CHT — Call Transcript 2023

Jun 2, 2023

1Q 2023
Operating Results

May 9, 2023
UBS Future-Now APAC Conference 2023
June 12, 2023
Hong Kong

Notes:

Thank you. This is Angela Tsai, Director of Investor Relations for Chunghwa Telecom. Welcome to our first quarter 2023 results conference call. Joining me on the call today are Harrison Kuo, our Chairman and CEO, and Vincent Chen, our Chief Financial Officer.

During today’s call, management will begin by providing the highlights and our business overview in the first quarter, followed by a discussion of our segment performance and the financial results. After, we will move on to the question and answer portion of the call.

On slide 2, please note our safe harbor statement.

Now, I will turn the call over to our Chairman. Chairman Kuo, please go ahead.

Disclaimer

STATEMENT REGARDING UNAUDITED FINANCIAL INFORMATION

The unaudited financial information under T-IFRSs in this presentation is preliminary and subject to adjustments and modifications. Adjustments and modifications to the financial statements may be identified during the course of the audit /review work, which could result in significant differences from this preliminary unaudited financial information.

NOTE CONCERNING FORWARD-LOOKING STATEMENTS

This presentation 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 presentation reflect the current belief of Chunghwa as of the date of this presentation 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 presentation 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 and tax on assets and statutory employee profit sharing, which is similar to a tax on income and (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 T-IFRSs. EBITDA should not be considered as an alternate measure of net income or income from operations, as determined on a consolidated basis using amounts derived from statements of operations prepared in accordance with U.S. GAAP or T-IFRSs, 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.

Notes:

Business Overview

Notes:

Committed to Improving Shareholder Value

Cash Return
2023 AGM resolved to distribute NT$36.5 billion to shareholders
NT$4.702 per share
payout ratio 100%

NT$ bn
Note:
1 ADR = 10 common shares
The regular dividend has been calculated based on total share number 7,757,446,545.

Notes:

1Q23 Highlights

Industry Outlook
| Positive outlook on our regulator’s decision to conditionally approve the mergers of our peers, which we believe is good for a benign market development in the future Stable mobile market development in Taiwan with steady 5G penetration |
| --- |

Financials
| Strong Q1 results beat all financial guidance metrics Segment performance: positive revenue and profit YoY growth of all segments Rising mobile service revenue: +6.6% YoY, lead the industry |
| --- |

Operations
| Mobile revenue market share approached 40%, exceeding subscriber share by 2.9%: 4th consecutive QoQ increase from 39% in 2Q22 300M+ fixed broadband subs > 1 million Emerging innovative applications revenue > +30% YoY Accelerating video service subs and ad revenue with unique 5G + 4D multi-angle broadcasting on WBC |
| --- |

Notes:

Thank you, Angela, and hello, everyone. Welcome to our first quarter results conference call. As this is the first time I am speaking to investors as the Chairman and CEO of Chunghwa, I would like to thank all our investors for your long-term support over the past years, and look forward to continuing our relationship going forward. Chunghwa Telecom is truly a trustworthy company with growth opportunities and strong corporate governance.
Now, please flip to slide 4 for the highlights of the first-quarter. To begin with, we’d like to bring to your attentions that NCC, our regulator, gave its conditional approval of the mergers among our peers in the first quarter, which we believe is a positive move for shaping healthy market competition in Taiwan. Based on the steady 5G penetration and the future industry landscape, we expect stable mobile market development that will further support our revenue growth momentum going forward.
For the results of the first quarter 2023, we were pleased that we beat all financial targets despite the uncertainties in the macro-economic context, thanks to the vibrant growth of our three business groups, which all delivered positive YoY increases in each segment’s revenue and profits.
In addition, with our consistent business strategies that drive our mobile and broadband services, our telecom services continued to deliver robust performance in the first quarter, including our 6.6% YoY mobile service revenue growth that outperformed to lead the industry, as well as the encouraging fixed broadband high-speed 300Mbps and above service subscriptions exceeded the threshold of 1 million.
Our technology capabilities also continued to fuel the performance of innovative applications. As a result, EBG’s emerging enterprise application revenue demonstrated strong growth and was up by more than 30% year over year. For CBG, subscription and advertisement revenue from MOD and Hami Video accelerated due to our 5G plus 4D multi-angle broadcasting capabilities utilized in the broadcasting of the World Baseball Classic during the quarter.

