Chunghwa Telecom Co., Ltd · TWSE:2412
Chunghwa Telecom — 2012 Asian Investment Conference
27 slides from Chunghwa Telecom's conference presentation, Mar 19, 2012
Slide 1: 2012 Asian Investment Conference
2012 Asian Investment Conference Credit Suisse 2012/03/19~21 Hong Kong 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 Integrated Service Provider Revenue Breakdown With Dominant Market Position (c) 2011 Revenue Breakdown Domestic Fixed (Consolidated- Unaudited) – #1 Local • 95.3% share by subs (12.1 mn subs) • 86.8% share by minutes – #1 DLD • 74.1% share by minutes – #1 Broadband access •
Slide 4: 2011 Performance
2011 Performance Consolidated Revenue Income and EBITDA NT$ bn NT$ bn Net Income and EBITDA Margin Net Income % EBITDA % 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 © 2011 Chunghwa Telecom 4
Slide 5: Focus on Stable Dividend
Focus on Stable Dividend Cash Return NT$ bn Expect to maintain a stable dividend Company Act was amended on 2012/01/04: – A company which is profitable is allowed to directly distribute cash to shareholders from its capital surplus or legal reserve. – When the legal reserve has exceeded 25% of the C
Slide 6: Business Overview
Business Overview
Slide 7: Mobile – Maintain Market Leadership
Mobile – Maintain Market Leadership After normalizing the F2M Mobile Service Revenue pricing right revert impact in (NT$bn) 2010 2011 Growth% 2011, CHT – Remain growing momentum CHT 73.1 70.9 -2.96% – Maintain mobile service CHT, normalizing F2M effect1 73.1 75.9 3.90% revenue market share TWM2 54.2
Slide 8: Mobile – Maintain Competitive Status
Mobile – Maintain Competitive Status Mobile VAS Revenue Q4 Q4 Growth Growth (NT$bn) 2010 2011 2010 2011 % % Maintain competitive CHT 3.07 4.01 31% 11.05 15.22 38% status after adjusting the effect of price discount CHT, adjusting the effect of mobile data usage＜＝1GB 3.07 4.29 40% 11.05 15.68 42% per
Slide 9: Subscribers
Largest Mobile Customer Base in the Market High Subs & Lowest Churn Strategies Thousand Maintain mobile leadership by acquiring customers, 12,000 2.50% minimizing churn rate, and increasing user loyalties via 10,000 compelling user experiences Subscribers 2.00% Select popular high-end smartphone as
Slide 10: Smartphone – Value Driver for Mobile
Smartphone – Value Driver for Mobile Performance Various Smartphone Models Smartphone customers account for 48% of the total Offering smartphone models from low to high end handsets CHT offered in year end 2011 Samsung Galaxy iPhone 4S HTC Sensation XL Nokia Lumia 800 – Q4 2011 reached 57.6% SII I91
Slide 11: Broadband Services Performance
Broadband Services Performance Performance Strategies Broadband ARPU NT$ 789 789 Continue migrating customers to higher speed 780 742 services 741 750 Increase fiber network coverage and promote 700 high speed internet 650 Deploy and develop triple play services to 600 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11
Slide 12: Growing Momentum in MOD/IPTV
Growing Momentum in MOD/ IPTV MOD/IPTV Subscribers Performance Launched Family Packages on Apr. 16, 2010 MOD/IPTV subscribers Continue enriching contents of Family Packages Thousand Thousand 900 1100 1,058 Subscriber 1000 961 600 887 451 567 640 160 268 318 900 834 300 814 800 260 245 230 215 176 17
Slide 13: 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 To strengthen cloud computing ICT potential business lines and infrastructure to develop innovative government project cloud applications to facilitate digital -
