CHT - Earnings call transcript Q1 2021 | Chunghwa Telecom Co., Ltd.

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Operator

Good afternoon, ladies and gentlemen. Welcome to Chunghwa Telecom Conference Call for the Company’s First Quarter 2021 Operating Results. [Operator Instructions] For your 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. Please visit CHT IR website, www.cht.com.tw/ir, under the IR Calendar section.

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

Angela Tsai

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

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

session. by to management After Slide of of operational On financial an highlights. our the by business our today’s call, statement. providing followed discussion During from will a on move we question-and-answer will begin note harbor please overview this quarter, X, and safe

President will President I turn Now, the call Please, over to ahead. Kuo. go Kuo,

Harrison Kuo

Tsai. Thank Angela XXXX results to call. Hello, you, our first quarter everyone, welcome conference

the accumulating of this Let’s subscribers ups market. in to are XXXX, unchecked quarter end the of internal continued X at potentially number set the we our main sign And begin report In our mobile target targets. a million the focus on of exceed We’ve Slide XG of first glad are to X. year. business be and the XG

postpaid quarter XG trend of continue achieving subscribers of in its X/X plans on. adopted above. subscribers XXX XX our XX% second the of or have of mobile remain growth the TWD positive and year-over-year and We about expect iPhone roughly ARPU As way to

year. than this In accumulating of XX,XXX of target XG addition, stations this base the – with with end the annual X,XXX quarter, XG we more stations compared completed during by base

the upload April, the Institute position was position top Our speeds XG XG ranked network construction in XG speed XG of download second terms the well is Taiwan and of in of in Opensignal’s In world. ahead experience report schedule. International the

deployment still XG provider, committed to to experience Taiwan. telecom we in leading taking service Taiwan’s enhance As user remain XG

to increase approximately number as Regarding our for migrate Contributing devices we pleased in XX% supporting the popular continued plan to to see megabit in year-over-year or higher uplift popularity are and price we growth and we of result by the year-over-year, broadband rollout XX-months continue enhance adoption. a both continue that Subscriber broadband are first per broadband that second overall home our The to of to higher revenue ongoing ARPU saw increased of a increase XXX we XXX% see pleased business, year-over-year. packages services. MOD performance, upsell also row. Wi-Fi channel home-centric business of SVOD applications. our services in to the

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

in update mobile our Turning In to maintain Slide an X, market. continued the to see leading can the position business. of our quarter, mobile we you first

increased IoT revenue further as international the had last this revenue year, of our business XX%. revenue service we expect Excluding due lock-up, loss impacted growth in to and COVID-XX in year. mobile the approximately for year-over-year in border share overall to SIMs, the the quarter. turn optimistic market first subscribers' quarter second share second by quarter roaming update to Slide on XX% broadband the Since X Please and reached an remain an

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

MOD/IPTV mobile enterprise by migration the decelerated Taiwan, business Since markets. our subscription majority in performance. pandemic million both overall services leading with of more result. subscribers. large illustrates than deployed continued the be status further as and solidify ARPU XXXX, intend to our a X.XX platform our and our in quarter movie our to to releases, we higher-speed momentum encourage COVID-XX In ahead, household video Looking roll-out largest sports Slide first the platform enhance events X, and

However, our slight MOD/ARPU the of year-over-year a our of as a achieved result pricing product schemes. successful portfolio and growth design

During product. the of a new our quarter, we service rolled out

decrease revenue rolled a ALL SVODs service Sorry to several complete service during in as package, SVOD a out package, number the quarter, SVOD which quarter-over-quarter. brought in of sign-ups, increase SVODs up-sell by drove up but aggregating quarter-over-quarter we SVOD new in PASS the resulted successfully a and

tiered popular, our absorbed as price be well. In continued channel which actually to packages addition,

year-over-year. and Going ICT strengthening to on on forward, to Please channels enhance to to new contribution We we X, will introduce explore create content the for Overall, project famous drivers. influencer focus turn by update growth customer business. increased new XX%, our continue hot first in Slide ARPU. quarter an the ICT aim to revenue

the service as smart increased due from revenues revenue government-related which increased XX% and project. IDC due and year-over-year, mainly recognition year-over-year well. XX% projects. primarily respectively, cloud – XX%, year-over-year campus ICT revenue emerging revenue Cybersecurity XX%, increased revenue Our some and to to by was

overall project ICT our be more margin. profit further will ICT to increase technology to we accounted portion a – continue As revenue enhance revenue of for selective capabilities total greater year-over-year, project our and

to the Now, I our Vincent, to call over results. would review will financial who turn like

Vincent Chen

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

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

impact XXXX. quarter and XX.XX% the COVID-XX and business provides to of voice increase in by XX.XX%, revenue our Slide XX, the Voice-over-IP of margin breakdown offset and revenue, as first increased total due substitution. a revenue sales mainly the from revenue in ICT to in decrease revenue a year-over-year, which services, same the X.X% project handset increased result from mobile by In addition, XXXX, period segment. the In EBITDA of of