Business Overview
Mobile Service


Mobile Revenue & Subs
Market Share (a)(b)
090 Postpaid ARPU 4% YoY
for 8 Consecutive-quarter Growth

Chart

Category	CHT
CHT	0.398
Others	0.602

Mobile service revenue(a)
YoY ▲ 6.6％
Monthly fee uplift from 4G
▲ 43%
Mobile Revenue Market Share exceeded subs market share by 2.9%

CHT’s Mobile revenue
market share: 39.7%

Chart

Category	Mobile Service Revenue	090 Postpaid ARPU
1Q22	14.84	515.0
2Q22	15.2	524.0
3Q22	15.37	526.0
4Q22	15.68	533.0
1Q23	15.83	536.0
39.8%
CHT’s Mobile subs market share: 36.8%
Source: Company data ,NCC statistics
Rev：Jan. 2023 to Mar. 2023
Sub：as of Mar. 2023
Note : a) Revenues are based on T-IFRSs; b) Excluding IoT SIMs
Source：Company data as of Mar. 2023
a) Consolidated Mobile Service Revenue (Including IoT)

Notes:

1Q23 09行動本業營收市占率39.7%，YoY(39.1%→39.7%)及QoQ(39.5%→39.7％)雙升；09行動門號市占率36.8%，YoY (36.0%→36.8%)與QoQ(36.6%→36.8％)雙升。
2022年底5G全區基地台逾1.68萬台，人口涵蓋率達94%；2023年預計超過1.9萬台，涵蓋率96% (不公開)
預計2023年市場合併後，三業者5G滲透率趨於一致；專注加速5G滲透、行動服務營收成長與價值競爭。
行動服務營收(含IoT)YoY+6.6%：行動月租YoY+5.7%(+7.3億)，主因升5G約Upsell及客戶數成長，價差YoY+5.06億、量差YoY+2.99億；行動數據YoY+111.4%(+3.9億)，主因漫遊及預付卡成長；行動加值YoY持平；疫情趨緩使行動語音YoY-8.7%(-0.5億)、簡訊YoY-14.7%(-0.8億)，1Q22 NCC防疫簡訊營收亦墊高基期。
3月中華09門號1108.6萬門、YoY+4.2% ；09月租型門號960.1萬門、 YoY+1.9%。
1Q23「4G升5G約」平均月繳金額提升+43%(588元→842元、+254元)；惟5G續5G平均月繳金額-0.7%(1021元→1014元)
09門號Post-paid ARPU YoY+4.0%或21元(515→536)，QoQ+3元(533→536)，因行動月租(YoY+16.7元)及數據通信(YoY+9.6元)成長，彌補語音(YoY-2.2元)、簡訊及加值營收減少(YoY共-3.5元)。
四月合作Line Mobile 5G，強強攜手、合作雙贏，為客戶創造更多價值。
Now, let’s move onto a closer look at our mobile business on slide 5.
In the first quarter, we were delighted to report that we expanded our leadership in subscriber share and revenue share in Taiwan’s mobile market, climbing to 36.8% and 39.7%, respectively, with growth on a YoY and QoQ basis, affirming our sustainable leading position in Taiwan. We are even more pleased to see our revenue share exceeded our subscriber share by 2.9%, reflecting a healthier subscriber structure compared to our peers.
Our mobile service revenue also took the lead in the industry with a 6.6% increase, maintaining its growth for 21 consecutive months on a year-over-year basis, owing to the upsells resulting from 5G migration and the increase of post-paid subscriber numbers. For those who migrate from our 4G to 5G, we observed an average 43% uplift in their mobile monthly fees. Additionally, owing to the revitalized cross-border activities, we see our roaming revenue and pre-paid revenue continued to ramp up in the first quarter. Total mobile subscriber numbers, excluding IoT SIMs, was up by 4.2% year-over-year backed by the increasing pre-paid and postpaid subscriber numbers, maintaining its upward trajectory for the 8th consecutive quarter.
In April, we teamed up with Line Mobile Taiwan to leverage digital capabilities on both sides that jointly increase better quality of customer service. We will continue our value creation strategy to expand our ecosystems going forward.

