Continued Growth Amid Intense Competition TAIPEI, Taiwan, March 28 /Xinhua-PRNewswire-FirstCall/ -- Chunghwa Telecom Co., Ltd (TAIEX: 2412; NYSE: CHT) ("Chunghwa" or "the Company"), today reported its operating results for the fourth quarter and full fiscal year 2006. All figures were prepared in accordance with US GAAP. Financial Highlights for Fiscal 2006: -- Total revenue increased 0.9% to NT$186.34 billion -- Internet and data revenue increased 9.9% to NT$46.33 billion -- Mobile revenue was NT$73.02 billion, in line with the 2005 level -- Net income totaled NT$42.07 billion, an increase of 26.3% -- Earnings per share (EPS) were NT$4.34, or NT$43.43 per ADS -- Net cash flow from operations increased 16.2% to NT$100.15 billion Financial Highlights for 4Q06: -- Total revenue increased 2.8% to NT$47.55 billion -- Internet and data revenue rose 9.5% to NT$12.11 billion -- Mobile revenue was NT$18.15 billion, a decrease of 1.5% -- Net income totaled NT$11.16 billion, an increase of 524.3% -- Earnings per share (EPS) were NT$1.15, or NT$11.54 per ADS -- Net cash flow from operations increased 5.9% to NT$31.68 billion Revenues Total revenues for fiscal year 2006 grew year-over-year by 0.9% to NT$186.34 billion, of which 33.8% was from fixed-line services, 39.2% was from mobile services and 24.9% was from Internet and data services. Total revenue growth can mainly be attributed to an increased proportion of revenues from the Internet and data business, which was led by sustainable broadband subscriber growth and continuous migration of broadband customers towards higher-speed services. Mobile revenue remained flat in 2006. Declining fixed-to-mobile traffic, tariff reductions for mobile-to-fixed calls, and an increased amount of promotional packages were offset by 3.4% increase in usage minutes and 30% revenue growth from mobile VAS. Fixed-line revenues declined by 5.0%, the result of a 4.3% local revenue decrease due to mobile and broadband substitution, a 9.7% domestic long distance revenue decrease due to mobile substitution and VoIP, as well as an International long distance revenue decline of 3.7% from the impact of increasing wholesale minutes compared to total ILD minutes on unit price. For the fourth quarter of 2006, total revenues were NT$47.55 billion, a 2.8% increase over the same period last year. Of this, 33.3% was from fixed- line services, 38.2% was from mobile services and 25.5% was from Internet and data services. The continued revenue growth was mainly driven by increased Internet and data business and contribution of other services, particularly corporate solution business. Costs and expenses For fiscal 2006, total operating costs and expenses decreased year-over- year by 6.8% to NT$130.05 billion, mainly due to the exclusion of the one-time NT$10.98 billion compensation cost charge connected to the employee stock subscription program that was part of the Company's August 2005 privatization. Moreover, depreciation and amortization costs began to decrease in 2006 due to effective capital expenditure control over the last five years, and the trend is expected to continue. Nevertheless, this was partially offset by an increase in handset subsidies of NT$1.25 billion, the additional NT$2.31 billion expense associated with the Early Retirement Program (ERP), and employee bonuses. The headcount reduction is expected to benefit our future operations. Total operating costs and expenses for the fourth quarter of 2006 of NT$33.79 billion fell 25.4% compared to same period in 2005, reflecting the decreased compensation costs related to the employee stock subscription program. EBITDA and net income EBITDA for fiscal 2006 increased 12.3% to NT$96.95 billion and the EBITDA margin was 52.0%. Net income for 2006 was NT$42.07 billion; the 26.3% increase can be attributed to a combination of increased total revenues and a decrease in compensation costs related to the employee stock subscription program, and represents a net income margin of 22.6% compared to 18.0% in 2005. For the fourth quarter of 2006, EBITDA increased by 110.7% to NT$23.90 billion and the EBITDA margin was 50.2%. Net income increased by 524.3% to NT$11.16 billion. The significant EBITDA and net income increases were due to the lower level of compensation costs recognized in connection to the employee stock subscription program compared to the same period of last year. Capex Capital expenditures totaled NT$27.68 billon for the full year, representing 14.9% of total revenues. Cash Flows Net cash flow from operations grew strongly, increasing 16.2% to NT$100.15 billion during the year ending December 31, 2006, compared to NT$86.17 billion for 2005. As of December 31, 2006, the Company's cash and cash equivalents totaled NT$70.67 billion. Businesses Performance Highlights Internet and Data Services -- Chunghwa added 192,000 new HiNet subscribers over the last twelve months to bring the total number of Internet subscriptions to 4.30 million at the end of December 2006, a solid increase from 4.11 million a year earlier. -- Broadband subscribers, including ADSL and FTTB subscribers, increased to 4.04 million at the end of December 2006. 197,000 new ADSL subscribers and 165,000 new FTTB subscribers were added during the year. -- The data business continued to grow, and was up 6.6% primarily due to increased leased line revenue and the contribution from Chief Telecom recognized in the fourth quarter of 2006. Mobile Services -- At the end of December 2006, Chunghwa had 8.49 million mobile subscribers, up 4.0% from the previous year. -- Chunghwa remained the leading mobile operator in Taiwan for 2006, both in terms of 2G revenue and 2G subscriber market share, with 35.7% and 40.9% respectively. -- Chunghwa added 646,000 3G subscribers in fiscal 2006, which brought the total to 943,000. At the end of year 2006, 3G ARPU was 31% higher than that of 2G. -- Mobile VAS revenue for 2006 represented 5.7% of total mobile revenue, compared to 4.4% in 2005. For the fourth quarter of 2006, mobile VAS revenue as a percentage of total mobile revenue increased to over 6.0%. Fixed-line Services -- As of the end of December 2006, Chunghwa maintained its market leading fixed-line market position, with fixed-line subscribers totaling 13.12 million, slightly down by 1.0% compared to 2005. The Company's market shares for local, DLD and ILD remained flat through 2006. Other -- Chunghwa added 150,000 MOD subscribers in fiscal 2006, which brought the total to 249,000. Financial Statements Financial statements and additional operational data can be found on the Chunghwa Telecom website at http://www.cht.com.tw/ir/filedownload . About Chunghwa Telecom Chunghwa Telecom (TAIEX: 2412; NYSE: CHT) is the leading telecom service provider in Taiwan. Chunghwa Telecom provides fixed-line, mobile and Internet and data services to residential and business customers in Taiwan. Note Concerning Forward-looking Statements Except for statements in respect of historical matters, the statements made in this presentation 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 Telecom 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 telecom industry; the intensely competitive telecom industry; our relationship with our labor union; general economic and political conditions, including those related 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 SARS; and those risks identified in the section entitled "Risk Factors" in Chunghwa Telecom's Form F-1 and F-3 filed with the U.S. Securities and Exchange Commission in connection with our ADR public offering. The financial statements included in this presentation were prepared and published in accordance with US GAAP. Investors are cautioned that there are many differences between US GAAP and ROC GAAP. As a result, our results under U.S. GAAP and ROC GAAP may in many events be substantially different. The forward-looking statements in this press release reflect the current belief of Chunghwa Telecom as of the date of this press release and we undertake no obligation to update these forward-looking statements for events or circumstances that occur subsequent to such date. For inquiries: Fu-fu Shen Investor Relations Tel: +886-2-2344-5488 Email: DATASOURCE: Chunghwa Telecom CONTACT: Fu-fu Shen of Chunghwa Telecom , +886-2-2344-5488, Web site: http://www.cht.com.tw/

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