Sat, May 06, 2017 page12

• Telecoms seek new growth drivers as revenue shrinks

  • By Lisa Wang / Staff reporter
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  Taiwanese telecoms are seeking new growth engines beyond traditional services to cope with stiff price competition in an overcrowded market, company executives said this week.

  Aside from offering conventional voice calls and Internet access, local telecoms are gradually expanding into value-added services, such as information communication technology (ICT) services, to avert a decline in revenue.

  Far EasTone Telecommunications Co (遠傳電信) is a good example. In 2015, the nation’s third-largest telecom built an ICT team to provide customized services for government agencies and major sectors like transportation, retail, healthcare and financial services.

  The company has seen its ICT revenue grow 18 percent year-on-year in the first quarter of this year, compared with a 3.5 percent year-on-year contraction in telecom services revenue as fierce price competition constrains growth.

  Five telecoms are jostling for a bigger share of the nation’s 28 million mobile phone users, a figure that is larger than the nation’s total population as some people use more than one mobile phone.

  Far EasTone said it has secured two major ICT contracts with a large hospital and a government agency, which will contribute a significant amount of revenue over the next two years.

  “We believe the ICT business is going to help us significantly in the next few years... This is a growing market,” a Far EasTone investor relations official said on Thursday. “Margin at the ICT business will also improve once the business achieves economies of scale.”

  Far EasTone said its ICT business contributed a mid-single-digit percentage to its overall revenue of NT$22.48 billion (US$744.8 million) in the first quarter.

  Another growing area would be its Internet of Things (IoT) business for both enterprise and smart-home solutions, it said.

  “This is one of the services that will leverage our 4G spectrum,” Far EasTone president Yvonne Li (李彬) said.

  Far EasTone is deploying a narrowband IoT network, a low-power wide-area network radio technology standard that has been developed to enable a wide range of devices, throughout the nation, she said.

  Smart home services “is an area we are trying to penetrate in the broadband market. We are looking at getting at least 20 to 25 percent market share in the long term,” Li said.

  Meanwhile, Taiwan Mobile Co (台灣大哥大) is trying to expand its TV, online retailing and cable businesses as fast as it can to fend off a downward trend in telecom services revenue.

  “Our TV and online retailing unit, momo.com Inc (富邦媒體), will see the most significant growth in terms of top line and bottom line this year,” Taiwan Mobile president James Jeng (鄭俊卿) said on Thursday.

  The growth will primarily come from momo.com’s overseas expansion to China and Thailand, he said.

  Momo.com is also looking at forming joint ventures with local partners in Southeast Asian nations, including Malaysia and the Philippines, he said.

  “TV shopping is even more popular than Internet shopping in Southeast Asia,” Jeng said.

  Subscriptions at its cable TV unit Kbro Ltd (凱擘) is expected to grow this year from 581,000 users following an upgrade, but telecom services revenue is likely to drop over the next few quarters, he said.

  Chunghwa Telecom Co (中華電信), the nation’s biggest telecom, is to focus on revitalizing its loss-making multimedia-on-demand (MOD) business.

  “It is our priority to turn around the MOD business,” Chunghwa Telecom chairman and CEO David Cheng (鄭優) said early this year.

  The company aims to make the MOD business profitable within two years, ending 13 years of losses, he said.
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