Business Overview
Fixed Broadband Service

ARPU YoY Growth for
14 Consecutive Quarters
Higher-Speed Adoption Growth
Fixed Broadband Revenue(a) YoY ▲ 2.5％
Fixed Broadband ARPU YoY ▲ 0.8％
300M+ Subs > 1 million

Chart

Category	ADSL	Fiber (<100M)	Fiber (≥100M~<300M)	Fiber (≥300M)
1Q22	0.15	0.38	0.31	0.16
2Q22	0.148	0.361	0.312	0.169
3Q22	0.146	0.352	0.295	0.196
4Q22	0.145	0.345	0.281	0.221
1Q23	0.143	0.334	0.274	0.239

[unsupported chart]

(Thousand)
Note : (a) Revenue is calculated based on T-IFRSs

Notes:

2023年主推Wi-Fi 6。
重視高速客戶成長數。
1Q23固網寬頻客戶數YoY+0.6%(+2.7萬戶)；HiNet寬頻客戶數YoY+1.2% (+4.5萬戶)，QoQ -0.03% (-1千戶)，主因疫情趨緩，疫情紅利降溫。
累計至1Q23，100M以上達225.2萬戶，YoY+9.9%(+20.3萬戶)；300M(含)以上達105.3萬戶，YoY+54% (+36.9萬戶)，主要來自於60M及100M客戶升速。
1Q23網寬頻合併營收YoY+2.5%(QoQ-0.6%為牌價降價影響)；寬頻ARPU 766元(QoQ-0.7%主因4Q22企客專案基期較高及本季續約不連貫及本公司1月主動降牌告之影響)，YoY +0.8%。

Moving on to slide 6, you may find an update of our fixed broadband business.
We rolled out speed upgrade promotion package in the second half of 2022, which was very well-received and beyond our expectation. Following the speed upgrading momentum, we are delighted to announce that our accumulated subscribers adopting 300Mpbs and above passed the threshold of 1 million in the first quarter. This success affirmed our strategy of focused resource allocation on attracting high speed service adoption. Going forward, we will follow the success and tilt our resources to grow 300Mbps, 500Mbps and Giga-level subscriptions.
In the first quarter, total fixed broadband revenue increased by 2.5% year over year driven by the digital trend and its opportunities. Fixed broadband ARPU also continued its growth trend for the 14th consecutive quarter, increasing by 0.8% year over year.
Now, let’s move on to the performance of our customer-centric business groups.

Segment Reporting

Notes:

Consumer Business Group (CBG)
1Q23 Financial Summary

Income before tax grew NT$0.24 billion, or 3.3% YoY


Revenue
Mobile service revenue of CBG +7.2% YoY due to continued growth of 5G migration and
postpaid subs

+4.1% YoY

Chart

Category	Mobile Services	Fixed-line Services	Sales	Others
1Q22	12.618195492	10.618374057	8.988287433	0.490632097
1Q23	13.522072934	10.597720958	9.384626874	0.550339776
of CBG increased due to the successful upsell along with the speed upgrade and strong growth of home Wi-Fi services
34.05

32.72
Sales revenue of CBG increased by 4.4% YoY due to the eased iPhone supply chain bottleneck

Notes:

CBG稅前淨利本期74.7億元，較去年同期72.3億元，YoY +3.3%(+2.4億)。
電信利潤增加1.5億元:主因行動業務收入增加；但配合核心業務成長之持續建設使線路維護、折舊及攤銷等成本增加，加上網路互連費用及外包費用增加，抵銷營收成長
資通訊及其他業務利潤增加1.2億元，主因政府補助收入增加所致
CBG營收YoY +4.1%；
行動服務營收YoY +7.2% (+9.04億)，主因4G續5G約Upsell及09門號數成長所帶動。
固網服務營收YoY -0.2% (-0.21億) ，主因固網語音下跌抵銷固網寬頻成長。
銷貨收入YoY +4.4% (+3.96億)，主因iPhone旗艦新機供貨恢復穩定，智慧通訊(手機終端)營收較去年同期成長。

