Chunghwa Telecom Reports Consolidated Operating Results for the
Third Quarter and First Nine Months of 2012
TAIPEI, Taiwan, Oct. 26, 2012 /PRNewswire/ -- Chunghwa
Telecom Co., Ltd. (TAIEX: 2412, NYSE: CHT) ("Chunghwa" or "the
Company") today reported its operating results for the third
quarter and first nine months of 2012. 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)
Third Quarter 2012 Financial Highlights
- Total net revenue decreased by 2.3% to NT$54.40 billion
- Mobile communications revenue increased by 4.7% to NT$24.88 billion
- Mobile value-added services (VAS) revenue increased by 36.5% to
NT$5.35 billion
- Handset sales revenue increased by 14.0% to NT$6.39 billion
- Internet revenue decreased by 6.1% to NT$6.05 billion
- Internet VAS revenue increased by 5.4% to NT$0.65 billion
- Domestic fixed communications revenue decreased by 7.7% to
NT$18.94 billion
- International fixed communications revenue increased by 2.2% to
NT$3.86 billion
- Total operating costs and expenses increased by 1.1% to
NT$42.30 billion
- Net income totaled NT$10.2
billion, representing a 14.6% decrease
- Basic earnings per share (EPS) was NT$1.31
First Nine Months of 2012 Financial
Highlights
- Total net revenue increased by 0.9% to NT$164.01 billion
- Mobile communications revenue increased by 9.1% to NT$75.2 billion
- Mobile VAS revenue increased by 33.2% to NT$14.94 billion
- Handset sales revenue increased by 33.6% to NT$20.95 billion
- Internet revenue decreased by 2.9% to NT$18.24 billion
- Internet VAS revenue increased by 5.0% to NT$1.94 billion
- Domestic fixed communications revenue decreased by 5.2% to
NT$56.38 billion
- International fixed communications revenue decreased by 0.5% to
NT$11.37 billion
- Total operating costs and expenses increased by 5.7% to
NT$126.14 billion
- Net income totaled NT$30.96
billion, representing a 16.5% decrease
- Basic EPS was NT$3.99
"We are pleased with our third quarter financial results and we
remain on track to meet our full year financial guidance,"
commented Dr. Shyue-Ching Lu,
Chairman and Chief Executive Officer of Chunghwa Telecom. "In order
to meet customer demands in today's quickly evolving digital and
mobile world, we continued to leverage our full suite of telecom
services to further attract subscribers and steadily increase
average revenue per user ("ARPU"). In fact, recent surveys
indicated that our MOD offers the highest quality TV services in
Taiwan, which is reflected in our
revenue growth and increasing demand from advertisers. On the
mobile front, we continued to maintain our leadership with the
largest customer base and highest customer loyalty in Taiwan, delivering over 51.5% year-over-year
growth in mobile internet services revenue."
Revenue
Chunghwa's total net revenue for the third quarter of 2012
decreased by 2.3% to NT$54.40
billion. This total was comprised of 45.7% mobile,
11.1% internet, 34.8% domestic fixed, 7.1% international fixed, and
the remainder was from other businesses.
While the mobile VAS and handset sales revenue from the
Company's subsidiary Senao continued their strong growth momentum
during the quarter, total net revenue decreased. This decrease was
primarily attributable to several declining factors including;
Mobile voice revenue attributable to Chunghwa's market competition
and the National Communication Committee's ("NCC") tariff
reduction, revenue recognized under domestic fixed and internet
segments from the government integrated taxation information system
project which is nearing completion, domestic service revenue due
to mobile substitution, as well as Domestic Long Distance ("DLD"),
broadband and ISP revenue due to tariff cuts.
Total revenue for the mobile business increased to NT$24.88 billion for the third quarter 2012,
representing 4.7% year-on-year growth. The increase was primarily
due to growth in mobile VAS revenue and handset sales from
smartphone promotions offered through Senao, which offset a decline
in mobile voice revenue due to market competition and the NCC
tariff reductions.
Chunghwa's internet business revenue decreased by 6.1%
year-over-year to NT$6.05 billion in
the third quarter of 2012. The decrease was primarily
attributable to the previously mentioned government project, HiNet
tariff reductions, the Company's voluntary broadband tariff
reductions and the NCC tariff reductions.
For the third quarter of 2012, domestic fixed revenue totaled
NT$18.94 billion, representing a 7.7%
year-over-year decrease. In addition to the abovementioned
government project, Local service revenue decreased by 4.2%
year-over-year, mainly due to mobile substitution. Moreover, the
35.9% revenue decline in the DLD business was mainly due to the
tariff reductions that began this year.
