Chunghwa Telecom Co., Ltd. — Interim / Quarterly Report 2015

May 18, 2015

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1Q 2015 Operating Results

May 27-28, 2015 TechNet Conference Asia Pacific 2015 Goldman Sachs

TSE: 2412 NYSE: CHT

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.

© 2015 Chunghwa Telecom 2

Committed to Improving Shareholder Value

Cash Return

NT$ bn

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45
40
5.59
35
30
16.58
25
42.4
20
37.7
35.9
15
10 18.5
5
0
2012 2013 2014 2015
Regular Dividend Special Dividend
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Board resolved to distribute NT$37.7 billion in 2015

• Dividend per share NT$4.8564

• Payout ratio about 97.6%

Note:

1. 1 ADR = 10 common shares

2. The regular dividend has been calculated based on total share number 7,757,446,545.

© 2015 Chunghwa Telecom 3

Business Overview

Chunghwa Telecom Overview

Strong Market Position[(a) ]

Mobile Performance

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Domestic Fixed

#1 Local

–

• 94.2% share by subs (11.32 mn subs)

• 85.7% share by minutes

• 1 DLD

• 82.6% share by minutes

• 1 Broadband access

• 76.4% share by subs[ (b)(c) ] (4.52 mn subs)

Mobile

• 1 Mobile subscribers

• 38.4% market share[(d)] (11.22mn subs)

#1 Mobile revenue

• 36.8% market share[(d) ]

Internet

• 1 ISP

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Mobile market shares continued to grow

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39.0% 38.4%
38.5%
38.0%
37.5%
37.0%
36.1%
36.5%
36.8%
36.0%
35.5%
35.0%
35.4%
34.5%
34.0%
33.5%
Mar. 14 Mar. 15
Subscriber share Revenue share
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• 68.4% share by subs (4.22 mn subs)

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International Fixed

#1 ILD

• 57.2% share by minutes

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Accumulating over 2 million 4G subscribers in April 2015

Source: Company data, MOTC, and NCC statistics

• a) Market share as of March 2015

• b) CHT access circuits were not included c) Excluding PWLAN subscriber numbers d) Includes 2G, 3G, 4G and PHS

• e) Revenues are based on T-IFRSs .

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Expecting population coverage to reach 99% for the whole country by the end of 2015

© 2015 Chunghwa Telecom 5

Number One Mobile Services Provider

VAS Performance Performance

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NT$ mn 47.3% 48.5%
45.6%
42.6% 43.9%
953
1,046
8,000 1,012 40%
998
1,040 30%
6,000 7,901 8,360 20%
7,541
7,053
6,615 10%
4,000 0%
Q1 14 Q2 14 Q3 14 Q4 14 Q1 15
Mobile Internet SMS Others
Highest Subs & Lowest Churn
Thousand
12,000 9.0%
8.0%
10,000
7.0%
8,000 6.0%
5.0%
6,000
4.0%
4,000 3.0%
2.0%
2,000
1.0%
0 0.0%
Q1 14 Q2 14 Q3 14 Q4 14 Q1 15
CHT TWM FET CHT TWM FET
Mobile
Revenue
VAS revenue
Service
VAS as %of
Churn
Subscribers
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Strategy

Focusing on 4G service promotion and mobile internet subscriber expansion

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Promoting VAS and new applications

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Developing enterprise mobile solutions for targeted customers

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Continuing the migration of 2G customers to 3G/4G network

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Mobile internet adoption

Mobile Internet Subs as % of Postpaid Subs

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NT$
49.0% 51.3% 54.1% 56.0%
7000 45.6% 60%
6000
40%
5000
4000 4286 4646 4891 5157 5350 20%
3000 0%
Mar 14 Jun 14 Sep 14 Dec 14 Mar 15
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Note : Mobile internet subscriber number excludes subscribers without plan subscription.

© 2015Chunghwa Telecom 6

Fixed Broadband and Internet Services

Performance

Strategy

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Broadband Access Revenue
NT$ mn 707 698 701 709 713 ARPU NT$
5,000 3,956 3,886 3,978 4,074 4,136 600
400
2,500
865 812 784 761 730 200
0 0
Q1 14 Q2 14 Q3 14 Q4 14 Q1 15
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ADSL Fiber
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Leveraging network capability to offer highspeed upload service

Optimizing broadband networks quality to increase customer satisfaction

Leveraging mobile, broadband and Wi-Fi capabilities to offer seamless internet services Expediting CDN construction and OTT promotion to enhance digital convergence product competitiveness

Note1 : Broadband ARPU is calculated as access plus ISP Note2 : Revenue is calculated based on T-IFRSs

