Taiwan Mobile Co (台灣大哥大) yesterday announced it is looking at scrapping its lowest flat rate for 4G services later this month, saying that steep price competition is eating into the profits of the nation’s No. 2 telecom.
The nation’s three biggest telecoms offer flat rates as low as NT$700 (US22.49) per month for 4G services.
Such low rates have “significantly” reduced Taiwan Mobile’s average revenue per user (ARPU) for its 4G services to less than NT$1,100 per month, from NT$1,500 per month when the company launched the service in 2015, Taiwan Mobile president James Jeng (鄭俊卿) told reporters yesterday.
When the service was first launched, new subscribers opted for the lower-price 4G service packages, but now the phenomenon has spread to existing subscribers, who also tend to choose lower 4G rate plans when renewing their service contracts, Jeng said.
“The competition has become irrational [since 4G threshold flat rates were cut to NT$700 in the middle of last year],” Jeng said. “The nation’s three biggest telecoms are bracing for mounting pressure [on profits] this year… Telecoms executives think that rate plans should be based on customer’s usage and should be tiered.”
It is highly likely that Taiwan Mobile will end its NT$699 flat rate for unlimited 4G usage by the end of this month, Jeng said.
Taiwan Mobile expects its ARPU for 4G subscribers to bounce back to more than NT$1,000 after the market returns to a normal and healthy level of competition, Jeng said, adding that the company expects the penetration rate of 4G to climb to 73 percent this year.
Taiwan Mobile projected that revenue this year would rise 2 percent annually to NT$111.85 billion, but net profits would shrink 6 percent year-on-year to NT$14.38 billion, while earnings per share would fall to NT$5.28.
The company has budgeted NT$6.8 billion for capital expenditures this year, with half of that to be invested in the firm’s mobile network and the other half in its fixed-line broadband and cable businesses.
Taiwan Mobile plans to upgrade its fixed-broadband network to hybrid fiber coaxial, paving the way for the company to roll out a much higher data transmission speed of 1 gigabyte per second for cable TV subscribers next year.
The 1 gigabyte service should be priced at about NT$1,000 per month next year, if the high-speed services become popular, Jeng said.
That would mean a lucrative business for most cable TV operators, given stiff price competition, Jeng said.
Currently, most cable TV users subscribe to 500 megabytes per second services via its subsidiary TFN Media Co (台固媒體), Jeng said, adding that TFN’s ARPU is less than NT$600.
The number of cable TV subscribers is expected to grow rapidly and reach about 2 million next year from 1.2 million, he said.
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