Chunghwa Telecom Co. Ltd. (CHT), the largest integrated telecommunications service provider of Taiwan, is gradually moving toward Mainland China for future growth. The company is all set to enter the Chinese wireless value-added services market in 2011. Chunghwa will establish two joint ventures. The first one will be with Spring House Entertainment Tech, a Taiwan-based record level and animated cartoon producer, and the second one with local Chinese partners for offering mobile value-added services.
After introducing home grown 3G TDS-CDMA technologies in China, wireless value-added services became the major growth driver for the telecom operators. Chunghwa is desperately pursuing this new opportunity. The company already invested in online music platform Kkbox, Spring House Entertainment Tech, and digital map developer Kingwaytek. Chunghwa is also negotiating with China Telecom Corp. Ltd. (CHA) to enter into the Chinese market. The company is also eyeing the lucrative $33.3 billion Chinese cloud computing market.
Chunghwa is aggressively promoting its mobile data and value-added services. The company is rapidly losing revenue in its fixed-line services (both domestic and international) segment.Chunghwa competes in a tough environment with Taiwan Mobile Company and Far EasTone Telecommunications Co. Ltd., the two other major service providers. We expect fierce competition going forward as the Chinese giant, China Mobile Ltd. (CHL), has purchased a significant stake in Far EasTone Telecommunications.
Chunghwa has witnessed significant subscriber growth for its mobile Internet services, due to the rising demand for 3G mobile broadband and smart-phones in Taiwan. Mobile subscriber base at the end of 2010 was 9.68 million, up 4.4% year over year. Out of this, 3G wireless subscriber base was 5.43 million, comprising an impressive 56.1% of total mobile subscriber base. In 2010,mobile-VAS revenue of Chunghwa was $364.6 million, up 30.8% year over year. The company expects revenue from this segment to rise further by almost 35% in 2011 to $490 million.
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