Chunghwa Telecom Co., Ltd · TWSE:2412
Chunghwa Telecom — H1 2007 Earnings Presentation
27 slides from Chunghwa Telecom's earnings presentation, Aug 30, 2007
Slide 1: 1H 2007 Operating Results, August 30, 2007
1H 2007 Operating Results, August 30, 2007
Slide 2: Disclaimer
Disclaimer Except for statements in respect of historical matters, the statements made in this presentation contain “forward-looking statements” within the meaning of Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934. Such forward-looking stat
Slide 3: Corporate Update
Corporate Update Business Review 2
Slide 4: 1H Results Establish Solid Foundation for 2007
1H Results Establish Solid Foundation for 2007 Internet and data segment continues to drive revenue growth due to broadband subscriber growth and access revenue Internet & Data Segment Drives Revenue Growth Continue migrate ADSL subscribers to higher speed service, including FTTB As Taiwan’s only in
Slide 5: Completion of 3 Year ERP
Completion of 3 Year ERP Personnel Expenses Fall Following Completion of ERP (NT$bn) HR structure revised 48 4,574 retired Deployment of ERP Estimate 1,540 recruited by 2007 43 2.3 Bonus Cost savings for expense 38 1.4 3.3 1.9 personnel expense will 1.4 start to fall by 2008 3.2 3.2 33 37.9 Addition
Slide 6: Capital Reduction Timeline
Capital Reduction Timeline Capital reduction $ Cash payment ( E ＋1 day ) Reduction rate：9.0909% Jan E End of trading suspension Reference price post reduction : (Closing price - Cash refund) Year 2008 (Capital stock after reduction/ Original capital stock) Year 2007 Example: (55-0.909 )/ (100%-9.09%
Slide 7: Financials
Financials Financials 6
Slide 8: 1H Income Statement in US and ROC GAAP
Financials 1H Income Statement in US and ROC GAAP US GAAP ROC GAAP Growth Growth (NT$bn) 1H 2006 1H 2007 1H 2006 1H2007 Rate Rate Revenue 91.40 96.43 5.5% 90.59 95.71 5.6% EBITDA 47.36 50.29 6.2% 50.17 51.61 2.9% Operating Profit 26.97 30.51 13.1% 29.59 31.65 7.0% Net income 19.78 26.40 33.5% 22.19
Slide 9: 2Q Income Statement in US GAAP
Financials 2Q Income Statement in US GAAP US GAAP US GAAP Growth Growth (NT$bn) 1H 2006 1H 2007 2Q 2006 2Q 2007 Rate Rate Revenue 91.40 96.43 5.5% 46.38 50.65 9.2% EBITDA 47.36 50.29 6.2% 24.53 25.20 2.7% Operating Profit 26.97 30.51 13.1% 14.37 15.34 6.8% Net income 19.78 26.40 33.5% 10.46 15.28 46
Slide 10: Financials: Business Segment Revenues (1H)
Financials: Business Segment Revenues 1H in US and ROC GAAP US GAAP ROC GAAP Growth Growth 1H 2006 1H 2007 1H 2006 1H 2007 (NT$ bn) Rate Rate Internet 17.34 18.66 7.6% 17.34 18.66 7.6% Data 5.26 5.69 8.2% 5.26 5.69 8.2% Mobile 36.20 36.74 1.5% 36.18 36.73 1.5% Fixed line 31.32 30.42 (2.9%) 30.52 29.
