Far EasTone Telecommunications Ltd (遠傳電信), Taiwan's fourth-largest mobile-phone company, plans to offer more wireless data services this year in a bid to boost its pre-tax profit margin to nearer 40 percent from 32 percent last year.
As sales may increase only 10 percent in 2002, company President Joseph O'Konek said the company may also cut costs in its attempt to increase its margin on earnings before interest, tax and depreciation and amortization.
"Improving margins roll down to net income," O'Konek said in an interview. Increasing margins to a percentage in the mid to high 30s is the best way of boosting profit, given the small expected increase from 2001 sales of NT$34.5 billion (US$986 million), he said.
The company is seeking to improve margins because even a modest increase in sales may be elusive as the market for mobile-phone services is saturated, sales per customer are falling and Taiwan's economy is mired in its worst slump since the 1970s.
There are four island-wide phone companies serving Taiwan and O'Konek estimated that 90 percent of the island's 23 million people have at least one mobile-phone account. In 2001, Far EasTone's average monthly sales per user fell 27 percent to NT$770.
Far EasTone had 3.8 million customers at the end of last year, the fewest of the four cellular service providers. Taiwan Cellular Corp (台灣大哥大) had 6.6 million users, Chunghwa Telecom Co (中華電信) 6.2 million and KG Telecommunications Co (和信電訊) 4.3 million.
The nation's economy contracted 2.38 percent in 2001, according to the central bank, which expects growth of 1.9 percent in 2002.
In December, 3.5 percent of Far EasTone sales came from new voice-related services and data, O'Konek said. He aims to boost that by offering customers horoscopes, more links with retailers and restaurants and enhanced SMS services.
"In the second half of this year, when we see more Internet protocol-based handsets with color screens, it will open a new set of applications," he said.
Far EasTone unit Yuan-Ze Tele-communications Co (
"We're prepared to pay a reasonable price for a 3-G license but we're also prepared if the price isn't reasonable to not pay for a license," O'Konek said.
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