Chunghwa Telecom Co (中華電信) aims to increase the number of multimedia-on-demand (MOD) subscribers by 10 percent this year, thanks to a major regulatory change, the nation’s biggest telecom said yesterday.
The National Communication Commission (NCC) earlier this year eased restrictions on Chunghwa Telecom’s MOD business, known as Internet TV, allowing the company greater flexibility in content offerings and increased profitability.
“In January, the NCC allowed us to package MOD channels freely to satisfy user demand. We believe that the change will give us a more favorable market environment and help us grow the MOD business,” Chunghwa Telecom chairman Sheih Chi-mau (謝繼茂) told an investors’ conference.
The company has teamed up with Netflix Inc along with other strategic partners to enrich its content offering, he said.
However, the company said that it could take longer to turn around the MOD business, which has been losing money since its inception 14 years ago.
Its MOD business briefly broke even last quarter after the subscriber base reached 2.05 million, the company said.
The business added 72,000 subscribers last year, from 1.3 million at the end of 2017, it said, adding that the total is expected to reach 2.2 million this year.
“A complete turnaround might take a year or two,” deputy spokeswoman Shen Fu-fu (沈馥馥) said, citing company estimates.
“To break even, the average revenue per user [ARPU] would need to be a bit higher [than the current level],” Shen said.
The MOD business had an ARPU of about NT$432 last quarter, totaling NT$889 million (US$28.77 million) in revenue.
The company’s core mobile business this year, as indicated by the segment’s ARPU, continues to be trapped in a downward spiral, the company said.
“As SIM card-only adoption continues to decrease and the handset replacement cycle becomes longer, we expect the decline in the segment’s ARPU to persist,” Sheih said.
To avert the downtrend, the company plans to launch more handsets bundled with rate plans and other incentive services to boost service revenue and the company’s margin, he said.
First-quarter revenue fell 4.3 percent year-on-year to NT$51.33 billion — below the company’s guidance of NT$52.43 billion to NT$52.72 billion — due to lower mobile revenue amid price competition, it said.
Net profit shrank 4.3 percent annually to NT$8.3 billion, meeting the company’s guidance of between NT$8.25 billion and NT$8.43 billion. Earnings per share were NT$1.08 for last quarter.
The company plans to spend NT$29 billion on equipment this year, higher than the NT$28.6 billion last year. Most investment would be to improve fiber optic, broadband and cloud-based infrastructure.
Capital spending would be the lowest in five years.
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