Taiwan Mobile Co (台灣大哥大), the nation’s second-biggest telecom operator, plans to spend less than NT$9 billion (US$300.4 million) on 5G infrastructure this year, more than its local peers, in preparation for a third-quarter commercial launch.
The 5G outlay would bring the company’s mobile capital spending to NT$11 billion this year, more than double last year’s NT$4.73 billion, Taiwan Mobile said yesterday.
Chunghwa Telecom Co (中華電信) and Far EasTone Telecommunications Co Ltd (遠傳電信) have said they plan to allocate NT$6.8 billion and NT$6.2 billion respectively for 5G network deployment this year.
Due to heavy 5G infrastructure rollouts as well as other investment projects, Taiwan Mobile expects its margin for “earnings before interest, taxes, depreciation and amortization” (EBITDA) to drop to 23.54 percent this year, from 26.84 percent last year, it said.
The company said the dip should be short term and it expects its EBITDA margin to pick up along with the rise of 5G services adoption, which would be low this year.
The company predicts net profit this year to shrink 11 percent to NT$11.17 billion from NT$12.48 billion last year.
As a result, earnings per share would be NT$3.96, down from NT$4.51 last year, hitting the lowest level in 13 years, it said.
Consolidated revenue is to expand at an annual pace of 8 percent to NT$134.53 billion from NT$124.42 billion last year, with mobile business revenue likely to grow 2 percent annually, Taiwan Mobile said.
“5G-enabled services including cloud gaming, streaming content, and enterprise cloud and enterprise connectivity solutions will be the major growing businesses,” Taiwan Mobile president Jamie Lin (林之晨) told investors at a teleconference.
As the 3.5 gigahertz (GHz) frequency band is considered the optimal spectrum for effective 5G deployment, investors are concerned whether Taiwan Mobile would be able to compete with Chunghwa Telecom and Far EasTone, which hold 90 megahertz (MHz) and 80MHz of the 3.5GHz band respectively.
Taiwan Mobile paid NT$30.66 billion for 60MHz of the 3.5GHz frequency band and 200MHz of the 28GHz frequency band.
“Based on our projections for 5G take-up rates and data traffic growth over the next five to 10 years, Taiwan Mobile owns more than enough [5G] spectrum to service our 7.1 million or 7.2 million users over the next five to 10 years,” Lin said.
Given how expensive the 5G spectrum is in Taiwan, “it is sensible to hold just enough spectrum to create a [higher] return-on-investment for our shareholders,” he said.
Far EasTone on Monday said that the term “big-three telecoms” would become history, as only two companies secured 80MHz in the 3.5GHz band.
“Spectrum is not equal to market share,” Lin said as a response.
Taiwan Mobile has the option to bid for more spectrum in the next one to two years, if 5G adoption accelerates, as the government is prepared to release more spectrum from some already allocated for satellites, Lin said.
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