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June 29, 2017

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Taiwan Mobile to see faster 4G development: firm

TAIPEI -- Taiwan Mobile Co., the country's second-largest mobile provider, will benefit from a faster-than-expected development of 4G mobile devices using the 700 MHz frequency, according to J.P. Morgan Securities.

Taiwan Mobile announced April 30 that it had gained a 4G operational license and is looking to launch 4G services in July when its network coverage reaches a certain scale.

Chunghwa Telecom Co. and Far EasTone Telecommunications Co. were the other two carriers to gain 4G licenses on the same day, and the three companies will have to begin operations of their 4G networks within six months based on local regulations.

"Given the uncertainty regarding the spectrum swap negotiation with Far EasTone, we see an increasing likelihood that both (Taiwan Mobile and Far EasTone) will be only able to launch services in the 700 MHz spectrum initially, which will place Chunghwa Telecom at an advantage," J.P. Morgan analyst Lucy Liu wrote in a note dated April 30.

Liu said, however, that Taiwan Mobile's management expects to see "a reasonably good selection" of 11 models of 4G smartphones — mostly from major brands like Sony and HTC — and four 4G tablets available at the initial stage of its 4G operation.

"The faster evolvement of the 700 MHz ecosystem may help alleviate concerns regarding (Taiwan Mobile's) spectrum disadvantage relative to Chunghwa Telecom to some extent," Liu said.

She maintained her "neutral" rating on Taiwan Mobile shares with a price target of NT$102 (US$3.38).

Taiwan Mobile is one of six companies that took part in bidding for Taiwan's 4G licenses in late 2013. It won the A4 block in the 700 MHz frequency and the C1 block in the 1800 MHz frequency.

The company has been in talks with Far EasTone to integrate their blocks in the 1800 MHz frequency, but the results are not expected to come out until the fourth quarter of this year, according to executives of the two carriers.

In a separate report, Germany's Deutsche Bank AG maintained its "hold" rating on shares of Taiwan Mobile, with an unchanged price target of NT$95.

Though Taiwan Mobile's earnings could drop to a low level in the third quarter due to its initial launch of 4G network, Deutsche Bank said the mobile operator expects its earnings to improve in the fourth quarter as some 500,000 customers are forecast to switch to its higher-priced 4G services by year-end.

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