In the news release, Chunghwa Telecom Reports Consolidated
Operating Results for the Fourth Quarter and Full Year 2011, issued
22-Feb-2012 by Chunghwa Telecom Co.,
Ltd. over PR Newswire Asia, we are advised by the company that the
first paragraph, first sentence, should read "Chunghwa Telecom Co.,
Ltd. (TAIEX: 2412, NYSE: CHT) ("Chunghwa" or "the Company") today
reported its unaudited operating results for the fourth quarter and
full year 2011." rather than "Chunghwa Telecom Co., Ltd. (TAIEX:
2412, NYSE: CHT) ("Chunghwa" or "the Company") today reported its
operating results for the fourth quarter and full year 2011." as
originally issued inadvertently. The complete, corrected release
follows:
Chunghwa Telecom Reports Unaudited Consolidated Operating Results
for the Fourth Quarter and Full Year 2011
TAIPEI, Taiwan, Feb. 22, 2012 /PRNewswire-Asia-FirstCall/ --
Chunghwa Telecom Co., Ltd. (TAIEX: 2412, NYSE: CHT) ("Chunghwa" or
"the Company") today reported its unaudited operating results for
the fourth quarter and full year 2011. All figures were prepared in
accordance with generally accepted accounting principles of the
Republic of China ("ROC GAAP") on
a consolidated basis.
(Comparisons, unless otherwise stated, are to
the prior year period)
Fourth Quarter 2011 Financial
Highlights
- Total consolidated revenue increased by 5.0% to NT$54.9 billion
- Mobile communications revenue increased by 7.3% to NT$24.1 billion; mobile value-added services
(VAS) revenue increased by 30.7% to NT$4.0
billion
- Internet revenue decreased by 1.7% to NT$6.1 billion; internet VAS revenue increased by
14.5% to NT$0.6 billion
- Domestic fixed communications revenue increased by 6.5% to
NT$19.9 billion
- International fixed communications revenue decreased by 1.1% to
NT$3.8 billion
- Total operating costs and expenses increased by 10.2% to
NT$43.1 billion
- Net income totaled NT$10.0
billion, representing a 5.9% decrease
- Basic earnings per share (EPS) increased by 17.8% to
NT$1.3
Full Year 2011 Financial
Highlights
- Total consolidated revenue increased by 7.5% to NT$217.5 billion
- Mobile communications revenue increased by 4.5% to NT$93.0 billion; mobile VAS revenue increased by
37.7% to NT$15.2 billion
- Internet revenue increased by 1.4% to NT$24.8 billion; internet VAS revenue increased
by 14.6% to NT$2.5 billion
- Domestic fixed communications revenue increased by 12.3% to
NT$79.4 billion
- International fixed communications revenue decreased by 2.0% to
NT$15.2 billion
- Total operating costs and expenses increased by 12.0% to
NT$162.5 billion
- Net income totaled NT$47.1
billion, representing a 1.1% decrease
- Basic EPS increased by 23.1% to NT$6.05
Dr. Shyue-Ching Lu, Chairman and
Chief Executive Officer, said, "I'm pleased to report a solid
performance for the full year 2011 despite challenging market
conditions. Top-line growth was driven mainly by higher fixed line
revenue resulting from the pricing right shift for fixed to mobile
calls, as well as rises in mobile VAS revenue and handset sales. We
continued to achieve strong growth momentum within our mobile
business, as well as gaining traction from new business
opportunities in areas such as MOD/IPTV, ICT and cloud computing.
We also expect our broadband business momentum will be catching up
this year. Though broadband growth momentum is mitigated
attributable to the tariff reductions, we believe relevant revenues
will recover to its original level in the near future.
"In view of the increasingly challenging business environment we
anticipate for 2012, we are focusing on initiatives to ensure our
customer offerings remain attractive and competitive, as well as
continuing to invest in medium- and long-term growth. In view of
this strategy, I am confident that Chunghwa will succeed in
maintaining its leadership within Taiwan's telecoms space."
Chunghwa's total consolidated revenue for the fourth quarter of
2011 increased by 5.0% year-over-year to NT$54.9 billion, of which 36.2% was from the
domestic fixed business, 43.8% was from the mobile business, 11.0%
was from the internet business, 6.9% was from the international
fixed business, and the remainder was from others. Chunghwa
maintained its growth momentum, due mainly to an increase in fixed
line revenue resulting from the shift in the pricing right of a
fixed-to-mobile call from mobile to fixed network operators, as
well as mobile VAS and handset sales. In addition, property sales
from the Company's property development subsidiary also contributed
to Chunghwa's revenue growth.
Total revenue for the mobile business amounted to NT$24.1 billion for the fourth quarter 2011,
representing a year-on-year increase of 7.3%, mainly due to growth
in mobile VAS revenue and handset sales relating to Smartphone
promotions, which offset the decline in mobile voice revenue. The
decline in mobile voice revenue resulted primarily from the shift
in pricing right for fixed to mobile calls from mobile to fixed
operators and the NCC mandated tariff reduction.
