CHT Global, the U.S. subsidiary of
Chunghwa Telecom Co. Ltd.
) has entered into an agreement with the third-largest U.S.
Sprint Nextel Corp.
). Per the deal, CHT Global will become a mobile virtual network
operator (MVNO) of Sprint. The company will provide wireless data
services to several enterprises and traveling business
professionals using Sprint's 3G and 4G LTE network.
The contract-free service will be known as "CHT Global
Mobility" and will have a monthly access fee of $5.99 per device
for 100 Mb data usage. Extra money will be charged once data
usage exceeds 100 Mb. Enterprises can purchase devices upfront in
full or they can opt for a 1 to 2 year financing plan.
We believe agreement with Sprint to enter the U.S. markets is
vital for Chunghwa. The company is the largest integrated
telecommunications service provider in Taiwan. However,
theTaiwanese telecom market is oversaturated and has become
extremely competitive following telecom regulatory changes.
Chunghwa competes in a tough environment with two other major
service providers, Taiwan Mobile Company and Far EasTone
Telecommunications Co. Ltd. The market size is small in
comparison to other countries, with approximately 23 million
potential customers. At present, Taiwan has 115% wireless
penetration. We expect fierce competition in the future.
Thus, it is essential for Chunghwa to explore the overseas
markets. The company is trying hard to get a solid foothold in
the mainland China. If the wireless and the Internet and data
segments are unsuccessful in gaining new business, Chunghwa's top
line may be severely affected.
Other Stocks to Consider
Currently, Chunghwa has a Zacks Rank #3 (Hold). Other stocks
in the non-U.S. telecom industry which are performing well
Telegraph and Telephone Corp.
Shenandoah Telecommunications Co.
). Currently, both the companies carry a Zacks Rank #1 (Strong
CHUNGHWA TELECM (CHT): Free Stock Analysis
NIPPON TELE-ADR (NTT): Free Stock Analysis
SPRINT NEXTEL (S): Free Stock Analysis Report
SHENANDOAH TELE (SHEN): Free Stock Analysis
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