Taiwan 3G market too small

November 28, 2004

Taiwan Cellular may delay its 3G rollout in Taiwan to next year as it fears the local market is too small to support all five 3G mobile phone operators.

Chunghwa Telecom, Yuan-Ze Telecommunications, Taiwan PCS Network and Asia Pacific Broadband Wireless Communications were the other operators in 2002 to win licenses to operate 3G services.

Taiwan Cellular chief executive officer Harvey Chang told reporters that "some of them will fail". Taiwan Cellular, which is spending NT$10 billion on 3G rollout, said it needs to focus more on how to improve profits in Taiwan's saturated mobile phone market.

Taiwan Cellular earlier this year cut about 1.2 million subscribers and focused attention on profitable users. The company increased its average revenue per user to NT$827 per month in August from NT$753 in December. Starting in the third quarter, revenue from new subscribers exceeded the amount lost from departing users, said Chang.

Chang did not say when the company would recoup its investment but added that significant revenue from 3G "won't come in the next 18 months, and maybe not in the next two years".

Mobile phone penetration in Taiwan was previously over 100%, meaning mobile phone subscriptions was higher than the island's population. In August subscriptions dropped below the population level for the first time in more than three years. The island had 22.6 million subscribers in August compared with a population of 22.7 million. Subscriber numbers continued to fall in September to 22.3 million.