Wed, Mar 12, 2014 - Page 14 News List

Chunghwa Telecom posts income rise, falling costs

By Kevin Chen  /  Staff reporter

Chunghwa Telecom Co (中華電信) on Monday reported that its net income in the first two months of the year increased 13.7 percent to NT$7.07 billion (US$233.3 million), from NT$6.23 billion a year earlier, because of falling expenses and operating costs.

The nation’s largest telecom services firm said in a statement that its earnings per share (EPS) in January and last month were NT$0.91, up from NT$0.8 for the same period last year.

Earnings before interest, tax, depreciation and amortization (EBITDA), which provides a better gauge of big-capex telecom companies’ profitability, was NT$13.89 billion in the two months period, rising 6 percent year-on-year from NT$13.1 billion, the statement said.

Chunghwa Telecom’s latest data showed its cumulated revenue in the first two months declined 3.9 percent to NT$37.61 billion from NT$39.13 billion one year ago, with mobile service revenue rising just 1.16 percent year-on-year to NT$12.78 billion in the first two months, while Internet service sales dropped 0.4 percent to NT$2.86 billion over the same period.

However, lower operating costs for its information and communications (IC) projects pushed the firm’s operating expenses to NT$29.25 billion in the first two months, down from the year-earlier level of NT$31.35 billion, offsetting the slight drop in net revenue during the two-month period, resulting in the double-digit rise in net income, the data showed.

On Jan. 28, the company projected its revenue would increase slightly by NT$203 million, or 0.1 percent, to NT$228.23 billion this year from last year, while net income would contract by 7.39 percent year-on-year to NT$35.84 billion, or NT$4.62 per share, due to an increased expense for fourth- generation (4G) service rollout.

Deutsche Bank’s Hong Kong-based analyst Peter Milliken yesterday said the latest results showed that “Chunghwa Telecom got off to a relatively slow start to the year.”

“Which indicates it may be feeling increased competitive pressure,” Milliken said in a research note.

The nation’s three major telecom operators — Chunghwa Telecom, Taiwan Mobile Co (台灣大哥大) and Far EasTone Telecommunications Co (遠傳電信) have allotted massive capital expenditure for the 4G telecom infrastructure deployment, while facing challenges of how to monetize the mobile data usage to offset a decline in traditional voice service revenue, as well as competition from two new 4G players that could bring material market disruption going forward, analysts said.

On Monday, Taiwan Mobile and Far EasTone also released their financial results for the first two months, with the former posting NT$2.74 billion in net income, or EPS of NT$1.02, during the two month period, with EBITDA of NT$5.07 billion and NT$18.89 billion in revenue.

Far EasTone reported net profit of NT$1.99 billion over the same period, or EPS of NT$0.61, with EBITDA of NT$4.32 billion and revenue of NT$15.61 billion, according to data posted on their Web sites.

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