Sat, May 12, 2018 - Page 12 News List

Chunghwa deal not for profits

QUEUING CUSTOMERS:The NT$499 flat-rate package should broaden the telecom’s customer base, but is offered at below cost so should not affect revenue, the firm said

By Lisa Wang  /  Staff reporter

Chunghwa Telecom Co president Sheih Chi-mau, left, speaks to the company’s chairman, David Cheng, during a news conference in Taipei yesterday to discuss the company’s introduction of a NT$499 flat-rate package on Tuesday.

Photo: CNA

Chunghwa Telecom Co (中華電信), the nation’s biggest telecom, yesterday said it is sticking to its financial forecast this year, as its NT$499 flat-rate package should have only a minor effect on its profit and revenue.

Launched on Wednesday, the company’s new deal has resulted in unprecedented queues of people wanting to switch to the bargain package outside its stores over the past three days.

Chunghwa Telecom said the new rate plan aims to counter competition from its rivals, who have been enticing new subscribers with low-cost tariffs.

“The new strategy is a reaction to the external environment,” chairman David Cheng (鄭優) told a media briefing. “We do not want to see a price war, but we have to fight back when there is a war.”

The NT$499 service package is a short-term promotion, available only for a week until Tuesday, the company said, adding that it does not promise that the plan would expire as scheduled.

Taiwan Mobile Co (台灣大哥大) and Far EasTone Telecommunications Co (遠傳電信) have unveiled almost identical plans to prevent losing subscribers. Yesterday, they announced that they would extend the service contract from 24 months to 30 months for subscribers to their NT$499 service package.

“We do not want to see such promotions becoming a regular occurrence, as the rate plan is below cost,” Chunghawa Telecom president Sheih Chi-mau (謝繼茂) said. “We will manage to strike a balance between business [expansion] and profitability [erosion].”

The short-term promotion would only eat away some of the company’s profit and slightly diminish overall average revenue per user (ARPU), Sheih said.

The company registered the lowest ARPU at NT$581 among the nation’s top three telecoms for the first three months of this year, compared with Taiwan Mobile’s NT$825 and Far EasTone Telecommunications’ NT$843.

“We still aim to hit this year’s financial target,” Sheih said.

Chunghwa Telecom expects revenue this year to grow between 1.7 percent and 2.4 percent to between NT$231.47 billion and NT$232.97 billion (US$7.77 billion and US$7.82 billion).

Net profit is expected to be between NT$37.25 billion and NT$40.31 billion, compared with NT$38.86 billion last year.

The company said the new rate plan would help it broaden its customer base and save on handset subsidies, as no mobile phones are bundled for subscribing to the service package.

Chunghwa Telecom said it spends more NT$10 billion each year on handset subsidies to retain existing subscribers or attract new users.

Chunghwa Telecom shares rose 0.46 percent yesterday to close at NT$109, ending a two-day losing streak since the launch of the NT$499 data plan, while shares of Taiwan Mobile dropped for the third straight day to NT$107 and Far EasTone rose 0.81 percent to NT$75.

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