Taiwan Telecommunications Report Q2 2008

With Taiwan's three largest mobile operators having all published year-end data for 2007, it appears that the number of Taiwanese mobile subscribers grew by 6.2% in 2007. For the first time in our analysis of Taiwan's mobile market, we have included the mobile customers of Taiwan's three smaller operators - CDMA operator Asia Pacific Broadband and Wireless (APBW), First International Telecom (Fitel) and 3G-only operator Vibo. The subscriber growth experienced by Taiwan's three smaller operators also contributed to the overall growth experienced by the Taiwanese mobile sector in 2007. Meanwhile, we have made some significant revisions to our estimates for the size of Taiwan's 3G subscriber market, following our decision to include the customers of 3G-only operator Vibo and APBW in our calculations.

We now believe that there were 7.097mn Taiwanese mobile customers who owned 3G devices at the end of 2007, which is equivalent to just over 29% of the total mobile subscriber base.

Taiwan's broadband market has seen a wave of announcements in the past few months, which have given us a clearer idea of the commercial launch plans of the country's six WiMAX licensees. One of those new licensees, WiMAX Telecom, announced in March 2008 that it planned to launch its first commercial services in the second or third quarter of 2008. However, a second licensee, Global Mobile, announced in February 2008 that it had postponed its commercial launch to early 2009. The company had planned to roll out services sometime in the last quarter of 2007, in line with the other new licensees. Global Mobile says it is delaying the launch until it can ensure three critical criteria are met: adequate availability of WiMAX devices; guaranteed faster data speeds; and satisfactorily low base station costs. Taiwan's regulator, the National Communications Commission (NCC) requires the country's six WiMAX start-ups to launch commercial services within 15 months of their licensing in July 2007, although it may grant extensions of up to one year.

In other news, it was reported in January 2008 that Taiwan Fixed Network (TFN) agreed to offload a 6% stake in the country's second-largest cellular operator, Taiwan Mobile. TFN is selling 30mn shares in its parent company to unnamed investors in a deal which Dow Jones values at around TWD13.95bn (US$431mn). TFN currently owns 27.4% of Taiwan Mobile shares.

Taiwan has fallen to sixth place in our latest Business Environment Ratings. The country now sits behind both Malaysia and South Korea. Taiwan's Telecoms Market score suffers as a result of its high mobile penetration rates and the saturated state of its cellular market. However, Taiwan's overall score also benefits from the relatively high score it receives for Country Risk.