Broadband access revenue, including ADSL and Fiber connections
("FTTx"), decreased by 3.7% year-over-year to NT$4.82 billion, primarily due to the Company's
voluntary broadband price reductions, as well as the mandated NCC
tariff reduction.
International fixed line revenue increased by 2.2% to
NT$.3.86 billion primarily due to an
increase in leased-line revenue.
Other revenue decreased by 44.3%, primarily due to a decrease in
construction revenue from the Company's property subsidiary.
For the first nine months of 2012, total revenue was
NT$164.01 billion, a 0.9% increase
compared to the same period last year. This total was comprised of
45.8% mobile, 11.1% Internet, 34.4% domestic fixed, 6.9%
international fixed, and the remainder was from other
businesses.
Operating Costs and Expenses
Total operating costs and expenses for the third quarter of 2012
amounted to NT$42.30 billion, an
increase of 1.1% compared to the same period of 2011. This increase
was mainly from Senao's cost of handsets sold and personnel expense
due to an early retirement program offered during the quarter. In
line with the Company's strategy, maintenance, material, rental and
depreciation expenses increased in order to support its broadband
and mobile internet service build-out.
Total operating costs and expenses for the first nine months of
2012 increased by 5.7% year-over-year to NT$126.14 billion, mainly due to the higher cost
of handsets sold, maintenance, material, rental and depreciation
expenses.
Income Tax
Income tax expense for the third quarter of 2012 was
NT$2.04 billion, representing a 1.6%
decrease, compared to NT$2.08 billion
for the same period of 2011.
Operating Income and Net Income
Income from operations decreased by 12.8% to NT$12.10 billion. The operating margin was 22.2%,
compared to 24.9% in the same period of 2011. Net income decreased
by 14.6% year-over-year to NT$10.20
billion. Basic earnings per share decreased to NT$1.31.
Cash Flow and EBITDA
Cash flow from operating activities for the third quarter of
2012 decreased by 17.2% year-over-year to NT$15.77 billion, mainly due to the decline in
income from operations compared with the same period of 2011.
EBITDA for the third quarter of 2012 decreased by 7.6% to
NT$20.27 billion. The EBITDA margin
was 37.3% compared to 39.4% in the same period of 2011. The lower
EBITDA margin was primarily due to tariff cuts and the higher
handset sales from our subsidiary Senao, of which the EBITDA margin
is relatively lower than our traditional telecom services.
Capital Expenditure ("Capex")
Total capex for the third quarter of 2012 amounted to
NT$8.33 billion, representing a 25.0%
year-over-year increase. Total capex was comprised of; 56.9%
domestic fixed communications, 19.2% mobile, 13.7% internet, 8.7%
international fixed communications, and the remainder was for other
uses.
Business and Operational Highlights
Broadband/HiNet
- This year, the Company is continuing to execute its strategy of
encouraging FTTx migration. As of September
30th, the number of FTTx subscribers reached 2.67 million,
accounting for 58.5% of total broadband users. Moreover, the number
of subscribers signing up for 50M connections reached 818 thousand.
- HiNet broadband subscribers totaled 3.77 million at the end of
September 2012, representing a
year-over-year increase of 2.6%.
Mobile
- As of September 30th, 2012,
Chunghwa had 10.21 million mobile subscribers, representing a 2.5%
year-over-year increase.
- As of September 30th, 2012, the
Company had 2.22 million mobile internet subscribers, demonstrating
strong growth of 68.5% year-over-year. The company revised up its
subscribers target for the end of 2012 from 2.35 billion to 2.45
million due to this strong growth momentum.
- Mobile VAS revenue for the third quarter of 2012 increased by
36.5% year-over-year to NT$5.35
billion, with mobile internet revenue, the largest
contributor to VAS revenue, increasing 51.5% year-over-year.
Domestic/International Fixed-line
- As of September 30, 2012, the
Company maintained its leading position in the fixed-line market,
with total 11.85 million subscribers.
- As of September, 30 2012, Chunghwa's Multimedia-on-Demand (MOD)
subscriber base exceeded 1.17 million subscribers.
Financial Statements
Financial statements and additional operational data can be
found on the Company's website at http://www.cht.com.tw/ir.
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.
Chunghwa provides fixed line, mobile, broadband access, and
internet services. The Company also provides information and
communication technology services to corporate customers.
Contact:
Fu-fu Shen
Phone: +886-2-2344-5488
Email: chtir@cht.com.tw
SOURCE Chunghwa Telecom Co., Ltd.