Far EasTone anticipates NT$20 billion in revenue

Far EasTone Telecommunications Co Ltd (遠傳電信), the nation's third biggest mobile phone service provider, said yesterday that it will reach NT$20 billion in sales this year, more than double last year's NT$7.5 billion.

The company began offering services last year and started breaking even in January. Far EasTone registered a loss of NT$600 million in 1998, but the company registered NT$8.84 billion in sales and NT$1.25 billion in pre-tax profit for the first half of this year.

Therefore, "We are confident that we will realize profits this year," said Susan Chen (陳素貞), vice president Far EasTone's marketing department, at a press conference yesterday.

Figures released at the conference show the number of Far Eas-Tone's revenue producing customers has reached 1.72 million, just about half that of state-run Chunghwa Telecom's (中華電信) 3.37 million, and behind Pacific Communications Services' (台灣大哥大) 3 million.

Looking toward the future, the company's board of director has agreed to invest NT$11 billion in infrastructure expansions next year, Chen said.

Capitalized at NT$10.7 billion, Far EasTone also plans to begin its initial public offering preparation process next year with an eye toward selling shares on the market during the first quarter of 2001, she said.

Chen made the remarks at a press conference held to mark the first anniversary of the company's introduction of pre-paid mobile phone cards.

Over the past year, Far Eas-Tone's cards have grabbed a 66 percent market share in Taiwan, followed by Pacific Communications Services' (台灣大哥大) cards with 19 percent, K.G. Telecommunications Co Ltd's (和信電) 10 percent, the company said, citing market research conducted by AC Nelson. Another 5 percent of the market is held by smaller companies.

Chen said revenue generated from the pre-paid phone card business now contributes to nearly 30 percent of Far EasTone's total revenues. She said research has found that more and more older people are using the company's cards.

In March, the number of people over 30 accounted for 40 percent of the company's total card users, but the percentage has now surged to 50 percent.

"We found that many children buy pre-paid mobile phone cards for their parents and that older pre-paid card users tend to receive phone calls more than dial out," she said.

Far EasTone predicts the penetration rate of pre-paid mobile phone cards will reach 50 percent of the total number of mobile phone users in Taiwan by the end of next year and increase to 65 percent in 2003.

Although some private mobile phone service providers are worried that Chunghwa Telecom will slash its mobile phone air-time fees next year due to its 168 percent rate of investment return on its mobile phone business, Chen said Far EasTone is not considering following suit and cutting its prices.

"We believe that price is not the only factor affecting customers' purchasing decisions. Value-added services are also very important," Chen said.

According to Far EasTone, before private mobile phone companies launched their services in January 1998, the penetration rate of mobile phone users in Taiwan was 7 percent of the total population. By the end of 1998, the penetration rate had increased to 8 percent.

However, the company is confident of a boom in the future, predicting the penetration rate will soar to between 30 percent and 33 percent of Taiwan's population in the near future.