Thoughts of chairman Mao: Chunghwa Telecom chairman Mao Chi-kuo has seen the worst of the sliding market for telco stocks, after four unsuccessful attempts at a partial-privatization. Mao and the Taiwan government are not giving up yet. Speaking with group editor Robert Clark, Mao cites the company's recovery in mobile, fast broadband rollout and revived corporate culture as reasons to believe - One-To-One

Telecom Asia, Oct, 2002 by Robert Clark

For this year, my agenda is try to make our bottom line grow again. We have to control our middle line, our cost line. We started last year on control of capex and opex. Significantly, by the end of last year around 7,000 employees took early retirement, voluntarily. This stood for 10% of our total head count. We anticipate our bottom line can grow again by a very significant amount, about 10%.

Going forward, for the rest of the year and early next year, we will try to improve our capital structure. Among all those metrics, probably this is the only index on which we have been challenged by investment analysts, because our gearing ratio is so low. So we are not really creating shareholder value fully. We are thinking about some measures to improve this in the coming months.

In short, all this can contribute to pave the way for further, smoother privatization.

So the investment community didn't feel you were working your assets hard enough.

According to all the interactions with investment analysts, I think they have no argument with our other performance metrics. I would say this is shared by state-owned companies around the world. We are not used to applying debt to run our business.

Don't you think it's ironic that at a time when other carriers are collapsing under too much debt, financiers are saying to you "we think you should be carrying a bit more?"

[Laughter] Maybe if you are at either end of the extreme, there is some room for you to improve. I would say we are at the other end of the extreme. Somebody said, comparing the gearing ratio and so on with other carriers, we are right off the scale, far away off the scale.

You've now been a corporation for six years and you've had competition for four years. How much progress has Chunghwa Telecom made in changing its culture?

I would say the corporate culture has changed very significantly. I would argue that without cultural change, it wouldn't be possible for us to have such phenomenal growth in our broadband rollout.

For a measure of whether Chunghwa Telecom's culture has changed or not, I would refer to the attitude and mind-set of our first-line unit.

In the past, when you walk into a regional service office, meet the counter staff, and ask what is their business, their simple answer is local telephony. But today local telephone revenue accounts for a bit more than 20%. I told myself, as far as resource allocation is concerned, this is totally unacceptable.

To have three-quarters of your staff looking after 20% of your revenue?

Exactly. Then I declared, all those fixed line service counters are the only service channel for all Chunghwa Telecom products. That meant our mobile division and data division, and also our international division could not have their own service counters.

Chunghwa had separate service counters for mobile and data?

HiNet, the ISP, didn't need a real counter, and international had no competition. But for mobile, at that time, we sold our mobile phone numbers and handsets through the fixed service counter, but no-one considered that the selling of mobile handsets and numbers was their real responsibility. They would refer to them as "those mobile guys"--that's the kind of language they used.