Far EasTone Telecommunications Co (FET, 遠傳電信) expects revenue erosion from the controversial NT$499 (US$16.30) monthly unlimited data plan to be largely absorbed by rapidly growing Internet of Things (IoT) and cloud services for enterprise customers, a company executive said yesterday.
The discount plan, which was unveiled in June by the nation’s major telecoms, sparked investor worries that it would dampen the already weakening growth in average revenue per user in the medium-to-long term.
FET, the nation’s third-largest telecom, said that the special offer reduced its connectivity revenue, as subscribers with higher-rate plans switched to the cheaper option, it said.
However, the effects remain manageable, company president Yvonne Li (李彬) told investors.
Growth from the company’s new business services — primarily IoT, cloud and Internet security services for enterprise users — would offset the losses, Li said.
Revenue from the new businesses this year is expected to grow 11.8 percent annually, with the highest growth coming from government projects and Internet security services, which are each expected to grow 50 percent, Li said.
The company’s new narrowband IoT service also shows robust growth momentum due to demand from government agencies and parking lots, Li said, adding that the company aims to generate NT$300 million in revenue from the service this year.
Connective revenue is to contribute a smaller share to the company’s overall service revenue, a portfolio shift that has been trending industry-wide, Li said.
FET expects enterprise information and communication technology services to contribute one-quarter of the company’s total service revenue over next three years, Li said.
On the plus side, the NT$499 rate plan brought in substantial savings in terms of commission payments and handset subsidies, Li said.
It also helped the firm add more mobile subscribers for the first time in four years to 28.9 million last quarter from 28.7 million in the first quarter, Li said.
FET’s mobile users also increased to 7.14 million from about 7.13 million a quarter earlier, she added.
The company’s average revenue per postpaid subscriber bounced back slightly to NT$847 from NT$843 in the previous quarter.
During the quarter that ended on June 30, FET saw net profit rise 9.39 percent to NT$2.68 billion from NT$2.45 billion in the first quarter, the company’s financial statement showed.
On an annual basis, net profit fell 8.22 percent from NT$2.92 billion.
Revenue fell to NT$21.62 billion from NT$21.67 billion in the first quarter and from NT$21.93 billion during the same period last year.
Meanwhile, the company’s board of directors approved a proposal to issue NT$5 billion in corporate bonds to replenish operating capital and repay debts, FET said in a filing with the Taiwan Stock Exchange.
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