Taiwan Mobile Co (台灣大哥大), the nation's third-largest wireless telecommunications service provider, expected profits in the fourth quarter to rise by 31 percent from a year ago, and forecast steady growth throughout next year.
"At the moment, we don't see any factors that will hinder Taiwan Mobile from continuing its current growth momentum into next year amid rising usage volumes [of voice services]," chief financial executive Cheng Hui-ming (
"But you cannot anticipate telecom operators posting high growth rates like high-tech companies do," Cheng added.
Slight slide
The company expected its net income for the fourth quarter to reach NT$3.58 billion (US$106 million), or NT$0.73 per share, leading to a slight slide in the yearly figure by 2 percent to NT$16.2 billion, or NT$3.33 per share, from NT$16.6 billion, or NT$3.55 per share last year, Cheng said.
However, fourth quarter revenue , is expected to climb higher to NT$15.11 billion, boosting annual revenue 7 percent over last year to NT$48.28 billion, he added.
"Without new services to boost sales, it will be impressive for local telecom players to just maintain profitability in Taiwan's saturated market," said Tony Tsai (蔡東松), a telecom industry analyst with Taiwan Ratings Co, a local arm of the rating agency Standard & Poor's.
Bottom line
Taiwan's wireless telecommunications service carriers still rely on voice services to buoy their bottom line as it will take time for them to benefit from the launch of 3G services in the third quarter of this year, Tsai said.
Taiwan Mobile said it now has around 50,000 subscribers for its data-oriented third-generation (3G) service, half-way to achieving its target of 100,000 users for the year.
One-third
The company now has 6.2 million subscribers in total, which equals a third of Taiwan's 20-million-user mobile market.
Taiwan Mobile plans to spend between NT$3 billion and NT$3.5 billion next year on deployment of 3G services, including building 1,000 more base stations, Cheng said.
The company has 2,600 3G base stations nationwide after 3G equipment spending totaling NT$8 billion, he said.
In addition, the launch of the mobile number portability service will further erode the bottom lines of local telecom companies, Tsai said.
The new service, which began in mid-October allows local mobile users to switch operators without changing their numbers.
Margins shrink
Taiwan Mobile's margins shrank unexpectedly to 46.2 percent in the third quarter from 48 percent in the second quarter, due to higher expenses on retention programs designed to cope with the launch of mobile number portability, Cheng said.
Margins were expected to drop further to around 44.4 percent in the fourth quarter, according to a company statement.
But Cheng expects margins to recover within two quarters after the launch, citing experience in other nations adopting the mobile number portability service.
Taiwan Mobile shares fell 0.89 percent to NT$27.7 yesterday on the Taiwan Stock Exchange before the release of its financial forecast for this year.
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