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

increase of XX, a you our balance March the and XX, that find billion compares billion, table On the increase $XX.XX XX.X% issuance The cash forecasts. of of primarily attributable may results of page with or As XXXX, an to XXXX. financial bonds. was equivalents was corporate to relative $XX.XX cash

performance including As QX first net income XXXX, though operations, you our EBITDA was from measures can EPS, income, see, and revenue our forecasts. margin, guidance, for our all EBITDA our quarter than exceeded lower

XX. to please Lastly, Slide turn

are focuses presentation. in end on That’s Harrison. the spending business CapEx, XG to Over and XXXX, of For submarine construction $XX.X XXXX, billion of cable. as including such we in accelerating my you, the budgeting network, IDC

Harrison Kuo

to we questions. Now the open

Operator

Thank Go Instructions] from you. [Operator Morgan begin coming We’ll Sara now please. is our question-and-answer Stanley. from question Our ahead session. Wang first

Sara Wang

ask a you the question. Thank opportunity for to

So three I questions. have

before lift the and third dollar over then they mobile just then will they So increase after XXX want when the were XG, And our, the XG, for question fiber-to-the-home? is second the they bps far, So on they example, like on they migrate start is side, to Meaning, the my customers? to project. how the migrate ARPU so be then XG? first, paid for question for is the amount fiber-to-the-home that the like the – apple-to-apple say how customers possible to is, penetration what’s on would broadband the on ICT paid XG all adopters? or be to is on assume ask amount And

So ICT revenue for it been the the past seems the quarters. quite growth has solid few of

like? us, would customer please kind they’re ICT on, they contribution we for say, is how have growth from? agency then what So government for you. say look enterprises revenue share target or Thank management or industries mostly, do Are revenue of the any XXXX? with And base

Harrison Kuo

our positive number mobile the see among one, about quarter. the To Thank you postpaid the ARPU, your to maintain price XG mobile our users, your XXXX, up And to and trend that to of mobile likely adoption be net mobile we for trend, ARPU while up-sell to in quarter are higher question. expect answer subs bottom plans. our XG will We continue. remain revenue strengthen to continued subscribers in of adds first question continuing the second

project... ICT the XX%. The the it’s approximately second And quarter, penetration about fiber-to-the-home rate, about

Vincent Chen

the So ICT regarding question.

one ICT, agencies, the City base customer for the yes. the in like terms some in major we had Government from one, Taipei about of are our and quarter growth research institutions, And basically XX%. is customers So for government the quarter rate

the selective will we year we – will with revenue, ICT this Because same. we IDC year, for our in probably picking We be expect the revenue, more be compared will about projects. the last say will

So the margin we my year. than ICT be will last And higher response. that’s expect

Sara Wang

you. Got it. Thank

Operator

next Thank ahead, you. is from please. coming The Go Anderson Instructions] [Operator Neale HSBC. from question

Neale Anderson

any the rollout? question data coverage. Can the XG? changes network had tell I thinking you. driving average But your I in us afternoon. the related you’re And data XG later you on that how adding you us in a Thank about tell to Good you’re focused and on piece. usage still capacity is presume network to usage what’s can relative rollout?

Angela Tsai

that. your repeat you Tsai, I’m question? is about could quite clear not Neale, This

Neale Anderson

how the to on data so that? going millimeter Is to additional your areas one that XG sites traffic, relates usage Do or of you. hotspots Thank about different not your related then or first or you’ve network, usage, to you think terms got so from that subscribers data lot to address Yes, And are very XG far. wave a so average of those? in much? where adding you

Angela Tsai

average is user that user, for usage XG average of the actually data – sure. data usage mobile than larger data The

the the first this XX year, For XG average data quarter for the mobile example, like user gigabytes gigabytes. like like user, versus data XX average

difference. the that’s think I

Neale Anderson

Thank it. you. Got

Operator

you. Thank next ahead, from Anderson Instructions] Neale [Operator Go HSBC. is please. The coming from question

Neale Anderson

a can have and the what investment. return at level the any on ask It’s sort targeting the ICT quite business? your also relating ICT on me profits to business of the give any us moment. because, on I investment don’t visibility you a I ask question follow-up. you’re have in insight to distinguish in we letting for level this hard Thanks whether

the you. to terms view, get helpful targeting investment your in in or that would segment? So of return in what year on be you’re next it two Thank

Angela Tsai

course, we’ve year. to for of many increase we’ve to working ICT increase to the into on every the order own our that, – project years. been between, like margin In this think I margin we also And, into as factor as you’ve bundle profit seen product in the trying project been well.

