Chunghwa Telecom Co., Ltd · TWSE:2412
Chunghwa Telecom — FY2010 Earnings Presentation
29 slides from Chunghwa Telecom's earnings presentation, Feb 24, 2011
Slide 1: 2010 Operating Results
2010 Operating Results February 24 , 2011 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: Solid Performance
Solid Performance Consolidated Revenue Income from Operations Net Income EBITDA NT$bn NT$bn 55 52.35 30 51.12 50.86 49.12 50.06 49.62 49.66 50 48.06 25 45 20 40 15 35 10 30 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 5 09 09 09 09 10 10 10 10 0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 09 09 09 09 10 10 10 10 2010 Revenue Breakdown (Con
Slide 4: Awards
Awards • Service Quality – Global Views Excellent Service Award 2010 – The most trusted brand 2010 of Readers Digest • Corporate Governance – IR Magazine Greater China Awards 2010- Best Governance & Disclosure (Taiwan) – FinaceAsia-Best Managed Company, Best Corporate Governance, Best Corporate Soci
Slide 5: Consistent Return to Shareholders
Consistent Return to Shareholders Cash Return • Cash dividend for 2010 totaled NT$49.1bn NT$bn • Cumulative cash returns of 60 NT$38.5bn to shareholders in 50 9.7 19.1 9.7 the previous three rounds of 40 capital reduction 30 20 34.6 40.7 37.1 39.4 • 4th capital reduction has been 10 19.4 completed 0
Slide 6: Financials Overview
Financials Overview
Slide 7: Financials: Income Statement Highlights
Financials: Income Statement Highlights ROC GAAP (Consolidated) Growth Growth (NT$bn) 2009 2010 Rate Q4 2009 Q4 2010 Rate Net Revenues 198.36 202.49 2.1% 51.13 52.35 2.4% Operating Costs and 141.97 145.13 2.2% 37.97 39.22 3.3% Expenses Income from Operations 56.39 57.36 1.7% 13.16 13.13 (0.3%) Net I
Slide 8: Financials: Business Segment Revenues
Financials: Business Segment Revenues ROC GAAP (Consolidated) Growth Growth (NT$bn) 2009 2010 Rate Q4 2009 Q4 2010 Rate Domestic Fixed 71.47 70.69 (1.1%) 18.52 18.64 0.6% Local 33.21 32.25 (2.9%) 8.60 8.19 (4.7%) DLD 7.40 6.65 (10.2%) 1.57 1.59 1.9% Broadband Access 19.90 20.32 2.1% 5.03 5.15 2.3% M
Slide 9: Financials: Costs & Expenses
Financials: Costs & Expenses ROC GAAP (Consolidated) Growth Growth (NT$bn) 2009 2010 Rate Q4 2009 Q4 2010 Rate Operating Costs 112.74 115.30 2.3% 29.79 31.23 4.8% Operating Expenses 29.23 29.83 2.1% 8.18 7.99 (2.3%) Marketing 22.29 22.61 1.4% 6.36 6.13 (3.6%) General and 3.77 3.98 5.7% 0.97 1.05 9.2
Slide 10: Cash Flow
Cash Flow ROC GAAP (Consolidated) Growth Growth (NT$bn) 2009 2010 Rate Q4 2009 Q4 2010 Rate Net Cash Flows from 77.29 84.59 9.5% 27.82 32.17 15.6% Operating Activities CAPEX 25.48 24.50 (3.8%) 8.92 9.00 0.9% Free Cash Flow 51.81 60.09 16.0% 18.90 23.17 22.6% Cash and Cash Equivalents at the end 73.2
Slide 11: 2011 Forecast
2011 Forecast ROC GAAP (Parent Company Only) Growth (NT$bn) 2010 2011E Rate Net Revenues 186.41 190.02 1.9% Operating Costs and Expenses 130.67 138.61 6.1% Income from Operations 55.74 51.41 (7.8%) Net Income 47.69 45.73 (4.1%) Net Income Margin (%) 25.58 24.07 EBITDA 89.38 83.80 (6.2%) EBITDA margi
Slide 12: Business Overview
Business Overview
Slide 13: Broadband Services - Growth Drivers in Fixed-Line
Broadband Services - Growth Drivers in Fixed-Line Broadband Subscribers Strategies Thousand 4,306 4,304 4,317 4,325 4,346 4,374 16.0% Aug 10 ADSL • Migrate ADSL subs to FTTx to offer 17.1% 16.9% 16.6% 16.3% 16.1% 7.5% 7.0% 7.6% 7.4% Free upgrades services including HDTV, remote 8.7% 8.0% 256K→512K 1
Slide 14: Growing Momentum in MOD/IPTV
Growing Momentum in MOD/ IPTV MOD/IPTV Subscribers Performance Thousand • Launching Family Packages on Apr 15, 2010 1,000 Thousand 1,000 800 Golden Package Family Package 900 % 700 + 7.3 810 600 Subscriber 800 500 742 550 668 667 665 691 400 267 700 300 66 160 10 200 600 281 270 260 245 100 200 500
