Chunghwa Telecom : ★ Q1 2024 Conference Call Presentation (567KB)

1Q 2024

Operating Results

May 2, 2024

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 audit /review work, which could result in significant differences from this preliminary unaudited financial information.

NOTE CONCERNING FORWARD-LOOKING STATEMENTS

This presentation contains forward-looking statements. These statements constitute "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward- looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Statements that are not historical facts, including statements about Chunghwa's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Investors are cautioned that actual events and results could differ materially from those statements as a result of a number of factors including, but not limited to the risks outlined in Chunghwa's filings with the U.S. Securities and Exchange Commission on Forms F-1,F-3,6-K and 20-F, in each case as amended. The forward-looking statements in this presentation reflect the current belief of Chunghwa as of the date of this presentation and Chunghwa undertakes no obligation to update these forward-looking statements for events or circumstances that occur subsequent to such date, except as required under applicable law.

This presentation is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration. Any public offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from the issuer or selling security holder and that will contain detailed information about the company and management, as well as financial statements.

SPECIAL NOTE REGARDING NON-GAAP FINANCIAL MEASURES

A body of generally accepted accounting principles is commonly referred to as "GAAP". A non-GAAP financial measure is generally defined by the SEC as one that purports to measure historical or future financial performance, financial position or cash flows but excludes or includes amounts that would not be so adjusted in the most comparable U.S. GAAP measure. We disclose in this report certain non-GAAP financial measures, including EBITDA. EBITDA for any period is defined as consolidated net income (loss) excluding (i) depreciation and amortization, (ii) total net comprehensive financing cost (which is comprised of net interest expense, exchange gain or loss, monetary position gain or loss and other financing costs and derivative transactions), (iii) other expenses, net, (iv) income tax, (v) cumulative effect of change in accounting principle, net of tax and (vi) (income) loss from discontinued operations.

In managing our business we rely on EBITDA as a means of assessing our operating performance. We believe that EBITDA can be useful to facilitate comparisons of operating performance between periods and with other companies because it excludes the effect of (i) depreciation and amortization, which represents a non-cash charge to earnings, (ii) certain financing costs, which are significantly affected by external factors, including interest rates, foreign currency exchange rates and inflation rates, which have little or no bearing on our operating performance, (iii) income tax and tax on assets and statutory employee profit sharing, which is similar to a tax on income and (iv) other expenses or income not related to the operation of the business.

EBITDA is not a measure of financial performance under U.S. GAAP or T-IFRSs. EBITDA should not be considered as an alternate measure of net income or income from operations, as determined on a consolidated basis using amounts derived from statements of operations prepared in accordance with U.S. GAAP or T-IFRSs, as an indicator of operating performance or as cash flows from operating activity or as a measure of liquidity. EBITDA has material limitations that impair its value as a measure of a company's overall profitability since it does not address certain ongoing costs of our business that could significantly affect profitability such as financial expenses and income taxes, depreciation, pension plan reserves or capital expenditures and associated charges. These non-GAAP measures are not in accordance with or an alternative for GAAP financial data, the non- GAAP results should be reviewed together with the GAAP results and are not intended to serve as a substitute for results under GAAP, and may be different from non-GAAP measures used by other companies.

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Chairman's Message

Leadership expanded in the post-merger market due to strong business growth

• Continuous market share expansion to drive overall performance
• Revenue hit a new peak for the same period since 2017
• Income before tax reached a record high for the same period since 2016 excluding the one-time item in 1Q23

Deploy resources to capture AI benefits and exponential growth opportunities:

• Leverage AI to drive operational efficiency and reduce cost:

• Facilitate AI to predict network degradation to achieve operation efficiency and cost reduction
• Utilize Gen AI to improve problem-shooting of network maintenance and customer service

• Build computility infrastructure across cloud, edge, and terminals and develop GPU as a service in progress to cater to AI exponential opportunities

Expand content deployment and digital ecosystems:

• Obtain exclusive broadcasting rights of 2024 Paris Summer Olympic Games to enrich our content portfolio and bring in subscribers and revenue
• Our investment in the Fund of Cultural Content Industry approved by our Board of Directors to expand content deployment

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Business Overview

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Business Overview

Mobile Service

Mobile Revenue & Subs

Market Share

090 Postpaid ARPU  3.4% YoY

12 Consecutive Quarters of Growth

CHT Others

CHT Others

CHT's Mobile revenue market share: 40.4%

CHT 39.8%

CHT's Mobile subs market share: 37.7%

Source: Company data ,NCC statistics Rev：Jan. 2024 to Mar. 2024

Sub： as of Mar. 2024

Note：Revenues definition from NCC (excluding IoT SIMs)

