CHT - Earnings call transcript Q1 2022 | 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 2022 Operating Results. [Operator Instructions] For information, this conference call is now being broadcast 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

to by will management and safe question-and-answer discussion of of please the segment an performance our move followed business call. today's call, X, providing quarter a During in highlights. harbor by we After, financial on will begin the Slide of overview the first portion statement. our On our note

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

Harrison Kuo

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

first ICT As fixed of an integrated under service businesses we telecom structure. the in broadband quarter mobile, provider, and achieved new in our corporate terms performance strong

overview Slide announce I pleased the business. mobile the and in believe Taiwan an Let's further remained quarter, market structure lead competition to change the go our to the for may the Taiwan. although of in We could on consolidation were first major landscape plans. as market our steady see X in-market In their competitive peers

networks maintaining For the most we our extensive confident in services, Chunghwa going fully forward. our with are in position leading for market

our Our outperform currently respectively, in revenue IoT peers mobile excluding by and to performance. XX.X% our Slide business and XX%, the presents subscriber SIMs, in X quarter continued overall market share, status. reaching the first digital

by year-over-year. Our number, mobile SIMs, subscriber IoT X.X% excluding increased

the revenue trend. and mobile its increased service upsell by subscribers, year-over-year existing maintained our With X.X% upward successful from

to observed monthly who attributable average to developed which penetration XX% uplift increase. services. to Meanwhile, customers steadily we quarter, XG an helped In year-over-year enhance to contracts XG ARPU the postpaid X.X% the adopt achieve renewed in fees addition, during

ongoing high that to Fixed number overview first fixed reflecting and an broadband revenue speeds grow the overall up speed megabits year-over-year or XX% to growth for subscriber the broadband XXX The growth driven per for adoption sign commercial continued our leading X the broadband higher work continued we performance. LAN for quarter pleased number X.X% by number by increasing are year-over-year Fixed in subscriber opportunities. business. of continuing Taiwan's first fixed Slide year-over-year broadband our in the to our market. trend of of see to of increased broadband increase on both market share from we due second In further the service to by overall ARPU owing home enhancing lifestyle. tenth quarter, Moving our consecutive higher also quarter year-over-year fixed X.X% by digital

encouraged achieve thus under other during group's COVID-XX and upward revenues the say maintained and move illustrates Now service the business additional the customers' opportunities performance at or satisfying decreased the of for fourth consumers and mainly to the migration. CBG. Sales year-over-year in trend our Group Fixed-line increase success reflecting numbers to video CBG HiNet quarter. drive continued in quarter customer-centric Business demand the the the quarter. the from increased X the home to MoD X.X% up year-over-year a of Slide by postpaid year-over-year our let's groups. due issue due Mobile attributable Consumer to our during supply Group quarter X.X% grew stay-at-home Consumer X.X% and in picture revenue service revenue higher-speed increase on revenue revenue during needs to its the XG digital year-over-year adoption. subscriber service revenue mainly to handset

Triple MOD, automotive media, virtual our Play Play work in further opportunities, up rolled expand Business services. sports, program WiFi we to demand catering the Group. of consumer and reality highlights Triple broadband services of the out grow demonstrates more time a program and home encourage state market, package to from opportunities mobile XX% formal Home gaming mobile -- X adopting that January at applications. same together. Including continued Consumer consumers focused and applications. to connections increase to further This of we WiFi promotes deliver WiFi fixed to or sustain sign media and Slide the demand program market year-over-year and and the will ahead, customer-centric reality by device In our our by home enjoy broadband, to on seamless Looking to popularity centric services

instead and increased the In largest basis OTT glad maintained of the subscriber packaging terms X.X among grew fee the by the video remaining tier total onetime upward on its driven the continued of upscale SVOD category quarter to media year-on-year. their businesses, revenue and due sell-off monthly in which we and IPTV quarters platform consecutive to approximately number was space. to setup, channel HiNet as Taiwan. to increase fifth service XX% MOD report [grew] by are of MOD during of our yearly that Harmonic million revenue pricing

In the international Harmonic addition, first and quarter. thanks [Indiscernible] the to packages number popular subscriber in quarter media during boosted at

the Group usage of and increased enterprise revenues for year-over-year and popular growth to quarter, Slide X.X% turn performance. normal. Business one We international subscribers second increased half. to Business the as for such mobile revenue FIFA in growth first attract to events broadband World Enterprise will as another trend continue fixed XX new this after the Games due Asian Cup our expect customers to the Please year Enterprise Group in held sports held the In and communication be

also fixed addition, and enterprise and back demand in and Taiwanese revenues. operations related small their overseas In that medium broadband home shift investments their brought

profit are to year-over-year. quarter, revenue decreased the the ICT total the and see glad we certain year-over-year Enterprise In to increase revenue margin project owing first recognition. the gross business, [different]of For

