Chunghwa Telecom Co., Ltd · TWSE:2412
Chunghwa Telecom — Q1 2011 Earnings Presentation
28 slides from Chunghwa Telecom's earnings presentation, Apr 28, 2011
Slide 1: Q1 2011 Operating Results
Q1 2011 Operating Results April 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 from Operations Net Income EBITDA NT$bn NT$bn 55 52.2952.48 30 51.12 50.86 49.1248.06 50.06 49.6249.66 50 25 45 20 40 15 35 10 30 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 5 09 09 09 09 10 10 10 10 11 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 09 09 09 09 10 10 10 10 11 2011 Q1 Reve
Slide 4: Consistent Return to Shareholders
Consistent Return to Shareholders Cash Return NT$bn 70 • The board approved (still 60 19.4 subject to AGM’s approval) 50 9.7 19.1 9.7 NT$5.5243 cash dividend per 40 share for year 2010 30 20 40.7 39.4 42.9 34.6 37.1 10 0 • Cumulative cash returns of 2007 2008 2009 2010 2011 NT$57.9bn to shareholders
Slide 5: Financials Overview
Financials Overview
Slide 6: Financials: Income Statement Highlights
Financials: Income Statement Highlights ROC GAAP (Consolidated) Growth Growth (NT$bn) 2009 2010 Rate Q1 2010 Q1 2011 Rate Net Revenues 198.36 202.43 2.1% 49.62 52.48 5.8% Operating Costs and 141.97 145.06 2.2% 34.74 38.53 10.9% Expenses Income from Operations 56.39 57.37 1.7% 14.88 13.94 (6.3%) Net
Slide 7: Financials: Business Segment Revenues
Financials: Business Segment Revenues ROC GAAP (Consolidated) Growth Growth (NT$bn) 2009 2010 Rate Q1 2010 Q1 2011 Rate Domestic Fixed 71.47 70.69 (1.1%) 17.20 19.20 11.6% Local 33.21 32.25 (2.9%) 7.91 9.82 24.3% DLD 7.40 6.65 (10.2%) 1.70 1.48 (13.2%) Broadband Access 19.90 20.32 2.1% 5.08 5.23 3.0
Slide 8: Financials: Costs & Expenses
Financials: Costs & Expenses ROC GAAP (Consolidated) Growth Growth (NT$bn) 2009 2010 Rate Q1 2010 Q1 2011 Rate Operating Costs 112.74 115.33 2.3% 27.79 31.24 12.4% Operating Expenses 29.23 29.73 1.7% 6.95 7.29 4.9% Marketing 22.29 22.47 0.8% 5.21 5.46 4.9% General and 3.77 4.01 6.6% 0.98 1.00 1.6% A
Slide 9: Cash Flow
Cash Flow ROC GAAP (Consolidated) Growth Growth (NT$bn) 2009 2010 Rate Q1 2010 Q1 2011 Rate Net Cash Flows from 77.29 84.77 9.7% 15.69 9.73 （38.0%） Operating Activities CAPEX 25.48 24.62 (3.4%) 4.17 4.38 5.0% Free Cash Flow 51.81 60.15 16.1% 11.52 5.35 (53.6%) Cash and Cash Equivalents at the end of
Slide 10: Forecast & Operating Results
Forecast & Operating Results ROC GAAP (Parent Company Only) Achieving Achieving (NT$bn) Q1 2011 2011 (E) Rate Q1 2011 Q1 2011 (E) Rate Net Revenues 47.58 190.02 25.0% 47.58 46.24 102.9% Operating Costs and 34.02 138.61 24.5% 34.02 33.51 101.5% Expenses Income from Operations 13.56 51.41 26.4% 13.56
Slide 11: Business Overview
Business Overview
Slide 12: Broadband Services - Growth Drivers in Fixed-Line
Broadband Services - Growth Drivers in Fixed-Line Broadband Subscribers Strategies Thousand 4,304 4,317 4,325 4,346 4,374 4,402 16.0% 15.8% • Migrate ADSL subs to FTTx to offer 16.9% 16.6% 16.3% 16.1% 7.5% 7.0% 7.6% 7.4% 7.2% Note: services including HDTV, remote 8.0% Aug 2010 surveillance and cloud
Slide 13: 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 % +2.4 800 Golden Package Family Package 900 700 814 834 600 Subscriber 800 500 742 550 691 400 267 318 700 667 665 160 300 10 66 200 600 281 270 260 245 100 230 2
Slide 14: Number One Mobile Services Provider
Number One Mobile Services Provider Highest Subs & Lowest Churn Strategies Thousand 12000 2.50% • Maintain mobile leadership by acquiring customers, minimizing churn rate, and 10000 2.00% increasing user loyalties via compelling user Subscribers 8000 experiences Churn 1.50% 6000 • Create value via s
Slide 15: Smartphone - Value Driver for Mobile
Smartphone - Value Driver for Mobile Performance Successful Smartphone Strategies • Smartphone customers account for • Promote smartphones with variety of 39% of the total handsets CHT offered applications to increase premium in Q1 2011 customer penetration – The percentage for year 2010 was 25% – P
Slide 16: 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 • Multi-screen services available by 2011: Micropayment,Video (Movie), Weather, News, Music • To focus on
Slide 17: Overseas Development
Overseas Development JV • Vietnam (Viettel IDC): Major businesses include Hosting Co-location, Server rental, VAS etc • China (Sertech): Duplicate our experiences in call center cross strait Subsidiary • Establish a subsidiary in China in Q1 2011: Provide ICT- ICT related solution with iEN, mobile V
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 24.5 – 3G / HSPA / HSPA+ / LTE 25 – FTTx Capex (NT$bn) 20 – Wi-Fi / Femtocell 15 – Service Platforms 10 • Additional investment will be on 4.2 4.4 cloud computin
Slide 19: Regulatory Update
Regulatory Update
Slide 20: Regulatory Update
Regulatory Update • Wireline and wireless tariff reduction starting from April 1, Tariff Regulation 2010 over 3 years (Pls refer to reference page 24) F2M calls • Pricing rights was reverted back to fixed operator in the Pricing Right beginning of 2011 (Pls refer to reference page 25~26) • Executive
Slide 21: Management Highlights
Management Highlights
Slide 22: Business Strategy and Policy
Business Strategy and Policy • Pursue business growth – Focus on broadband, VAS, innovation and digital converged services – Cooperate with subsidiaries to expand overseas business and operation scale • Focus on innovative services – Accelerate network upgrades and integration to enhance competitive
Slide 23: Q&A
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Slide 24: Reference
Reference
Slide 25: Tariff Regulations
Tariff Regulations Years Business X factor Target Applicable services in Formula: △CPI -X Operation effect 1 IP Peering 1. The three year tariff Domestic wholesale reduction plan is SMP 2 leased line applicable from Apr 1, (Significant Fixed- 2010 to Mar 31, 2013 3 ADSL circuit 4.816% 3 Market line
Slide 26: Regulatory Update - F2M call pricing
Regulatory Update- F2M call pricing Payment to Mobile Operators (NT$/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$2.15) only in off-peak player hours No higher than ◎Transiti
Slide 27: F2M Call Pricing Right Revert Back (2) – Illustration of impact on profit
F2M Call Pricing Right Revert Back (2) – Illustration of impact on profit Annual Impacta Note: (a) The illustration are based Fixed Mobile NT$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 28: 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