			Monthly fee uplift		Mobile service revenue(a)
				from 4G
									YoY ▲ 5.1％
				▲ 45%
(Billion)
20		536	545	553		556	554		600
																500
15
																400
10																300
		15.83	16.17	16.42		16.59	16.64		200
5
																100
0																0
	1Q23		2Q23		3Q23			4Q23		1Q24
				Mobile Service Revenue				090 Postpaid ARPU

Source：Company data as of Mar. 2024
a) Consolidated Mobile Service Revenue (Including IoT)	5

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Business Overview

Fixed Broadband Service

ARPU YoY Growth for

18 Consecutive Quarters

Fixed Broadband Revenue(a) YoY ▲ 3.8％ Fixed Broadband ARPU YoY ▲ 2.0％

Higher-Speed Adoption Growth

300M+ Subs YoY ▲ 29%

(Million)

12,000

10,000

8,000

6,000

4,000

2,000

0

766

10,771

774

10,907

775

10,952

780 781

700

600

500

400

11,118

11,176

300

200

100

0

				(Thousand)
4,381	4,382	4,389	4,403	4,397
24.1%	26.1%	27.9%	29.4%	30.9%
27.4%	26.3%	26.7%	26.9%	27.1%
34.2%	33.4%	31.6%	30.1%	28.7%
14.3%	14.1%	13.8%	13.6%	13.3%

1Q23	2Q23	3Q23	4Q23	1Q24
Fixed Broadband Revenue		Fixed Broadband ARPU
Note : (a) Revenue is calculated based on T-IFRSs

1Q23	2Q23	3Q23		4Q23	1Q24
		ADSL				Fiber (<100M)
		Fiber (≥100M~<300M)		Fiber (≥300M)

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Segment Reporting

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Consumer Business Group (CBG)

1Q24 Financial Summary

Income before tax increased NT$0.28 billion, or  3.7 % YoY

Revenue

+1.7% YoY

Mobile service revenue of CBG +4.2% YoY due to 5G migration, continued growth of postpaid subscribers, and roaming revenue

(Billion)

34.05

34.62

35	0.55	0.60
30	9.38	9.24
25
20	10.60	10.69
15
10

Fixed broadband revenue of CBG +4.6% YoY due to successful speed upgrades

5	13.52	14.09	Sales revenue of CBG fell 1.5%

0						YoY due to higher base in 1Q23
			1Q23		1Q24
			Mobile Services		Fixed-line Services
		Sales		Others

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Consumer Business Group (CBG)

1Q24 Highlights

Multiple-Play Package			IPTV/MOD + OTT			Consumer Cybersecurity
Performance		Business Performance		Subscriptions
Fixed-Broadband + Mobile	Largest video platform in		Consumer Cybersecurity
+ Wi-Fi Service package	Taiwan with subscribers		Subscriptions + 17.1 % YoY
subscription +23.3 % QoQ	remained flat
						YoY ▲ 17.1％
23.3%
		2,890	2,890	2,885
			2,871

17.6%	2,844
	16.4%
	14.0%
10.2%

1Q23

2Q23

3Q23

4Q23

1Q24

1Q23

2Q23

3Q23

4Q23

1Q24

1Q23

1Q24

Multiple-Play Package subscription QoQ

IPTV(MOD)+OTT Subscription(K)

Consumer Cybersecurity subscriptions

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Enterprise Business Group (EBG)

1Q24 Financial Summary

Income before tax decreased NT$0.53 billion, or

Excluding one-time item last year,



1.5% YoY



13.4% YoY

Revenue

-0.9% YoY

								Excluding one-time
(Billion)					item, EBG revenue
20							YoY ▲ 1.9％
				17.10
					16.95
16		1.40		1.05
	5.14		5.31
12
8
	8.39		8.33
4
	2.17		2.25
0
	1Q23			1Q24
		Mobile Services		Fixed-line Services
		ICT Business		Others

EBG revenue -0.9% YoY mainly due to the higher base resulting from the onetime item in the same period last year, excluding the item mentioned above, EBG revenue YoY +1.9%

EBG Mobile service revenue continued to grow due to 5G migration, international roaming recovery and an increase in text message revenue

EBG ICT business revenue increased mainly driven by the strong growth in our emerging services such as cloud, cybersecurity, AIoT and big data

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