Taiwan’s top three telecom operators’ launching of their own 4G long-term evolution (LTE) networks is expected to depress the firms’ bottom lines, starting from this month, Yuanta Investment Consulting (元大投顧) said on Saturday.
Chunghwa Telecom Co (中華電信), the largest telecom services provider in Taiwan, was the first to launch the 4G network on May 29, followed by Far EasTone Telecommunications Co (遠傳電信) on June 3 and Taiwan Mobile Co (台灣大哥大) the following day.
All of the three companies started their 4G operations earlier than planned, in a bid to lure as many 3G users as possible to shift to the new services after they won a bid to secure 4G licenses last year.
In a research note, Yuanta said increased operating costs related to the launch of the 4G services could slow down the three companies’ profit growth from this month.
Even worse, they could witness their profit fall this month, the advisory firm added.
In the first five months of this year, the three telecom operators recorded growth in net profit, indicating that they continued to enjoy stable growth in their bottom lines, but the uptrend could be reversed this month, Yuanta said.
In the first five months of this year, Taiwan Mobile was the top earner among the three in terms of earnings per share, reporting NT$2.56 in earnings per share (EPS), up from NT$2.42 in EPS recorded over the same period last year.
Chunghwa Telecom came in second after reporting NT$2.2 in EPS in the five-month period, up from NT$2.09 in EPS registered in the same period last year, ahead of Far EasTone with NT$1.67 in EPS, which rose from the NT$1.49 seen a year earlier.
Last month alone, Taiwan Mobile’s EPS stood at NT$0.55, up from NT$0.53 recorded a year earlier, while Chunghwa Telecom posted NT$0.44 percent in EPS that month, compared with NT$0.43 in EPS a year earlier, and Far EasTone reported NT$0.37 in EPS, up NT$0.31 in EPS recorded a year ago.
Yuanta said in recent trading sessions in the local bourse, shares of the three telecom operators have significantly risen amid optimism that new competitors in the local 4G services business are unlikely to impose threats to them.
In addition, the three telecom stocks have been favored by investors as they tended to issue attractive dividends. Taiwan Mobile is expected to issue NT$5.6 in cash dividend for last year’s earnings, Chunghwa Telecom is to give NT$4.52 and Far EasTone is to dole out NT$3.75.
However, Yuanta said that amid uncertainty over the three telecom operators’ profitability, the advisory firm is maintaining a “neutral” recommendation on the three stocks.
On Friday, Chunghwa Telecom rose 0.10 percent to close at NT$96.20, while Far EasTone fell 0.15 percent to end at NT$68.70 and Taiwan Mobile closed down 0.10 percent at NT$98.70.
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