Tue, Jul 29, 2014 - Page 14 News List

Taiwan Mobile to increase its capex by 13.4 percent

By Kevin Chen  /  Staff reporter

Taiwan Mobile Co (台灣大哥大) said its capital expenditure (capex) for this year will increase by 13.4 percent from its previous estimate, as the nation’s second-largest telecommunications company expects further profit contributions from its TV shopping business.

The company yesterday said its board had approved capital expenditure of NT$15.4 billion (US$512.7 million) for this year, compared with its previously projected spending of NT$13.58 billion.

Last year, the company allocated NT$15.1 billion for capital expenditure.

“The board today approved an additional NT$1.82 billion capex budget for 2014, mainly to reflect MoMo’s investment of its logistics and warehousing center,” Taiwan Mobile said in a presentation document released on the company’s Web site following its quarterly investors’ conference.

Taiwan Mobile holds a controlling stake in the nation’s No. 2 TV shopping channel operator, Fubon Multimedia Technology Co (富邦媒體科技), which operates the MoMo TV channel.

Overall, Taiwan Mobile plans to spend NT$9.8 billion on mobile business, NT$2.1 billion on fixed-line business, NT$1 billion for cable TV and NT$2.5 billion for MoMo and other subsidiaries, the company said in the presentation document.

Taiwan Mobile has gained approval from the National Communications Commission (NCC) to introduce its 4G telecom network since June and is positioned itself to capture the business upside of the long-term evolution (LTE) services.

The company yesterday said it is scheduled to launch its 4G LTE service using the 1,800MHz frequency bands by the end of September, after the company earlier this month gave back 5MHz in the 2G spectrum to the commission and swapped some 1,800MHz bands with Far EasTone Telecommunications Co (遠傳電信).

“Acceleration in the deployment of the 4G network, the growing number and greater variety of LTE devices and the earlier-than-expected availability of the 1,800MHz LTE spectrum will propel customers’ migration to 4G services,” the Web site document said.

For this quarter, Taiwan Mobile forecast it would make a net income of NT$3.44 billion, or earnings per share of NT$1.28.

The forecast represents a decline of 19 percent from NT$4.27 billion, or NT$1.58 per share, made in the third quarter of last year. It is also compared with NT$4.14 billion, or NT$1.54 a share, recorded in the second quarter this year.

Revenue for this quarter is predicted to increase by about 5 percent year-on-year and quarter-on-quarter to NT$28.3 billion due to growth in both handset sales and MoMo revenue, the company said.

The projected decline in net income for this quarter reflects a drop in the company’s telecom business earnings amid higher 4G-related spending during the early stage of its 4G service launch.

As a result, Taiwan Mobile predicted that its earnings before income tax, depreciation and amortization (EBITDA) would decline 2 percent year-on-year to NT$7.89 billion this quarter, with non-operating expenses likely rising by 115 percent to NT$620 million from NT$290 million last year.

The company’s board yesterday approved up to a US$500 million euro convertible bond issue plan. Investors can convert the zero-yield securities after the bonds mature five years later for Taiwan Mobile shares at a premium of between 20 percent and 32.5 percent, the company said.

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