Chunghwa's internet business revenue decreased to NT$6.1 billion in the fourth quarter of 2011, a
decline of 1.7% year-over-year, due to the company's broadband
tariff reduction in June.
For the fourth quarter of 2011, domestic fixed revenue totaled
NT$19.9 billion, representing an
increase of 6.5% year-over-year. Local revenues increased by 26.6%
year-over-year, mainly due to the shift in pricing right for fixed
to mobile calls. The 13.1% decline in Domestic Long Distance
("DLD") revenues was due to mobile and Voice over Internet Protocol
("VOIP") substitution, as well as reflecting the mandated tariff
reduction.
Broadband access revenue, including ADSL and Fiber to the x
("FTTx"), decreased by 1.9% year-over-year to NT$5.1 billion, primarily due to the company's
broadband tariff reduction in June, as well as the mandated tariff
reduction.
International fixed line revenue decreased by 1.1% to
NT$3.8 billion, primarily due to the
decrease in international long distance service revenue as a result
of market competition.
Other revenue decreased by 7.7%, primarily due to lower
consolidated revenue from subsidiaries.
For the full year 2011, total revenue was NT$217.5 billion, a 7.5% increase compared to
2010. Of this total, 36.5% was contributed by the domestic fixed
business, 42.8% was from the mobile business, 11.4% was from the
Internet business, the international fixed business accounted for
7.0%, and the remainder was from others.
Costs and Expenses
Total operating costs and expenses for the fourth quarter of
2011 amounted to NT$43.1 billion, an
increase of 10.2% compared to the same period of 2010. This
increase was mainly due to the higher cost of handsets sold,
interconnection costs and transition fees resulting from the shift
in pricing right of fixed-to-mobile calls.
Total operating costs and expenses for the full year 2011
increased by 12.0% year-over-year to NT$162.5 billion, due mainly to the same reasons
as for the fourth quarter.
Income Tax
Income tax expense for the fourth quarter of 2011 was
NT$1.8 billion, representing a 8.1%
decrease compared to NT$1.9 billion
for the same period of 2010. The decrease was due to lower income
from operations.
EBITDA and Net Income
EBITDA for the fourth quarter of 2011 decreased by 7.2% to
NT$19.9 billion, while income from
operations decreased by 10.4% to NT$11.8
billion. The decreases in both EBITDA and income from
operations reflected higher operating costs and expenses.
The EBITDA margin for the fourth quarter of 2011 was 36.30%
compared to 41.05% in the same period of 2010, and the operating
margin was 21.4%, compared to 25.1% in the previous year. Net
income decreased by 5.9% year-over-year to NT$10.0 billion. EPS increased by 17.8%
year-over-year to NT$1.3, primarily
due to the capital reduction in January
2011, which reduced the total number of outstanding shares
by 20%.
Capital Expenditure
("Capex")
Total capex for the fourth quarter of 2011 amounted to
NT$10.3 billion, a 12.7%
year-over-year increase. Of the NT$10.3
billion capex figure, 61.4% was used for the domestic fixed
communications business, 12.9% was for the mobile business, 18.3%
was for the internet business, 4.7% was for the international fixed
communications business, and the remainder was for other uses.
Cash Flow
Cash flow from operating activities for the fourth quarter of
2011 decreased by 9.4% year-over-year to NT$29.3 billion.
Business and Operational Highlights
Broadband/HiNet
- As of the end of 2011, FTTx subscribers had reached 2.4
million, accounting for 53.3% of total broadband users. This year,
the Company is continuing to execute on its strategy to encourage
FTTx migration. On June 22, 2011, the
Company reduced its broadband service tariffs, especially for
speeds of 20Mbps and 50Mbps, to accelerate migration and increase
subscriptions. Although the lower broadband tariff had a temporary
impact on Chunghwa's revenue, the Company believes the speed
upgrade will have a positive effect on its promotion of broadband
value added services in the long run.
- HiNet broadband subscribers totaled 3.7 million at the end of
2011, a year-over-year rise of 3.0%.
Mobile
- As of the end of 2011, Chunghwa had 10.1 million mobile
subscribers, an increase of 4.1% compared to 9.7 million at the end
of 2010.
- As of the end of 2011, Chunghwa had 1.5 million mobile internet
subscribers compared to 809 thousand subscribers as of the end of
2010, demonstrating the strong growth momentum that the Company has
achieved. Chunghwa expects to accumulate 2.2 million mobile
internet subscribers by the end of 2012.
- Mobile VAS revenue for 2011 rose 37.7% year-over-year to
NT$15.2 billion, with mobile Internet
revenue increasing 77.7% year-over-year, making it the largest
contributor to VAS revenue.
Domestic/International Fixed-line
- As of the end of 2011, the Company maintained its leading
fixed-line market position, with fixed-line subscribers totaling
12.1 million.
