We maintain our long-term Neutral recommendation on
Chunghwa Telecom Co. Ltd.
). The company reported mixed financial results for the second
quarter of 2013. We believe that Chunghwa is currently fairly
Why the Reiteration?
Chunghwa is the largest integrated telecommunications service
provider in Taiwan. The company offers a full suite of telecom
services through fixed-line, mobile, and data networks throughout
Taiwan and also to offshore islands. Though fixed-line service
became relatively saturated, we believe Chunghwa's mobile and
Internet/Data operations will drive overall growth over the next
several years. Aggressive rollout of fiber-to-the-home and 3G
mobile services have placed the company ahead of its competitors.
The company has also expanded into IPTV and cloud-computing
Chunghwa holds 80% of the broadband market share, along with
96% of local fixed-line and 77% of the long-distance fixed-line
market share. The company also commands 34% of the Taiwanese
wireless market share. Management has set a revenue target of
approximately $7.6 billion by 2015, which will be an improvement
of 16% from 2010.
Recently, CHT Global, the U.S. subsidiary of Chunghwa, entered
into an agreement with U.S. telecom giant
). 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.
Other Stocks to Consider
Chunghwa currently has a Zacks Rank #4 (Sell). Other stocks in
the non-U.S. telecom service provider industry which are
performing well include
BT Group plc.
Hawaiian Telecom Holdco Inc.
). Both these stocks currently have a Zacks Rank #2 (Buy).
BT GRP PLC-ADR (BT): Free Stock Analysis
CHUNGHWA TELECM (CHT): Free Stock Analysis
HAWAIIAN TELCOM (HCOM): Free Stock Analysis
SPRINT CORP (S): Free Stock Analysis Report
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