Slide highlights. year positive remain Enterprise XX we performance Enterprise business. of demonstrates However, about our ICT Business the full our

our project peers. year-over-year growth progress of We Enterprise are the a and of revenue applications. enterprise completion strong revenue. in confirming in an to XG of and tripled recurring the network reached our increased first first basis, double-digit year-over-year revenue to our to growth In due report revenue glad attributable projects quarter quarter, mobile both emerging growth the large cybersecurity revenue while momentum increase ahead private its On IDC ICT

Our efforts big capabilities and X% data growth. analysis achieved of to worked revenue develop

For inspection. ICT Chunghwa Chunghwa System International, Integration to to work the first subsidiaries, realize we with successfully and performance project project vehicle the Security Taiwan in Harbor XG Smart unmanned acquire

network ICT We our also project, acquired recurring and Health translates a large into which integrated Smart capabilities revenue. long-term strong

to leverage market. and and to continue services will to Slide our successful develop enterprise we further demonstrates performance forward, business XX resources technologies to Business our company our duplicate solutions International overseas the opportunities. Going

continued peers develop a Group in approach has to Taiwan, For global localized advantage deliver clients a markets in and many the is overseas for including service for decades, Business quarter, to among which services our Chunghwa increased some unique Group serve International in growing OTT global first revenue Taiwan. IDC, mainly our Business global from offering XX.X% demand clients, of International providers. In and ICT cloud our services

Our service consortiums, on cable, our cables strategy is and that to [Indiscernible] undersea revenue quotable opportunities to OTT enable to IDC HiNet providers. cater investment the provide including to in primarily like sustain line, business the undersea and in growth. from airport peering capitalize service fixed international highlight to and in growing opportunities international particular, us would growing I

to Vincent the call financial like I Now would to for our turn highlights.

Vincent Chen

will quarter walk financial you, you now through our Thank President first everyone. afternoon, results. I Kuo. Good

provide that statement. XX Slide with highlights from start our income Let's

EPS network. Income of XG depreciation TWDX.XX year. increased from net total business expenses on increased quarter by subsidiaries personnel with X.X% of growth due increased while our For quarter amid XXXX, in the increase to expenses and X.X% from of a first costs compared by deployment X.X%. operating X.X% revenues by and the increased QX basis mainly and same increased by to by TWDX.XX operations year-over-year the last of expenses income

In to X.X%. payable. offset payment financial net was from Slide to XX.XX% period. minus by of of Cash of year-over-year cash XX.XX% and our mainly The flows of equipment the to EBITDA Please net strength. flow was total by XX proceeds the by sheet for suppliers, margin from December XX, operating due increase Total TWDX.XX to from accounts assets activities increase the or liabilities turn bonds X.X%. increased TWDXX.XX for XX.XX% the issuance is and highlights. XX.X% total demonstrate increased of our billion liabilities our increase ratio mainly addition, Slide quarter XXXX payable of summary. of billion of prior receivables. first increased in total billion over Compared sustainable tax which our before X.XXx, shows is accounts year mainly for XXXX TWDX.XX balance which to and assets XX collections EBITDA Debt due debt of the decrease increase cash bonds. due to the decreased or The to income

quarter strong support forecasts. year. we in network cash in XX% quarter XX, results XG first numbers outflows As operating expenditure, see a year-over-year quarter. Altogether, acquisitions last that for to a We XG flows compared provides generated fund spending capital last the constructed cash from compares free of our these strong for our On due in same to our CapEx Page with flows which future cash financial and present increased activities, expansions. demonstrate our deployment QX increase table with

of attributed As costs. all operations, EBITDA guidance. see, our we better-than-expected EBITDA the our than of business guidance and section. services met costs, quarter net almost from expenses measures; our fell revenues the had broadband EPS, you quarter our quarter including project financial income, margin; first to project low revenue access. our and can short first were first and business and income in review repair guidance while Revenue XXXX performance expectation costs end lower of of and beat mobile from Operating of business core maintenance the That's because

I Please, Kuo. turn to President President call Kuo. back the Now

Harrison Kuo

practices illustrates telecom Thailand. domestic Expo Summit and Taiwan Sustainability X global international recognitions and sustainable the ranking excellent achievements. and our our the affirming Global Coming award ESG City We the sector Small S&P in the delivered award ICT of XX leading for of to for in and of highlighting and also X first operations. were ESG the the applications We Top digital and our Slide & received winner an in quarter, innovative in status recognitions in as awards award the

quarter In sustain international in the public addition, services. and you attention. from we for your also got the our accreditation to AWS, international first further Microsoft Thank cloud Google

open to floor questions. like would I Now for the

Operator

Neale from HSBC. first Anderson Our coming Instructions] is question from [Operator

Neale Anderson

I on please. the have Business, International a question

So very quite the I of to assume the it's reporting relates My quite similar. is growth what question similar good how to first your that business and prior is in relates Most growth to what year. bit fourth had fixed. you that good it used mixed. to a the in was quarter prior And be was to of little it that, But international quarter. last --

decline likely growth that over time you this sort businesses are you -- rate that do that continue? expect legacy could any And of to will would in grow? or So mostly segment there

Vincent Chen

So International Group, basically for organized so Business revenue the we right, the structure.