- Up to now, Chunghwa's Multimedia-on-demand (MOD) subscriber
number had reached 1.07 million, and it continues to rise,
suggesting that the enriched content is satisfying customer
demands.
2012 Guidance (Parent Company Only)
Total revenue for 2012 is expected to decrease by NT$3.6 billion to NT$188.9 billion, primarily due
to a NT$2.4 billion decline relating
to the reduction in tariffs for domestic long distance calls,
NT$2.0 billion resulting from the
mandated tariff reduction, as well as Fiber and ADSL broadband
price cuts, mobile promotional packages, and lower voice revenue.
However, as mentioned above, the Company's ongoing promotion of
mobile internet, broadband services, MOD and cloud computing
services is expected to partially offset the decline.
Operating costs and expenses for 2012 are expected to increase
by NT$2.5 billion, mainly due to the
promotion of the Company's mobile internet and broadband
businesses, as well as planned enhancements to network efficiency,
which are expected to increase the cost of handsets sold in
relation to Smartphone sales, and maintenance & material
expenses. Furthermore, expenses relating to the enhancement of
digital content, including broadcasting rights for the Company's
cross-platform services for the 2012 London Olympic Games, are also
expected to increase. As a result, income from operations and
EBITDA are expected to decrease as compared to 2011.
Non-operating income is expected to decrease by NT$2.6 billion due to higher property sales from
Chunghwa's subsidiary, Light Era, as well as relevant deferred
income on property disposals in 2011. Income before income tax is
expected to be NT$46.6 billion, with
net income at NT$39.2 billion,
representing decreases of NT$8.7
billion and NT$7.9 billion
respectively. Earnings per share are expected to decrease to
NT$5.05, mainly due to lower income
from operations and non-operating income.
Capex for 2012 is budgeted to be NT$33.1
billion, primarily relating to cloud computing service
development and network quality enhancement. Long-term investments
are projected to total NT$5 billion,
which is NT$3.9 billion higher than
in 2011.
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(NT$ billion
except EPS)
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2012(F)
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2011
(unaudited)
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YoY
(%)
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Revenue
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188.9
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192.5
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(1.86)
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Operating Costs and
Expenses
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143.8
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141.3
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1.76
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Income from
Operations
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45.1
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51.2
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(11.85)
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Income before Income
Tax
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46.6
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55.3
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(15.68)
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Net Income
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39.2
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47.1
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(16.82)
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EPS after Tax
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5.05
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6.05
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(16.53)
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EBITDA
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77.1
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83.1
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(7.24)
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EBITDA Margin %
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40.81%
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43.18%
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-
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Acquisition of Property, Plant
and Equipment, Long-term Investments
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38.0
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27.6
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38.02
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Disposal of Property, Plant and
Equipment, Long-term Investments
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-
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14.6
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(100.00)
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Financial Statements
Financial statements and additional operational data can be
found on the Company's website at
www.cht.com.tw/ir/filedownload.
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.
SPECIAL NOTE REGARDING NON-GAAP FINANCIAL MEASURES
A body of generally accepted accounting principles is commonly
referred to as "GAAP". A non-GAAP financial measure is generally
defined by the SEC as one that purports to measure historical or
future financial performance, financial position or cash flows but
excludes or includes amounts that would not be so adjusted in the
most comparable U.S. GAAP measure. We disclose in this report
certain non-GAAP financial measures, including EBITDA. EBITDA for
any period 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 expenses,
net, (iv) income tax, (v) cumulative effect of change in accounting
principle, net of tax and (vi) (income) loss from discontinued
operations.
In managing our business we rely on EBITDA as a means of
assessing our operating performance. We believe that EBITDA can be
useful to facilitate comparisons of operating performance between
periods and with other companies 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.
EBITDA is not a measure of financial performance under U.S. GAAP
or ROC GAAP. EBITDA should not be considered as an alternate
measure of net income or operating income, as determined on a
consolidated basis using amounts derived from statements of
operations prepared in accordance with U.S. GAAP or ROC GAAP, as an
indicator of operating performance or as cash flows from operating
activity or as a measure of liquidity. EBITDA has material
limitations that impair its value as a measure of a company's
overall profitability since it does not address certain ongoing
costs of our business that could significantly affect profitability
such as financial expenses and income taxes, depreciation, pension
plan reserves or capital expenditures and associated charges. These
non-GAAP measures are not in accordance with or an alternative for
GAAP financial data, the non-GAAP results should be reviewed
together with the GAAP results and are not intended to serve as a
substitute for results under GAAP, and may be different from
non-GAAP measures used by other companies.
About Chunghwa Telecom
Chunghwa Telecom (TAIEX: 2412, NYSE: CHT) is Taiwan's leading telecom service provider. The
Company provides fixed-line, mobile and Internet and data services
to residential and business customers in Taiwan.
Contact:
Fu-fu Shen
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Phone:
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+886-2-2344-5488
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Email:
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chtir@cht.com.tw
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SOURCE Chunghwa Telecom Co., Ltd.