Taiwan Mobile expects that the company plans to double its network capital expenditure year-on-year in order to promote its 5G deployment, but its profit in 2020 will continue to face pressure.

The company expects profits to fall by 11% to NT $ 11.2 billion (US $ 374 million) and revenue growth to reach 8%.

In the earnings call, Jamie Lin, the president of Taiwan Mobile, said that the profitability of investing in 5G, cloud games and streaming content will take some time to show.

The company’s board of directors approved a capital expenditure budget of NT $ 14.5 billion in 2020. The company said that as 4G nears the end of the investment cycle, capital expenditures in 2019 will fall from NT $ 8.49 billion in 2018 to NT $ 7.14 billion.

Lin Junjie explained: “In our operating environment, customers continue to seek lower tariff plans, postpone their equipment upgrades under the expectation of 5G, and use less paid voice talk time.”

He said that although the entire telecommunications industry is facing adverse factors, the company achieved its first EBIT profit in the fourth quarter of 2019 since the second quarter of 2018.

In 2019, the company’s net profit fell by 9% to NT $ 12.5 billion, and revenue increased by 5% to NT $ 124 billion. Revenue from mobile services fell 11% to NT $ 51.2 billion, and hybrid ARPU fell 8% to NT $ 574. E-commerce business grew by 45.5% to 51.8 billion Taiwan dollars, driving revenue growth. Its user base is stable at 7.18 million, of which postpaid users account for 70.2%.

In a 5G auction that ended in January this year, the operator obtained a 3.5GHz band at 60MHz and a 28GHz band at 200MHz for NT $ 30.66 billion.

At the end of last month, its competitor Far EasTone also warned that its huge investment in 5G services will hit its bottom line in 2020, but it is expected that the launch of 5G will drive revenue growth as ARPU climbs.