Slide 8 presents the performance of our CBG group.
In the first quarter, income before tax of CBG increased by 3.3% year-over-year mainly due to the enduring growth of telecom services. Total revenue of CBG increased by 4.1% year-over-year while mobile service revenue grew by 7.2% year-over-year propelled by stable 5G migration and the increase of postpaid subscriber numbers. Fixed-line service revenue was flat while fixed broadband revenue maintained its upward trend owing to the successful upsell along with the speed upgrade and strong growth of home Wi-Fi services. Sales revenue increased by 4.4% year-over-year mainly due to the stabilized iPhone supply during the quarter.

Consumer Business Group (CBG)
1Q23 Highlights

Multiple-Play Package Performance
Home Wi-Fi
Subscriptions
IPTV/MOD + OTT
Business Performance
Package subscription
+17.6 % QoQ
Home Wi-Fi subscriptions
+ 150.9 % YoY
Largest video platform in Taiwan with subscribers exceeding 2.89mn

Chart

Category	Home Wi-Fi subscriber sunscription YoY
1Q22	0.101
2Q22	1.279
3Q22	1.432
4Q22	2.637
1Q23	1.509

Chart

Category	IPTV(MOD)+OTT Subscription(K)
1Q22	2588.0
2Q22	2665.0
3Q22	2713.0
4Q22	2786.0
1Q23	2890.0

Chart

Category	Multiple-Play Package sunscription QoQ
1Q22	0.447
2Q22	0.132
3Q22	0.338
4Q22	0.28
1Q23	0.176

Notes:

三網Multiple Play 實績 364,770 路，QoQ +17.6%(+54,554路)
付費家用Wi-Fi當季淨增AP戶數 YoY +150.9%(+11.06萬台)，QoQ-26.2% (-3.9萬台) 。
MOD + Hami Video影視客戶數289萬戶，YoY +12.3% (+31.6萬戶)，維持台灣最大影視平台
MOD客戶數206萬戶，YoY +0.1% (+0.3萬戶)，QoQ +0.5% (+1.1萬戶)。MOD市占率30.6% vs. CATV市占衰退1.9% (-9.2萬戶)，相對緩衰。
MOD營收9.36億元，YoY+0.9% (+0.08億) ，主因1Q23 仍有MOD家速方案支撐（含SVOD upsell 至 《影劇館+》+2.6百萬、自選餐客戶75％選擇全選餐+4百萬）、部分WBC廣告浥注
Hami Video客戶數83萬，YoY+56.3% (+30萬戶)，因影劇年約付費戶數成長與WBC經典賽帶動
Hami Video 營收1.38億元，YoY成長53.8％(+0.48億)；主因客戶訂閱數增加，未來亦將搶攻CATV剪線族市場，加速客戶增加以帶動OTT營收成長。
Hami Video運動賽事轉播：2022-2023體育轉播包含NBA、WBC棒球經典賽、BWF(世界羽球聯盟)、HBL（高中籃球甲級聯賽）、杭州亞運。
Slide 9 further illustrates our consumer business group highlights.
In the first quarter, our multiple-play package continued to support the growth momentum of our CBG business. The subscriber numbers of mobile, fixed-broadband and Wi-Fi services altogether demonstrated 17.6% quarter-over-quarter growth. In particular, our Home Wi-Fi subscription numbers increased by 1.5 times on year-over-year basis, boosting our subscription-based revenue and sustaining the popularity of home-centric applications.
The number of our video subscription increased during the quarter thanks to our attractive content and effective marketing strategies. MOD’s revenue and subscriber number increased mainly due to our successful bundled plans promoting MOD and fixed broadband altogether. Hami Video sign-ups soared thanks to our well-received broadcasting of the World Baseball Classic held in Taiwan. We demonstrated our 5G + 4D panorama broadcasting technology and delivered excellent viewing experiences. The success was also reflected in the growth of our advertisement revenue. We will continue to invest in sports events and exclusive content to maintain our video platform leading positions in Taiwan.