Slide 11: Financials: Business Segment Revenues (2Q)
Financials: Business Segment Revenues 2Q in US GAAP US GAAP US GAAP Growth Growth 1H 2006 1H 2007 2Q 2006 2Q 2007 (NT$ bn) Rate Rate Internet 17.34 18.66 7.6% 8.77 9.34 6.5% Data 5.26 5.69 8.2% 2.64 2.83 7.4% Mobile 36.20 36.74 1.5% 18.26 18.66 2.2% Fixed line 31.32 30.42 (2.9%) 15.97 15.64 (2.1%) L
Slide 12: 1H Costs & Expenses in US and ROC GAAP
Financials 1H Costs & Expenses in US and ROC GAAP US GAAP ROC GAAP Growth Growth (NT$ bn) 1H 2006 1H 2007 1H 2006 1H 2007 Rate Rate Costs of Revenues 30.88 34.19 10.7% 26.18 29.53 12.8% Marketing Expense 9.97 9.12 (8.5%) 11.64 11.92 2.4% G&A Expense 1.82 1.55 (14.9%) 1.41 1.44 2.1% R&D Expense 1.38
Slide 13: 2Q Costs & Expenses in US GAAP
Financials 2Q Costs & Expenses in US GAAP US GAAP US GAAP Growth Growth (NT$ bn) 1H 2006 1H 2007 2Q 2006 2Q 2007 Rate Rate Costs of Revenues 30.88 34.19 10.7% 15.45 19.30 25.0% Marketing Expense 9.97 9.12 (8.5%) 4.93 4.67 (5.3%) G&A Expense 1.82 1.55 (14.9%) 0.75 0.81 8.2% R&D Expense 1.38 1.29 (6.8
Slide 14: Effective and Efficient Capital Expenditures
Effective and Efficient Capital Expenditures Capital Expenditure (NT$ bn) 30 1H Capex decreased YoY 27.68 due to decline in Mobile 25 spending by NT$3.1bn 22.93 Future investments will Capex (NT$bn) 20 focus on core businesses and on migrating mobile 15 and data customers to 11.95 higher revenue pla
Slide 15: Business Review
Business Review Business Review 14
Slide 16: Chunghwa Telecom Overview
Chunghwa Telecom Overview Market Leader in Mobile Communication, Internet and Data and Fixed-line Services Integrated Services Provider 1H07 Revenue Breakdown with Dominant Market Shares DLD Mobile Local #1 subscribers 5% 19% ILD - 36.3% market share (b) (8.58 mm subs) Internet 7% #1 revenue & Data
Slide 17: Taiwan's Leading Internet and Data Provider
Taiwan’s Leading Internet and Data Provider Steadily growing broadband subscriptions and revenue Broadband Subscribers Broadband Access Revenue NT$ mn Thousands 4,166 20,000 4,036 4,114 18,991 4,000 3, 970 18,000 16,668 17.6% 20.6% 23.2% 24.9% 3,500 16,000 3,000 14,000 % +7.3 12,000 2,500 43.2% 42.1
Slide 18: Increasing Access Speeds and Fiber Deployment
Increasing Access Speeds and Fiber Deployment Expanding offerings at the speed of light Proven Broadband Initiatives Rising Average Bandwidth Per User Transitioning subscribers to higher Mbps 3 2.69 access speed and expand bandwidth 2.56 2.14 As of Jun. 2007, subscribers of 2 1.60 >8Mbps services re
Slide 19: Number One Mobile Provider
Number One Mobile Provider Increasing data usage as a 6.5% of revenue Mobile Subscribers Successful Mobile VAS Rollout Thousands Successful “emome” VAS platform 9,000 continuing to generate growth 8,487 8,556 8,581 8,416 8,500 Total VAS exhibited 18.0% growth YoY in 1H 2007 8,000 1,685 Mobile Intern
Slide 20: 3G Deployment Gaining Traction
3G Deployment Gaining Traction New phones and offerings spur shift to 3G ARPU Expansion from “Upselling” Innovative 3G Strategies 1.68 million 3G subscribers as of Jun. 2007, of which 45% are utilizing 3G Customized 3G handsets: handsets CHT9000 series Customers subscribing to mPro 81.8% of 3G subsc
Slide 21: Undisputed Leader in Fixed-Line Services
Undisputed Leader in Fixed-Line Services Fixed-Line Ringback Tones Fixed-Line Market Share Thousands % 490 98% 98% 97% 97% 97% 465.3 100 450 89% 89% 89% 89% 410 90 89% 377.0 370 88% 86% 87% 330 80 85% 84% 282.3 290 250 233.9 70 210 171.5 170 60 60% 61% 61% 130 103.6 58% 58% 90 77.4 50 56.4 50 2003 2
Slide 22: Bundled Solutions for All Customer Segments
Bundled Solutions for All Customer Segments Meeting customer demand for convergence Enterprise Bundled Solutions MOD/IPTV subscribers Chi-Mei Optoelectronics- LCD field: Thousands Provide ICT service with IBM and Cisco 350 333 Farglory : 300 Digital home solution 249 250 Taipei Stadium total solutio
Slide 23: Regulatory Update
Regulatory Update Fixed line: Indoor wiring maintenance fee can not be charged by default Mobile (2G) Fixed to Mobile Calls 4.88% New Tariff Setting Prepaid 5.2% Regulations Effective on Apr.1, 2007 Package with highest rate 4.8875% ADSL ADSL access 5.4% ADSL bundled local service not allowed MOD op
Slide 24: Business Outlook
Business Outlook Financials 23
Slide 25: Near Term Strategic Overview
Near Term Strategic Overview Expand broadband coverage to create revenue stream from new service Continue to applications Improve Core Strengthen data mining capabilities to offer tailored services Businesses Reorganize customer service structure to enhance service quality Introduce rewarding plan t
Slide 26: Near-Term Strategic Overview
Near-Term Strategic Overview Conduct a joint development of MSN and digital life products with Microsoft Business Alliances Cooperate with Google for applications such as map, mail, browsing and search engine on ISP and mobile phones Form a co-marketing alliance with Financials and developers Manage
Slide 27: Q&A Session
Q&A Session Q&A Session www.cht.com.tw 26