Slide 14: Closing Remark for Business Overview
Closing Remark for Business Overview Facing price reduction pressure because of the government regulation and market competition in 2011, and expecting most of the pressure will continue to impact both revenue and cost & expense in 2012. Expecting to see the continual development of FTTx, fixed and
Slide 15: Financials Overview
Financials Overview
Slide 16: Financials: Income Statement Highlights
Financials: Income Statement Highlights ROC GAAP (Consolidated) Growth Growth (NT$bn) 2010 2011 Rate Q4 2010 Q4 2011 Rate Net Revenues 202.43 217.52 7.5% 52.30 54.91 5.0% Operating Costs and 145.06 162.51 12.0% 39.16 43.14 10.2% Expenses Income from 57.37 55.01 (4.1%) 13.14 11.77 (10.4%) Operations
Slide 17: Financials: Business Segment Revenues
Financials: Business Segment Revenues ROC GAAP (Consolidated) Growth Growth (NT$bn) 2010 2011 Rate Q4 2010 Q4 2011 Rate Domestic Fixed 70.69 79.35 12.3% 18.64 19.85 6.5% Local 32.25 41.69 29.3% 8.19 10.37 26.6% DLD 6.65 5.79 -12.9% 1.59 1.39 -13.1% Broadband Access 20.32 20.42 0.5% 5.15 5.05 -1.9% M
Slide 18: Financials: Costs & Expenses
Financials: Costs & Expenses ROC GAAP (Consolidated) Growth Growth (NT$bn) 2010 2011 Rate Q4 2010 Q4 2011 Rate Operating Costs 115.33 131.46 14.0% 31.26 34.69 11.0% Operating Expenses 29.73 31.05 4.4% 7.90 8.45 6.9% Marketing 22.47 23.39 4.1% 5.99 6.55 9.3% General and Administrative 4.01 4.15 3.4%
Slide 19: Cash Flow
Cash Flow ROC GAAP (Consolidated) (NT$bn) 2010 2011 Growth Rate Q4 2010 Q4 2011 Growth Rate Net Cash Flow from 84.77 74.34 (12.3%) 32.34 29.29 (9.4%) Operating Activities CAPEX 24.62 26.86 9.1% 9.12 10.28 12.7% Free Cash Flow 60.15 47.48 (21.1%) 23.22 19.01 (18.1%) Cash and Cash Equivalent at the en
Slide 20: Forecast & Operating Results
Forecast & Operating Results ROC GAAP (Parent Company Only) Growth (NT$bn) 2011 2012 (E) Rate Net Revenues 192.46 188.88 (1.9%) Operating Costs and Expenses 141.26 143.75 1.8% Income from Operations 51.20 45.13 (11.9%) Net Income 47.10 39.18 (16.8%) EPS 6.05 5.05 EBITDA 83.11 77.09 (7.2%) EBITDA mar
Slide 21: Effective and Efficient Capital Expenditure
Effective and Efficient Capital Expenditure Capital Expenditure NT$ bn 35 33.1 Moderately speed up mid-term capital 0.8 expenditure 1.6 30 26.9 4.5 – Focus on Fixed and Mobile broadband 25.5 24.6 0.7 25 1.2 1.4 1.5 Budgeted capex for 2012: NT$33.1 bn 1.3 1.7 3.7 6.9 2.1 20 1.9 Continue to focus on c
Slide 22: Q&A
Q&A
Slide 23: Reference
Reference
Slide 24: Regulatory Update
Regulatory Update Tariff • Wireline and wireless tariff reduction starting from April 1, 2010 over 3 years (Pls refer to reference Regulation page 26) F2M calls • Pricing rights was reverted back to fixed operator in the beginning of 2011 (Pls refer to reference Pricing Right page 27) Digital • Exec
Slide 25: Tariff Regulations
Tariff Regulations Years Business X factor Target Applicable services in Formula: △CPI -X Operation effect 1 IP Peering 1. The three year tariff Domestic wholesale SMP 2 reduction plan is leased line (Significant Fixed- applicable from Apr 1, 3 ADSL circuit 4.816% 3 2010 to Mar 31, 2013 Market line
Slide 26: Regulatory Update- F2M call pricing
Regulatory Update- F2M call pricing Payment to Mobile Operators (NT$/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 27: 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