Fixed Broadband Subs

Internet Revenue

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NT$ mn
15.9% 15.3%
8,400 14.0%
13.4% 12.7%
15%
6,600
10%
4,800 6,134 6,295 6,876 6,692 6,218 5%
3,000 0%
Q1 14 Q2 14 Q3 14 Q4 14 Q1 15
Revenue VAS as % of Internet Revenue
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Note : Revenue is calculated based on T-IFRSs

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Thousand
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4,537 4,543 4,547 4,539 4,529
5,000
4,000 492 627 752 867 936
3,000
2,501 2,405 2,331 2,253 2,244
2,000
1,000
1,544 1,511 1,464 1,419 1,349
0
Mar 14 Jun 14 Sep 14 Dec 14 Mar 15
ADSL Fiber (<100M) Fiber ( ≧ 100M)
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© 2015Chunghwa Telecom 7

MOD/ IPTV Service

Performance

Revenue increased by 10.0% YoY for Q1 2015

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Subscriber market share (CATV+IPTV) YoY grew from 19.8% to 20.4% in Q4 2014

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Household TV Usage rate increased to 58.7% from 66.2% YoY for Q1 2015

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thousand
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0.99
0.98
1,300 0.90 1.0
0.87
0.85 0.9
1,200
1,286 1,291 1,285 1,286 0.8
1,253
1,100
0.7
1,000 0.6
Mar 14 Jun 14 Sep 14 Dec 14 Mar 15
Total Subscribers Average Package Subcription per MOD subscriber
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Strategy

Continuing to enrich local contents and VOD programs

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Optimizing MOD cost structure Leveraging the existing broadband subscriber base to grow MOD subscription

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Providing the SVoD packages and improving user experience to differentiate from CATV services

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NT$ mn

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MOD Revenue
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800
600
698
654 662
602 615
400
Q1 14 Q2 14 Q3 14 Q4 14 Q1 15
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© 2015 Chunghwa Telecom 8

Enterprise ICT Initiatives

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Performance

Information security and cloud service revenue doubled YoY in Q1 2015

Personal Cloud (Hami[+] ) subscribers accumulated to 2.8 million

IoT service revenue totaled NT$500 mn in 1Q 2015

Acquired several significant ICT projects in Q1 2015 with contract amount totaling NT$900 mn

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Strategy

Leveraging our advantage on network infrastructure, IDC, CDN, etc. to expand ICT business

Offering ICT total solutions by integrating our capability on cloud, information security, IoT and customization

Developing in-house big data capability for future commercialization

Cooperating with partners to develop an ecosystem to provide IoT services across various industries

.

© 2015 Chunghwa Telecom 9

Financials Overview

Financials: Income Statement Highlights

Consolidated	Consolidated	Consolidated	Consolidated	Consolidated	Consolidated
(NT$bn) Q1 2014	Q1 2015	Growth %	2013	2014	Growth %
Revenues 55.05 56.47		2.6	227.98	226.61	(0.6)
Operating Costs and Expenses 43.14 44.66		3.5	180.36	182.44	1.1
Other Income and Expenses (0.01) (0.03)		(222.2)	0.06	0.63	967.8
Income from Operations 11.90 11.78		(0.9)	47.68	44.80	(6.0)
Net Income2 10.24 10.45		2.0	39.72	38.62	(2.7)
Net Income Margin3 (%) 18.86 18.77		-	17.91	17.28	-
EPS 1.32 1.35		2.0	5.12	4.98	(2.7)
EBITDA 20.26 20.34		0.4	79.87	78.92	(1.2)
EBITDA Margin (%) 36.81 36.01		-	35.03	34.83	-

Note:

1. Financials are prepared in accordance with T-IFRSs. Figures of Q1 2015 are unaudited.

2. Net income attributable to owners of the parent.

3. Net income margin is based on consolidated net income (including net income attributable to NCI) 4. The calculation of growth rates is based on NT$mn.

© 2015 Chunghwa Telecom 11

Financials: Business Segment Revenues

(NT$bn) Q1 2014	(NT$bn) Q1 2014	Q1 2015	Growth %	2013	2014	Growth %
Domestic Fixed	17.15	17.54	2.3	73.50	72.06	(2.0)
Local	8.90	8.35	(6.2)	37.82	35.60	(5.9)
DLD	0.82	0.77	(5.9)	3.46	3.31	(4.6)
Broadband Access	4.82	4.87	0.9	19.11	19.12	0.0
MOD	0.60	0.66	10.0	2.22	2.57	15.8
Mobile	27.51	28.00	1.8	110.59	110.67	0.1
Mobile Voice	10.85	10.18	(6.2)	48.33	42.70	(11.6)
Mobile VAS	8.05	9.58	19.0	28.38	34.77	22.5
Sales of Mobile Handsets, Tablets and Data Cards	8.42	8.06	(4.3)	33.10	32.45	(2.0)
Internet	6.13	6.22	1.4	25.45	26.00	2.2
Internet Services	4.29	4.33	0.9	17.19	17.24	0.3
Internet VAS	0.67	0.63	(5.4)	2.69	2.96	10.1
International Fixed	3.80	4.06	6.9	15.75	15.31	(2.8)
ILD	2.73	2.68	(1.7)	11.25	10.43	(7.3)
Leased line	0.36	0.42	15.0	1.43	1.52	6.7
Others	0.46	0.66	43.7	2.69	2.57	(4.5)
Total	55.05	56.47	2.6	227.98	226.61	(0.6)

