The nation’s three major telecom operators reported sound financial results for the quarter ending on March 31, helped by better-than-expected earnings before interest, tax, depreciation and amortization (EBITDA), analysts said on Friday.
On Thursday, Chunghwa Telecom Co (CHT, 中華電信), the nation’s largest telecom carrier, said it earned NT$10.2 billion (US$338.5 million), up 10.9 percent from a year earlier, with earnings per share of NT$1.32.
The company’s EBITDA, which provides a gauge of large-capex telecom companies’ profitability, was NT$20.27 billion in the quarter, rising 5.2 percent year-on-year, data showed.
Smaller rival Taiwan Mobile Co (TWM, 台灣大哥大) posted NT$4.08 billion profit for the first three months, or NT$1.52 per share, growing 7.28 percent from the same period last year, while Far EasTone Telecommunications Co (FET, 遠傳電信) reported NT$3.11 billion profit or NT$0.95 a share during the quarter, up 11.83 percent year-on-year, according to the companies’ statements.
Taiwan Mobile’s EBITDA grew 3.43 percent annually to NT$7.77 billion last quarter, while Far EasTone’s expanded 9.05 percent to NT$6.7 billion.
“On annualized basis, CHT and FET first-quarter net profit is 14 percent ahead of [their] full-year guidance respectively,” Hong Kong-based UBS analyst Wang Jinjin (王晶晶) said in a note on Friday. “TWM’s first-quarter earnings also beat the company’s guidance by 4.5 percent.”
The three companies’ earnings in the first quarter have also achieved 25 percent of UBS’ estimates, even though the seasonal slow demand had caused mixed impact on their revenues in the first three months.
Chunghwa’s first-quarter revenue fell 2.7 percent annually to NT$55.06 billion, but Taiwan Mobile’s figure rose 5.19 percent to NT$27.73 billion, and Far EasTone also saw sales increase 3.52 percent to NT$22.86 billion last quarter.
Wang said the three companies may see weaker bottom line in the second half of the year, as earnings will be impacted by margin pressure from their preparation for the commercial launch of new 4G telecom services and the amortization of their 4G spectrum license fees, she added.
Barclays Capital analysts led by Anand Ramachandran also expressed concern about the downside earnings risks to three companies later this year, given uncertainties about their ability to charge higher 4G services prices in order to drive higher revenue and the potential competition from two new 4G players.
“We expect earnings to decline in 2014,” Barclays analysts said in a separate note on Friday. “An earnings recovery in 2015 will depend on the companies’ ability to monetize 4G and sustain competitive stability.”
Shares of Chunghwa were unchanged at NT$93.70 on the Taiwan Stock Exchange on Friday. The stock has underperformed the TAIEX by 4.08 percent year-to-date, the exchange’s data showed.
Taiwan Mobile shares rose 1.04 percent to NT$97 on Friday, rising 0.73 percent so far this year, while Far EasTone moved up 0.15 percent to NT$65, retreating by 0.76 percent from the beginning of the year and compared with the broader market’s 3.44 percent increase over the same period.