Thu, Feb 24, 2011 - Page 11 News List

Chunghwa Telecom Co expects earnings to drop

MOU-VING ON:The nation’s largest telecom operator also signed two memorandums of understanding with China Telecom to jointly develop business opportunities

By Kevin Chen  /  Staff Reporter

Chunghwa Telecom Co (中華電信), the nation’s largest telecom operator by revenue, yesterday forecast a net income of NT$45.73 billion (US$1.55 billion), or earnings per share of NT$5.87, this year, a company statement showed.

The earnings forecast for this year represents a decline of 4.1 percent from NT$47.69 billion made last year, because of a 6.08 percent increase in operating costs and expenses from last year, as the government requires fixed-line operators to shoulder the interconnection costs and transition fees for fixed-to-mobile calls, the company said.

Higher operating costs and expenses are also attributable to increased smartphone subsidies amid rising demand and continued investment in network upgrades to facilitate traffic transmission and improve customer services, the company added.

This year, the company is set to allocate NT$31.13 billion for capital expenditures, 28.05 percent higher than the NT$24.31 billion earmarked for last year, as it plans to expand mobile and broadband networks as well as invest in cloud computing technology.

Earnings per share, however, increased 19.33 percent from NT$4.92 per share last year after the company exercised a 20 percent reduction in its paid-in capital from NT$96.97 billion to NT$77.57 billion last year, which cut down the number of its outstanding shares.

Revenue is expected to reach NT$190.02 billion this year, up 1.94 percent from NT$186.41 billion last year. The company attributed the sales increase to expected gains from fixed-line and broadband revenues, as well as rising demand for its Internet TV, mobile data and cloud computing services, the statement said.

The company is slated to hold its annual general meeting on June 24 to review its financial results for last year and approve the company’s plans for dividend payouts.

Meanwhile, Chunghwa Telecom yesterday signed two pacts with China Telecom Corp (中國電信) to share resources and develop business potentials in the coastal region of China’s Fujian Province, according to a Taiwan Stock Exchange filing.

In the filing, Chunghwa Telecom said its northern branch and data-service branch signed two memorandums of understanding with China Telecom’s Fujian branch to jointly develop business opportunities there. The pacts come as China Telecom chairman Wang Xiaochu (王曉初) is in Taiwan for a visit.

In related news, Far EasTone Telecommunications Co (遠傳電信), the nation’s No. 3 telecom operator, yesterday forecast net income may fall 4 percent to NT$8.48 billion, or NT$2.60 per share, this year from NT$8.85 billion, or NT$2.72 per share, last year.

Revenue is expected to rise 17 percent to NT$74.4 billion from NT$63.44 billion last year, according to a presentation document released on the company’s Web site yesterday, when it held a quarterly conference for investors.

The company will slightly increase capital expenditure this year by 0.73 pecent to upgrade its services. This year’s spending will reach NT$8.28 billion, including NT$2.35 billion for fixed-line services and NT$5.93 billion for the mobile front, according to the presentation document.

Last year, the company spent NT$8.22 billion in capital expenditure, with NT$770 million on fixed-line services and NT$7.45 billion on the mobile end.

Shares of Chunghwa Telecom ended 0.23 percent higher at NT$87.7 yesterday on the Taiwan Stock Exchange, whlie those of Far EasTone were up 1.08 percent at NT$42.3.

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