Chunghwa Telecom Co (中華電信) said it planned record-high capital spending of about NT$40 billion (US$1.36 billion) to build its high-speed network next year after it won a 4G license last week.
That would represent 7.53 percent growth from this year’s budget of NT$37.2 billion. The new capital spending will help the nation’s top telecom operator roll out its 4G service in the second half of next year.
Local telecom companies are required to deploy at least 250 4G base stations to launch the service, as requested by the National Communications Commission (NCC).
“Next year will be the peak [in terms of capital spending] and then [the figure] will go down,” company president Shih Mu-piao (石木標) told investors during a teleconference on Friday.
To boost 4G coverage, Chunghwa Telecom planned to build 7,000 4G base stations within next five years, from the end of this year, Shih said. Those base stations would be deployed first in the nation’s six most populous cities, industrial parks and alongside the highways, Shih said.
Chunghwa Telecom has 10.55 million subscribers, with a market share of 36 percent.
Last week, Chunghwa Telecom obtained a maximum of 35 megahertz of bandwidth on the 4G spectrum in an intensive auction for NT$39.08 billion. Chunghwa Telecom said it would pay all of the license fee at the end of the year as it has sufficient cash and bonds on hand totaling about NT$50 billion.
When asked if Chunghwa Telecom would be able to make profits from offering 4G services in light of the high bidding prices and expensive equipment investment, Shih said tiered pricing would be vital.
“We think tiered pricing is a must to keep operation healthy as Internet traffic will grow much higher when we enter the 4G era, than it does in the 3G era,” Shih said. “It is almost becoming a consensus among the industry that we cannot adopt the same [pricing] strategy with the 3G [services].”
Now, Chunghwa Telecom and local rivals offer mobile services at flat rates for unlimited traffic usage, or fixed-rates for limited allowance, but no speed limit is imposed.
Chunghwa Telecom will offer a wide range of pricing packages with different Internet access speeds and data allowances, Shih said.
Although the competition will intensify when the 4G services are launched next year, Chunghwa Telecom did not plan to acquire any local competitors for consolidation, Shih said.