Sat, Jul 30, 2016 - Page 12 News List

Chunghwa cloud launch might boost data industry

HOLDOUTS:Slowing subscription service sign-ups are expected as most higher-tier subscribers have upgraded to 4G, while rival carriers have started consolidating

By Ted Chen  /  Staff reporter

Minister of Transportation and Communications Hochen Tan, fourth left, Premier Lin Chuan, fifth left, and Chunghwa Telecom chairman Rick Tsai, sixth left, take part in the inaugural ceremony for Chunghwa Telecom’s cloud data center yesterday in New Taipei City.

Photo: Ho Yu-hua, Taipei Times

Chunghwa Telecom Co (CHT, 中華電信), the nation’s biggest telecom operator, yesterday launched its new cloud computing data center in a bid to accelerate the nation’s digital economy and industry transformation.

“We aim to elevate Taiwan to one of the leading data hubs in Asia and attract international businesses, such as over-the-top content providers, as well as boosting the nation’s financial technology development,” chairman Rick Tsai (蔡力行) said at the facility’s opening ceremony in New Taipei City’s Banciao District (板橋).

The international data corp facility covers 90,000m2, has 4,500 server racks and cost NT$13 billion (US$407 million) to build, the company said.

The complex is adjacent to the Taiwan Stock Exchange and the Taiwan Futures Exchange data facilities to achieve low latency for financial-sector clients, the company said, adding that it provides virtual private network solutions to more than 80 percent of local brokerages.

On Thursday, the company told an investors’ conference that its capital expenditure in the first half fell 34.6 percent annually to NT$6.8 billion, meeting only 22 percent of its goal for this year.

“Our expenditure target this year remains unchanged at NT$30.6 billion,” Tsai told reporters yesterday, adding that the dip in the first half was due to slower-than-expected progress in a number of construction projects.

“Construction and spending will accelerate in the second half, meeting the target for this year,” Tsai said.

Credit Suisse Group AG analyst Varun Ahuja said in a note that the company’s capital expenditure is expected to increase in the second half, mainly on new submarine cable and other information and communications technology-related projects.

Tsai yesterday reiterated the company’s goal to add 2 million 4G mobile subscribers before the end of this year and bolster its 37.5 percent market share.

The company’s enterprise solution sales are expected to grow from 4 to 5 percent of the company’s total revenue last year to between 6 and 8 percent, helped by the new facility and expanded capacity, Chunghwa Telecom president Shih Mu-piao (石木標) said on Thursday.

However, Shih said enterprise solution sales have much lower margins compared with the company’s consumer telecoms services.

Meanwhile, the company is facing slowing growth in higher-tier subscription counts, as Taiwan’s 4G penetration has reached 50 percent.

“Most higher-tier subscribers have already upgraded to 4G and future growth will rely on lower-tier 2G and 3G holdouts,” Shih said.

At the same time, rising competition from rival carriers in the lower-tier segments, as well as SIM card consolidation among subscribers have strained the company’s average revenue per user performance, he said.

Shih said that it would take considerable time before consumers adjust to the company’s new pricing structure, which was launched in April, and that the company is not expecting tangible improvements in earnings from its new NT$999 and NT$1,399 data plans in the near term.

Consumers prefer unlimited or generous data plans to high handset purchase subsidies, Shih said, adding that the current iPhone model is not as popular as its predecessors, leading to diminished demand.

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