CHT - Earnings call transcript Q4 2020 | Chunghwa Telecom Co., Ltd.

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Operator

Good afternoon, ladies and gentlemen. Welcome to Chunghwa Telecom conference call for the company's fourth quarter 2020 operating results.

During the presentation, all lines will be on listen-only mode. [Operator Instructions] For information, this conference call is now being broadcasted live over the Internet. Webcast replay will be available within an hour after the conference is finished. website, the IR Calendar CHT visit www.cht.com.tw/ir IR under section. Please

ahead. over like Relations. Angela go to I'd to Ms. turn please Investor Now of it Ms. Director Tsai, Tsai, the

Angela Tsai

Director Thank of Welcome you. our XXXX quarter conference fourth Angela This Tsai, to Investor for Chunghwa is Relations Telecom. call. results the

today Harrison Financial Officer. our on and President; me Joining are Vincent the call Kuo, Chen, Chief our

Kuo, operational our and begin On go business management our highlights. the During will by a call now, providing please And discussion overview to by today's will Harbor Safe we of the during ahead. Slide then over turn of financial quarter, And President note on will the followed call, President an to statement. I X, move please session. Q&A Kuo.

Harrison Kuo

our and XXXX Angela, hello, quarter to Welcome everyone. fourth you, call. earnings Thank

begin XXXX, of the XG fourth Slide mobile and X. were competition migration. more Let's In that the stable on focused operators relatively quarter on was

exceed of or up the plans with We the iPhone that push of launch to are high-priced And pleased continued more sign-ups TWDXXX iPhone choose expected. number that XX XX% XX XG adoption of than our had target subscribers above. the plans. we observed We XG quickly of annual

to base XXXX. XX,XXX In managed of end expect of of base station to base end station addition, XXXX, station the establish our exceed construction schedule. of XG and nationwide, we ahead by is By the over X,XXX

substantially years XG government's manufacturing. later another years, industry, We we wave during to network launched vertical will City XG XG application, construction milestone develop private in subsidies to of XG in intended marking semiconductor to five world's fourth XG In participated which quarter, smart of the leverage enterprise efforts terms on. the which elaborate first network three from for the we accelerate millimeter to Kaohsiung our

quarter the key Now of from fourth will I provide XXXX. highlights

higher increase result increase Subscriber revenue approximately price year-over-year, of of to year-over-year. row. as the megabits broadband continue also business, broadband see The XX% higher XX continued uplift to our ARPU year-over-year devices broadband ongoing contributing Wi-Fi to for XXX% or our increased of migration For home by to months in pleased number in a a XXX plan second we growth are per adoption.

me each lines. you allow walk Now our through business to of

Turning the an of increased quarter to mobile fourth share, continue to reached business. the of as share to XX.X%. subscriber market X, Slide SIMs, maintain XXXX, market you revenue we can market position leading update see excluding our our the IoT XX% and In mobile the to in services

healthy post a payment effective We a in are to to year, consecutive to pleased XG and our mobile attributable XG migration, which we Marking four retention positive maintained believe see adds continue will our subscriber whole business support mobile net quarters. subscriber for trajectory.

update our XG to seen aim have - optimistic million we an in our fourth quarter. And in We of the plans. in enhance XG to turn multi Please development XG an to X remain broadband performance this XXXX. X year. on continued the subscribers price and our Slide mobile about for We contribution upset higher accumulate business

our trend enterprise while the subscribers' of in well. contributions the XXX the migrating sign-up we benefits increased that secure grew VPN low-speed ongoing to second that decline broadband confident for the from megabits subscribers we upward customers Thus, in revenue will overall subscribers quarter, reflects number During ARPU year-over-year, year-over-year, X% in despite business, XX% or number by higher maintain as of higher speed quarter-over-quarter. space increased services stay-at-home our are and which our success per adopt from broadband by opportunities connection The in of new other normal. the

X expand in on to and the platform the movie we headwind focus our our momentum our demonstrates high-speed business to application resilient remained decelerated as MOD XXXX, releases. home-centric quarter the business result. of today share. migration MOD/IPTV subscription Slide fourth Subscription enhancement, our of forward, and In performance. under events market video data-driven developing COVID-XX will household Going a sports relatively platform Taiwan. major And largest sporting large continued and be pandemic, which and

