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TWM Interim / Quarterly Report 2019

Sep 27, 2019

52277_rns_2019-09-27_4c394f35-d227-47be-8acd-092f5dc4cd8b.pdf

Interim / Quarterly Report

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Taiwan Mobile Co., Ltd. 2Q19 Results Summary July 25, 2019

1

Disclaimer

The information contained in this presentation, including all forward-looking information, is subject to change without notice, whether as a result of new information, future events or otherwise, and Taiwan Mobile Co., Ltd. (the “Company”) undertakes no obligation to update or revise the information contained in this presentation. No representation or warranty, either expressed or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein, nor is the information intended to be a complete statement of the Company, markets or developments referred to in this presentation.

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Business Overview

3

Stabilization in Telecom Market

Telecom Revenue YoY Change

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14%
7%
-1%
-5%
-6%
Telecom Market
-3%
-5%
-7% -7% 2 Small Players
-9%
2Q18 3Q18 4Q18 1Q19 2Q19
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Mobile Service Revenue

2Q19 Spectrum Yield (Mobile Service Revenue/Spectrum Amortization)

(Mobile Service Revenue/Spectrum Amortization)
Pre-IFRS
IFRS		 (Mobile Service Revenue/Spectrum Amortization)
Pre-IFRS
IFRS		 NT$mn CHT TWM TWM FET
IFRS Pre-IFRS
2Q19 14,664 11,203 12,924 12,599
1Q19 14,721 11,342 13,129 12,707
June 2019 YoY -5.9% -7.1% -7.9% -8.0%
2Q19 YoY -17.8% -13.8% -14.0% -12.0%
CHT
TWM		 TWM
FET		 1Q19 YoY -8.4% -11.2% -11.9% -11.4%

Note:1Q19 spectrum amortization is used in the calculation prior to release of 2Q19 financial statements.

4

Versatility

2Q19 results

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+65% YoY

of iPhone bundle plan

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+14% YoY

Cloud service revenue

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YoY +6ppts % of non-handset bundle plan

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+35% YoY IoT connectivities

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1.1% Record low Postpaid churn rate

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+70% YoY ICT service revenue

5

Resilience in Pay-TV Business

2Q19 Basic TV Subscribers

2Q19 Penetration Rate

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DTV Broadband
(‘000) Subscribers YoY(%)
TFNM 559 -2.7%
48.7%
44.8%
41.9% 41.8%
Kbro 1,145 -3.7%
30.4%
25.6% 27.0%
CNS 1,134 -4.7%
11.8%
TBC 739 -2.6% DTV BB
Top 4 MSO 3,577 -3.6%
TFNM Kbro CNS TBC
Pre-IFRS 16 D&A EBIT
(NT$mn) (NT$mn)
324 +11% YoY
-23% YoY
529
250
476
2Q18 3Q18 4Q18 1Q19 2Q19 2Q18 3Q18 4Q18 1Q19 2Q19
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6

momo’s Dominance in B2C Market

E-commerce platform net income comparison

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(NT$mn)
1Q18 1Q19
396
309
138 121
1Q18 1Q19 105 100 17 20 7 49
(59) (45)
(112)
(303) (472)
momo EHS Books.com. KuoBrothers friday Ruten PChome PCstore
Note: 2Q19 financial statements are not yet available.
(928)
Revenue
(NT$mn) B2C profitability
B2C others 3C(%) gross margin operating margin
41% 9%
38% +23%
11,815 7%
YoY
9,630
5%
+30%
10,261
YoY 3%
7,915
1%
2Q18 3Q18 4Q18 1Q19 2Q19 2Q18 3Q18 4Q18 1Q19 2Q19
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7

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Financial Overview

8

Performance by Business

Performance by Business
NT$bn
 Revenue Pre-IFRS16 EBITDA
Telecom
CATV
momo
Total1

6.14
0.78
0.44
7.46

82%
10%
6%
100%

-12%
-3%
8%
-11%

-11%
-3%
17%
-9%




1%
Telecom
CATV
momo
**Total1 **
2Q19 16.38
1.54
11.82
29.61
% of
total		 55%
5%
40%
100%
2Q19
YoY		 -5%
-3%
23%
4%
1Q19
YoY		 -10%
-3%
15%
-1%
2Q19 YoY (Reported)
  1. The sum of each account of telecom, CATV and momo does not equal to the consolidated total number due to other revenue and minor adjustments / eliminations.

