Chunghwa Telecom Reports Operating Results for the First Half of 2009

TAIPEI, Taiwan, Aug. 27 /PRNewswire-Asia-FirstCall/ -- Chunghwa TelecomCo., Ltd (TAIEX: 2412; NYSE: CHT) ("Chunghwa" or "the Company"), todayreported its operating results for the first six months of 2009. All figureswere presented on a consolidated basis and prepared in accordance to generallyaccepted accounting principles in the Republic of China ("ROC GAAP").

Revenues

Chunghwa's total consolidated revenues for the first half of 2009decreased by 3.7% year-over-year to NT$97.2 billion, of which 27.3% was fromfixed-line services, 36.3%was from mobile services, 25.4% was from Internetand data services, and the remainder was mainly from handset sales fromChunghwa's subsidiary SENAO on a consolidated basis. The primary reason forthe total revenue decline was due to the deteriorating economic environmentand market competition, which resulted in the reduced traffic for fixed lineand mobile businesses.

For the mobile business, total revenue for the first half of 2009 amountedto NT$35.2 billion, representing a decline of 2.9% year-over-year. For thefirst half of 2009, Chunghwa achieved some progress via increased subscribernumbers of 3.0% and enhanced VAS service revenues of 18.5% compared to thefirst half of 2008. However, these successes were offset by the economicdownturn and the market competition Chunghwa's internet and data revenuedecreased slightly by 0.2% year-over-year to NT$24.7 billion in the first halfof 2009, mainly due to the tariff reduction for HiNet and ADSL services. As ofthe end of first half of 2009, Chunghwa provides FTTx to about 1,342 thousandof subscribers, compared to 782 thousand as of the end of first half of 2008.

In the first half of 2009, fixed-line revenue totaled NT$26.5 billion,decreasing 7.7% year-over-year. The local and domestic long distance revenuesdecreased by 5.7% to NT$16.3 billion and by 10.5% to NT$3.8 billion year-over-year, respectively, for the first half of 2009. These decreases were mainlydue to the economic downturn, as well as mobile and VOIP substitution.Similarly, international long distance revenue decreased by 10.7% year-over-year to NT$6.3 billion, as a result of the overall economic downturn, VOIPsubstitution and market competition.

Finally, other revenue decreased by 4.0% to NT$10.7 billion in the firsthalf of 2009 compared to same period last year, mainly due to the decrease ofhandset sales.

For the second quarter of 2009, total revenue was NT$48.1 billion, a 3.8%decrease from the same period last year. Of this, 27.9% was from fixed-lineservices, 36.8% was from mobile services and 25.5% was from Internet and dataservices, with the remainder primarily attributed to the consolidation ofNT$2.6 billion in revenue from SENAO.

Costs and expenses

Total operating costs and expenses for first half 2009 were NT$68.1billion, a decrease of 0.7% compared to the first half 2008. For the secondquarter of 2009, total operating costs and expenses were NT$33.1 billion, adecrease of 2.9% compared to the second quarter of 2008. Both decreases ofcosts and expenses in the first half and the second quarter of 2009 weremainly due to the decline of Senao's operating costs primarily resulted fromSenao's revenue decline, as well as the decrease in the parent company'sdepreciation expense. However, the operating expenses in first half 2009 wereNT$13.9 billion, an increase of 3.3% compared the same period 2008. Theincrease was mainly due to additional ERP compensation and increased G&Aexpenses resulted from the establishment of subsidiaries in Singapore andJapan, etc. which commenced in the second half of 2008.

Income Tax

Income taxes for the first half of 2009 were NT$6.8 billion, representinga decrease of 2.1% compared to NT$7.0 billion for the first half of 2008. Thiswas mainly due to the decrease of revenue resulting in an increase ofeffective tax rate.

EBITDA and Net Income

Both EBITDA and the operating profit for the first half of 2009 decreasedby 8.0% to NT$47.4 billion and by 10.0% to NT$29.0 billion, respectively,primarily due to the revenue decrease. However, net income decreased only by4.2% mainly because of a NT$2.7 billion valuation loss recognized in the firsthalf of 2008 from the 10-year foreign currency derivative contract. EBITDAmargin and the operating margin for the first half of 2009 were 48.8% and29.9%, respectively, relatively stable compared to 51.0% for EBITDA margin and32.0% for the operating margin in the first half of 2008.

Similarly, both EBITDA and the operating profit for second quarter of 2009decreased by 5.2% to NT$24.1 billion and by 5.9% to NT$14.9 billion,respectively. The reasons for these declines are due to the overall revenuedecrease. However, both EBITDA and operating profit margins for the secondquarter of 2009 are relatively stable at 50.1% and 31.1%, respectively,compared to the second quarter of 2008. Net income decreased by 8.3% toNT$11.5 billion for the second quarter of 2009, at a relatively higher declinerate than the operating profit for the same period, mainly due to the reducedinterest income generated from the lower interest rate.

Capital Expenditure ("Capex")

The total capex for the first half of 2009 amounted to NT$10.3 billion, a9.0% decrease compared to that of the same period in 2008. Of this capexfigure, 73.2% was for wireline equipment (including fixed-line and Internetand data), 21.3% was for wireless equipment and the remainder was for otherexpenditures.

Cash Flow

Cash flow from operating activities for the first half of 2009 decreasedby 21.0% to NT$34.3 billion compared to the first half of 2008, primarily dueto the revenue decline, as well as due to the NT3.2 billion income tax refundreceived by the parent company in the first half of 2008.

As of June 30, 2009, the Company's cash and cash equivalents totaledNT$83.4 billion, a decrease of 12.5% year-over-year compared to the sameperiod last year, and the decrease was because of the cash payment frompreviously completed capital reduction program.

Financial Statements

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

Note Concerning Forward-looking Statements

Except for statements in respect of historical matters, the statementsmade in this press release contain "forward-looking statements" within themeaning of Section 27A of the U.S. Securities Act of 1933 and Section 21E ofthe U.S. Securities Exchange Act of 1934. Such forward-looking statementsinvolve known and unknown risks, uncertainties and other factors that maycause the actual performance, financial condition or results of operations ofChunghwa to be materially different from what may be implied by such forward-looking statements. Investors are cautioned that actual events and resultscould differ materially from those statements as a result of a number offactors including, among other things: extensive regulation of telecomindustry; the intensely competitive telecom industry; our relationship withour labor union; general economic and political conditions, including thoserelated to the telecom industry; possible disruptions in commercial activitiescaused by natural and human induced events and disasters, including terroristactivity, armed conflict and highly contagious diseases, such as SARS; andthose risks identified in the section entitled "Risk Factors" in Chunghwa'sannual reports on Form F-20 filed with the SEC.

The forward-looking statements in this press release reflect the currentbelief of Chunghwa as of the date of this press release and we undertake noobligation to update these forward-looking statements for events orcircumstances that occur subsequent to such date.

About Chunghwa Telecom

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

SOURCE Chunghwa Telecom