ARPU quarter-over-quarter OTT slightly increased MOD of such as as continue to However, subscribers Netflix services grow.

digital continue packages. our channel upsell In in we price addition, see convergence to tiered packages and

with content will we which been growth-oriented games, enriching our well XK is VR to services, XXXX. forward, place Going AI to expected as by and had differentiate delayed along products and the as take in continue core

the to year-over-year revenue in promoting on turn large ICT Overall, sales Please by due ICT increased the to ARPU. revenue enhance our for We core Slide revenue XX.X% X, update quarter business. of fourth platform government recognition ICT also enhance to further by projects. to project on plan an

the international Our and revenues emerging completion as as the services. revenue Cybersecurity increased both in due to projects. well. budgets. revenue significant year-over-year, of revenue IDC XX.X% ICT year-over-year increased from see with public service contribution increased XX.X% year-over-year increased projects year-over-year increase revenue by Cloud financial-related XX.X% cloud we large a

for continue results. to the technologies call of financial more over be selective and time, accounted our enhance year-over-year, who our in selecting to and profitability. to At Vincent, turn revenue this a I enhance review would revenue greater margin to will ICT project portion ICT project projects total As like we further will

Vincent Chen

discuss Thank fourth income I will you, our statement. financial from Slide provides our afternoon, which turn Good highlights now President, everyone. results. to Kuo. XX, quarter Please

net by by and XXXX, operating fourth increased income on by expenses the from year-over-year by and and revenues a costs For basis total of increased X.X%. X.X% Income quarter increased increased XX.X%. X.X%, our operations

the result XX.XX% of drivers project a of year-over-year, addition, fourth Slide as in to and which X.X% market XX.XX% a for handset margin revenues revenue and from due competition mobile year the IP Internet-related increased XX, offset increase the fourth revenue, quarter the ICT prior mainly by and voice period. sales voice breakdown Please by in revenue, to EBITDA in services In segment. decrease revenue from of decreased substitution. to XXXX, the turn in total In business our quarter

shows Moving period. year-over-year, activities prior and increased higher operating mainly XX.X% costs and quarter the TWDX.X on cost that project to the Slide was of cash an XX.X% or billion costs XX, to Slide This or sold. XX, goods year fourth in XXXX for the due compared quarter accounts by our of TWDX.XX to expenses increased fourth by mainly payable. flows from operating of billion driven increase by ICT

TWDXX.XX Page auction. you that XX, XX, balance a fee results our XG the the billion, XXXX. payments XXXX, cash equivalents The As transaction billion the decrease compares attributable decline forecast. of find XX.X% a and relative to table December or primarily from may cash TWDX.XX of was was of On financial frequency spectrum to versus

income, XXXX, As for and ICT project EPS, revenues. can income you QX, exceeded net EBITDA see, performance and all forecast. from margin EBITDA guidance attributed handset Revenue operations, measures, net our including to sales our higher

for Slide our consolidated guidance Please Moving XX. now see to XXXX.

ahead, concession. equivalent and increase result sold to X.X% is XXXX is by handset driven to total Internet by depreciation Looking X.X% increases XXXX. in revenue in goods XG and to expenses XG sales. amortization the cost be revenue, the increase in for for between increase expected XXXX for communications to in mobile and expense X.X% to by of revenue costs of as expected to X% expected The expense a compared Operating and increase are

increase projections, EPS. in Given we X% to expect decrease year-over-year these year-over-year X.X%

Lastly, please turn Slide to XX.

procurement was XG projects, lower which the to which TWDXX.X TWDXX.X with the In during in the in of negotiations vendors spending first CapEx optimization process, to spend well billion, CapEx Our was changes some to owing budgeted XXXX construction, the than spite review billion. XXXX. price and the as actual of as spending of amount include increase network decreased, internal

in are the construction and such as business you your Submarine of in billion TWDXX.X as Thank as items including For XXXX, spending from XG network, we accelerating for on time. Cable budgeting well CapEx, XXXX. deferred XXXX, forecasts IDC

