A new Post "Chunghwa Telecom Reports Operating Results for the Second Quarter and First Half of 2010" was written on the August 26, 2010 at 8:00 am on "Press Release – Buzz Issue.".
TAIPEI, Taiwan, Aug. 26 /-Asia-FirstCall/ --- Chunghwa Telecom
Co., Ltd. (TAIEX: 2412, NYSE: CHT) ("Chunghwa" or "the Company"),
today
reported its operating results for the second quarter and first half
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").
Dr. Shyue-Ching Lu, Chairman of Chunghwa Telecom, said, "I am pleased
to
report another quarter of solid results, boosted by the continuing
economic
recovery and the execution of our marketing initiatives. Despite the
mandated
National Communications Commission ("NCC") tariff reduction effective
April 1
this year, consolidated revenue increased 3.3% to NT$49.7 billion
during the
second quarter of 2010, mainly due to higher handset sales and
increased
revenue from both mobile value-added services ("VAS") and Internet
services.
Our prudent cost management initiatives enabled us to deliver stable
operating
income, and the income tax reduction from 25% to 17% starting from
2010
resulted in a 12.7% year-over-year rise in net income to NT$12.9
billion."
(Comparisons, unless otherwise stated, are to the prior year period)
Financial Highlights for the Second Quarter of 2010: -- Total
consolidated revenue increased by 3.3% to NT$49.7 billion --
Mobile communications business revenue increased by 6.5% to NT$22.1
billion; mobile value added revenue increased by 31.4% to NT$2.7
billion -- Internet business revenue increased by 7.0% to
NT$6.0 billion -- Domestic fixed communications business revenue
decreased by 1.1% to NT$17.3 billion; broadband access revenue
increased by 1.9% to NT$5.0 billion -- International fixed
communications business revenue decreased by 2.3% to NT$3.7
billion -- Total operating costs and expenses increased by 4.9% to
NT$34.8 billion -- Net income totaled NT$12.9 billion,
representing an increase of 12.7% -- Basic earnings per
share (EPS) increased by 12.7% to NT$1.34 Financial Highlights for
the First Half of 2010: -- Total consolidated revenue increased by
2.2% to NT$99.3 billion -- Mobile communications business revenue
increased by 4.2% to NT$44.3 billion -- Internet business
revenue increased by 4.5% to NT$11.9 billion -- Domestic fixed
communications business revenue decreased by 2.0% to NT$34.5
billion; broadband access revenue increased by 1.5% to NT$10.1
billion -- International fixed communications business revenue
increased by 3.4% to NT$7.7billion -- Total operating costs
and expenses increased by 2.0% to NT$69.5 billion -- Net
income totaled NT$25.0 billion, representing an increase of
12.3% -- Basic EPS increased by 12.3% to NT$2.58 Revenue
Chunghwa's total consolidated revenue for the second quarter of 2010
increased by 3.3% year-over-year to NT$49.7 billion, of which 34.9%
was from
its domestic fixed business, 44.5% was from its mobile business, 12.2%
was
from its Internet business, 7.5% was from its international fixed
business and
the remainder was from other business segments. The primary reasons
for the
year-over-year increase were the economic recovery and the Company's
marketing
efforts.
Domestic fixed line business revenue totaled NT$17.3 billion,
representing
a decrease of 1.1% year-over-year. Of this, local revenues decreased
by 2.2%
year over year to NT$8.1billion, mainly due to mobile and Voice over
Internet
Protocol (VOIP) substitution. The 12.6% decline in domestic
long-distance
revenues to NT$1.7 billion was also due to mobile and VOIP
substitution, and
the interconnection fee adjustment at the end of 2009.
Broadband access revenue, including ADSL and FTTx, increased by 1.9%
year
over year to NT$5.0 billion. Although ADSL access revenue decreased as
more
ADSL subscribers migrated to fiber solutions, the decrease was fully
offset by
growth in FTTx access revenue. Chunghwa believes that this migration
will
continue as customers continue to demand increased bandwidth, and that
broadband revenue will therefore increase over time.
Mobile revenue increased by 6.5% year over year to NT$22.1 billion,
mainly
due to growth in handset sales and mobile VAS revenue related to our
smartphone promotion.
Internet revenue increased by 7.0% to NT$6.0 billion, mainly
attributable
to Internet services growth, which was driven by the increase in
broadband
subscribers and the migration of ADSL subscribers to fiber solutions.
International fixed line revenue decreased by 2.3% to NT$3.7 billion,
mainly due to VOIP substitution and market competition that was
partially
offset by growth in leased line revenue.
Finally, other revenue increased by 47.9% to NT$0.5 billion in the
second
quarter of 2010 compared to the same period of 2009, primarily due to
the
consolidation of subsidiaries.
For the first half of 2010, total revenue was NT$99.3 billion, a 2.2%
increase from the same period last year. Of this amount, the domestic
fixed
business 34.8%, the mobile business contributed 44.7%, the internet
business
12.0%, the international fixed business 7.7%, and the remainder was
from
others.