Enterprise Business Group (EBG)
1Q23 Financial Summary

Income before tax grew NT$0.14 billion, or 3.7% YoY


EBG revenue +8.2% YoY mainly driven by continued strong ICT business growth
Revenue

+8.2% YoY
Mobile service revenue of EBG increased mainly due to the growth of international roaming revenue and 5G contribution

Chart

Category	Mobile Services	Fixed-line Services	ICT Business	Others
1Q22	2.17	8.52	4.06	1.06
1Q23	2.173	8.39	5.14	1.4

17.10
15.81
ICT business revenue of EBG increased mainly driven by the strong growth of our emerging services such as 5G private network, IDC, cloud, cyber security and big data with double-digit YoY growth

Notes:

Enterprise Business Group (EBG)
1Q23 Highlights

Emerging Enterprise Application Revenue 31.5% YoY

Enterprise ICT Business Revenue
Continue to develop 5G smart medical applications via 5G private networks to facilitate remote collaboration in the hospitals

Big Data

YoY  131.3%

5G private network
YoY 100%

Cloud Service
YoY 38.5%
Integrate text analysis and big data/AI innovative applications to successfully obtain projects

Cyber Security
YoY  31.5%

IDC
YoY  38.7%

AIoT
YoY  11.6%
Develop international cloud capacity and obtain the first VMware Sovereign Cloud certificate in Taiwan to serve highly data-sensitive clients

Notes:

International Business Group (IBG) 1Q23 Financial Summary

Income before tax grew NT$0.06 billion, or 13.3% YoY


IBG revenue +24.3% YoY mainly driven by ICT and fixed-line service revenue

Revenue

+24.3%(a) YoY

Chart

Category	Fixed-line Services	ICT Business	Others
1Q22	1.226437591	0.368328532	0.11945941199999986
1Q23	1.338889	0.545498	0.245543
(Billion)
2.13

0.25
1.71
Our Japan subsidiary successfully obtained the Specific Construction License to facilitate acquisition of large telecom construction projects in Japan

Note : (a) The calculation of growth rate is based on actual amount

Notes:

國際電信部門稅前淨利5.1億元較去年同期4.5億元，YoY+13.3% (+0.6億)。
資通訊及其他利潤增加0.5億元: 資通訊及其他收入增加2.2億元，主因係國際客戶設備代管收入增加1.6億元，政府補助收入增加0.6億元；資通訊及其他業務成本增加1.7億元，主要係專案建置成本(含機房客戶設備代管)增加。
IBG合併營收21.3億元，YoY +24.3%(+4.15億)；排除ST2補償金，YoY +20.6% (+3.5億)：國際電路需求成長使固網服務營收增加；IDC及雲端業務的需求增加，使ICT業務營收成長。
固網營收13.4億元，YoY +9.2% (+1.1億)，主因國際電路出租需求增加。
ICT營收5.5億元，YoY+48.1%(+1.8億)，主因IDC及雲端需求增加。
其他(行動服務營收、銷貨收入、租賃等)營收2.5億元，YoY+105.5% (+1.3億)；排除ST2補償金0.62億，YoY +53.6% (+0.64億)。
行動服務營收(行動語音、漫遊、跨境物聯網等) YoY +141% (+0.79億)。
銷貨收入、租賃及其他：YoY +74.1% (+0.47億)，含ST2補償金0.62億。
提供OTT業者海/陸纜整合、IDC、HiNet Peering等四合一服務，協助落地台灣。
提供大型台商於美國、日本、東南亞等海外擴廠之資通訊整合、4G訊改及5G專網服務。
日本子公司取得電氣通信工事之特定建設業許可，可承接台商大規模專案工程。
SJC2海纜預計113年Q1完工；Apricot預計113年啟用，採非經南海的菲印尼海域的新海纜路由，強化本公司海纜多元化並積極爭取菲、印尼新商機。
Slide 12 illustrates our international business performance.
In the first quarter, our international business group revenue increased by 24.3% year-over-year, mainly driven by emerging business revenue and fixed broadband revenue due to strong demand of International Private Leased Circuit, IDC and cloud services from global clients.
In the first quarter, our subsidiary in Japan made great strides as they successfully received the green light to acquire large-scale ICT construction projects in Japan by obtaining Japan’s Specific Construction License for the telecommunication construction business. With the license, we anticipate foreseen business expansion in Japan, particularly the areas of large ICT projects and 5G private network constructions.
Now, l would like to turn the call to Vincent for our financial highlights.