President like of would to for highlights over President Kuo, call the we hand to in XXXX. strategy please. our Now Kuo

Harrison Kuo

Please turn Slide to XX.

of Now highlight items I part strategy. key XXXX to development like our would as some

to earlier, peers, our thereby increasing base, we network and service of will subscriber XG boosting quality in ahead XG our overall As our XXXX, network mentioned speed remains accelerate revenue. development mobile ensure while

Asia to our industry always Cable revenue To fixed APAC will to applications to For Pacific center. we capture ICT private success as realm with on aim encourage share, by To To invest opportunities to and incentives we smart overall we business and region's IoT leveraging grow will double ecosystems in fixed the the IDC, development. build enterprise forward-looking new in we government in partners, submarine to enhance business, Cloud business, focus fixed the applications. opportunities environment. XG in of broadband we building will expand by connected network continue partners, collaborating and develop strengthen rings broadband from services hope used partnership in acquiring, ICT broadband broadband overseas migration particularly market continue construction our become Submarine grow region Computing and and/or submarine to the Cybersecurity, cable regional

Provider our Finally, IDC services. Slide mobile, our the potential further time. Chungwa was Managed the capabilities Services validations demonstrating your XX, worth value strength and the quarter. and Also and fourth of our in governance to you Expert AWS Managed business and from well Thank sustainability Azure cloud recognitions as receive and noting Provider, Services corporate extension first awards our Highlighting brand in illustrates operator as cloud service for opportunities.

the line for like would up Now we to questions. open

Operator

from Neale HSBC. Instructions] Anderson [Operator you. Thank first coming Go please. from is question Our ahead

Neale Anderson

questions, Hi afternoon. Two there, good please.

in much first ecosystem, slower spend you is business? you when to that's expect on year other second that lack discuss to in the and how again which down now, of wave can on you. And quite to indication you XG. give And to cetera? Thank due high this margin been question relates to Can The year? details how contribution. from is due of the of I give revenue that, ask how et much ICT And on margin business. this possible would the would trends related to much which If is rollover the the like wave on not contribution CapEx the rollout, to countries ICT next one-offs? possible expect it part you be some has millimeter millimeter to of us obviously handsets, The do come some sort the

Harrison Kuo

for Okay. your question. Thank you

to the the quarter same an and was year, TWDXX.XX increase of from amortization in mainly operations last increase fourth due margin from margin costs. X.X% income the Our and period billion, EBITDA

in broadband increase for One migrating service. in ARPU, which our operations reasons reflects higher speed adopt to the success from subscribers income of is the in the increase fixed

is projects that as reason last to Another year. more compared large ICT

in the fourth project year. Our quarter last ICT large recognized

question the CapEx. bit So the second margin higher is was And a year. than then last little about the

Vincent Chen

the to to Okay. question. I the If first may, me answer let add

the regarding the of margin, margin ICT ICT size So project. the the on so depends

But XXXX, in XXXX. XXXX. expected peak CapEx the the CapEx turn with the in So on is see the billion. right, plus you average, second a which year. highest CapEx, TWDXX.X the question, margin the will flagship it believe is for be be lower. our to project, CapEx, We will will can to for actually, it's following in in And XX% of about down be margin as is the our And respect

So I'm sure not your question. answered I

Neale Anderson

Thank you That's comment please? deployment, you. have Do wave great. any on millimeter the

Vincent Chen

Okay.

off, think is industry. game first the a So we changer XG for

XG So a we invest the shorten to Taiwanese years Also, our enter XG station base in years. five construction base we from three policy actually, station. in lot quite to the

will the be the next three or continue for So quite we of mobile amount and CapEx years, segment two steady. expect the will

Harrison Kuo

stations XG don't the base deployed companies, will the you. disclose so And wave based numbers. millimeter amount we Thank of station this be private on

Neale Anderson

much. Thank very you

Harrison Kuo

Thank you.

