Taiwan Mobile Co (台灣大哥大), the country’s second-largest mobile provider, is to benefit from a faster-than-expected development of 4G mobile devices using the 700MHz frequency, JPMorgan Securities said.
Taiwan Mobile announced on Wednesday that it had been awarded a 4G operational license and plans to launch services in July, when its network coverage reaches a certain scale.
Chunghwa Telecom Co (中華電信) and Far EasTone Telecommunications Co (遠傳電信) are the other two carriers who were awarded 4G licenses on the same day, and the three companies must begin operations of their 4G networks within six months.
“Given the uncertainty regarding the spectrum-swap negotiation with Far EasTone, we see an increasing likelihood that both [Taiwan Mobile and Far EasTone] will only be able to launch services in the 700MHz spectrum initially, which will place Chunghwa Telecom at an advantage,” JPMorgan analyst Lucy Liu wrote in a note on Wednesday.
However, Liu said that Taiwan Mobile’s management expects to see “a reasonably good selection” of 11 models of 4G smartphones — mostly from major brands such as Sony and HTC Corp (宏達電) — as well as four 4G tablets available in the initial stages.
“The faster evolvement of the 700MHz ecosystem may help alleviate concerns regarding [Taiwan Mobile’s] spectrum disadvantage relative to Chunghwa Telecom to some extent,” Liu said.
The analyst maintained her “neutral” rating on Taiwan Mobile shares with a price target of NT$102.
Taiwan Mobile is one of six companies that took part in bidding for 4G licenses late last year, winning the A4 block in the 700MHz frequency and the C1 block in the 1800MHz frequency.
The company has been in talks with Far EasTone to integrate their blocks in the 1800MHz frequency, but the results are not expected to come out until the fourth quarter of this year, according to executives of the two carriers.
In a separate report, Germany’s Deutsche Bank AG maintained its “hold” rating on Taiwan Mobile shares, with an unchanged price target of NT$95.
Though Taiwan Mobile’s earnings could drop in the third quarter due to its launch of the 4G network, Deutsche Bank said it expects the operator’s earnings to improve in the fourth quarter as about 500,000 customers are forecast to switch to its higher-priced 4G services by the end of the year.
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