Credit: Shutterstock photoOn Oct 16, 2014, we issued an updated research report on Chunghwa Telecom Co., Ltd. ( CHT ). The company reported dismal financial results for the second quarter of 2014.
The company is the largest integrated telecommunications operator in Taiwan. Chunghwa offers a full suite of telecom services via fixed-line, mobile and data networks throughout Taiwan and the offshore islands. Though the fixed-line service is relatively saturated, we believe Chunghwa's mobile and Internet/Data operations will drive overall growth over the next several years.
This Zacks Rank #2 (Buy) company is building large-scale fiber-to-the-home (FTTH) and fiber-to-the-building (FTTB) access infrastructure and currently provides both these facilities to 75% of Taiwan's population. Notably, Chunghwa has witnessed significant subscriber growth for its mobile Internet services on rising demand for 3G mobile broadband and smartphones in Taiwan.
Mobile subscriber base at the end of second-quarter 2014 stood at 10.92 million, up 4.8% year over year. Mobile Internet subscriber base was 4.65 million, up by a significant 46.6% year over year.
Increasing fiber coverage has helped Chunghwa offer several HD services. The company now offers 43 HD channels. Chungwa plans to offer both broadband and MOD plan in a single package, thereby driving both MOD subscription and fiber migration.
On the flip side, Chunghwa performed poorly in certain important metrices in the second quarter of 2014. Quarterly total revenue recorded a drop of 0.1% year over year while the Domestic Fixed-line Communications segment grossed $572 million in revenues, down 5.2% year over year. Likewise, Other Business revenues fell 36.2%. Moreover, the company expects operating income and EBITDA for fiscal 2014 to fall 8.5% and 3.4% year over year, respectively, mainly due to higher promotional expenses related to IPTV services.
Stocks That Warrant a Look
Other well-placed stocks that warrant a look in this sector include BT Group plc ( BT ), Verizon Communications Inc. ( VZ ) and T-Mobile US, Inc. ( TMUS ). BT Group carries a Zacks Rank #1 (Strong Buy), whereas Verizon Communications and T-Mobile hold a Zacks Rank #2 (Buy).
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CHUNGHWA TELECM (CHT): Free Stock Analysis Report
BT GRP PLC-ADR (BT): Free Stock Analysis Report
VERIZON COMM (VZ): Free Stock Analysis Report
T-MOBILE US INC (TMUS): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
