TAIPEI -(Dow Jones)- Chunghwa Telecom Co. (NYSE:CHT) (CHT) has a five-year capital- reduction plan designed to boost returns on equity, Chief Financial Officer Joseph Shieh said Wednesday.

The company is "very likely" to approve Friday a capital cut to return excess capital to shareholders next year, he added.

Chunghwa Telecom (NYSE:CHT) , Taiwan's largest phone by company by revenue, wants to raise its return on equity to 15% in five years, and to 18% in eight years, from 11.5% in 2007, Shieh told Dow Jones Newswires by phone.

"Our earnings are good but our equity is too large, so the return on equity is low," said Shieh.

Shieh declined to elaborate on the size of the planned capital reduction to be discussed by the board Friday.

The local Commercial Times reported Wednesday, citing unnamed sources, that Chunghwa Telecom's (NYSE:CHT) board may approve a capital reduction of NT$20 billion.

-By Alex Pevzner, Dow Jones Newswires; 8862-2502-2557; alex.pevzner@ dowjones.com

    (END) Dow Jones Newswires   06-24-08 2304   Copyright (c) 2008 Dow Jones & Company, Inc.