Chunghwa Eyes Chinese Expansion - Analyst Blog
June 24 2011 - 6:15AM
Zacks
Taipei-based Chunghwa
Telecom Co. Ltd., (CHT) recently announced its plans to
enter into an agreement with Chinese telecom operators in order to
provide value-added services and other application support to the
Chinese subscribers. The agreement will allow the company to seize
the $33.3 billion opportunity in the lucrative Chinese cloud
computing market.
The company had a pact with China
Telecom Corp. and China Unicom (Hong Kong)
Ltd. (CHU) to access software from its application stores
as well as provide premium services to thesubscribers.
The Taiwanese telecom market is
rapidly approaching maturity and has become extremely competitive
due to the telecom regulatory changes and smaller market size with
approximately 23 million potential customers. Recently, Chunghwa
Telecom is also exploring other markets particularly Southeast Asia
and China.
Chunghwa Telecom is the largest
telecom service provider in Taiwan mainly dominating the fixed-line
service of the country. It is also the leading wireless and
Internet/Data service provider in Taiwan.
Currently, Chunghwa has witnessed
significant subscriber growth for its mobile Internet services due
to a rising demand for 3G mobile broadband and smart-phones in
Taiwan. Itis also conducting live trial runs of Long Term Evolution
(LTE) networks using Nokia Siemens Network solutions. The company
seeks to develop a super-fast next-generation mobile broadband
network that will act as a natural upgrade for its existing WCDMA
networks. Chunghwa decided to implement LTE in 2011 in Taiwan.
Moreover, aggressive rollout of FTTx (fiber to the
home/building/curb) has positioned the company ahead of its
competitors.
Despite such positive traits, the
company is losing revenue in its Fixed-line Services (both domestic
and international) segment. Moreover, saturated domestic telecom
market coupled with regulatory changes may act as headwinds for the
company going forward.
We, thus, maintain our long-term
Neutral recommendation forChunghwa Telecom. Currently, Chunghwa
Telecom has a Zacks #3 Rank, implying a short-term Hold rating on
the stock.
CHUNGHWA TELECM (CHT): Free Stock Analysis Report
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