Chunghwa Telecom Reports Operating Results for the First Quarter of 2010

USA - English

• USA - English

TAIPEI, Taiwan, April 30 /PRNewswire-Asia-FirstCall/ -- Chunghwa Telecom Co., Ltd. (TAIEX: 2412, NYSE: CHT) (''Chunghwa'' or ''the Company''), today reported its operating results for the first quarter of 2010. All figures were presented on a consolidated basis and prepared in accordance with generally accepted accounting principles in the Republic of China (''ROC GAAP'').

    (Comparisons, unless otherwise stated, are to the prior year period)
    Financial Highlights for the First Quarter of 2010:
    -- Total consolidated revenue increased by 1.0% to NT$49.6 billion
    -- Mobile communications business revenue increased by 2.1% to NT$22.2
       billion
    -- Internet business revenue increased by 2.0% to NT$5.9 billion
    -- Domestic fixed communications business revenue decreased by 2.8% to
       NT$17.2 billion; Broadband access revenue increased by 1.1% to NT$5.1
       billion
    -- International fixed communications business revenue increased by 9.3%
       to NT$4.0 billion
    -- Total operating costs and expenses decreased by 0.7% to NT$34.7 billion
    -- Net income totaled NT$12.1 billion, representing an increase of 11.8%
    -- Basic earnings per share (EPS) increased by 11.8% to NT$1.24

Revenue

Chunghwa's total consolidated revenue for the first quarter of 2010 increased by 1.0% year-over-year to NT$49.6 billion, of which 44.8% was from the mobile business, 11.8% was from the internet business, 34.7% was from the domestic fixed business, 8.0% was from the international fixed business and the remainder was from the other business segment. The primary reasons for the year-over-year increase were the economic recovery and the company's marketing efforts.

For the mobile business, total revenue for the first quarter of 2010 amounted to NT$22.2 billion, representing an increase of 2.1% year-over-year. The increase was mainly due to the growth of mobile data revenue and increased handset and data card sales, which were the result of the Company's successful promotion of smartphones and increased user demand for mobile internet services. In addition, the overall economic recovery also supported handset sales and the mobile data revenue.

Chunghwa's internet business revenue increased by 2.0% year-over-year to NT$5.9 billion in the first quarter of 2010, mainly attributable to HiNet and internet value-added service revenue. The HiNet revenue growth was driven by the increase in broadband subscribers and the migration of ADSL subscribers to fiber solutions. Internet value-added service revenue increased by 9.3% year over year, mostly attributable to the growth of land administrative sales and on-line music and advertisement service revenues.

For the first quarter of 2010, domestic fixed revenue totaled NT$17.2 billion, representing a decrease of 2.8% year-over-year. Of this, local revenue decreased by 2.5% to NT$7.9 billion and domestic long-distance (DLD) revenue decreased by 10.6% to NT$1.7 billion on a year-over-year basis. The decrease of local and DLD revenue was mainly due to mobile and VOIP substitution. Broadband access revenues, including ADSL and FTTx, increased by 1.1% to NT$5.1 billion year-over-year. ADSL access revenue decreased as more ADSL subscribers migrated to fiber solutions, and this decrease was fully offset by the FTTx revenue growth. Chunghwa believes that this migration will continue as customers continue to demand increased bandwidth, and that broadband revenue will increase over time accordingly.

International fixed line revenue for the first quarter of 2010 increased by 9.3% to NT$4.0 billion, which was mainly due to the growth of ILD and leased-line revenue. ILD revenue growth was driven by economic recovery while leased-line revenue growth was due to the expansion of overseas data wholesale and increased sales to multinational corporations.

Finally, other revenue increased by 35.5% to NT$0.4 billion in the first quarter of 2010 compared to the same period of 2009.

Costs and expenses

Total operating costs and expenses for the first quarter of 2010 were NT$34.7 billion, a decrease of 0.7% year-over-year, mainly due to decreased depreciation expenses.

Income Tax

Income tax expense for the first quarter of 2010 were NT$3.0 billion, representing a decrease of 10.9% compared to NT$3.3 billion for the same period of 2009. This decrease was mainly due to the reduced income tax expense resulting from the income tax rate adjustment.

