Wed, Jan 15, 2014 - Page 8 News List

EDITORIAL: New strategy for Chunghwa Telecom

It is common practice for workers to protest or strike to demand better working conditions and higher wages. However, Chunghwa Telecom workers recently demonstrated as a way to oppose the appointments of new high-ranking executives.

Over the past years, the labor union of the nation’s biggest telecom operator and once state-run telecoms monopoly has organized several rallies to voice workers’ opposition to the nominees for the position of company chairman.

The latest demonstration was held on Wednesday last week, declaring union members’ strong opposition to the designation of former Taiwan Semiconductor Manufacturing Co (TSMC) chief executive officer Rick Tsai (蔡力行) as Chunghwa’s new chairman.

Last month, the Ministry of Transportation and Communications — Chunghwa Telecom’s biggest shareholder — tapped Tsai to replace chairman Lee Yen-sung (李炎松), citing Tsai’s global view and his experience in managing TSMC, the world’s biggest contract chipmaker.

Labor union leader Chu Chuang-ping (朱傳炳) said the union is opposed to the appointment of anyone without knowledge and experience in the telecoms industry and is against the hiring of high-ranking executives from outside the company.

Chu said union members are concerned that Tsai will initiate massive layoffs by means of early retirement programs.

Tsai discharged a number of employees during the 2008-2009 global financial crisis as chief executive of TSMC, citing poor performance.

It is understandable that workers want to safeguard their jobs by protesting the hiring of any executive who is not promoted from within and does not share the consensus of maintaining the “status quo.”

However, maintaining the “status quo” means regressing in profitability and market share as competition intensifies and challenges to making a profit from selling just bandwidth on top of expensive 4G licenses in Taiwan grow.

Maintaining the “status quo” could come at the expense of Chunghwa Telecom’s shareholders.

During their terms, Lee and his predecessor, Lu Shyue-ching (呂學錦), were promoted from within the company and invested in some businesses without asking for proper returns to cope with government policies.

Chunghwa formed an alliance with local companies, including handset maker HTC Corp and banks, last month to make a joint investment of NT$500 billion (US$ 16.7 billion) in developing Taiwan Taoyuan International Airport into a “smart area” with local electronics companies over the next five years.

Premier Jiang Yi-huah (江宜樺) lauded the development plan as one of the country’s top 10 public construction projects, given that it could create NT$2.3 trillion worth of business opportunities.

He did not specify how the plan would benefit Chunghwa, which would invest in building a 4G network in the area and high-speed optical fiber network as well as a cloud-technology data center.

As Chunghwa is now a privately run company, it should not always follow the government’s policies and should not make any investment without proper returns.

As the nation’s biggest telecom company, it has the ability to expand its business faster at home and abroad in terms of capital and talent if it can get rid of the burden of having to act like a government agency. Chunghwa Telecom needs to have a leader from outside the company in order to safeguard its shareholders’ interests and possibly defy government policies.

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