Slide 1: Q3 2011 Operating Results
Q3 2011 Operating Results October 28, 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 and EBITDA NT$ bn NT$ bn Revenue Breakdown (Consolidated) Net Income and EBITDA Margin 9 months 2011 Q3 2011 Net Income % EBITDA % 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 © 2011 Chunghwa Telecom 3
Slide 4: Consistent Return to Shareholders
Consistent Return to Shareholders Cash Return NT$ bn NT$5.5243 per share cash dividend for year 2010 has been distributed on August 17, 2011 Cumulative cash returns of NT$57.9bn to shareholders in the previous four rounds of capital reduction Note: 1. The cash return was calculated based on cash div
Slide 5: Business Overview
Business Overview
Slide 6: Business Highlights
Business Highlights • Smartphone drives VAS revenue growth, smartphone represents 45% of handset sold in Q3 Mobile • Offer limited “on-net call free” and “my hot line” packages to retain customers’ loyalty • Promoting higher-speed package, subscriber of 50Mbps reached 365,000 Broadband • Tariff redu
Slide 7: Number One Mobile Service Provider
Number One Mobile Service Provider VAS Performance Strategies Maintain mobile leadership by acquiring customers, minimizing churn rate, and increasing user loyalties via compelling user experiences Create value via smartphone and tablets services Increase mobile VAS revenue by offering customized an
Slide 8: Smartphone – Value Driver for Mobile
Smartphone – Value Driver for Mobile Performance Successful Smartphone Strategies Smartphone customers account for 45% of the total handsets CHT offered in Q3 2011 Promote smartphones with variety – The percentage for year 2010 was 25% – The percentage is expected to reach 35% to of applications to
Slide 9: Broadband Services - Growth Drivers in Fixed-line
Broadband Services - Growth Drivers in Fixed-line Performance Strategies Broadband ARPU NT$ 789 789 789 780 Continue fiber network construction to 750 742 increase household coverage 700 Promote fiber high-speed broadband 650 services and focus on 50Mbps service in 600 2011 Q3 10 Q4 10 Q1 11 Q2 11 Q
Slide 10: Growing Momentum in MOD/IPTV
Growing Momentum in MOD/ IPTV MOD/IPTV Subscribers Performance MOD/IPTV subscribers Launched Family Packages on Apr. 16, 2010 Continue enriching contents of Family Packages Thousand 1,000 1000 961 Thousand 887 900 900 834 814 Subscriber 600 800 742 700 451 567 691 160 268 318 700 300 66 270 260 245
Slide 11: Financials Overview
Financials Overview
Slide 12: Financials: Income Statement Highlights
Financials: Income Statement Highlights ROC GAAP (Consolidated) Jan-Sep Jan-Sep Growth Growth (NT$bn) 2010 2011 Rate Q3 2010 Q3 2011 Rate Net Revenues 150.13 162.61 8.3% 50.85 55.71 9.5% Operating Costs and 105.90 119.37 12.7% 36.41 41.83 14.9% Expenses Income from 44.23 43.24 (2.3%) 14.44 13.88 (3.
Slide 13: Financials: Business Segment Revenues
Financials: Business Segment Revenues ROC GAAP (Consolidated) Jan-Sep Jan-Sep Growth Growth (NT$bn) 2010 2011 Rate Q3 2010 Q3 2011 Rate Domestic Fixed 52.05 59.50 14.3% 17.52 20.52 17.1% Local 24.06 31.33 30.2% 8.10 10.74 32.6% DLD 5.05 4.40 (12.8%) 1.65 1.46 (11.4%) Broadband Access 15.17 15.37 1.3
Slide 14: Financials: Costs & Expenses
Financials: Costs & Expenses ROC GAAP (Consolidated) Jan-Sep Jan-Sep Growth Growth (NT$bn) 2010 2011 Rate Q3 2010 Q3 2011 Rate Operating Costs 84.08 96.76 15.1% 28.94 34.17 18.1% Operating Expenses 21.82 22.61 3.6% 7.47 7.66 2.5% Marketing 16.48 16.85 2.2% 5.73 5.82 1.6% General and Administrative 2
Slide 15: Cash Flow
Cash Flow ROC GAAP (Consolidated) Jan-Sep Jan-Sep (NT$bn) 2010 2011 Growth Rate Q3 2010 Q3 2011 Growth Rate Net Cash Flow from 52.43 45.05 (14.1%) 19.49 19.05 (2.3%) Operating Activities CAPEX 15.50 16.58 7.0% 6.18 6.66 7.9% Free Cash Flow 36.93 28.47 (22.9%) 13.31 12.39 (6.9%) Cash and Cash Equival
Slide 16: Forecast & Operating Results
Forecast & Operating Results ROC GAAP (Parent Company Only) Jan-Sep Achieving Achieving (NT$bn) 2011 2011 (E) Rate Q3 2011 Q3 2011 (E) Rate Net Revenues 144.57 190.02 76.1% 49.04 47.70 102.8% Operating Costs and 104.21 138.61 75.2% 36.21 34.59 104.7% Expenses Income from 40.36 51.41 78.5% 12.83 13.1
Slide 17: Effective and Efficient Capital Expenditure
Effective and Efficient Capital Expenditure Capital Expenditure NT$ bn 35 Moderately speed up mid-term 30.1 capital expenditure 30 0.8 1.2 – Focus on Fixed and Mobile broadband 2.2 25.5 24.5 Continue to focus on core 25 1.2 5.2 1.3 1.4 2.1 1.7 20 5.0 1.9 businesses for future investments 15 5.3 – 3G
Slide 18: Q&A
Q&A
Slide 19: Reference
Reference
Slide 20: Regulatory Update
Regulatory Update Tariff Wireline and wireless tariff reduction starting from April 1, Regulation 2010 over 3 years (Pls refer to reference page 21) F2M calls Pricing rights was reverted back to fixed operator in the beginning of 2011 (Pls refer to reference page 22~23) Pricing Right Executive Yuan
Slide 21: 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 22: 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$2.15) only in off-peak player hours No higher than ◎Transiti
Slide 23: F2M Call Pricing Right Revert Back
F2M Call Pricing Right Revert Back -Illustration of impact on profit Note: Annual Impacta (a) The illustration are based on actual traffic volume for Fixed Mobile year 2010. NT$bn Total Voice Voice (b) Fixed voice revenue will increase but partially offset by the removal of Service revenues intercon
Slide 24: Continuing Broadband Network Construction
Continuing Broadband Network Construction Fiber Deployment Plan • FTTx access expected to exceed ADSL access by year 2011 • FTTx coverage (≥ 100Mbps) expected to reach 80% by year 2015 • Broadband access + ISP revenue slightly growing in upcoming years • Wireline(note) VAS revenues expected to have