Taiwan Mobile Corp (台灣大哥大), the nation’s second-biggest telecoms operator, yesterday hiked its capital spending by almost 10 percent for this year to quicken its 3G data capacity expansion, amid growing demand for mobile data transmission.
This year, Taiwan Mobile budgeted NT$11.8 billion (US$392 million) for capital spending, up 29 percent from last year’s NT$6.24 billion and up from the NT$10.8 billion estimated in January.
This year, the firm plans to spend NT$6.8 billion on its mobile business, from NT$5.8 billion estimated six months ago.
“We expect to maintain capital spending at this level, which is up slightly from our previous year’s level. And this [level of spending] shall continue [in the next few years],” chief financial executive Rosie Yu (俞若奚) told an investor’s teleconference, citing increased demand for data usage.
Overall, this would boost the capital spending to revenue ratio to around 12 percent, if the telecoms operator hits its consolidated revenue goal of NT$101.18 billion. Last year the ratio was around 8 percent.
“The capital increase just reflects that smartphone traffic is increasing very fast,” co-president Cliff Lai (賴弦五) told investors.
To cope with the launch of Apple Inc’s iPhone 5 and iPad mini in the third and fourth quarters, “we feel that it’s better to prepare [more network capacity] earlier ... This is a precaution,” he said.
For the full year, Taiwan Mobile said it would hit its targets, despite Taiwan’s unstable macroeconomy impacting the performance of its TV shopping business.
The TV shopping business would miss its annual target, Yu said. She did not provide a detailed forecast.
Yesterday, Taiwan Mobile released a detailed second-quarter financial report, which showed net income grew 13 percent annually to NT$3.91 billion, or NT$1.45 per share, better than the NT$1.4 earnings per share projected by the company in January.
The company said the growth in service revenue and a smaller asset loss helped contribute to the improved results. Service revenue increased 4.76 percent to NT$17.62 billion last quarter, from NT$16.82 billion a year ago.
The non-operating loss improved to NT$20 million from a loss of NT$80 million in the second quarter of last year, and from a loss of NT$50 million in the first quarter.
The quarterly net profit was a 17 percent growth from NT$3.35 billion, or NT$1.25 per share, in the first quarter.
Taiwan Mobile rose 0.31 percent to NT$96.3 and Far EasTone Telecommunications Co (遠傳電信) climbed 0.75 percent to NT$66.9.
However, bigger rival Chunghwa Telecom Co (中華電信) dropped 0.9 percent to NT$88.3 after the National Communications Commission amended a draft telecom bill on Wednesday that will require the company to lease the last kilometer of broadband access to home networking, or local loop, to its local peers at cost price.
Lai said the new policy would help boost Taiwan Mobile’s broadband business.