EBITDA and Net Income

EBITDA and operating profit for the first quarter of 2010 increased by 0.9% to NT$23.6 billion and by 5.3% to NT$14.9 billion, respectively, primarily due to the revenue growth in the first quarter of 2010. The Company's EBITDA margin and operating profit margin for the first quarter of 2010 were 47.5% and 30.0%, respectively, compared to 47.6% and 28.8%, respectively, for the same period of 2009. Net income for the first quarter of 2010 increased by 11.8% year-over-year to NT$12.1 billion, primarily because of the revenue growth and the decreased income tax rate.

Capital Expenditures (''Capex'')

Total capex for the first quarter of 2010 amounted to NT$4.2 billion, representing a decrease of 11.4% year-over-year, primarily because the slight delay of capex budget execution. Of the NT$4.2 billion in capex, 66.8% was used for the domestic fixed communications business, 17.8% was for the mobile communications business, 4.6% was for the internet business, 9.2% was for the international fixed communications business and the remainder was for other uses.

Cash Flow

Cash flow from operating activities for the first quarter of 2010 decreased by 2.2% to NT$15.7 billion compared to the same period of 2009. This was primarily due to the increase in other monetary assets.

As of March 31, 2010, the Company's cash and cash equivalents totaled NT$79.2 billion, an increase of 14.5% year-over-year, primarily due to the smaller capital reduction distribution amount in February of 2010 compared to that in March of 2009.

    Businesses Performance Highlights:
    Broadband/ HiNet Business
    -- Total broadband subscribers were 4.3 million as of March 31, 2010.
       Chunghwa continued its effort to migrate ADSL subscribers to FTTx
       solutions. By the end of the first quarter of 2010, there were 1.74
       million FTTx subscribers, accounting for 40.4% of Chunghwa's total
       broadband subscriber base. By the end of the first quarter 2010, the
       number of ADSL and FTTx subscribers with a service speed greater than 8
       Mbps reached 2.1 million, representing 48.8% of total broadband
       subscribers, compared to 39.0% at the end of the first quarter of 2009.
    -- HiNet subscribers totaled 4.07 million at the end of the first quarter
       of 2010, growth of 6,545 compared to the end of 2009.

    Mobile Business
    -- As of March 31, 2010, Chunghwa had 9.4 million mobile subscribers, an
       increase of 4.2% compared to 8.98 million at the end of the first
       quarter of 2009.
    -- Chunghwa had 4.9 million 3G subscribers at the end of March 2010,
       accounting for 52.7% of its total subscriber base.
    -- Mobile VAS revenue for the first quarter of 2010 was up 23.9%
       year-over-year to NT$2.5 billion; SMS revenue was up 5.3%
       year-over-year and mobile internet revenue was up 73.9% year-over-year.

    Domestic/International Fixed-line Businesses
    -- As of the end of the first quarter of 2010, the Company maintained its
       leading fixed-line market position, with fixed-line subscribers
       totaling 12.4 million.

Financial Statements

Financial statements and additional operational data can be found on the Company's website at http://www.cht.com.tw/ir/filedownload .

Note Concerning Forward-looking Statements

Except for statements in respect of historical matters, the statements made in this press release 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 statements involve known and unknown risks, uncertainties and other factors that may cause the actual performance, financial condition or results of operations of Chunghwa to be materially different from what may be implied by such forward- looking statements. Investors are cautioned that actual events and results could differ materially from those statements as a result of a number of factors including, among other things: extensive regulation of telecom industry; the intensely competitive telecom industry; our relationship with our labor union; general economic and political conditions, including those related to the telecom industry; possible disruptions in commercial activities caused by natural and human induced events and disasters, including terrorist activity, armed conflict and highly contagious diseases, such as SARS; and those risks identified in the section entitled ''Risk Factors'' in Chunghwa's annual reports on Form F-20 filed with the SEC.

The forward-looking statements in this press release reflect the current belief of Chunghwa as of the date of this press release and we undertake no obligation to update these forward-looking statements for events or circumstances that occur subsequent to such date.

About Chunghwa Telecom

Chunghwa Telecom (TAIEX 2412, NYSE: CHT) is the leading telecom service provider in Taiwan. Chunghwa Telecom provides fixed-line, mobile and Internet and data services to residential and business customers in Taiwan.

    Contact:

     Fu-fu Shen
     Tel:   +886-2-2344-5488
     Email: [email protected]

SOURCE Chunghwa Telecom Co., Ltd.