Slide 1: 1H 2011 Operating Results
1H 2011 Operating Results A August t 26, 26 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 1H 2011 Q2 2011 Net Income % EBITDA % 60% 50% 40% 30% 20% 10% 0% Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 © 2011 Chunghwa Telecom 3
Slide 4: Consistent Return to Shareholders
Consistent Return to Shareholders Cash Return NT$ bn 70 NT$5.5243 per share cash 60 dividend for year 2010 has been 19 4 19.4 distributed on August g 17, 2011 50 9.7 19.1 9.7 Cumulative cash returns of 40 NT$57.9bn to shareholders in the 30 previous four rounds of capital 20 40.7 39.4 42.9 reduction
Slide 5: Recent Developments
Recent Developments p
Slide 6: Digital Rainforest
Digital Rainforest -An Enabler of Prospering Digital Economy Ecosystem • Migrate from K- era Æ M- era Æ G- era Broadband • Enhance 3G HSPA+ network and offload data Connectivity traffic via WiFi • Evolve to LTE • Promote digital services powered by ICT Platform Platform, e.g., IaaS, PaaS, Cloud Mark
Slide 7: Cloud Computing
Cloud Computing -Innovative Service under Digital Rainforest B b C + Partners Customers ISVs hi l d PaaS hicloud P S …… hicloud Apps mall SaaS CaaS hicloud StaaS Services Performance Service launched Collaborating with government network – SaaS CRM in Jan 2010 communication entity and independent –
Slide 8: Comprehensive Service Channels
Comprehensive Service Channels Renovate Customer-oriented Intelligent Service Channels User Experience Communication and share with customers Caring Bridge digital gap by serving people of User different ages and in different areas Experience Holistic Offer integrated and versatile services Trustwor
Slide 9: Financials Overview
Financials Overview
Slide 10: Financials: Income Statement Highlights
Financials: Income Statement Highlights ROC GAAP (Consolidated) Growth Growth (NT$b ) (NT$bn) 1H 2010 1H 2011 Rate Q2 2010 Q2 2011 Rate Net Revenues 99.28 106.90 7.7% 49.66 54.42 9.6% Operating Costs and 69.49 77.54 11.6% 34.75 39.01 12.3% Expenses Income from 29.79 29.36 (1.4%) ( ) 14.91 15.41 3.4%
Slide 11: Financials: Business Segment Revenues
Financials: Business Segment Revenues ROC GAAP (Consolidated) Growth Growth (NT$bn) 1H 2010 1H 2011 Rate Q2 2010 Q2 2011 Rate Domestic Fixed 34.53 38.98 12.9% 17.33 19.78 14.1% Local 15.96 20.59 29.0% 8.06 10.77 33.6% DLD 3.40 2.94 -13.6% 1.70 1.46 -13.9% B Broadband db d Access A 10 06 10.06 10 36
Slide 12: Financials: Costs & Expenses
Financials: Costs & Expenses ROC GAAP (Consolidated) Growth Growth (NT$bn) 1H 2010 1H 2011 Rate Q2 2010 Q2 2011 Rate Operating Costs 55.14 62.60 13.5% 27.35 31.35 14.7% Operating Expenses 14.35 14.94 4.1% 7.40 7.66 3.5% Marketing 10.75 11.02 2.5% 5.54 5.56 0.3% General and Administrative 2.04 2.22 9
Slide 13: Cash Flow
Cash Flow ROC GAAP (Consolidated) (NT$bn) 1H 2010 1H 2011 Growth Rate Q2 2010 Q2 2011 Growth Rate Nett Cash N C h Flow Fl from f 32.94 26.00 (21.1%) 17.25 16.28 （5.6%） Operating Activities CAPEX 9.32 9.92 6.4% 5.15 5.54 7.6% Free Cash Flow 23.62 16.08 (31.9%) 12.10 10.74 (11.2%) Cash and Cash Equiva
Slide 14: Forecast & Operating Results
Forecast & Operating Results ROC GAAP (Parent Company Only) Achieving g Achieving g (NT$bn) 1H 2011 2011 (E) Rate Q2 2011 Q2 2011 (E) Rate Net Revenues 95.53 190.02 50.3% 47.94 47.52 100.9% Operating Costs and 67.99 138.61 49.1% 33.97 34.42 98.7% Expenses Income from 27.54 51.41 53.6% 13.97 13.10 10
