S&P: Careful moves needed for Taiwan telecoms

Taiwan's investment-hungry telecom operators will need to protect their strong credit health as they eye up expansion opportunities and contemplate shareholder-friendly moves, according to an article jointly published by Standard & Poor's and its subsidiary, Taiwan Ratings Corp.

The three biggest players have built up large war chests and are eager to spend, S&P said. But they'll need to tread carefully amid a tightening regulatory environment and technological advances, the agency added.

While sound financial profiles should underpin credit quality over the medium term, effective cash management and investment planning will be the key to constraining credit risks for the three major operators, Chunghwa Telecom Co. Ltd. (AA with stable outlook), Far EasTone Telecommunications Co. Ltd. (A- with stable outlook) and Taiwan Mobile Co. Ltd., which isn't rated.

Despite the industry's stable outlook, the operating environment is changing fast with the next generation of wireless technology set to launch in the second half of this year, sparking a potential bidding war for licenses, S&P said.

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