Taiwan Mobile Co (台灣大哥大) expects mobile revenue to remain flat over the next two years as it seeks to bolster its presence in the enterprise sector to counter the effect of escalating subscriber-price wars.
On the commercial side, cut-throat competition continues to lower telecom service tariffs, which will reduce average revenue per user (ARPU) and cut into the company’s top line, Taiwan Mobile president James Cheng (鄭俊卿) told an investor teleconference on Monday.
However, the firm has also found that most of the lower-rate plan subscribers sign their service contracts through online stores or social media partners, not in brick-and-mortar stores, he said.
That has meant a reduction in operating costs as Taiwan Mobile does not pay handset subsidies and dealer’s commissions for those subscribers, Cheng said.
“So in terms of bottom line, it [lower price rate] will not have as significant an impact,” Cheng said.
The nation’s No. 2 telecom said it would stop offering a NT$499 rate plan for unlimited 4G Internet access as of yesterday.
Its bigger rival, Chunghwa Telecom Co (中華電信), yesterday also scrapped its controversial NT$499 rate plan that had offered unlimited Internet connection for civil servants, teachers and military personnel, although it is launching new plans with a monthly minimum of NT$469 and NT$599 for those same clients that offer unlimited connections, but at a slower speed.
Taiwan Mobile is working to improve its position in the enterprise and government sectors for its landline services, Cheng said.
“We have started to penetrate those two markets. We have landed a government tender to offer an artificial intelligence platform with our strategic partners,” he said.
The service contract is worth NT$1.1 billion (US$37.16 million), Cheng said.
“Hopefully, that will boost our telecom revenue and compensate a bit for [weakness in] mobile revenue,” he said.
“Mobile revenue, from what I see, for next two years, probably will remain flat in terms of the top line,” he said.
Telecom revenue of NT$18.47 billion for the first three months of the year was a 6 percent drop from the same period last year, while total revenue rose 5 percent to NT$30.31 billion from NT$28.84 billion, boosted by growth in TV shopping and cable TV businesses.
Net profit shrank 12 percent annually to NT$3.48 billion from NT$3.96 billion, 13 percent more than the company’s earnings forecast for the quarter of NT$3.07 billion.
Earnings per share fell to NT$1.28 from NT$1.46 the same period last year, while blended ARPU fell 4 percent annually to NT$691 from NT$720.
The board of directors approved a proposal to distribute a cash dividend of NT$5.6 per common share by allocating some of the firm’s capital surplus. That brought the payout ratio to 107 percent as the firm earned NT$5.21 per share last year.
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