Chunghwa Telecom Co., Ltd · TWSE:2412
Chunghwa Telecom — Taiwan, Technology & Beyond Conference (Bank of America Merrill Lynch) 2014
24 slides from Chunghwa Telecom's conference presentation, Mar 18, 2014
Slide 1: Q4 2013 Operating Results
Q4 2013 Operating Results March 18, 2014 Taiwan, Technology & Beyond Conference Bank of America Merrill Lynch TSE: 2412 NYSE: CHT
Slide 2: Disclaimer
Disclaimer STATEMENT REGARDING UNAUDITED FINANCIAL INFORMATION The unaudited financial information under T-IFRSs in this presentation is preliminary and subject to adjustments and modifications. Adjustments and modifications to the financial statements may be identified during the course of the audi
Slide 3: Chunghwa Telecom Overview
Chunghwa Telecom Overview Dominant Market Position (a) Highest Mobile Internet Subs Market Share(e) Domestic Fixed 35% 33.3% 33.5% 34.1% 34.8% – #1 Local 30.0% 29.6% 28.8% 28.2% 30% 29.0% 28.5% • 94.6% share by subs (11.55 mn subs) 27.6% 27.2% • 85.7% share by minutes 25% – #1 DLD 20% • 77.7% share
Slide 4: Committed to Improving Shareholder Value
Committed to Improving Shareholder Value Cash Return NT$ bn 70 AGM resolved to distribute special 60 cash dividend of NT$0.7205 per share from capital surplus 19.4 50 9.7 19.1 Total payment was NT$5.35 per share 9.7 40 5.59 or NT$41.5 billion including the earnings distribution of NT$4.6295 per 30 s
Slide 5: Business Overview
Business Overview
Slide 6: Number One Mobile Services Provider
Number One Mobile Services Provider Performance Highest Mobile VAS Revenue Growth % Strategy 7.71 Solidifying high-tier smartphone subscriber 7 6.20 6.23 6 5.53 base by offering quality handset models 4.88 5.01 5 Introducing mid-to-low tier smartphones to NT $bn 4 3 expand mobile internet subscriber
Slide 7: Smartphone – Value Driver for Mobile
Smartphone – Value Driver for Mobile Smartphone Adoption Smartphones accounted for 89% of the total Smartphone penetration* handsets CHT offered in Q4 2013 62% 100% 60% 50% 53% 25.0% 21.0% 43% 47% 80% 27.0% 27.0% 50% 38% 40% 19.0% 30% 60% 25.0% 41.0% 20% 49.0% 40% 10% 0% 56.0% 20% 48.0% Dec 12 Mar 1
Slide 8: Fixed Broadband and Internet Services
Fixed Broadband and Internet Services Performance Strategy Continuing to migrate customers from low Broadband Access Revenue NT$ mn 708 710 698 703 708 ARPU NT$ speed to high speed fiber services 5,000 3,724 3,767 3,695 3,819 3,923 600 Leveraging network capability to offer 400 higher-speed upload s
Slide 9: MOD/ IPTV Service
MOD/ IPTV Service Performance Subscriber & Usage Subscriber market share (CATV+IPTV) YoY grew from IPTV revenue increased by 15.0% YoY 19.3% to 19.8 % in Q4 2013 in 2013 82.3% of IPTV subscribers signed up additional Packages IPTV advertisement revenue grew by 37.0% YoY in 2013 Total IPTV Subscriber
Slide 10: ICT and Cloud Computing Initiatives
ICT and Cloud Computing Initiatives Performance Strategy Cloud service revenue tripled YoY in 2013 Leveraging core telecom infrastructure and services to expand ICT business Personal Cloud (Hami+) subscribers accumulated to 1.47 million Leading the cloud computing industry by Acquired several signif
Slide 11: Regulatory Update
ime DEBE = ‘Chunghwa’ Regulatory Update
Slide 12: Regulatory Update
