Taiwan Mobile Co (台灣大哥大) yesterday predicted that earnings are likely to fall this year due to lingering macroeconomic factors and a highly saturated 4G market.
The nation’s second-largest telecom carrier expects revenues to grow 4 percent annually this year to NT$120.6 billion (US$3.59 billion), but net income is likely to dip 11 percent annually to NT$14.01 billion compared with last year.
Earnings per share are forecast to reach NT$5.15 this year, the company said.
"The year-on-year earnings decline is mainly due to lower
EBITDA [earnings before income tax, depreciation and amortization ] margin given more handset sales, 6 percent growth in depreciation and amortization, and the lack of one-off gains," Yuanta Securities Investment Consulting Co (元大投顧) said in a client note.
Taiwan Mobile's guidance is as conservative as rival Chunghwa Telecom Co's (中華電信). On Thursday, the nation’s biggest telecom services provider gave a soft earnings outlook for the year, projecting that revenue would edge up 0.7 percent annually to NT$233.4 billion, but net income would fall 6.6 percent to NT$39.98 billion, or NT$5.15 per share.
CAPITAL EXPENDITURE
Taiwan Mobile's business scope include mobile, fixed line, cable TV and e-commerce, among others. The company said it has set its capital expenditure target for this year at NT$11.1 billion, about NT$3 billion lower than last year.
“Current spectrum holdings are sufficient for future growth in demand, and cash savings from capital expenditure and other operating costs will enhance our marketing flexibility and accelerate the monetization of our 4G investments better than our peers,” company president James Jeng (鄭俊卿) told an investors’ conference.
Asked about the company’s reduced spending this year and its decision to withdraw from the 2.5GHz spectrum auction in November last year, Jeng dispelled concerns about potential network constraints.
“As the 4G market is already highly saturated, subscribers migrating from 2G or 3G to 4G this year are not expected to be heavy users, so we expect data usage growth to be flat and average at about 12 gigabytes per user,” Jeng said, adding that the company is prioritizing quality over quantity in its strategy to expand market share.
Jeng added that subscribers moving up one or two pricing tiers as they migrate to 4G do not contribute much to raising the company’s average revenue per user (ARPU) performance.
ARPU for mobile subscribers last quarter rose 3.7 percent annually to NT$874, company data showed.
Cuts in handset subsidies also add to the company’s cost savings, as sales of Apple Inc’s iPhone 6S handsets last year fell short of expectations, Jeng said.
Last year, Taiwan Mobile’s net income rose 5 percent annually to NT$15.69 billion, with sales rising 3 percent to NT$116.14 billion. Earnings per share were NT$5.76, exceeding the company’s guidance by 14 percent.
Yuanta Securities said the company's EBITDA is likely to grow 2.9 percent this year from last year, citing improving ARPU and lower subsidies per handset.
MOMO.COM
Momo.com Inc (富邦媒), a 50 percent holding of Taiwan Mobile, on Thursday reported that its TV shopping sales dipped 6 percent annually to NT$8.42 billion, while online shopping sales grew 7 percent from the previous year to NT$17.22 billion, leading to a 7 percent annual gain in consolidated sales to NT$25.64 billion for the year.
However, Yuanta Securities said it is cautious about Momo.com’s outlook as the company faces intensifying pricing competition, while offering little to differentiate itself from peers on value-added services, especially market leader PChome Online Inc (網路家庭).
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