Operator

question from of is please. ahead next Bank America. [ph] Vanji The coming from Go

Unidentified Analyst

taking for you the Thank question.

what XXXX? XG of it intends first That's add is customers another presentation, is you the - as company XG X my total the the And question, that share just confirm had million subscribers number Chunghwa in possible is of mentioned July of question. for to XXXX, First your to correct? end that that the to first

could that significantly now you the CapEx time, question going also XXXX CapEx is have of budget a so-called said, XXXX? through at of jumps question. for within back internet same And budget the that because then Second year-on-year, budget move internet billion for jumped of times And Chunghwa much such budget confirm an this customers, year six XG the us noticed XXXX. you. CapEx access started? Tier that, for or with big they you the That's second business? both to is significant for specific And only CapEx projects is you back switch we is Could new TWDXX that that jump billion much when so-called the allocated when of are customers? from lead from but XXXX, of TWDXX spend savings we right entirely uplift in TWDXX from in or XG actually, you Chunghwa's is Thank have what they CapEx that XXXX? a the there all sign projects X in XXXX non-XG in last the to budget, going getting XG, billion, how now businesses, us you budget walk terms to share a CapEx the auto to How question to CapEx

Vincent Chen

Okay.

Our XG we annual customers over our this anticipate of accumulate total beyond at X will last the subscribers numbers end And million number of year. of is far we year. target our

Unidentified Analyst

this have of X we year, million So I will XG the have customers X may year by will Thank or clarify? this if customers we X like, million end we million you. new is kind expect of

Vincent Chen

the accumulated accumulated million is the - X number. number total total

Unidentified Analyst

you. Thank Okay.

Harrison Kuo

you. Thank

so CapEx, So job question, very the base good XG the attending a actually, for did station. equipment we at CapEx

So government's the lot policy reliable, the in money. to we to yes, basically, And we because pandemic. for the number respond need of the items, save would the amount is say of I a deferred

is are some for the services for XXXX, XXXX. ITC, CapEx business that's is for deferred And mainly on the the the our mobile segment, of and most for why of CapEx So And services, FTTx. internet the items cloud XG. to the

Angela Tsai

about Internet So the basically, we're talking CapEx.

of project. identified, know, it, about we of Of think about the sometimes, a course, are is responsible really you any highly mentioned most actually some for identifying nondisclosure I this actually kind we disclose project what there special As cannot to that we this? projects happen. specific we but the are it's But so likely

we in why included it budget. So the that's

likely the marine of this that's kind cable how international internet this year. reason. happen of think I opportunity kind see in data and our this we And center,

lower this why we are year. that's little more So budgeting for a

reason this think I the explains for Internet session. that, for

Unidentified Analyst

And the ARPU uplift?

Angela Tsai

Yes.

last to the XX% I that's situation, think they switch XG leading course, from we Will - market. customers it's we to non-XG XG operator this question. from yes, of your talked about our of because mobile XG, customers, the are in XG,

Unidentified Analyst

leaving, a I But they XG? us switch package, when essentially, they monthly non-XG XG? to same for switch are XG those my I is, from from money even Or getting customers the so-called when upgrade they guess phone paying amount the customers, higher mean to to those question they bill company them of after

Angela Tsai

notice see, from this that customers must You presentation, the our uplift we our postpaid year, receive actually you actually of the ARPU.

from mainly sources. is this think two I

XG. part. we of second XG all, the the XG to that's migrate is the managed one First the XG the have XG, we because uplift have ARPU is to of XG, have uplift, The -

of have Mother's We the lot For civil a more of the this than people, XG, months had we a customer we XX% customer ago, kind package. because service, a lot and Day, of migration. that XX of managed

small have uplift. We ARPU

I that. think reason for the major that's

for - last I customers revenue have postpaid we pretty this why ARPU say, that year, XXXX. should uplift good that's So a year

Unidentified Analyst

follow-up a the years. in rollout may our have to company we question. just three XG the mentioned squeeze If Also decided ask presentation, that to five from small I years

three and five years? Our our operating should change specific finish taking to see instead and promise just broad in that network that it of okay, within there environment terms product we years, of up you. that we out speed need we rollout, the Thank

Angela Tsai

need in like the acquire situation for to this we sure, course, accelerate the leading really the a the big money. the because Of doesn't government mobile change this to Taiwan. is XG, because deployment to be - But would operator we lower whole

this doesn't in - change environment. the believe, in of XG I leading this era, kind for we operation, this of position think terms all so either I maintain is

that this question. So I your think hope I answers -

Unidentified Analyst

Thank you.