Financial Overview

Notes:

Income Statement Highlights

| (NT$bn) | Q1 2022 | Q1 2023 | Growth % |
| --- | --- | --- | --- |
| Revenues | 51.30 | 54.21 | 5.7 |
| Operating Costs and Expenses | 39.63 | 42.04 | 6.1 |
| Income from Operations | 11.66 | 12.17 | 4.4 |
| Net Income2 | 9.06 | 9.64 | 6.4 |
| EPS | 1.17 | 1.24 | 6.4 |
| EBITDA3 | 21.34 | 22.05 | 3.3 |
| EBITDA Margin (%) | 41.61 | 40.68 | |
Note:
Financials are prepared in accordance with T-IFRSs. Figures for 2023 are unaudited.
Net income attributable to owners of the parent.
EBITDA = operating income + depreciation & amortization.
The calculation of growth rates is based on NT$mn.

Notes:

Balance Sheet Highlights

| (NT$bn) | 2022.12.31 | 2023.03.31 | Growth % |
| --- | --- | --- | --- |
| Total Assets | 523.20 | 524.58 | 0.3 |
| Current assets | 101.90 | 107.25 | 5.3 |
| Property, plant and equipment | 291.53 | 289.18 | -0.8 |
| Total Liabilities | 129.42 | 121.11 | -6.4 |
| Accounts Payable | 16.97 | 10.29 | -39.4 |
| Total Equity | 393.78 | 403.47 | 2.5 |
| Debt Ratio (%) 3 | 24.74 | 23.09 | -6.7 |
| Net Debt / EBITDA (x) 4 | 0 | 0 | - |
Note:
惠請協助以”Net Debt” ，EBITDA以年化計算。
Financial Template：Net Debt計算項目為：短期借款+應付短期票券+一年內到期之長期借款+長期借款+應付公司債-現金及約當現金
Note:
Financials are prepared in accordance with T-IFRSs. Figures for 2023 are unaudited.
The calculation of growth rates is based on NT$mn.
Debt includes short-term and long-term liabilities. The debt ratio is defined as the ratio of total debt to total assets.
4. Net Debt includes short-term loans + short-term bills payable + current portion of long-term loans+ long-term loans + bonds payable – cash and cash equivalents.

Notes:

Now move on to page 15 for balance sheet highlights.

Compared to the end of 2022, total assets on March 31 of 2023 grew by 1.38 billion mainly due to an increase in current assets. Total liabilities declined by 6.4%, primarily attributable to the decrease of accounts payable. This brings down our debt ratio from 24% to 23%. On top of that, net debt over EBITDA remains zero. Altogether, these ratios showcase how robust our balance sheet is.

Cash Flow Summary

| (NT$bn) | Q1 2022 | Q1 2023 | Growth % |
| --- | --- | --- | --- |
| Cash Flows from Operating Activities | 11.82 | 11.21 | -5.2 |
| Capital Expenditures2 | 5.23 | 5.42 | 3.6 |
| Mobile2 | 2.25 | 1.46 | -34.8 |
| Non-Mobile2 | 2.98 | 3.95 | 32.5 |
| Free Cash Flow3 | 6.59 | 5.79 | -12.2 |
Note:
Financials are prepared in accordance with T-IFRSs. Figures for 2023 are unaudited.
Numbers or percentages are on cash basis.
Free cash flow is calculated by subtracting CapEx from Net Cash Flows from Operating Activities.

Notes:

Page 16 presents the summary of our cash flows.
Cash flows from operating activities decreased by 5.2% on year, mainly due to the settlement of salaries payable, and payments to suppliers and maintenance contractors.
As for capital expenditure, the total amount of cash outlays increased by 3.6%. Specifically, mobile-related capex was lowered by 35% on year whereas non-mobile related capex increased by 33% on year mainly attributable to IDC investments. In addition, free cash flows decreased by 12.2% on a year-over-year basis.
Overall, our strong balance sheet together with robust cash flows from operations lay out solid foundation for us to steer through economic uncertainty and to remain committed to driving operational growth and creating long-term value for our shareholders.

