Chunghwa Telecom Reports Un-Audited Consolidated Operating Results for the Second Quarter of 2019

TAIPEI, Taiwan, July 31, 2019 /PRNewswire/ -- Chunghwa Telecom Co., Ltd. (2412CHT ("Chunghwa" or "the Company") today reported its un-audited operating results for the second quarter of 2019. All figures were prepared in accordance with Taiwan-International Financial Reporting Standards ("T-IFRSs") on a consolidated basis.

(Comparisons throughout the press release, unless otherwise stated, are made with regard to the prior year period.)

Second Quarter 2019 Financial Highlights

• Total revenue decreased by 6.6% to NT$ 50.11billion.
• Mobile communications revenue decreased by 11% to NT$ 22.90 billion.
• Internet revenue increased by 1.6% to NT$ 7.26 billion.
• Domestic fixed communications revenue decreased by 2.9% to NT$ 15.92 billion.
• International fixed communications revenue decreased by 4.4% to NT$ 3.11 billion.
• Total operating costs and expenses decreased by 4.3% to NT$ 39.8 billion.
• Net income attributable to stockholders of the parent decreased by 13.1% to NT$ 8.57 billion.
• Basic earnings per share (EPS) was NT$1.10.

Mr. Chi-Mau Shieh, Chairman and CEO of Chunghwa Telecom, stated, "Even though the market remained competitive during the second quarter of 2019, we were able to maintain our leading position in terms of mobile revenue and subscriber number in Taiwan. To offset the down-sell triggered by the 499 plan last year, we continued to migrate our subscribers to higher value plans, and we saw continuous increase of iPhone users. In our broadband business, we experienced a slight subscriber loss in the first half of this year due to cable competition. However, we also noticed that our subscribers continued to migrate to higher-speed fiber services. Going forward, we will remain focused on providing multi-service, home-centric digital plans to attract more subscribers."

"This was another robust quarter for our MOD/IPTV business. We continued to be the largest video platform in Taiwan, reaching 2.08 million subscribers. We also introduced a flexible package plan, which allows our customers to make their own packages fully based on their preferences, and expect to help us further increase our subscriber base, enhance current customer stickiness, and differentiate ourselves from our competitors. To seek more opportunities and to maximize revenue in our ICT business, we will focus on selected verticals. We have acquired several Fintech projects in the financial industry to leverage our advantages in the IDC and information security business, and we aim to develop our AI- and IoT-related capabilities to enhance overall ICT performance. We are confident in the strength of our business and our ability to further fuel our sustainable development for our shareholders in the years to come," Mr. Shieh concluded.

Revenue
Chunghwa Telecom's total revenues for the second quarter of 2019 decreased by 6.6% to NT$ 50.11 billion.

Mobile communications revenue for the second quarter of 2019 decreased by 11.0 % to NT$ 22.90 billion. This was mainly due to the decrease in mobile service revenue resulted from market competition and VoIP substitution, offset by the increase in handset sales revenue.

Internet business revenue for the second quarter of 2019 increased by 1.6 % year over year to NT$ 7.26 billion. The increase was primarily attributable to higher application value-added service revenue.

Domestic fixed revenue for the second quarter of 2019 decreased by 2.9 % year over year to NT$ 15.92 billion, mainly due to the decrease of local telephone service revenue by 7.1% to NT$ 6.51 billion, primarily driven by the increased mobile and VoIP substitution.

International fixed communications revenue decreased by 4.4 % to NT$ 3.11 billion, mainly due to lower international long distance communications revenue as a result of increased market competition.

Operating Costs and Expenses
Total operating costs and expenses for the second quarter of 2019 decreased by 4.3 % year over year to NT$ 39.80 billion, mainly due to lower personnel and interconnection costs.  

Operating Income and Net Income
Income from operations for the second quarter of 2019 decreased by 14.5 % to NT$ 10.30 billion. The operating margin was 20.6%, as compared to 22.5% in the same period of 2018. Net income attributable to stockholders of the parent decreased by 13.1% to NT$ 8.57 billion. Basic earnings per share was NT$1.10.

Cash Flow and EBITDA
Cash flow from operating activities for the second quarter of 2019 decreased by 6.8% to NT$ 15.96 billion.
Cash and cash equivalents, as of June 30^th, 2019, decreased by 16.6 % to NT$ 36.58 billion as compared to that as of June 30^th, 2018.
EBITDA for the second quarter of 2019 decreased by 4.6 % to NT$ 19.11 billion. EBITDA margin was 38.1%, as compared to 37.3% in the same period of 2018.