So you year-over-year, improving a that actually it’s see lot. can

also, between, think like to part in So I try project, of whole we to individual And I that’s we figure think in how increase different out are doing. to enhance model process. this would to how the

been this we’ve sure. hopefully, doing later in think for will facilitate years, I And okay.

Harrison Kuo

add private one that, me side, the Let network actively point commercial developed industries. solution for XG in we enterprise

ASE BXBXX factory verticals the industries. and And, in XG manufacturing business last projects the we with had for semiconductors partners small leading to you as to with application, And continue Technology For company, Holding up team know, the year. for we develop other joined launched semiconductor the model. smart various been via Qualcomm service will our develop will Chunghwa, and

mentioned small you. driving, that etc., agriculture, healthcare, as are I earlier, applied Our autonomous transportation, focus smart manufacturing, and in verticals. different smart smart Thank includes

Neale Anderson

you. Thank

Operator

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

Sara Wang

Thank you.

So questions. I another two have

congratulations It So expectations. all solid quarter first exceeded first first so on on our like results, the result.

management expectation? growth which Like, higher the expectation? are than versus can share is we area ICT. actually terms previous still So, And results what’s in beat biggest then question of second our our the seeing on

other our XXXX applications? are upsides factoring XG business applications? enterprise models guidance, some for do from any or monetizational So, net in we potential revenue see enterprise early words, we for in the XG profit, either Or

Harrison Kuo

Okay.

from yes, securities. our for first beating Page the cyber is type results, can like so expectation so right, of so X, X, Page emerging on cloud and – business, the So – IDC, such for our what see quarter revenues as you

see, you much pretty can growth the as So, over XX% to is XX%.

and really So we your And enterprise private news to on, working with positive that’s application second us. for enterprise enterprise network. on to question are the regard their

of our respect this point, the we of level privacy at customers. So,

unable are their to we So disclose names.

Sara Wang

it. Got

revenue or contribution Just the guidance, applications? we in revenue like profit of, incremental XXXX in say, do XG factor terms enterprise so factor those in any, from

Harrison Kuo

So, very the on because stage for early they the are network, private still yes.

quite So proportion yes. the is actually small,

Sara Wang

Got it. Thank you.

Operator

The next Peter you. is Thank Go Bank. please. question from ahead, Milliken, coming Deutsche

Peter Milliken

five us, expect question in My as CapEx for particular, about which $X.X that really billion, for previous you is Can Thank come call years. you. XXXX? as And two thanks good the XXXX. much the the what’s XXXX? afternoon just the for revenues CapEx? CapEx the good part was the and increase and behind Yes, about results. Internet times in the be from to In of it Or of would the remind that reason in a would you longer-dated CapEx

Harrison Kuo

Okay.

the So to right, has relative in why question for periods. right, gone is the the up, CapEx, so CapEx prior XXXX

So for XG that, we network. the enhance we accelerate our deployment is XG reason want will the network, to of – and

also, So of IDC, that’s demand services. with reasons. one cloud lot we see regards from And to a of the customers our

also, constructions. spent of spent a from why so submarine that’s on money also these see cables. – expenditures And need the on the and yes, we lot kind quite of money So we some we the capital

work international build with partners to why submarine So more that’s our we cables.

question, of come XXXX? no. expect and will we in So to revenue do Yes, second say in terms we right, yes your

we the profits near-term. For some of capital see can in expenditures,

For will some we the capital see Yes. investments, longer-term. in it

Peter Milliken

So of things Is build. center you’re the there that the also is correct? when look mainly a billion, part of Internet that sharply be I expanding lot would $X.X XXXX? very data other CapEx, in the Or at

Harrison Kuo

are you so Yes, data right. center, Yes, IDC. normally

Peter Milliken

Right.

very Thank much. Okay. you

Operator

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

Jack Hsu

you Sorry. Do Hello. hear me?

Operator

Yes. Go ahead, please.

Jack Hsu

our And the ask first giving margin also the have question. is of mean, increased. mobile the questions My increase also But you. thanks questions. Thank Okay. grown. is has chance three – sales about, for I two just I question to devices me EBITDA

private base news collaborated first more could from – informed, So the correct? billions mean, XXXX, can June? us about And base has XG my were in until or second until margin private – May the informed customers about network. my the color second questions. Because they many These And, or or about just maybe how the X question. mobile the EBITDA read maybe above billion is given the And many commercial is sales us you reason how that revenue billion. deploy maybe that revenue on network device governments, have the to some Is you. some give Thank This give – the this Thank private My how base – we our the and is the information I why – we subsidy network the the some question I we grow, deployed news are we informed growth? about just – commercial will have or could about have to the now? you my question related with may is team X related TWD the even many And revenue were number TWD station just until XXXX? Or question. billion station now XG of give about in number private market. until you. my the the third station have