Operating Results vs. Forecasts

| (NT$bn) | Q1 2023?(A) | Q1 2023?（E） | Achieving ?% | 2023 (E) | Achieving ?% |
| --- | --- | --- | --- | --- | --- |
| Revenues | 54.21 | 52.21~52.62 | 103.0~103.8 | 221.27~222.79 | 24.3~24.5 |
| Operating Costs and Expenses | 42.04 | 41.48~41.64 | 100.9~101.4 | 176.58~177.29 | 23.7~23.8 |
| Income from Operations | 12.17 | 10.73~10.97 | 111.0~113.4 | 44.67~45.99 | 26.5~27.2 |
| Net Income2 | 9.64 | 8.34~8.57 | 112.5~115.6 | 34.55~36.10 | 26.7~27.9 |
| EPS | 1.24 | 1.07~1.10 | 112.5~115.6 | 4.45~4.65 | 26.7~27.9 |
| EBITDA3 | 22.05 | 20.65~20.88 | 105.6~106.8 | 85.05~86.36 | 25.5~25.9 |
| EBITDA Margin (%) | 40.68 | 39.55~39.69 | | 38.44~38.76 | |
Note:
Financials are prepared in accordance with T-IFRSs. Figures for 2023 are unaudited.
Net income attributable to owners of the parent.
EBITDA = operating income + Depreciation & Amortization.

Notes:

On slide 17, the table reports financial results against our financial guidance.
In the first quarter of 2023, all performance measures, including revenue, income from operations, net income, EBITDA, and EBITDA margin exceeded our financial forecasts. Notably, profit-related performance measures, such as income from operations, net income and EBITDA beat our guidance by a modest margin, attributable to continuously strong performance in core and ICT businesses.
That concludes the overview of our Q1 financial results. Let me turn the call over to Harrison.

Awards and ESG Recognitions

Awarded Top 5% S&P Global ESG Score in the Sustainability Yearbook 2023
Competing with the over 7,800 companies all over the world
Clinched the 3rd place in the Telecommunications Group
Won FinanceAsia Awards with 3 Gold, 1 Silver and 2 Bronze Award
Gold Award in categories of Best Overall Company across industries, Best Telecommunications Company and Best Corporate ESG Strategy
Silver Award in categories of Best Large-cap; and Bronze Award in categories of Best DEI Strategy and Best Investor Relations
Awarded by TWSE as One of the TOP 5% companies for best corporate governance
8th times awarded among Taiwan companies for the Best Corporate Governance in 2022
Subsidiaries, including Chief Telecom and CHPT, also ranked as TOP 5% for best corporate governance among companies, demonstrating CHT Group’s consolidated corporate governance strength

Notes:

Thank you, Vincent. On slide 18 is our awards and ESG recognitions received in the first quarter.
In the Sustainability Yearbook 2023, we were awarded the prestigious Top 5% S&P Global ESG Score, competing against over 7,800 companies worldwide. Our impressive performance also placed us the top 5% and the 3rd ranking in the Telecommunications group.
At the FinanceAsia Awards, we proudly received 3 Gold Awards for Best Overall Company, Best Telecommunications Company, and Best Corporate ESG Strategy. Additionally, we were honored with the Silver Award for Best Large-cap, and the Bronze Awards for Best Best Investor Relations and Best Diversity, Equation and Inclusion Awards. I’d like to thank investors again for your encouraging support.
Moreover, our commitment to corporate governance excellence was acknowledged by Taiwan Stock Exchange, recognizing us as one of the TOP 5% companies. This marks our 8th time receiving awards for best corporate governance Taiwanese companies in 2022. Our subsidiaries, Chief Telecom and Chunghwa Precision Test, also received the TOP 5% recognition for their corporate governance, showcasing the consolidated strengths of the CHT Group.
These achievements solidify our position as a leader in the telecommunications industry and exemplify our unwavering commitment to sustainability, ethical practices, and corporate excellence. Guided by responsible business principles, we remain dedicated to delivering long-term value for our stakeholders.
This concludes our prepared remarks, thank you for your attention. At this time, I would like to open up our conference call for questions.

Q & A

Notes: