Slide 1: Q1 2014 Operating Results
Q1 2014 Operating Results April 30, 2014 TSE: 2412 NYSE: CHT
Slide 2: Disclaimer
Disclaimer STATEMENT REGARDING UNAUDITED FINANCIAL INFORMATION The unaudited financial information under T-IFRSs in this presentation is preliminary and subject to adjustments and modifications. Adjustments and modifications to the financial statements may be identified during the course of the audi
Slide 3: Chunghwa Telecom Overview
Chunghwa Telecom Overview Strong Market Position (a) Highest Mobile Internet Subs Market Share(e) Domestic Fixed 35% 33.5% 34.1% 34.8% 35.6% – #1 Local 29.6% 30% 28.8% 28.2% 27.5% • 94.6% share by subs (11.53 mn subs) 28.5% 27.6% 27.2% 27.0% • 86.3% share by minutes 25% – #1 DLD 20% • 79.0% share by
Slide 4: Committed to Improving Shareholder Value
Committed to Improving Shareholder Value Cash Return NT$ bn 70 Board resolved to distribute NT$35.1 billion or NT$4.5251 per share to 60 shareholders 19.4 NT$2.3881 per share from earnings 50 19.1 distribution for 2013 9.7 40 5.59 NT$2.137 per share from capital surplus 30 16.58 Special dividend
Slide 5: Business Overview
Business Overview
Slide 6: Number One Mobile Services Provider
Number One Mobile Services Provider Performance VAS Performance Strategy Solidifying high-tier smartphone subscriber NT$ mn 42.6% 39.7% base by offering quality handset models 8,000 35.7% 37.3% 35.0% Mobile VAS Revenue % 40% 1,077 1,040 Continuing to introduce mid-to-low tier 1,106 6,000 smartphones
Slide 7: Smartphone – Value Driver for Mobile
Smartphone – Value Driver for Mobile Smartphone Adoption Smartphones accounted for 90% of the total Smartphone penetration* handsets CHT offered in Q1 2014 62% 100% 53% 56% 21.0% 60% 47% 50% 27.0% 27.0% 26.0% 50% 43% 80% 40% 60% 25.0% 41.0% 30% 49.0% 49.0% 20% 40% 10% 0% 20% 48.0% 38.0% Mar 13 Jun 1
Slide 8: Fixed Broadband and Internet Services
Fixed Broadband and Internet Services Performance Strategy Continuing to migrate customers from low speed to Broadband Access Revenue NT$ mn 710 698 703 708 707 ARPU NT$ high speed fiber services Expediting FTTH construction and enhancing 5,000 3,767 3,695 3,819 3,923 3,956 600 household coverage of
Slide 9: MOD/ IPTV Service
MOD/ IPTV Service Performance Subscriber & Usage Subscriber market share (CATV+IPTV) YoY grew from IPTV revenue increased by 19.9% 19.3% to 19.8 % in Q4 2013 YoY in Q1 2014 84.9% of IPTV subscribers signed up additional Packages Household TV Usage rate increased Total IPTV Subscribers & Package Subs
Slide 10: ICT and Cloud Computing Initiatives
ICT and Cloud Computing Initiatives Performance Strategy Cloud service revenue doubled YoY in Q1 2014 Leveraging core telecom infrastructure and services to expand ICT business Personal Cloud (Hami+) subscribers accumulated to 1.76 million Leading the cloud computing industry by Acquired several sig
Slide 11: Regulatory Update
ime DEBE = ‘Chunghwa’ Regulatory Update
Slide 12: Regulatory Update
