Chunghwa to invest T$130bn in network

Chunghwa Telecom, Taiwan’s largest telecoms company, said Wednesday that it would invest T$130bn over the next five years to upgrade its fixed-line and mobile networks.

The group hopes the large-scale investment will help to raise revenue from higher value-added services as the former monopoly faces increasing competition.

T$60bn will be spent on building an advanced fibre-optic network that will allow the company to offer faster transmission speeds for higher-margin services including video and other data services, according to Hochen Tan, chairman. Another T$70bn is to be invested in related equipment and the upgrading of Chunghwa’s mobile network, he said.

“This will of course drive our capital expenditure up over the next few years,” he said, adding that capital expenditure was to rise to T$30bn this year from T$24bn in 2006.

Mr Hochen warned that, if Chunghwa failed to expand revenues aggressively enough, the investment programme could have an adverse impact on earnings. “In that case, we would have to adjust our investment plans accordingly,” he said.

However, in the longer term the upgrade aims to enhance profitability. “We need to increase the contribution of services other than traditional voice,” he said.

The company, which at the end of last year had 150,000 users connected through fibre-optic lines, hopes to increase that number to 500,000 by the end of 2007. By 2011, Chunghwa aims to have 2.5m users, or more than half of its broadband customers, upgraded to its fibre-optic network.

Through the higher transmission speed allowed by fibre-optic networks, Chunghwa can increase services such as video-on-demand.

Corporate customers are expected to become the new network’s main beneficiaries. Chunghwa executives said they hope to have 60 per cent of corporate customers and 25 per cent of private users upgraded to the fibre-optic network by 2011.

Chunghwa’s move is likely to generate new orders for global suppliers such as Nortel, the Canadian telecoms equipment company, but the Taiwanese group said it also hoped to team up with local component manufacturers and was likely to pick more than one supplier.