Taiwan Mobile Corp (台灣大哥大) yesterday reported that its net income rose 10 percent annually and 6 percent quarterly to NT$4.16 billion (US$126.6 million) last quarter, or NT$1.53 per share, as an iPhone replacement and insurance program helped reverse a downturn in overall quarterly sales.
Last quarter's profit was 11 percent above Taiwan Mobile's guidance of NT$3.7 billion, and the company said its earnings before interest, tax, depreciation and amortization (EBITDA) grew to NT$8.58 billion in the quarter, which was more than enough to mitigate the increase in 4G-related depreciation and amortization expenses.
In addition, the company slashed capital expenditure to NT$2.96 billion last quarter from NT$3.57 billion in the previous quarter, saying its current 4G network capacity remains sufficient, but it plans to bid for more bandwidth to improve indoor reception and coverage in some areas.
“Looking ahead to the fourth quarter, we expect our earnings-per-share performance to be slightly better than last year, as we have reduced the subsidy amount for handset purchases,” Taiwan Mobile Multiple Service Operator Unit chairman James Cheng (鄭俊卿) told an investors’ conference.
The impact of handset subsidy expenses for this year’s iPhone 6S is expected to be much smaller than last year during the launch of the iPhone 6, he added.
Shortly after Taiwan’s launch of the iPhone 6S, the company introduced an annual upgrade program for subscribers opting for the popular handset, which allows them to renew their contract with a subsidized next generation iPhone one year later by trading in their iPhone 6S.
Eligible subscribers can also buy into extended warranty within the contract period for an additional monthly charge of NT$258.
The two offerings, which require additional monthly payments from subscribers, are expected to minimize the cost of subsidizing iPhones and raise the pool of subscribers, Cheng said.
The nation’s second-largest telecoms carrier said it had a total of 2.4 million 4G subscribers as of Sept. 30, with a target to achieve 3 million by the end of this year.
Taiwan Mobile said its core telecom, mobile service and fixed-line broadband businesses continued growing in terms of residual value last quarter.
However, revenues during the period fell 3 percent sequentially and 1 percent annually to NT$27.57 billion, meeting 89 percent of the company’s target.
“Our third-quarter top line came in lower than our forecast, due to lower-than-expected sales of high-end handset, and weaker sales from our MoMo TV shopping business,” Taiwan Mobile chief financial officer Rosie Yu (俞若奚) said.
In the July-September quarter, mobile device sales fell 16 percent sequentially and 1 percent annually to NT$4.24 billion, while MoMo TV channel, in which Taiwan Mobile holds a controlling stake, saw sales decline 3 percent from the previous quarter to NT$6.33 billion, 11 percent lower than the same period last year, Yu said.
For this quarter, analysts said whether the sale of iPhone 6S will drag down the company's EBITDA and if Momo.com Inc (富邦媒) can turn around its TV home shopping business remain worth watching closely.
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