Chunghwa Telecom Co (CHT, 中華電信) yesterday said that it would maintain its market share expansion strategy that centers on subscriber acquisition and retention initiatives, despite missing its operating forecast for the past quarter.
The company reported that net income for the past quarter dropped 16.2 percent annually to NT$8.5 billion (US$274.5 million), with revenue dipping 6.6 percent year-on-year to NT$52.71 billion. Earnings per share were NT$1.1.
The company achieved 88.3 percent of its NT$10.34 billion upper-end earnings forecast for the period, and 90.7 percent of its NT$58.42 billion upper-end revenue target.
The drop was due to intensifying market competition, and because consumers have been favoring Voice over Internet Protocol (VoIP), which has cut into the company’s mobile voice call revenue, Chunghwa Telecom chairman and chief operating officer David Cheng (鄭優) said.
Although efforts such as a back-to-school promotion in August helped the company maintain its industry-leading 36.5 percent market share in mobile subscribers and its 37.8 percent hold on Taiwan’s mobile revenue, executives at an investors’ teleconference continued to share a dim outlook for further growth.
The company, which was the first to launch cheap unlimited mobile data plans at NT$499, triggering a wave of similar deals across the nation, said it expects average revenue per user (ARPU) to continue falling.
At the end of the third quarter, the company’s aggressive pricing strategy helped increase the number of its mobile subscribers to 9.08 million, or 86.1 percent of the Taiwanese market, representing a 3.89 percent rise from the previous quarter.
ARPU has fallen consistently in the past five quarters to NT$703 at the end of September, down from NT$717 a year ago.
Newly launched iPhones could help stem the decline, the company said, adding that it has begun to waive breach-of-contract penalties for NT$499 subscribers willing to switch to higher monthly tariffs, as they could be willing to do so to take advantage of subsidized handset purchases.
However, while handset and data card sales in the past quarter rose 6.1 percent year-on-year to NT$8.09 billion, the company said that the number of new iPhones sold did not outperform last year’s figures.
“Due to the higher prices of more premium iPhones, consumers have significantly lengthened their upgrade cycles, with many preferring to purchase their handsets out of contract,” said Shen Fu-fu (沈馥馥), director of the company’s investor relations department.
“We need to be nimble in our data plan offerings to react to market changes and cater to a wider variety of customers,” Shen said.
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