Far EasTone Telecommunications Co (FET, 遠傳電信) yesterday said that its revenue would drop 2.3 percent this year as its NT$499 monthly unlimited data plan continues to eat into profits, adding that there is no quick fix in sight before the arrival of 5G technology.
Revenue last year fell 6 percent annually to NT$86.64 billion (US$2.81 billion), missing the company’s target of NT$89.89 billion, which was attributed to the unlimited data plan launched in May last year.
The nation’s other telecoms also launched similar data plans.
The nation’s No. 3 telecom expects net income this year to slide at a faster rate of 9.8 percent annually to NT$8.47 billion, compared with NT$9.38 billion last year. Earnings per share is expected to sink to NT$2.6 this year from NT$2.88 last year.
“The price cuts definitely are driven by competition. There are five telecom companies in Taiwan, which is a small market,” FET president Chee Ching (井琪) told her first investor conference after taking up the position last month.
The average revenue per user (ARPU) “trend is going down. There is no way of going back. With the price war, there is no point of return,” Ching said.
The telecom’s ARPU shrank to NT$770 last quarter from NT$787 a quarter earlier and NT$866 a year earlier.
However, FET said that it has been seeing some encouraging signs.
“We have information that some of our peers are losing their appeal to consumers, compared with [when the data plans first] disrupted the market,” she said. “The price war happened last year, we do not expect that it will happen at such a large scale soon.”
Commenting on new ultra-low monthly plans launched by rivals during the Lunar New Year holiday, Ching said only a very limited number of consumers would benefit from the plans, given qualification restrictions.
Asia Pacific Telecom Co (亞太電信) early this month launched a new flat rate of NT$299 per month targeting new subscribers, while Taiwan Star Telecom Co (台灣之星) unveiled several new rate plans starting from NT$288 per month with caps on connection speed or capacity.
Apparently, the consensus between the nation’s big three telecoms — FET, Chunghwa Telecom Co (中華電信) and Taiwan Mobile Co (台灣大哥大) — is that “NT$499 is the bottom line,” Ching said.
“We are hoping that when 5G becomes available, it will give us an opportunity to see some upward trends,” she said.
The technology would allow for new consumer-oriented services, which would spur people’s willingness to pay more for the new services, she said.
FET’s strategy is to expand to new areas for growth, such as its “new economy business” that includes services leveraging advanced technologies like the Internet of Things, cloud computing and artificial intelligence, the company said.
The new economy business accounted for 10 percent of total revenue last year and its contribution is expected to grow to about 14 percent this year, the telecom said.
It plans to maintain a stable cash dividend distribution policy, FET said.
The company plans to distribute a cash dividend of NT$3.75 per common share this year, same with the past four years.
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