Chunghwa Widens FTTx Footprint

 
Chunghwa Telecom Co. Ltd. (CHT - Analyst Report)  is gradually expanding its subscribers’ base for FTTx (fiber to the home/building/curb) offerings. At the end of June 2009, total FTTx subscribers of the company were 1.342 million, an improvement of 25.4% year-over-year.

Chunghwa is the largest broadband service provider in Taiwan, with 84% market share. Broadband penetration in Taiwan is 65.6%, which indicates the company can further increase its market position.

Management now expects the FTTx subscriber base to reach 1.8 million by the end of this year. During this period, the total number of ADSL and FTTx subscribers with service speed of greater than 8 Mbps together reached 1.78 million. This constituted 41.4% of total broadband subscribers for Chunghwa.

From mid-2007, Chunghwa initiated its network transformation to a single, IP-based converged network to be completed by 2013. The company is building large-scale fiber-to-the-home (FTTH) and fiber-to-the-building (FTTB) access infrastructure, and is aiming to provide both of these facilities to 75% of Taiwan’s population by 2011.

This strategy will transform switching, backbone and access systems as the existing class-4 and class-5 circuit switches migrate to IMS. The backbone network will adapt MPLS advancement, and mobile access will be upgraded to HSPA+ technology to enhance mobile Internet applications.

The company has decided to launch HSPA+ 3G services from 2010. Through HSPA+, Chunghwa will be able to offer 21 Mbps mobile broadband download speed to its customers.

The Taiwanese telecom market is quickly approaching maturity and has become extremely competitive following telecom regulatory changes. We expect fierce competition going forward as Chinese giant China Mobile Ltd. (CHL - Snapshot Report) has acquired a 12% stake in Far EasTone Telecommunications, the main competitor of Chunghwa.

Therefore, advanced technology deployment is critical for the company’s operations to retain a leading edge. Chunghwa has selected Nokia-Siemens Network, a joint venture of Nokia Corp (NOK - Analyst Report) and Siemens AG (SI - Analyst Report) to upgrade its wireless networks to HSPA+ technology.

Furthermore, as part of its next-generation network implementation program, Chunghwa is deploying the Cisco System Inc (CSCO - Analyst Report) optical network solution, which will enable it to expand coverage from 6 to 12 cities in different countries of Asia, Europe and the U.S. Successful deployment of an all IP-based converged network will generate considerable international revenue (currently 4% of total sales) as many of the Taiwanese companies have offices in different foreign countries.

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