Chunghwa Telecom Co., Ltd · TWSE:2412
Chunghwa Telecom — Q1 2012 Earnings Presentation
24 slides from Chunghwa Telecom's earnings presentation, Apr 30, 2012
Slide 1: Q1 2012 Operating Results
Q1 2012 Operating Results April 30, 2012 TSE: 2412 NYSE: CHT
Slide 2: Disclaimer
Disclaimer STATEMENT REGARDING UNAUDITED FINANCIAL INFORMATION The unaudited financial information under ROC GAAP in this presentation is preliminary and subject to adjustments and modifications. The audited financial statements and related notes with reconciliation to U.S. GAAP will be included in
Slide 3: Chunghwa Telecom Overview
Chunghwa Telecom Overview Revenue Breakdown Dominant Market Position (a) Q1 2012 Revenue Breakdown Domestic Fixed (Consolidated) – #1 Local • 95.3% share by subs (12.0 mn subs) • 88.1% share by minutes – #1 DLD • 76.0% share by minutes – #1 Broadband access • 79.9% share by subs (b)(c) (4.53 mn subs
Slide 4: Business Overview
Business Overview
Slide 5: Largest Mobile Customer Base
Largest Mobile Customer Base -Enhance Network Quality to Meet Customers Demand Highest Subs & Lowest Churn High-quality Network Continue mobile leadership by maintaining largest Continuously improve users experience of mobile customer base and lowest churn rate data to increase customers’ Thousand s
Slide 6: Growing Mobile Value-added Service
Growing Mobile Value-added Service VAS Performance VAS Breakdown VAS Breakdown NT$ mn 10,000 8,000 6,000 4,000 2,000 0 2010 2011 Q1 2011 Q1 2012 SMS Mobile Internet Others Mobile Internet Subs Strategies Continue mobile leadership by maintaining largest customer base and lowest churn rate, and incre
Slide 7: Smartphone – Value Driver for Mobile
Smartphone – Value Driver for Mobile Performance Strategies Smartphone adoption NT$ – Select popular high-end smartphone as well 1,500 ARPU 1,260 1,278 1,200 as mid and low tier models to offer 1,000 customized services and meet various 811 643 598 584 756 750 customer demand 500 Smartphone customer
Slide 8: Fixed Broadband Services Performance
Fixed Broadband Services Performance Performance Strategies Broadband ARPU NT$ 789 Continue migrating customers to higher speed 780 services as well as attracting more broadband 742 741 750 customers 702 700 Increase fiber network coverage and promote 650 high speed internet 600 Develop triple play
Slide 9: Growing Momentum in MOD/IPTV
Growing Momentum in MOD/ IPTV Subscriber & ARPU Performance Subscriber market share (CATV+IPTV) YoY 43% 42.6% 42.7% 80% grows from 13.8% to 17.3% in the end of 2011 42.0% 41.8% 42% 76.5% of IPTV subscribers sign up additional Packages 60% 40.7% 51.6% – Package subscription rate YoY increase from 65.
