Chunghwa reports drop in net profit on higher operating costs

22 Feb 2012

Taiwanese telco Chunghwa Telecom (CHT) has released its financial results for the three- and twelve-month periods ended 31 December 2011, revealing a 5.9% year-on-year drop in quarterly net profit, despite turnover growing by 5% compared to the year-earlier period. For the last fiscal quarter of 2011 CHT posted a net profit of TWD10.0 billion (USD337 million), while for the full-year period net income stood at TWD47.1 billion, a 1.1% drop compared to the previous year. The declines were largely attributed to increased operating costs, with the operator reporting a 10.2% y-o-y increase compared to 4Q2010 and a 12% rise compared to FY2010. Higher costs, it said, were mainly due to rising costs associated with handset sales and increased interconnection costs.

Total consolidated revenue for the last quarter stood at TWD54.9 billion, an increase of 5% year-on-year, with turnover from mobile voice and value added services (VAS) rising by 7.3% and 30.7% respectively compared with the last quarter of 2010. Fixed line internet revenues, meanwhile, were up 1.7%, with internet VAS increasing by 14.5%. Despite domestic fixed voice communications revenue increasing by 6.5% to TWD19.9 billion, turnover from international fixed telephony fell by 1.1%. For the full year period CHT reported total consolidated revenues of TWD217.5 billion, up 7.5%, with turnover from mobile voice and mobile VAS accounting for TWD93.0 billion (up 4.5%) and TWD15.2 billion (up 37.7%) of that respectively. Internet revenue, domestic fixed communications and international fixed communications, meanwhile, were TWD24.8 billion (up 1.4%), TWD79.4 billion (up 12.3%), TWD15.2 billion (down 2.0%) respectively.

In operational terms, at the end of 2011 CHT had 10.1 million mobile subscribers, representing a 4.1% increase compared to the figure at end-2010. Mobile internet subscribers at that date numbered 1.5 million, up from 809,000 at December 2010, and CHT said it expects that to climb to 2.2 million by end-2012. With regards to fixed line accesses, these totalled 12.1 million at the end of the 2011 fiscal year.

Commenting on the results, Dr. Shyue-Ching Lu, CHT chairman and CEO, said: ‘I’m pleased to report a solid performance for the full year 2011 despite challenging market conditions. Top-line growth was driven mainly by higher fixed line revenue resulting from the pricing right shift for fixed to mobile calls, as well as rises in mobile VAS revenue and handset sales. We continued to achieve strong growth momentum within our mobile business, as well as gaining traction from new business opportunities in areas such as MOD/IPTV, ICT and cloud computing. We also expect our broadband business momentum will be catching up this year. Though broadband growth momentum is mitigated attributable to the tariff reductions, we believe relevant revenues will recover to [their] original level in the near future.’

Taiwan, Chunghwa Telecom