Operator

question you. Security. Jack please. is Thank The Go next coming ahead from Hsu, SinoPac

Jack Hsu

CapEx. interested I achieved Hi, maybe achievement our giving the company rate question question. we about got questions. the thanks me for guidance - My XXXX, But the XX% for ask around have the chance CapEx - give XX%. I'm is three in about us to thanks because to the

was So or almost higher? is the forecast 'XX question. rate my in first achievement And that the maybe XXXX, same in be will we this

question should just question? continue one So question? one my by I Or

Harrison Kuo

questions. Okay. Thanks, your Jack, for

XX%, So to is we have are and between although XX% in done XXXX, rate do. actually, construction attribution supposed the every we

basically, [Indiscernible], save is can our So we mean actually, the items, CapEx deferred basically that portion I remaining procurement and ability. the through bargaining

So that's that attribution to we did rate XX% why at XX%.

So to XG so do. will thank are whatever we at you. process, whether we we in the say we cannot our XXXX, think supposed optimize are rate deploy will attribution procurement review whatever do like and we will our Yes, our year, construction I do submarine cable, or number one this supposed be to do still next but year and I to

Vincent Chen

And will guidelines. good items XXXX, it's that total XX% one in from point move of deferred our to spending maybe some that XXXX the to our deferred of because XX% spending CapEx to

Angela Tsai

And all thing is me add thing. our presentation. accrued, cash actually on let basis. worth reporting not the a noting It's that one One

So probably, bit it's a little different.

Jack Hsu

second maybe And in base of and will have around XX,XXX station But you. our target just XXXX of the end to XX my base target, according the And the of the Yes. Taiwan. about stations we Thank will XX,XXX almost or other hope it XXXX. almost 'XX XG plan because will Okay. be XG the mentioned XXXX, we seems end the at guidance. question is be ahead and the at need

station, color the So for base about Thank our our you. deployment could us some strategy? you strategy XG give

Harrison Kuo

the stations you. the base beyond total do Well, as this that years, we we of not And will period. than construct base of mentioned end year. we disclose station year. Thank station XX,XXX of three this numbers to Yes. we I accelerate years at five and earlier, the from end construction accelerated the And more base will

Jack Hsu

sir. you, from Thank cover the XX% the news, I maybe Because over the of - to the news maybe until XXXX and has will guidance - Okay. - will information the Taiwan. company's got can the

data, to that numbers XG of the the And historical stations, it base so so will and at base Taiwan, we almost stations Thank seems forecast base built end maybe according that XXXX? the XX,XXX has the have XG stations, over said been it around company you.

Harrison Kuo

that will I of stations, XG anticipate of rate the base XX%. construction sure we your it after coverage not if other I'm achieve population question. a XX,XXX Yes, answer

Jack Hsu

care interested question the third of at ARPU, I'm in with my And year, plan, only we But it about this plan $XXX. is because ARPU ARPU, our A, the mobile maybe seems But sir. you, I end the on of comparison the Thank the three about the web, $XXX. $XXX. is mobile and it just plan mean because about have - is Okay. is seems especially below last about our our majority, it tariff tariff majority the around

we And we growth. now, seems it ARPU, transfer when now, mobile XG our the good right have the to so and interested to XG something cannot under that subscriber campaign data our try we match XG, but we customers see and

can give you. us So about our details some mobile Thank you ARPU? about

Harrison Kuo

about your mobile question answer the I'll ARPU.

subscribers, strengthen XXXX. aim including mobile of XG see the higher-priced adds users net It's year, service positive bottomed among it postpaid mobile last plans, iPhone maintained adoption users. first. our to our strengthen As in expect We in revenue whole upsell for continues and up be originally we XG the to to and while the year

from year-over-year, impact mobile COVID-XX the from our However, last service to year. due starting mainly in two international quarter revenue decreased XXXX, of revenue resulting decrease

year. branded Thank revenue So I'd point are we includes to two do it this is the year-over-year And mobile in the quarter because likely add actually, continue. lower trend ARPU expect, IoT service you. numbers. increase expect we in this, our we that all one And will