Slide 15: Business Overview
Business Overview
Slide 16: Broadband Services - Growth Drivers in Fixed-line
Broadband Services - Growth Drivers in Fixed-line Performance Strategies Broadband ARPU NT$ 790 789 789 789 780 Continue fiber network construction to 776 increase household coverage 770 Promote fiber high-speed broadband 750 services and focus on 50Mbps service in 730 2011 Q2 10 Q3 10 Q4 10 Q1 11 Q
Slide 17: Growing Momentum in MOD/IPTV
Growing Momentum in MOD/ IPTV MOD/IPTV Subscribers Performance MOD/IPTV subscribers Launched Family Packages on AprApr. 16 16, 2010 Continue enriching contents of Family Packages Thousand 1,000 1,000 Thousand 887 900 900 834 814 ber 600 Subscrib 800 742 700 691 318 451 665 160 267 700 300 10 66 281
Slide 18: Number One Mobile Service Provider
Number One Mobile Service Provider VAS Performance Strategies Maintain mobile leadership by acquiring customers, Mobile VAS Revenue % minimizing churn rate, and increasing user loyalties via compelling user experiences 25% 20.8% Create value via smartphone and tablets services 20% 15.1% Increase mob
Slide 19: Smartphone – Value Driver for Mobile
Smartphone – Value Driver for Mobile Performance Successful Smartphone Strategies Smartphone customers account for 40% of the total handsets CHT offered in 1H 2011 Promote smartphones with variety – The percentage for year 2010 was 25% – The percentage is expected to reach 35% to of applications to
Slide 20: Effective and Efficient Capital
Effective and Efficient Capital Capital Expenditure NT$ bn b Moderately speed up mid-term 35 30.1 capital expenditure 30 0.8 1.2 – Focus on Fixed and Mobile broadband 22 2.2 25.5 24.5 25 5.2 1.2 1.3 1.4 1.7 Continue to focus on core 2.1 20 1.9 businesses for future investments 5.0 15 5.3 – 3G / HSPA
Slide 21: Q&A
Q Q&A
Slide 22: Reference
Reference
Slide 23: Regulatory Update
Regulatory Update Tariff Wireline and wireless tariff reduction starting from April 1, Regulation 2010 over 3 years (Pls refer to reference page 24) F2M calls Pricing rights was reverted back to fixed operator in the beginning of 2011 (Pls refer to reference page 25~26) Pricing Right Executive Yuan
Slide 24: 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 ( g Fixed- 2010 to Mar 31 31, 2013 3 ADSL circuit 4 816% 4.816%
Slide 25: Regulatory Update- F2M call pricing
Regulatory Update- F2M call pricing Payment y to Mobile Operators p (NT$/Minute) ( $/ ) F2M call p pricing g Dominant ◎ Mobile Interconnection Fee (NT$2.15) + Transition Fi d line Fixed- li F Fee (NT$1 956 0) in (NT$1.956~0) i peakk hours h and d Mobile M bil Market Interconnection Fee (NT$2.15) onl
Slide 26: F2M Call Pricing Right Revert Back
F2M Call Pricing Right Revert Back -Illustration of impact on profit Note: Annual Impacta (a) The illustration are based on actual traffic volume for Fixed Mobile year ear 2010 2010. NT$bn Total Voice Voice (b) Fixed voice revenue will increase but partially offset by the removal of Service revenues
Slide 27: Continuing Broadband Network Construction
Continuing Broadband Network Construction Fiber Deployment Plan Thousands Coverage Port FTTH • FTTx access expected to exceed 12,000 90% FTTN/FTTB ADSL access by year 2011 ADSL 80% 80% 10,000 Coverage(≥100Mbps) • FTTx coverage (≥ 100Mbps) expected 1 550 1,550 70% 610 1,100 68% 2,000 to reach 80% by