IPG now business basically and several submarine for the of to So And international, it traditional, and and the plus line, domestic includes -- cable IDC also revenue hundred global distance is so the the and long the in accounts. the also cloud. comprised addition the business for

these business So lines International Group. Business are the the of major

Neale Anderson

Okay.

operators like have things most other are can wholesale. businesses of the grow? like businesses to sounds in declines it reported that So to say? expect segment But be international fair that this Would we in

Vincent Chen

the compare last You're performance fair year. not with the of right we revenue IBG reorganized structure the it's because so that to

our mentioned global growth positive is going So just the still You we to about from are we be, rate right? revenue the accounts. what growth expect

momentum governance is So business on on go business observation the our trends we and will recent up. climate. expect to the based This

Neale Anderson

Got business? ask more similar one Very It's a question enterprise your I question. just helpful. it. Could about

us got expect a reporting ICT what or grow mobile to your year, part the you've you is Business other bit in of call decline and how please? other. you fixed, Enterprise this in So more and the that Could

Angela Tsai

Okay.

public comprised international, undersea is some First some communication or cable. like satellite revenues -- other revenue EBG The from the sales for drivers. and of like

Operator

speaking, when question Deutsche the reminder, is a coming are The As be Milliken, louder from Peter please to microphone. next you Bank. or closer

Peter Milliken

My on the is ARPU. question

big you out go getting a that of when accounting that that can they're how for that kind number more much XG, to how That's much by of XX% mentioned handset increase migrate with good you're costs? You some and there handset XG is deals? spending provide those after see. Is it's number is sort My on of subsidies taken question to people more. of net

Harrison Kuo

public. the Okay. questions. we for question. your That's discuss to Peter, Because don't first information your for such

Peter Milliken

a they're handset we Okay. typically any Is are XXX getting people taking that there though happening? now churning these could the on XXX subsidy? and would like contracts see significant say that and off what's you are change Is plans the that

Vincent Chen

Okay.

So specific numbers. increased, for we right? So disclose definitely don't number, this actually it's but

Operator

coming next [Operator Wang, from Sara question is Instructions] UBS. The

Sara Wang

X So I have question. just

penetration this ask and the I XG what's trend so target how far may our year? of the So migration end by and

Harrison Kuo

penetration, As XX% will and toward XG of year that for XX% mark. be the the passed target be you're will right, end the the

So target. track the to we right achieve are on the

Sara Wang

it. speed just driver think Got or you is follow-up. up? And faster do the one handset penetration? for Is What quick it XG or set is it application biggest

Angela Tsai

like our handset applications the increase. XG you kind a is XG also that, to expect push also just migration. the XG said, Other we help can of driver to migration that than Actually innovative up

the For overall that lots that applications. VR of the like music the the choose would and migration. to the example other like related users like and AR XG applications gaming innovative increase services, All to are

Operator

Lo from from The next Bloomberg. Marvin Instructions] coming question [Operator is

Marvin Lo

X have questions. I Actually

question Day The a end I'm on April. on be of the is of significant I that second I'm that second read related promotion, first performance if just the the COVID-XX about any cases would well. confirmed Mother's if the news. for seems the quite any in just company which uplift fee recent discount. would at of impact have second in starting the from the the one the increase monthly to The as is impact quarter? have quarter Taiwan in the wondering That wondering to

Vincent Chen

Marvin, your Okay. for Thank you, questions.

your first affect -- our actually the So our speed LAN it about ARPU. for doesn't ARPU right, promotion, question

In business have COVID-XX, so also affect -- taken think comes disruption don't already And business a because in may about will measures it's affect that precautionary products, COVID-XX it happening. severely we telecom our that second, is right? business. So your steady fact supply the because For the to when the we right? prevent the of

to kind have of So already risk. taken mitigate we measures that

Operator

to Kuo. there If ahead, President I Go further turn it Instructions] will over [Operator please. no questions, are back

Harrison Kuo

you Thank Goodbye, participation. for everyone. your

Operator

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

You Goodbye. disconnect. may now

Chunghwa Telecom (CHT) 3 May 222022 Q1 Earnings call transcript