Far EasTone Telecommunications Co (FET, 遠傳電信) yesterday said that its revenue would drop 2.3 percent this year as its NT$499 monthly unlimited data plan continues to eat into profits, adding that there is no quick fix in sight before the arrival of 5G technology.
Revenue last year fell 6 percent annually to NT$86.64 billion (US$2.81 billion), missing the company’s target of NT$89.89 billion, which was attributed to the unlimited data plan launched in May last year.
The nation’s other telecoms also launched similar data plans.
The nation’s No. 3 telecom expects net income this year to slide at a faster rate of 9.8 percent annually to NT$8.47 billion, compared with NT$9.38 billion last year. Earnings per share is expected to sink to NT$2.6 this year from NT$2.88 last year.
“The price cuts definitely are driven by competition. There are five telecom companies in Taiwan, which is a small market,” FET president Chee Ching (井琪) told her first investor conference after taking up the position last month.
The average revenue per user (ARPU) “trend is going down. There is no way of going back. With the price war, there is no point of return,” Ching said.
The telecom’s ARPU shrank to NT$770 last quarter from NT$787 a quarter earlier and NT$866 a year earlier.
However, FET said that it has been seeing some encouraging signs.
“We have information that some of our peers are losing their appeal to consumers, compared with [when the data plans first] disrupted the market,” she said. “The price war happened last year, we do not expect that it will happen at such a large scale soon.”
Commenting on new ultra-low monthly plans launched by rivals during the Lunar New Year holiday, Ching said only a very limited number of consumers would benefit from the plans, given qualification restrictions.
Asia Pacific Telecom Co (亞太電信) early this month launched a new flat rate of NT$299 per month targeting new subscribers, while Taiwan Star Telecom Co (台灣之星) unveiled several new rate plans starting from NT$288 per month with caps on connection speed or capacity.
Apparently, the consensus between the nation’s big three telecoms — FET, Chunghwa Telecom Co (中華電信) and Taiwan Mobile Co (台灣大哥大) — is that “NT$499 is the bottom line,” Ching said.
“We are hoping that when 5G becomes available, it will give us an opportunity to see some upward trends,” she said.
The technology would allow for new consumer-oriented services, which would spur people’s willingness to pay more for the new services, she said.
FET’s strategy is to expand to new areas for growth, such as its “new economy business” that includes services leveraging advanced technologies like the Internet of Things, cloud computing and artificial intelligence, the company said.
The new economy business accounted for 10 percent of total revenue last year and its contribution is expected to grow to about 14 percent this year, the telecom said.
It plans to maintain a stable cash dividend distribution policy, FET said.
The company plans to distribute a cash dividend of NT$3.75 per common share this year, same with the past four years.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to