Costs and Expenses
Total operating costs and expenses for the second quarter of 2010 were
NT$34.8 billion, an increase of 4.9% year-over-year, mainly due to the
increased cost of handset sales and the performance-based bonus
accrual that
is related to the net income growth.
Total operating costs and expenses for the first half of 2010
increased
2.0% year over year to NT$69.5 billion, due to the same reason.
Income Tax
Income tax expenses for the second quarter of 2010 were NT$1.9
billion,
representing a decrease of 44.9% compared to the same period of 2009.
This
decrease resulted from the government's income tax rate reduction from
25% to
17% this year. Effect of tax rate reduction from 20% to 17 % for the
first
quarter 2010 income tax expenses was fully reflected in the second
quarter.
EBITDA/Operating income/Net Income
Operating income for the second quarter of 2010 remained flat
year-over-year at NT$14.9 billion. EBITDA decreased by 2.3% to NT$23.5
billion, primarily as a result of the mandated NCC tariff reduction
and
changing cost structure. The Company's EBITDA margin and operating
income
margin for the second quarter of 2010 were 47.3% and 30.0%,
respectively,
compared to 50.1% and 31.1%, respectively, for the same period of
2009.
Net income for the second quarter of 2010 increased by 12.7%
year-over-year to NT$12.9 billion, primarily due to revenue growth and
the
lower income tax rate.
For the first half of 2010, operating income amounted to NT$29.8
billion,
a rise of 2.6% year over year. EBITDA decreased slightly by 0.7% to
NT$47.1
billion. Net income reached NT$25.0 billion, a 12.3% increase, mainly
due to
the income tax rate reduction.
Capital Expenditure ("Capex")
Total capex for the second quarter of 2010 amounted to NT$5.2 billion,
representing a decrease of 7.8% year-over-year. Of the NT$5.2 billion
in
capex, 63.1% was spent on the domestic fixed communications business,
23.1% on
the mobile communications business, 6.8% on the Internet business,
4.8% on the
international fixed communications business and the remainder was used
for
other purposes.
Cash Flow
Cash flow from operating activities for the second quarter of 2010 was
NT$17.3 billion, a 5.2% decrease compared to the same period of 2009.
As of June 30, 2010, the Company's cash and cash equivalents totaled
NT$92.8
billion, an increase of 11.2% year-over-year, still showing a strong
cash
position.
Businesses Performance Highlights: Domestic Fixed/Broadband/HiNet
Business -- As of the end of June 2010, the Company maintained its
leading fixed-line market position, with fixed-line subscribers
totaling 12.4 million. -- Total broadband subscribers
amounted to 4.3 million as of June 30, 2010, accounting for
82.2% of market share. Chunghwa continued its efforts to
migrate ADSL subscribers to FTTx solutions. By the end of the
second quarter of 2010, there were 1.85 million FTTx subscribers,
accounting for 42.8% of Chunghwa's total broadband subscriber base.
By the end of the second quarter of 2010, the number of ADSL and
FTTx subscribers with a service speed greater than 8 Mbps
reached 2.2 million, representing 50.9% of total broadband
subscribers, compared to 48.8% at the end of the first quarter
of 2010. -- HiNet subscribers totaled 4.07 million at the end of
the second quarter of 2010. -- MOD subscriber number is
over 720 thousand up to now. Mobile Business -- As of June 30,
2010, Chunghwa had 9.4 million mobile subscribers, an increase
of 4.5% compared to 9.0 million at the end of the first half of
2009. -- Chunghwa had 5.1 million 3G subscribers at the end of
June 2010, accounting for 53.9% of its total subscriber base.
-- Mobile VAS revenue for the first half of 2010 increased 27.6%
year-over-year to NT$5.2 billion; Short Message Service revenue
rose 6.9% year-over-year and mobile Internet revenue increased
78% year-over-year. -- Smartphone subscription accounted
for 17% of total handsets offered by the Company during the
first half of 2010. Smartphone Average Revenue per User
("ARPU") was 132% higher than blended ARPU for the same period.
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 the
telecom
industry; the intensely competitive telecom industry; Chunghwa's
relationship
with its labor union; general economic and political conditions,
including
those relating 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
Severe Acute Respiratory Syndrome; 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. The Company
undertakes no obligation to update these forward-looking statements
for events
or circumstances that occur subsequent to the date of this press
release.
About Chunghwa Telecom
Chunghwa Telecom (TAIEX 2412, NYSE: CHT) is Taiwan's leading
telecom
service provider. It provides fixed-line, mobile and Internet services
to
residential and business customers in Taiwan.
Contact: Fu-fu Shen Tel: +886-2-2344-5488 Email:
chtir@cht.com.tw
SOURCE Chunghwa Telecom Co., Ltd.
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Chunghwa Telecom Reports Operating Results for the Second Quarter and
First Half of 2010
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