Note:

1. Financials are prepared in accordance with T-IFRSs. Figures of Q1 2015 are unaudited.

2. The calculation of growth rates is based on NT$ mn.

© 2015 Chunghwa Telecom 12

Financials: Costs & Expenses

Consolidated	Consolidated	Consolidated	Consolidated	Consolidated	Consolidated	Consolidated
(NT$bn)	Q1 2014	Q1 2015	Growth %	2013	2014	Growth %
Operating Costs 35.02		36.70	4.8	147.36	148.38	0.7
Operating Expenses 8.12		7.96	(2.0)	33.00	34.06	3.2
Marketing 6.17		5.98	(3.0)	25.16	26.14	3.9
General and Administrative 1.08		1.14	5.7	4.19	4.42	5.3
R&D Expense 0.87		0.84	(4.2)	3.65	3.50	(4.2)
Total 43.14		44.66	3.5	180.36	182.44	1.1

Note:

1. Financials are prepared in accordance with T-IFRSs. Figures of Q1 2015 are unaudited.

2. The calculation of growth rates is based on NT$ mn.

© 2015 Chunghwa Telecom 13

Cash Flow & EBITDA Margin

Consolidated	Consolidated	Consolidated	Consolidated	Consolidated	Consolidated
(NT$bn) Q1 2014	Q1 2015	Growth %	2013	2014	Growth %
Net Cash Flow from Operating Activities 9.62	11.79	22.6	75.29	71.38	(5.2)
CapEx 5.77	5.53	(4.1)	36.38	32.56	(10.5)
Free Cash Flow 3.85	6.26	62.6	38.91	38.82	(0.2)
Cash and Cash Equivalents at the end of period 18.99	30.80	62.2	14.59	23.56	61.5
EBITDA Margin(%) 36.81	36.01	-	35.03	34.83	-

Note:

1. Financials are prepared in accordance with T-IFRSs. Figures of Q1 2015 are unaudited.

2. The calculation of growth rates is based on NT$ mn.

3. Free cash flow is calculated by subtracting CapEx from Net Cash Flows from Operating Activities.

© 2015 Chunghwa Telecom 14

Operating Results vs. Forecast

Consolidated	Consolidated	Consolidated	Consolidated	Consolidated	Consolidated	Consolidated
(NT$bn) Q1 2015(A)	Q1 2015（E）		Achieving %	2014 (A)	2015 (E)	Growth %
Revenues 56.47		55.61	101.6	226.61	231.09	2.0
Operating Costs and Expenses 44.66		44.27	100.9	182.44	185.92	1.9
Other Income and Expenses (0.03)		(0.07)	41.9	0.63	(0.12)	(120.0)
Income from Operations 11.78		11.27	104.6	44.80	45.05	0.5
Net Income 10.45		9.28	112.5	38.62	37.50	(2.9)
EPS 1.35		1.20	112.5	4.98	4.83	(2.9)
EBITDA 20.34		20.07	101.3	78.92	80.02	1.4
EBITDA Margin (%) 36.01		36.10	-	34.83	34.63	-

Note :

1. Financials are prepared in accordance with T-IFRSs. Figures of Q1 2015 are unaudited.

2. The information therein is predictive and may not necessarily be fully realized in the future, and that reference to the company's significant accounting policy and summary of basic assumptions shall be made for further details. © 2015 Chunghwa Telecom 15

Effective and Efficient Capital Expenditure

Capital Expenditure

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Budgeted capex for 2015: NT$30.7 bn

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NT$ bn
36.4
33.3 32.6
30.7
50
45 15.0% 16.0% 14.4% 13.3% 20%
40 10.5% 9.8%
10%
0.6
35 1.6
30 0.7 2.4 3.4 4.6 0.9 1.5 4.4 0.6 2.0 0%
25 9.2 6.9
7.2 -10%
20 9.6
8.3
15 5.8 5.5 -20%
10 19.6 20.4
5 16.2 13.0 0.2 0.4 0.9 0.0 0.9 0.1 -30%
1.2 1.6
3.1 2.9
0 -40%
2012 2013 2014 2015 (E) Q1 14 Q1 15
Domestic Fixed Mobile Internet International Fixed Others
Capex
Capex as % of Revenue
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Continue to focus on core businesses for future investments

• 4G

• FTTx

• Service Platforms

• IDC/ Cloud

© 2015 Chunghwa Telecom 16

Q&A