Business and Operational Highlights

Broadband/HiNet
The Company continued to execute its strategy of encouraging FTTx migration. As of June 30^th, 2019, the number of FTTx subscribers reached 3.63 million, accounting for 81.4% of the Company's total broadband users. Moreover, the number of subscribers signing up for speeds of 100Mbps or higher increased by 10.6% year over year, reaching 1.50 million. 

HiNet broadband subscribers decreased by 1.2% year over year to 3.66 million as of June 30^th, 2019.

Mobile
As of June 30^th, 2019, Chunghwa Telecom had 10.60 million mobile subscribers, representing a 0.8% year-over-year increase.

Fixed line
As of June 30^th, 2019, the Company maintained its leading position in the fixed-line market, with a total of 10.30 million subscribers.

Financial Statements

Financial statements and additional operational data can be found on the Company's website at https://www.cht.com.tw/en/home/cht/investors/financials/quarterly-earnings.

NOTE CONCERNING FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements. These statements constitute "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Statements that are not historical facts, including statements about Chunghwa's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Investors are cautioned that actual events and results could differ materially from those statements as a result of a number of factors including, but not limited to the risks outlined in Chunghwa's filings with the U.S. Securities and Exchange Commission on Forms F-1, F-3, 6-K and 20-F, in each case as amended. The forward-looking statements in this press release reflect the current belief of Chunghwa as of the date of this press release and Chunghwa undertakes no obligation to update these forward-looking statements for events or circumstances that occur subsequent to such date, except as required under applicable law.

This press release is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration. Any public offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from the issuer or selling security holder and that will contain detailed information about the company and management, as well as financial statements.

NON-GAAP FINANCIAL MEASURES
To supplement the Company's consolidated financial statements presented in accordance with International Financial Reporting Standards pursuant to the requirements of the Financial Supervisory Commission, or T-IFRSs, Chunghwa Telecom also provides EBITDA, which is a "non-GAAP financial measure".  EBITDA is defined as consolidated net income (loss) excluding (i) depreciation and amortization, (ii) total net comprehensive financing cost (which is comprised of net interest expense, exchange gain or loss, monetary position gain or loss and other financing costs and derivative transactions), (iii) other income, net, (iv) income tax, (v) (income) loss from discontinued operations.

In managing the Company's business, Chunghwa Telecom relies on EBITDA as a means of assessing its operating performance because it excludes the effect of (i) depreciation and amortization, which represents a non-cash charge to earnings, (ii) certain financing costs, which are significantly affected by external factors, including interest rates, foreign currency exchange rates and inflation rates, which have little or no bearing on our operating performance, (iii) income tax (iv) other expenses or income not related to the operation of the business. 

CAUTIONS ON USE OF NON-GAAP FINANCIAL MEASURES
In addition to the consolidated financial results prepared under T-IFRSs, Chunghwa Telecom also provide non-GAAP financial measures, including "EBITDA". The Company believes that the non-GAAP financial measures provide investors with another method for assessing its operating results in a manner that is focused on the performance of its ongoing operations.

Chunghwa Telecom's management believes investors will benefit from greater transparency in referring to these non-GAAP financial measures when assessing the Company's operating results, as well as when forecasting and analyzing future periods. However, the Company recognizes that:

• these non-GAAP financial measures are limited in their usefulness and should be considered only as a supplement to the Company's T-IFRSs financial measures;
• these non-GAAP financial measures should not be considered in isolation from, or as a substitute for, the Company's T-IFRSs financial measures;
• these non-GAAP financial measures should not be considered to be superior to the Company's T-IFRSs financial measures; and
• these non-GAAP financial measures were not prepared in accordance with T-IFRSs and investors should not assume that the non-GAAP financial measures presented in this earnings release were prepared under a comprehensive set of rules or principle.   

Further, these non-GAAP financial measures may be unique to Chunghwa Telecom, as they may be different from non-GAAP financial measures used by other companies. As such, this presentation of non-GAAP financial measures may not enhance the comparability of the Company's results to the results of other companies. Readers are cautioned not to view non-GAAP results as a substitute for results under T-IFRSs, or as being comparable to results reported or forecasted by other companies.

About Chunghwa Telecom
Chunghwa Telecom (((TAIEX 2412, NYSE:CHT) ("Chunghwa" or "the Company") is Taiwan's largest integrated telecommunications services company that provides fixed-line, mobile, broadband, and internet services. The Company also provides information and communication technology services to corporate customers with its big data, information security, cloud computing and IDC capabilities, and is expanding its business into innovative technology services such as IoT, AI, etc. In recent years, Chunghwa has been actively involved in corporate social responsibility and has won domestic and international awards and recognition. For more information, please visit our website at www.cht.com.tw

SOURCE Chunghwa Telecom Co., Ltd.