Slide 10: Business Opportunity - ICT and Cloud Computing
Business Opportunity- ICT and Cloud Computing Strategy for ICT Business Strategy for Cloud Computing To expand business scope and focus on ICT To strengthen cloud computing potential business lines and government infrastructure to develop innovative cloud project applications to facilitate digital l
Slide 11: Financials Overview
Financials Overview
Slide 12: Financials: Income Statement Highlights
Financials: Income Statement Highlights ROC GAAP (Consolidated) Growth Growth (NT$bn) 2010 2011 Rate Q1 2011 Q1 2012 Rate Net Revenues 202.43 217.49 7.4% 52.48 55.42 5.6% Operating Costs and 145.06 162.41 12.0% 38.53 44.09 14.4% Expenses Income from 57.37 55.08 (4.0%) 13.95 11.33 (18.7%) Operations
Slide 13: Financials: Business Segment Revenues
Financials: Business Segment Revenues ROC GAAP (Consolidated) Growth Growth (NT$bn) 2010 2011 Rate Q1 2011 Q1 2012 Rate Domestic Fixed 70.69 79.35 12.3% 19.20 19.00 (1.1%) Local 32.25 41.69 29.3% 9.82 10.01 1.9% DLD 6.65 5.79 (12.9%) 1.48 1.00 (32.2%) Broadband Access 20.32 20.42 0.5% 5.23 4.75 (9.2
Slide 14: Financials: Costs & Expenses
Financials: Costs & Expenses ROC GAAP (Consolidated) Growth Growth (NT$bn) 2010 2011 Rate Q1 2011 Q1 2012 Rate Operating Costs 115.33 131.53 14.0% 31.24 36.62 17.2% Operating Expenses 29.73 31.05 3.9% 7.29 7.47 2.4% Marketing 22.47 23.17 3.1% 5.46 5.60 2.5% General and Administrative 4.01 4.18 4.2%
Slide 15: Cash Flow
Cash Flow ROC GAAP (Consolidated) (NT$bn) 2010 2011 Growth Rate Q1 2011 Q1 2012 Growth Rate Net Cash Flow from 84.77 75.36 (11.1%) 9.73 13.12 34.9% Operating Activities CAPEX 24.62 26.88 9.2% 4.38 6.69 52.9% Free Cash Flow 60.15 48.48 (19.4%) 5.35 6.43 20.3% Cash and Cash Equivalent at the end 90.87
Slide 16: Forecast & Operating Results
Forecast & Operating Results ROC GAAP (Parent Company Only) Growth Q1 2012 Achieving (NT$bn) 2011 2012 (E) Rate Q1 2011 Q1 2012 (E) Rate Net Revenues 192.46 188.88 (1.9%) 47.58 47.74 46.29 103.1% Operating Costs and 141.26 143.75 1.8% 34.02 37.27 34.83 107.0% Expenses Income from 51.20 45.13 (11.9%)
Slide 17: Financial Impact after adoption of IFRS
Financial Impact after adoption of IFRS Financial Impact on Jan. 1st , 2012 Assets Liabilities Equity Employee benefits-defined benefit plan (1)Retained earnings –NT$20.65 bn (1) Pension obligation upon APIC +NT$20.65 bn (2)-NT$15 mn (2)+NT$1.5 bn privatization (2)Retained earnings –NT$1.5 bn (2) Re
Slide 18: Effective and Efficient Capital Expenditure
Effective and Efficient Capital Expenditure Capital Expenditure Moderately increase mid-term capital expenditure – Focus on Fixed and Mobile broadband NT$ bn 35 33.1 Budgeted capex for 2012: NT$33.1 bn 0.8 1.6 30 24.6 26.9 4.5 Continue to focus on core businesses for future investments 0.7 25 1.5 1.
Slide 19: Q&A
Q&A
Slide 20: Reference
Reference
Slide 21: Regulatory Update
Regulatory Update Tariff • Wireline and wireless tariff reduction starting from April 1, 2010 over 3 years (Pls refer to reference Regulation page 22) F2M calls • Pricing rights was reverted back to fixed operator in the beginning of 2011 (Pls refer to reference Pricing Right page 23) Digital • Exec
Slide 22: Tariff Regulations
Tariff Regulations Years Business X factor Target Applicable services in Formula: △CPI -X Operation effect 1 IP Peering 1. The three year tariff Domestic wholesale SMP 2 reduction plan is leased line (Significant Fixed- applicable from Apr 1, 3 ADSL circuit 4.816% 3 2010 to Mar 31, 2013 Market line
Slide 23: Regulatory Update - F2M call pricing
Regulatory Update- F2M call pricing Payment to Mobile Operators (NT$/Minute) F2M call pricing Dominant ◎ Mobile Interconnection Fee (NT$2.15) + Transition Fixed- line Fee (NT$1.956~0) in peak hours and Mobile Market Interconnection Fee (NT$2.15) only in off-peak player hours No higher than ◎Transiti
Slide 24: Continuing Broadband Network Construction
Continuing Broadband Network Construction Fiber Deployment Plan • FTTx access exceeded ADSL access in Aug. 2011 • FTTx coverage (≥ 100Mbps) expected to reach 97% by year 2016 • Broadband access + ISP revenue slightly growing in upcoming years • Wireline(note) VAS revenues expected to have higher gro