Jack Hsu

Okay.

question. follow-up one Just

us percentage in segment because business, percentage confusion. you the could give the Yes, and IoT mobile our has ARPU? information so And about it is this of of in part the some growing our also

Thank mean some us percentage IoT of the the give ARPU, you could you. ARPU? So detail about the I

Angela Tsai

high customer but market - the our understanding, think from this the that same our single-digit for of accounted number currently diluted already currently like kind the number, the think our of is the in percentage, entire so one IoT ARPU the IoT I customer to I Basically, level. - - disclose

Jack Hsu

Okay. sir. you, Thank Thank you.

Operator

Thank please. you. The from Lee next Go ahead Amber question is from Yuanta. coming

Amber Lee

Hi, here. two questions

firstly was I have calls, sorry, been if other the on my And questions asked. apologies so

this of one, First your on year. profitability

think I well like be looks it to seems improved margin last EBITDA from year.

improvement to seems happening However, quarter. be the the most in fourth significant

ideas to and for throughout whole, this just because So trying is companies has you're of I'm improvement get a quarter fourth EPS guiding as the year. this quarter how the quarterly been highest from years, the always difficult yet more your most telecom

Harrison Kuo

quarter increased. of of increased increased revenue our your you. you XXXX, and same increase main increased operation mainly service our That's of year-over-year. X.X% fourth the the service for revenue our EBITDA mobile project fixed our Thank about reason to from broadband because Thank due Yes, from question. income the postpaid of ratio mobile period over revenue and margin our

Amber Lee

again, Yes. breakdown you. believe looks Thank fourth guidance a XXXX, And year? very it quarter provide your but EPS how and in about the four your that you you is throughout quarters. this margin have like was year, I quarterly Because highest the year? for for this improvement a good still this the And in for your

reasons this profitability are any this specific year, there fourth quarter? improvement So for behind that's

Harrison Kuo

Okay.

we our margin quarter, projects, will ICT more the is selective higher for of where fourth relative in because be more in other projects. to normally projects. we But securing margin because EBITDA we we'll have expect ICT margin lower EBITDA be more XXXX, have So completion because

So are that's margin EBITDA that in confident XXXX. why we higher be quite will

Amber Lee

was I mostly guess ICT projects. it due to

Harrison Kuo

Sorry?

Amber Lee

due to ICT projects? mostly It's

Harrison Kuo

XXXX? You mean in

Amber Lee

Yes, this year.

Harrison Kuo

And also Okay. upturn, continue that our so also services the add believe EBITDA will our will we or raise margin. broadband

NPVs, EBITDA up. of Yes, ICT since also is we go and higher more EBITDA with one drivers XXXX. increase will But our good affect for this being acquiring believe revenue main services, services our are in that we think margin the ICT and higher margin the and in broadband the project. So selective our we mobile project also will so we think

Amber Lee

other question, as the second a follow-up my And you. from analysts. Thank Okay.

reflect internet such support be able the will talked for as been internet CapEx the growth Has to budgeted see on about you business your investment business growth? CapEx guidance year? And increased to to potential sales opportunity. this we opportunities of in the some business since level For sector, to

Harrison Kuo

Okay.

think segment, FTTx. IDC section, it's right, from this just and our our the we I CapEx, Internet mainly So before, from mentioned as for CapEx

So IDC for first to we one, because crash. business, the know tighten

So customers I also this and than use see think overseas is our opportunity large a services. good from come we IDC to

So of of we still investment in and investment is in pay And very economy. there's pandemic, need because also FTTx whole promising. the area improvement, these off. revenue fact, this secondly, believe the in the And in areas. we our so raise booming a think there's some a why And to will that's from see we

Amber Lee

Okay. Very helpful.

all guidance, for your seen it? this the guidance So been through revenue Is you've opportunities has that budgeted year? of

Harrison Kuo

Okay.