Regulatory Update • The mobile broadband license bidding process ran from September 3 to October 30, 2013. Six of qualified bidders secured 4G spectrum bands 4G Spectrum Auction • All of the six winners received approval from NCC to deploy 4G networks • The 2600MHz spectrum band is expected to be re
Slide 13: Financials Overview
Financials Overview
Slide 14: Financials: Income Statement Highlights
Financials: Income Statement Highlights Consolidated 2012 2013 Growth Q1 2013 Q1 2014 Growth (NT$bn) (T-IFRSs) (T-IFRSs) Rate (T-IFRSs) (T-IFRSs) Rate Revenues 221.42 227.98 3.0 56.62 55.06 (2.8) Operating Costs and 171.48 180.36 5.2 45.36 43.15 (4.9) Expenses Other Income and (1.57) 0.06 103.8 (0.0
Slide 15: Financials: Business Segment Revenues
Financials: Business Segment Revenues Consolidated 2012 2013 Growth Q1 2013 Q1 2014 Growth (NT$bn) (T-IFRSs) (T-IFRSs) Rate (T-IFRSs) (T-IFRSs) Rate Domestic Fixed 76.13 73.50 (3.5%) 18.05 17.15 (5.0%) Local 40.86 37.82 (7.5%) 9.42 8.90 (5.5%) DLD 3.77 3.46 (8.0%) 0.85 0.82 (4.0%) Broadband Access 1
Slide 16: Financials: Costs & Expenses
Financials: Costs & Expenses Consolidated 2012 2013 Growth Q1 2013 Q1 2014 Growth (NT$bn) (T-IFRSs) (T-IFRSs) Rate (T-IFRSs) (T-IFRSs) Rate Operating Costs 141.51 147.29 4.1 37.45 34.96 (6.6) Operating Expenses 29.97 33.07 10.4 7.91 8.19 3.6 Marketing 22.25 25.16 13.1 5.99 6.23 4.0 General and Admin
Slide 17: Cash Flow & EBITDA Margin
Cash Flow & EBITDA Margin Consolidated 2012 2013 Growth Q1 2013 Q1 2014 Growth (NT$bn) (T-IFRSs) (T-IFRSs) Rate (T-IFRSs) (T-IFRSs) Rate Net Cash Flow from 65.66 75.29 14.7% 8.53 9.70 13.7% Operating Activities CapEx 33.28 36.38 9.3% 7.53 5.77 (23.4%) Free Cash Flow 32.38 38.91 20.2% 1.00 3.93 293.0
Slide 18: Forecast & Operating Results
Forecast & Operating Results Consolidated 2013 2014 Growth Q1 2014 Q1 2014 Achieving (NT$bn) (T-IFRSs) (T-IFRSs E) Rate (T-IFRSs) (T-IFRSs E) Rate Revenues 227.98 228.23 0.1% 55.06 56.53 97.4% Operating Costs and 180.36 184.70 2.4% 43.15 46.24 93.3% Expenses Other Income and 0.06 - - (0.01) - - Expe
Slide 19: Effective and Efficient Capital Expenditure
Effective and Efficient Capital Expenditure Capital Expenditure NT$ bn Increase capital expenditure 50 22.3% 19.1% – Fixed and Mobile broadband 17.6% 20% 45 15.0% 16.0% – Cloud deployment including cloud data 12.4% 40.1 center build out 40 36.4 0.7 1.9 10% 33.3 Budgeted capex for 2014: NT$40.1bn Cap
Slide 20: Q&A
Q&A
Slide 21: Reference
Reference
Slide 22: Regulatory Update (2013/4/1~2017/3/31)
Regulatory Update (2013/4/1~2017/3/31) Years Target Business Applicable Services X factor in Formula : △CPI - X effect xDSL monthly fee 1. The four year FTTx monthly fee (exclude FTTH and tariff reduction 1 plan is applicable FTTB) from April 1. 2013 to March 31, 2017 and applied SMP 2 Domestic
Slide 23: Continuing Broadband Network Construction
Continuing Broadband Network Construction FTTH Fiber Deployment Plan Thousands FTTN/FTTB Coverage Port ADSL 97% 97% FTTx coverage (≥100M) reach 97% by 12,000 95% 100% Coverage(≥100Mbps) 97% 2016 92.8% 95% Coverage(≥60Mbps) 90% 90% 2,494 10,000 82% 86.7% 2,014 Increase FTTH construction in order to 7