Chunghwa Telecom Reports Operating Results for the First Nine Months and Third Quarter of 2004 TAIPEI, Taiwan, R.O.C. Oct. 28 /Xinhua-PRNewswire-FirstCall/ -- Chunghwa Telecom Co., Ltd (TAIEX: 2412; NYSE: CHT) ("Chunghwa" or "the Company"), today announced its unaudited operating results for the third quarter of 2004. All figures were prepared in accordance with US GAAP. Highlights for the first nine months ending September 30, 2004: -- Revenues were NT$138.4 billion, a 1.5% YoY increase -- Net income was NT$39.6 billion, a 9% YoY increase -- Fully-diluted earnings per common share (EPS) was NT$4.11, or US$ 1.2 per ADS, and 9% YoY increase Highlights for the third quarter of 2004: -- Revenues were NT$46.5 billion, a 0.3% QoQ increase -- Net income was NT$13.2 billion, a 2.7% QoQ decrease -- Earnings per share (EPS) were NT$ 1.36, or US$0.4 per ADS, a 2.7% QoQ decrease. "We are very pleased with our results given the increasingly competitive landscape of the Taiwan telecom market," said Tan Ho Chen, Chairman of Chunghwa Telecom. "Through the first nine months, revenues increased 1.5%. Although it is well-known that our fixed line business is in decline, as it is for most telecom companies, we have worked very hard to maintain our overall profitability by concentrating on growing markets such as Internet and data and mobile businesses. Our ADSL business alone saw a tremendous 29% jump in new subscribers. As we move into the fourth quarter of 2004 and into year 2005, we will continue to focus on increasing shareholder returns by concentrating on these growing markets while also redoubling our efforts to implement stringent cost control. Summary Total revenue for the first nine months of 2004 was NT$138.4bn, a 1.5% increase YoY. Of this, 39.0% was from fixed-line services, 38.2% from wireless services and 21.3% from Internet and data services. The remainder was from other services. Revenue from the Company's mobile, and Internet and data services grew by 6.4% and 11.6%, respectively. International long distance revenue declined slightly by 2.4%, mainly due to stiff price competition and a decrease in outgoing minutes. Domestic long distance revenue declined by 11.8%, mainly because a number of customers transitioned to mobile services and also because of a decrease in interconnection revenues owing to the return of transit fees to alternative operators. Local call revenue declined by 7.2% YoY, again, mainly due to mobile substitution and a migration of subscribers to broadband from dial-up Internet access services. Total operating costs and expenses for first nine months 2004 decreased by 0.2% YoY, mainly because of a decrease in bad debt provisions and depreciation and amortization. The company will continue to implement stringent cost controls. Total revenue for the third quarter of 2004 was NT$46.5bn, a 0.3% QoQ increase. Of this, 38.9% was from fixed-line services, 38.8% was from wireless services and 20.4% was from Internet and data services. The remainder was from other services. We continued to shift our revenue mix towards growing businesses, including Internet and data and wireless services. Total operating costs and expenses for the third quarter of 2004 were NT$30.7bn, a 1.0% QoQ increase. This was mainly due to an increase in handset subsidies and other marketing expenses. Businesses Performance Highlights Internet and Data Services -- Internet and data revenue for first nine months increased by 11.6% YoY to approximately NT$29.4bn. Revenue in the third quarter of 2004 was NT$9.5bn, a 6.3% QoQ decrease. This was primarily driven by tariff reductions for our HiNet ISP service, and for ADSL services since June. -- The total number of Internet subscribers was about 3.8mn as of Sep. 30, 2004, a 7.0% YoY increase. In the third quarter of 2004, we added 72,000 subscribers. -- ADSL subscribers totaled 2.9mn as of Sep. 30, 2004, a 29% YoY increase. We continued our strong growth in this business by adding 195,000 ADSL subscribers in the third quarter of 2004. Mobile Service -- Mobile revenue for the first nine months of 2004 increased by 6.4% YoY to NT$52.6bn due to strong subscriber growth, an increase in minute usage and increased VAS revenue. For the third quarter of 2004, mobile revenue increased by 3.7%. This was due to strong subscriber growth and typical seasonal spikes in usage. -- At the end of September 2004, mobile subscribers reached 8.3mn, a 4.0% YoY increase. -- Our blended Average Revenue per User (ARPU) was NT$707 for the first nine months of the year. Q3 ARPU increased by 2.4% to NT$732 due to seasonal spikes in usage. -- Chunghwa continues to be the leading mobile operator in Taiwan in both revenue and subscriber market share with 35.4% and 36.2% respectively as of the end of August 2004, according to data announced on the Directorate General of Telecommunications (DGT) website. Fixed Line Services -- Total fixed line revenues for the first nine months 2004 declined by 7.1% to NT$54.0bn, mainly due to fixed-line competition, mobile substitution and a continuous migration of dial-up subscribers to ADSL broadband services. Fixed-line revenue for the third quarter of 2004 was NT$18.1bn, a decrease of 0.1% QoQ. -- Chunghwa's total fixed line subscriber base stood at approximately 13.2mn as of Sep. 30, 2004, a 1.0% YoY increase. Financial Statements Financial statements and additional operating data can be found on our 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 press conference 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 state owned enterprises by the ROC government and 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 filed with the U.S. Securities and Exchange Commission in connection with our U.S. initial public offering. The financial statements included in this press conference were unaudited, and prepared and published in accordance with U.S. GAAP. Chunghwa Telecom also prepared certain financial statements for the same periods discussed in this press conference under ROC GAAP. Investors are cautioned that there are many differences between ROC GAAP and U.S. 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 conference reflect the current belief of Chunghwa Telecom as of the date of this press conference and we undertake no obligation to update these forward-looking statements for events or circumstances that occur subsequent to such date. For more information, please contact: Fufu Shen, Investor Relations Tel: +886-2-2344-5488 Email: DATASOURCE: Chunghwa Telecom Co., Ltd CONTACT: Fufu Shen, +886 2 2344 5488 or

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