Far EasTone Telecommunications Co (遠傳電信) expects a proposed merger with Asia Pacific Telecom Co (APT, 亞太電信) to add at least NT$3 billion (US$107 million) in earnings before interest, taxes, depreciation and amortization (EBITDA) in the first year of combination, mostly from savings in operating expenses regarding network deployment and operation.
Far EasTone on Friday unveiled its plan to acquire APT via a share-swap deal valued at about NT$24.7 billion.
The company plans to issue 356.7 million new shares for APT shareholders, it said.
Photo: Wang Yi-hung, Taipei Times
“This [NT$3 billion] is a rather conservative estimate,” Far EasTone president Chee Ching (井琪) told an online investors’ conference yesterday. “I will be comfortable with NT$3 billion synergy contribution in the first year. Any upsides will be just bonuses.”
As both companies use Ericsson AB equipment and technology, about 90 percent of APT’s base stations can directly join Far EasTone’s network upon approval of the merger by local regulators, Ching said.
Two telecoms integrating into one would prevent overlapping investments, she said.
Far EasTone also expects synergy from combined capacity in the 28 gigahertz (GHz) frequency band, as the two telecoms together have 800 megahertz in 5G capacity.
The company is exploring new business opportunities to provide low-Earth-orbit (LEO) Internet services in collaboration with satellite companies like StarLink, Ching said.
The company also plans to use the 28GHz bandwidth for enterprise clients to build private networks, she said.
Far EasTone expects EBITDA to expand 8.1 percent to NT$30.45 billion this year from NT$28.17 billion last year.
The company said mobile telecom services and “new economy,” including cloud-based and digital services, are growth engines.
The forecast does not factor in synergies from the planned merger.
“We will continue to grow the telecom business, which is different from the past few years when telecom [services] had been declining,” Ching said. “Now we are seeing ... demand and growth momentum from telecom as well.”
Net income is expected to grow 1.1 percent to NT$9.22 billion this year from NT$9.12 billion last year, Far EasTone said.
That would translate into earnings of NT$2.83 per share, up from NT$2.8 last year.
Revenue is expected to rise 4.1 percent to NT$88.79 billion this year from NT$85.32 billion last year.
Capital expenditures this year are expected to fall about 8 percent to NT$11.1 billion from NT$12.1 billion last year.
The company has proposed to distribute a cash dividend of NT$3.25 per share, the same as last year and 2020.
The proposal is subject to shareholders’ approval during the annual general meeting in June, the company said.
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