Chunghwa Telecom Co’s (中華電信) new chairman, Rick Tsai (蔡力行), yesterday promised to safeguard the interests of shareholders and employees amid pressure from the government to give rivals access to the company’s local loop.
The 62-year-old Tsai, who took the helm of the nation’s largest telecom operator from Lee Yen-sung (李炎松) yesterday, said he would work to bridge the communication gap between the company and the Ministry of Transportation and Communications, which is pushing for the opening of the company’s “last-mile” access.
The last mile is the crucial final connection to subscribers’ residences or places of work.
Photo: CNA
“I’ll keep communicating with the government to create a win-win situation,” Tsai said in his inauguration speech.
The former Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) chief executive officer said he also looks forward to building a close relationship with the company’s 24,000 employees.
Prior to the handover ceremony, Tsai phoned up Chunghwa Telecom Workers Union chairman Chu Chuan-ping (朱傳炳), who earlier this month submitted a petition to Chinese Nationalist Party (KMT) vice chairman Tseng Yung-chuan (曾永權) expressing the union’s opposition to Tsai’s appointment.
Photo: CNA
The union believes it is unfair for Chunghwa Telecom to open its “last mile” access to local rivals.
However, union members yesterday canceled a planned protest at the handover ceremony “for reasons related to the phone call,” a person told the Taipei Times on condition of anonymity.
For years, Chunghwa Telecom has been reluctant to give up its last-mile monopoly, given the massive investment it has made to build most of the nation’s telecom infrastructure.
In 2012, the National Communications Commission proposed amendments to the Telecommunications Act (電信法) requesting that the company share its last-mile access with rivals. However, the Cabinet has twice suspended planned evaluations of the proposals, once in October 2012 and in July last year.
Tsai also yesterday said he is confident that the company will perform better than has been forecast, but did not disclose specifics about his strategy plans.
Chunghwa Telecom aims to become the first in Taiwan to launch 4G services this year as soon as the second half of this year, he added.
To prepare for the launch of 4G services, the company has decided to increase its capital expenditure to NT$40.13 billion (US$1.32 billion) this year from NT$36.41 billion last year.
Driven by an increase in sales of its wireless services, the company reported a net profit of NT$9.36 billion, or NT$1.21 per share, last quarter, up 3.4 percent from NT$9.05 billion a year ago, according to its financial report. But the results were 12.11 percent lower than the previous quarter.
Earnings before interest, tax, depreciation and amortization (EBITDA) — which provides a better gauge of big-capex telecom companies’ profitability — were NT$19.27 billion last quarter, declining 6.68 percent from the previous quarter, but rising 0.4 percent from the same period of 2012, the company’s data showed.
EBITDA margin declined to 32.8 percent last quarter, from 36.4 percent in the third quarter and 34.1 percent in the fourth quarter of 2012, because of tariffs cuts and an increase in handset sale costs, the company said.
For the whole of last year, net profit was NT$38.7 billion, or earnings per share of NT$5.14.
With increased expense on 4G services, Chunghwa Telecom forecast net profit would fall 7.39 percent this year to NT$35.84 billion or NT$4.62 per share.
EBITDA is expected to fall 3.4 percent to NT$77.1 billion this year from last year, while total revenue is to increase slightly by 0.1 percent to NT$228.23 billion, the company predicted.
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