Fri, Jan 20, 2012 - Page 12 News List

Taiwan Mobile bets big on data usage

CLOUDY FUTURE?The telecoms company will build a new Internet data center to support cloud computing, but its Momo TV acquisition diluted its EBITDA margins

By Lisa Wang  /  Staff Reporter

Taiwan Mobile Co (台灣大哥大), the nation’s No. 2 telecoms operator, yesterday projected net income this year would grow 7 percent from last year, boosted by rising mobile data usage and by its new TV shopping business.

The phone company said it also planned to spend 68 percent more this year, or NT$10.8 billion (US$361 million) — compared with last year’s NT$6.42 billion — on speeding up its mobile phone network, including adding a further 900 high-speed 3G base stations and building a new Internet data center to support cloud-computing technology.

Net income is expected to climb to NT$14.36 billion this year, compared with last year’s NT$13.47 billion, Taiwan Mobile said. In July of last year, the company acquired a 51 percent stake in Fubon Multimedia Technology Co Ltd (富邦媒體科技), which operates the nation’s No. 2 TV shopping channel, Momo TV.

However, the earnings before interest, taxes, depreciation and amortization (EBITDA) margin, would shrink 5.25 percentage points to 28.04 percent this year, from 33.29 percent last year, on dilution of margins this year following the Momo TV acquisition.

The TV shopping channel would deliver only 7 percent in EBITDA margin, company financial executive Rosie Yu (俞若奚) told investors in a teleconference yesterday, where analysts expressed concern over the downtrend in the EBITDA margin.

“The dilution is mostly because of a larger revenue contribution from the Momo TV shopping business,” Yu said. This year, the TV shopping channel would account for a 19 percent share of the telecoms carrier’s total revenues, the company’s financial statement showed.

Revenues are expected to grow 25 percent to NT$101.83 billion this year, from last year’s NT$81.37 billion, according to the company’s financial forecast.

However, annual growth of its telecoms services and TV shopping business is forecast at only 6 percent, with the strongest growth coming from mobile data usage, which is expected to increase by 39 percent this year, the company said, offsetting the diluting effect of price cuts on mobile and landline voice charges, as requested by the National Communications Commission.

Answering an analyst’s question on the negative impact from Apple Inc’s iPhone 4S on Taiwan Mobile’s EBITDA margin, Taiwan Mobile co-president Cliff Lai (賴弦五) said: “The impact of iPhone 4S will happen mainly in the first quarter of this year owing to better handset supply.”

The launch of the iPhone 4S last month caused an increase in promotional spending and thereby cut Taiwan Mobile’s EBITDA, as reflected in its financial report, Lai said. EBITDA dropped 20 percent last month to NT$1.92 billion, from NT$2.4 billion in November, -according to the company.

Taiwan Mobile withheld details of its cash dividend, causing analysts at yesterday’s meeting further concern.

Yu said the company’s board would not discuss the dividend until its next meeting in April.

Taiwan Mobile has delivered a 90 percent payout ratio over the last few years, meaning shareholders are likely to receive a cash dividend of NT$4.23 per share, based on last year’s earnings per share of NT$4.7.

Taiwan Mobile shares rallied 35 percent to NT$94.4 at the end of last year, from NT$69.7 at the end of 2010, outperforming the TAIEX, which fell 21.08 percent during the period.

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