Sat, Oct 14, 2017 - Page 12 News List

Chunghwa profit gains on declining subsidies, costs

By Lisa Wang  /  Staff Reporter

Chunghwa Telecom Co (中華電信), the nation’s biggest telecom carrier, saw its net profit grow at an annual rate of 6 percent to NT$10.15 billion (US$336 million) last quarter, widely beating market expectations, due mainly to declining handset subsidies and operating costs.

That translated into earnings per share of NT$1.31 for the third quarter, the company said on Tuesday.

Annual growth was supported by strong earnings before interest, taxes, depreciation and amortization (EBITDA), which climbed 3.3 percent year-on-year to NT$6.62 billion last quarter and marked the first annual growth since the second quarter of last year, the company said.

Operating costs and expenses fell by 7.2 percent annually during the quarter, the company said.

“Chunghwa Telecom’s third-quarter net income came above our estimate,” Credit Suisse Group AG analyst Varun Ahuja said in a report on Wednesday, citing strong EBITDA and lower-than-expected operating expenses.

Ahuja forecast NT$9.59 billion in quarterly profit for the company.

However, the company continued to see a downward spiral in service revenue last quarter, down 3.6 percent year-on-year to NT$56.42 billion, with more revenue setbacks in its international fixed and domestic fixed segments, down 19.8 percent and 5.5 percent year-on-year respectively.

However, Yuanta Securities Investment Consulting Co (元大投顧) believes there is a bright spot.

With continuing cutbacks in phone subsidies, Chunghwa Telecom may see profit margins stay flat this quarter from last quarter, when Apple Inc’s new iPhone X hits local stores next month, Yuanta analyst Chen Chuan-chuan (陳娟娟) said in a report on Thursday.

Local telecom companies offered a NT$1,000 subsidy for subscribers to purchase an iPhone 8, less than the subsidy offered for the iPhone 7, Chen said, adding that Chunghwa Telecom is likely to offer a similar NT$1,000 subsidy for the premium iPhone X.

Taiwan Mobile Co (台灣大哥大), the nation’s No. 2 telecom company, saw its net profit fall 0.75 percent annually to NT$3.96 billion last quarter, which also surpassed Ahuja’s estimate of NT$3.75 billion, primarily due to lower tax expenses.

The company’s service revenue last quarter was NT$24.16 billion, little changed from NT$23.84 billion made during the same period last year, but down 6 percent from the prior quarter because of lower contributions of revenue from roaming charges from Asia Pacific Telecom Co (亞太電信).

Meanwhile, Far EasTone Telecommunications Co (遠傳電信), the third-largest telecom, posted an 11 percent annual decline in net profit for last quarter at NT$2.85 billion, while revenue fell 1.9 percent to NT$22.86 billion, the company said earlier this week.

Comments will be moderated. Keep comments relevant to the article. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned. Final decision will be at the discretion of the Taipei Times.

TOP top