TELECOMS

Taiwan Mobile 5G Capex Splurge To Hit Profit

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Taiwan Mobile forecast continued pressure on its bottom-line in 2020 as it plans to double network capex year-on-year to fuel its 5G deployment.

The operator expects its profit to decline 11 per cent to TWD11.2 billion (US$374 million), with revenue growth tipped at 8 per cent.

In an earnings call, Taiwan Mobile president Jamie Lin said profitability from investments in 5G, cloud gaming and streaming content will take time to kick in.

The board approved a 2020 capex budget of TWD14.5 billion. For 2019, capex dropped to TWD7.14 billion from TWD8.49 billion in 2018, as 4G approached the tail-end of the investment cycle, the company said.

“We are in an operating environment where customers continue to seek lower rate plans, delay their device upgrades in anticipation of 5G, as well as use fewer paid voice minutes,” Lin explained.

Despite the headwinds the entire telecoms industry faces, he said the company managed to move telecoms EBIT into positive territory in Q4 2019 for the first time since Q2 2018.

Net profit for 2019 fell 9 per cent to TWD12.5 billion, with revenue rising 5 per cent to TWD124 billion. Mobile service revenue fell 11 per cent to TWD51.2 billion, with blended ARPU down 8 per cent to TWD574.

Top-line growth was driven by a 45.5 per cent jump in its e-commerce business to TWD51.8 billion.

Its subscriber base was stable at 7.18 million, with post-paid accounting for 70.2 per cent.

In a 5G auction which ended in January, the operator acquired 60MHz of 3.5GHz spectrum and 200MHz in the 28GHz band for TWD30.66 billion.

Late last month, rival Far EasTone also warned its heavy investment in 5G services would hit its 2020 bottom-line, but expects the rollout to drive revenue growth as ARPU climbs. –Mobile World Live

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