Slide 15: Number One Mobile Services Provider
Number One Mobile Services Provider Highest Subs & Lowest Churn Strategies Thousand • Maintain mobile leadership by acquiring 12000 2.50% customers, minimizing churn rate, and 10000 increasing user loyalties via compelling user Subscribers 2.00% 8000 experiences Churn 1.50% 6000 • Create value via s
Slide 16: Smartphone - Value Driver for Mobile
Smartphone - Value Driver for Mobile Performance Successful Smartphone Strategies • Smartphone customers account for • Promote smartphones with variety of 25% of the total handsets CHT offered applications to increase premium in 2010 customer penetration – The percentage is expected to over 35% – Pl
Slide 17: New Business Initiatives for Future Growth
New Business Initiatives for Future Growth • Services launched: Music (hifree,KKBOX), Video (Sports, Movie), News, Micropayment , weather, Surveillance, Convergence Multimedia Phone etc Services • Cloud-based multi-screen services available by 2011:Micropayment,Video (Movie), Weather, News, Music •
Slide 18: Effective and Efficient Capital Expenditures
Effective and Efficient Capital Expenditures Capital Expenditure 35 • Future investments continue to 30 30.1 focus on core businesses 25.5 25 24.5 – 3G / HSPA / HSPA+ / LTE 20 – FTTx Capex (NT$bn) – Wi-Fi / Femtocell 15 – Service Platforms 9.0 10 8.9 • Additional investment will be on 5 cloud comput
Slide 19: 2011 Operational Focus
2011 Operational Focus VAS Marketing Broadband Services Integration Platform Innovation Network © 2010 Chunghwa Telecom 18
Slide 20: Regulatory Update
Regulatory Update
Slide 21: Regulatory Update
Regulatory Update • Wireline and wireless tariff reduction starting from April Tariff regulation 1, 2010 over 3 years (Pls refer to reference page 25) F2M calls • Pricing rights was reverted back to fixed operator in the Pricing Right beginning of 2011 (Pls refer to reference page 26~27) • Executive
Slide 22: Management Highlights
Management Highlights
Slide 23: Business Strategy and Policy
Business Strategy and Policy • Pursue business growth – Focus on broadband, VAS, innovation and digital converged services – Cooperate with subsidiaries to expand overseas business and operation scale • Focus on innovative services – Accelerate network upgrades and integration to enhance competitive
Slide 24: Q&A
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Slide 25: Reference
Reference
Slide 26: Tariff Regulations
Tariff Regulations Years Business X factor Target Applicable services in Formula: △CPI -X Operation effect 1 IP Peering 1. The three year tariff Domestic wholesale reduction plan is SMP 2 leased line applicable from Apr 1, (Significant Fixed- 2010 to Mar 31, 2013 3 ADSL circuit 4.816% 3 Market line
Slide 27: Regulatory Update- F2M call pricing
Regulatory Update- F2M call pricing Payment to Mobile Operators (NT$/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$2.15) only in off-peak player hours No higher than ◎Transiti
Slide 28: F2M Call Pricing Right Revert Back (2) – Illustration of impact on profit
F2M Call Pricing Right Revert Back (2) – Illustration of impact on profit Annual Impacta Note: (a) The illustration are based Fixed Mobile NT$bn Total on actual traffic volume for year Voice Voice 2010. (b) Fixed voice revenue will Service revenues increase but partially offset from external +11.48b
Slide 29: Continuing Broadband Network Construction
Continuing Broadband Network Construction Thousands FTTH FTTN/FTTB Fiber Deployment Plan Port Coverage 12,000 ADSL 90% Coverage(≧ 50Mbps) 80.0% • FTTx access expected to 76.0% 78.0% 80% exceed ADSL access by year 10,000 73.0% 68.8% 70.0% 1100 1550 2000 70% 2011 610 8,000 59.7% 26 5 280 60% • FTTx co