Vincent Chen

Okay.

the our And so the question, there’s margin first we because is why contribution for increases. from application also, the there’s quarter, revenue. revenue of because of a right, broadband high, just also ICT mentioned, our lot for – And EBITDA via first we services. increase value-added an So also in – right,

increased. that’s So margin EBITDA our why

revenue, right? at one for we customers – point. our the that, enterprise so, their also is regards this because And the to disclose don’t cannot identity. to private the question, the want network, And because For second us with disclose reason

the revenue, a at And it’s early very nice to not disclose. us because also, So, for for it’s stage.

we are – are at yes, them at unable to unavailable stage, point. comment so of the this many to So still POC

the construction actually, number question, regarding the third of planned. so progresses XG the base the stations, of network for as So

it’s at government say end the – stations So, the year, portion, yes, XX,XXX – get the quarter. in $XX.X line more pay now base spectrum over in at because one-third, And stations, of basically, the the we’ll so the roughly, terms government the by this and we’ll end cost. billion subsidies, we of X,XXX than with the will hit base already, of we yes, first and

Jack Hsu

And questions. Got it’s Thank And two it. you. just follow-up follow-up to – helpful.

So let will from income – to so cost subsidy you. affect this affect we question the Will if subsidy the will get affect is the about, will we’ll or first subsidy – how does follow-up the the statement? the EBITDA Thank margin? government,

Vincent Chen

Okay.

So for deferred we a record it the we should the station. So government approved, we it over then then budget revenue, basically, XG amortize will subsidy, how of for right, is will so account the useful base it? life as the once

Jack Hsu

Is that mean segment? So that revenue be to included true? that the does will

Vincent Chen

included be as Yes. Yes, it revenue. will

Jack Hsu

accounted So year? second Thank or the will accounted for half second of be net be quarter for will the in in the you. revenue the

Harrison Kuo

it we’ll NCC once Yes, include approves.

Jack Hsu

Okay.

So until the half – in does to year? second the the or now has NCC approved

Harrison Kuo

Okay.

not up yes. our to So it’s decision,

to will So decide, we wait for NCC the yes. the timing,

Jack Hsu

we And Thank Okay. and just disclose commercial kind cannot interest private network – – about the of of we the our question now, the you. we maybe network revenue private But customers' billion. we because, just media. is it. wins second informed Got the TWD part inform the than X my follow-on information. had more They news were commercial up got from to

give network TWD many how XXXX even the color private details So, about Thank some the you. revenue more in billion XXXX? commercial will could TWD X you or or in be X us above billion

Harrison Kuo

you idea mentioned, no We yes. the have about just number

point. not at we are So, this able to comment

Jack Hsu

Okay. It’s Thank very it. Thank you. helpful. you. Got

Operator

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

Jack Hsu

– a another ICT to I’m segment. ask the with interested chance for Also the many revenue, thanks question. also thanks And for revenue

clarify, different? ICT revenue you. is revenue. with the almost But enterprise same that’s the some We something Thank have just want about I to revenue the or – ICT is is question just

Vincent Chen

Yes.

enterprise are revenue, yes. so right, mostly revenue, they for ICT So

Jack Hsu

it. Got

how I – of – percentage So, revenue ICT? to revenue is with the many many – mean, many related the how how

Angela Tsai

last ICT-related in – a I already roughly more I Last the larger, think year, think we already past revenue lot because year it’s the had than mentioned government-related that in years, like XX%, we right it’s incurred. of year XX%. the last several large project –

little more for because XX% this when is mentioned projects in it’s major this year, So the or we this the bit quarter, XX%. bit big for like about a in – will the percentage year – volume will first be which January less. And a than less ICT, be mentioned year the guidance the we

– portion. we year, XX% this So I think like anticipate we kind of

Jack Hsu

So be last will and XXXX, ICT will be XX% that the the that year, is XX% the in correct?

Angela Tsai

it’s correct. Yes,

Jack Hsu

Got Thank it. Okay. you.

And so, about we will just will And – one we mentioned the deployment. budget sum follow-up data center question. the just

I because XXXX the Can So Thank center CapEx you IDC the information our just story? many in missed deployment to us information. data relate how the you. the give will

Vincent Chen

IDC, So yes. for in mostly section, capital expenditure Internet, our $X.X And for is billion. total that

Jack Hsu

Got helpful. you. Thank It’s it. very

Operator

Thank you. [Operator Instructions]

Harrison Kuo

you Okay. for Goodbye, Thank your everyone. participation.

Operator

be Please the your Thank in IR www.cht.com.tw/ir replay you, Thank Calendar under visit for you within webcast Kuo. conference. Telecom’s an participation Chunghwa Section. President a hour. There will

disconnect. now many You Goodbye.

Chunghwa Telecom (CHT) 6 May 212021 Q1 Earnings call transcript