will go think you So up. there be we services so like mobile and And of Yes. will the can we up. service for internet believe also because see, forecast, our our that X% as revenue handsets that will expect go or we growth sale

that's I So why question. we will better last hope I be the revenue bit a answered little your year. than think

Amber Lee

Thank you Okay, very helpful. much. so

Operator

The ahead Thank please. Jack SinoPac is Securities. you. coming [Operator Instructions] Hsu, Go from question next

Jack Hsu

us some details have chance Thank XXXX? it Tinker. profit in ask construction question. segment quarter has the to question our for fourth about project And you the been give you. the in The in so the company could we you seems their construction we giving one in construction Thank means finished is have me income another about, - India, with

Vincent Chen

is open this actually, For billion. profit project, about development $X.XX the

Jack Hsu

Okay.

good. So

Okay.

Just follow-up one question.

the another there you. will kind XXXX? this of So income, will Thank happen be in

Vincent Chen

Yes.

Jack Hsu

Sorry sir? me? Excuse

Vincent Chen

Okay.

So for the rental right? income,

Jack Hsu

Yes, yes.

Vincent Chen

project? You mean Indian the

Jack Hsu

the income put another in of kind that We line much the don't the XXXX? in too expectation in XXXX. Yes, I happened mean, this second

Vincent Chen

Yes.

gains we on give items in will exercise, for other significant the very asset PPE, specific disposal position of category. continue a number but cannot our By we now. XXXX, have but don't So, we this

Jack Hsu

Okay.

possible XXXX another XXXX? it So don't the also much to gain we get expectation put in in on this item too is or the

Vincent Chen

any we for cannot give details So at point, this question. this

Jack Hsu

you, Okay. helpful. Thank sir. very It's

Operator

ahead The you. is Credit Thank from please. Go question Billy Lee next coming with Suisse.

Billy Lee

the I Thank got opportunity. you, few for questions. quick management, have

you revenue your outperformance to is your The actually is, EBITDA your could relative first below guidance, us question understand guidance. while help your

So could saving question growth the that's question. visibility you the what and area regarding of it XXXX? into help last was to ICT us So growth. is you the that in of last big in CapEx. second around understand XXXX, XXXX? first growth Obviously, did the cost relative question was going And ICT year, And a is

you years. For be imply the beyond intensity to shortened about XG three that Thank years XXXX Will be XXXX CapEx, and cycle i.e. entire the XXXX, earlier high? does as talk it And CapEx you. XXXX as will as well? from five elevated

Harrison Kuo

Yes.

EBITDA our our business, and mentioned about mainly increase our period was that of earlier, broadband in revenue I year. means in ratio EBITDA quarter the main of As year-over-year. of core that the profit postpaid mobile our an the our X.X% fourth service And project increase. increase well, because from our reason from large increased same and a XXXX, fourth we recognize last - growth our revenue increase the fixed of XXXX, due That's quarter to ICT

the the that's will ICT total we CapEx, And be about mentioned it to there this so Vincent less more bit And will deployment projects, mention will big a what this in CapEx spending to in the will the year, than quick then upcoming highest. XG the CapEx revenue, increase were service the see company. want earlier. we will we last XXXX. because be the XXXX, than in the this possible spending, be anticipate a year, decrease be revenue as And CapEx XG it and ICT we the selective, XXXX we highest but that year. The boom the we accelerate the year-over-year were as because ICT ICT little amount that as want year the because So profit anticipate a that the will of

Billy Lee

Great. Thank you.

Operator

Thank coming please. Wang next Stanley. from is ahead question Go you. Sara Morgan from The

Sara Wang

you. Thank

two So questions. I have

the ICT. still is first So on

we that on, roughly or question also us major profit would what on contribute? are do then like revenue say So we with demand on second ICT - the ICT is projects? And examples please kind or give have we percent, like doing like And you that projects, what say, the the clients, some ICT projects how CapEx. for on projects some much of [Indiscernible] any

to rollout accelerate XG XXXX. we So in try

So Thank or to to kind adoption is, like than overall better metrics XG say, do rollout either you. see opportunity we we so like plan? what expected is that the that revenue decide rate accelerate of the

Vincent Chen

Okay.