Regulatory Update • Executive Yuan requested NCC to draft the Digital Convergence Regulation in order to integrate the current Broadcasting and Telecom related regulations. • Before submitting the draft proposal, NCC collected opinions from Digital stakeholders and academics regarding the issues of
Slide 13: Financials Overview
Financials Overview
Slide 14: Financials: Income Statement Highlights
Financials: Income Statement Highlights Consolidated Q4 2012 Q4 2013 Growth 2012 2013 Growth (NT$bn) (T-IFRSs) (T-IFRSs) Rate (T-IFRSs) (T-IFRSs) Rate Revenues 56.25 58.82 4.6% 221.42 228.00 3.0% Operating Costs and 45.09 47.82 6.1% 171.48 180.49 5.3% Expenses Other Income and (0.30) 0.10 - (1.57) 0
Slide 15: Financials: Business Segment Revenues
Financials: Business Segment Revenues Consolidated Q4 2012 Q4 2013 Growth 2012 2013 Growth (NT$bn) (T-IFRSs) (T-IFRSs) Rate (T-IFRSs) (T-IFRSs) Rate Domestic Fixed 19.29 19.34 0.3% 76.13 73.55 -3.4% Local 9.83 9.23 -6.1% 40.86 37.82 -7.5% DLD 0.90 0.85 -4.8% 3.77 3.46 -8.0% Broadband Access 4.83 4.8
Slide 16: Financials: Costs & Expenses
Financials: Costs & Expenses Consolidated Q4 2012 Q4 2013 Growth 2012 2013 Growth (NT$bn) (T-IFRSs) (T-IFRSs) Rate (T-IFRSs) (T-IFRSs) Rate Operating Costs 36.81 38.56 4.8% 141.51 147.08 3.9% Operating Expenses 8.28 9.26 11.9% 29.97 33.41 11.5% Marketing 6.27 7.20 14.8% 22.25 25.53 14.7% General and
Slide 17: Cash Flow & EBITDA Margin
Cash Flow & EBITDA Margin Consolidated Q4 2012 Q4 2013 Growth 2012 2013 Growth (NT$bn) (T-IFRSs) (T-IFRSs) Rate (T-IFRSs) (T-IFRSs) Rate Net Cash Flow from 24.57 30.04 22.3% 66.06 75.04 13.6% Operating Activities CAPEX 10.72 13.11 22.2% 33.28 36.42 9.4% Free Cash Flow 13.85 16.93 22.3% 32.78 38.62 1
Slide 18: Forecast & Operating Results
Forecast & Operating Results Consolidated 2013 2014 Growth (NT$bn) (T-IFRSs ) (T-IFRSs E) Rate Revenues 228.00 228.23 0.1% Operating Costs and Expenses 180.49 184.70 2.4% Other Income and Expenses 0.08 - - Income from Operations 47.59 43.53 (8.5%) Net Income 39.84 35.84 (10.1%) EPS 5.14 4.62 (10.1%)
Slide 19: Effective and Efficient Capital Expenditure
Effective and Efficient Capital Expenditure Capital Expenditure Increase capital expenditure NT$ bn – Fixed and Mobile broadband 22.3% 50 17.6% 19.1% – Cloud deployment including cloud data 15.0% 16.0% 20% center build out 45 12.4% 40.1 36.4 Budgeted capex for 2014: NT$40.1bn Capex as % of Revenue 4
Slide 20: Q&A
Q&A
Slide 21: Reference
Reference
Slide 22: Regulatory Update (2013/4/1~2017/3/31)
Regulatory Update (2013/4/1~2017/3/31) Years Target Business Applicable Services X factor in Formula : △CPI - X effect xDSL monthly fee 1. The four year FTTx monthly fee (exclude FTTH and tariff reduction 1 plan is applicable FTTB) from April 1. 2013 to March 31, 2017 and applied SMP 2 Domestic
Slide 23: Continuing Broadband Network Construction
Continuing Broadband Network Construction FTTH Fiber Deployment Plan Thousands FTTN/FTTB Coverage Port ADSL 97% 97% FTTx coverage (≥100M) reach 97% by 12,000 95% 100% Coverage(≥100Mbps) 97% 2016 92.8% 95% Coverage(≥60Mbps) 90% 90% 2,494 10,000 82% 86.7% 2,014 Increase FTTH construction in order to 7
Slide 24: Mobile Broadband Spectrum Auction Completed
Mobile Broadband Spectrum Auction Completed CHT Secures Broadest Bandwidth Bidding Result including most sought after slot at 1800MHz Floor Actual Band- Band Slot Price Payment Current Carrier Winner width (NT$ bn) (NT$ bn) acquiring the largest amount of A1 10M 4.6 6.415 APT bandwidth with 2x35 MHz