Taiwan Market: Increased smartphone sales pressure carrier operating costs Tweet

Smartphone sales have hampered Taiwan-based carriers' operating costs since the higher price tags require higher subsidies, according to industry sources.

Chunghwa Telecom (CHT) has raised its smartphone procurement plans for 2010 by 50%, Taiwan Mobile (TWM) will evaluate orders with smartphones now accounting for 20% of total sales instead of the 18% it forecast, and Far EasTone Telecommunications (FET) expects smartphones to represent 30% of its 2010 procurement instead of 20%, sources said.

Carriers in Taiwan subsidize roughly NT$2,000-3,000 (US$63-94) for feature phones, but often more than NT$10,000 for smartphones, sources said, adding that it takes an average ten months of service fees for carriers to break even.

TWM, which began distributing Apple's iPhone in March, posted April consolidated revenues of NT$5.78 billion, up 2% on year, yet due to higher subsidy costs, EBITDA fell 2% from a year ago to NT$2.37 billion.

Sources from TWM and FET pointed out that the current pressure on operating cost is merely a transitional issue. ARPU (average revenues per user) should jump from the current NT$700-800 to NT$1,500 in the near future, the companies said.

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