For the first project. question, regarding ICT

about consolidated of from for ICT income our XXXX accounts statement. So revenue total in XX% the revenue,

so also so that's Yes. example, are Zhongshan. for something energy the And in projects adding that large and projects, solar guide the to like they

So I your question. answered hope I

Operator

Okay.

Sara Wang

I'm or wait. sorry. sector sector the we note. Basically, of various project public have from from it's kind the different different private government No, sector, the a

government a with think also partner to of we reason other sector, kind I I private about in projects kind the mentioned the is but versatile, projects. the partners so different take the large from some that's large, it's projects, of

Vincent Chen

that customers - deploy I there station, soon the to use will as XG more we add we that as base one point our the anticipate be services.

the from the a station base one want to business via our verticals XG the result about us of applications we CapEx XG services XG deployment. the And - to help subsidies, mention to for model. spending one why government So develop to that the accelerate up XG is We new that second what And on the want accelerate will the third to services. BXB about we team is our I the that second that's one. various third partners the is one - from the want construction, with

These et on smart verticals. healthcare, be driving, smart applications manufacturing, in include will autonomous focus will smart applied and smart transportation and different cetera. We agriculture,

be small these So telecom we want applications to and healthy as will possible new that our as our Taiwan deploy economy. industry for

Sara Wang

Thank Okay, got it. you.

Operator

Thank you. The coming from next ahead Go question Kaz from please. Soma is Fidelity.

Kazuyuki Soma

Hello. me okay? hear Can you

Operator

ahead go Yes, please.

Kazuyuki Soma

Hello? opportunity. Oh, the thanks for

two quickly Just questions.

projecting why EBITDA struggling So to higher I'm still margin. you understand are

is first it reason ICT actually further mentioned clarify right point? the higher it But by Why is margin? core why it be cost is driven projects, project ICT business. tend should previously telecom margins lower, You be can't my That's driven Or question. you than this your right? margin that be the Could for cutting? lower by should

Angela Tsai

has year, in projects. project, revenue is overall compared year, this margin a much for kind the margin will have with so accounted be we think we This which don't I have of government less, project, several ICT which projects, last large the portion lower higher. the large

Okay.

Kazuyuki Soma

Okay. a guidance, method you. I your guess Thank into in to then the of year-over-year, any about or And so rise you X% That's on me is, clear. you potentially understand depreciation second Because your you're amortization depreciation you expenses did And could the help you. projection? right? then and could is actually the change large get despite projecting factored subsidies based why? by increase government CapEx, Thank question

Vincent Chen

we our change don't deployment, We of only for only because July started half for last XG And Yes. depreciation year, expenses, policy. the it's D&A for the so year.

Kazuyuki Soma

XXXX, CapEx spectrum, latter you of in I simple recognize right? projected year, Yes, amortization by depreciation months, right, the obviously And recognized that six versus near for you're standards? for expenses year half XX increase what any throughout for increase only without your sort also in accounting have But to amortization a your this the result but going it is question year, X% to terms it in and a of mean, of changing of is, months of you're my for is loss year-over-year? will to saying in

Angela Tsai

June yes. by happened, XX. probably know, But we actually it's inspection, the not you CapEx, for the right. Amortization For service launched amortization actually because for a

only actually for it year. half So happened

expenses only this But are year for this network going deploy explained spending. will forecast XG year. I we CapEx, amortization the the the already to we accelerate to So we CapEx think spending for for half year, whole

we reason know. to you want the that's So

to to of subsidy government the we we XG. seize XG First and want want acquire all, for opportunity

Kazuyuki Soma

you. Thank

Operator

Thank back you. over to Ladies and further gentlemen, is if questions, no ahead, turn it please. Kuo. President I Go will there

Harrison Kuo

Year. for your Happy participation. you Thank New Bye-bye. Chinese

Operator

an call. hour. Thank be www.cht.com.tw/ir visit There you under you. Thank will for Please section. participation Chunghwa your for the in Calendar replay within attending Thank the a IR Telecom you webcast Conference.

may now Good disconnect. bye. You

Chunghwa Telecom (CHT) 6 Feb 212020 Q4 Earnings call transcript