9

Results Summar y

NT$bn 2Q19 2Q19 2Q19 1H19 1H19 1H19
Amount YoY % of 2Q
guidance		 Amount YoY % of full
year
guidance
Revenues
29.61
4%
99%
59.49
1%
48%
Operating Costs
(21.49)
10%
99%
(43.17)
5%
48%
Operating Expenses
(3.80)
-5%
92%
(7.76)
-5%
46%
Operating Income
4.33
-13%
103%
8.55
-12%
50%
Non-op. Income
(Exp.)
(0.10)
-11%
61%
(0.24)
-17%
34%
Pre-tax Income
4.22
-13%
105%
8.31
-11%
51%
Net Income
3.21
-16%
105%
6.28
-14%
51%
EPS1 (NT$)
1.16
-17%
104%
2.29
-14%
51%
EBITDA
8.43
1%
101%
16.84
2%
50%
EBITDA
Pre-IFRS 16
7.46
-11%
14.90
-10%
  1. EPS is based on share count of 2.747bn in 2Q19, and 2.738bn in 1H19.

10

Balance Sheet Analysis

NT$bn
2Q19
1Q19 2Q18		 NT$bn
2Q19
1Q19 2Q18		 NT$bn
2Q19
1Q19 2Q18		 NT$bn
2Q19
1Q19 2Q18















NT$bn
2Q19
1Q19 2Q18
Liabilities
89.18
82.53
90.77
Current Liabilities
49.76
39.41
48.18
- ST Debts
8.70
13.60
9.77
- Current Lease Liabilities1
3.42
3.41
0.00
- Other Current Liabilities
37.63
22.40
38.42
Non-current Liabilities
39.42
43.12
42.59
- Long-term Borrowings
28.73
32.29
38.27
- Non-current Lease Liabilities1
6.19
6.37
0.00
- Other Non-current Liabilities
4.50
4.46
4.31
Shareholders' Equity
64.42
72.68
60.64
Paid-in Capital
34.68
34.34
34.21
Capital Surplus
16.65
13.47
12.31
Legal Reserve
28.92
27.56
27.56
Treasury Shares
(29.72)
(29.72)
(29.72)
Un-appropriated Earnings
0.49
3.39
3.39
Non-controlling Interest
5.86
6.37
5.68
Retained Earnings & Others3
7.53
17.27
7.22















NT$bn
2Q19
1Q19 2Q18
Liabilities
89.18
82.53
90.77
Current Liabilities
49.76
39.41
48.18
- ST Debts
8.70
13.60
9.77
- Current Lease Liabilities1
3.42
3.41
0.00
- Other Current Liabilities
37.63
22.40
38.42
Non-current Liabilities
39.42
43.12
42.59
- Long-term Borrowings
28.73
32.29
38.27
- Non-current Lease Liabilities1
6.19
6.37
0.00
- Other Non-current Liabilities
4.50
4.46
4.31
Shareholders' Equity
64.42
72.68
60.64
Paid-in Capital
34.68
34.34
34.21
Capital Surplus
16.65
13.47
12.31
Legal Reserve
28.92
27.56
27.56
Treasury Shares
(29.72)
(29.72)
(29.72)
Un-appropriated Earnings
0.49
3.39
3.39
Non-controlling Interest
5.86
6.37
5.68
Retained Earnings & Others3
7.53
17.27
7.22















NT$bn
2Q19
1Q19 2Q18
Liabilities
89.18
82.53
90.77
Current Liabilities
49.76
39.41
48.18
- ST Debts
8.70
13.60
9.77
- Current Lease Liabilities1
3.42
3.41
0.00
- Other Current Liabilities
37.63
22.40
38.42
Non-current Liabilities
39.42
43.12
42.59
- Long-term Borrowings
28.73
32.29
38.27
- Non-current Lease Liabilities1
6.19
6.37
0.00
- Other Non-current Liabilities
4.50
4.46
4.31
Shareholders' Equity
64.42
72.68
60.64
Paid-in Capital
34.68
34.34
34.21
Capital Surplus
16.65
13.47
12.31
Legal Reserve
28.92
27.56
27.56
Treasury Shares
(29.72)
(29.72)
(29.72)
Un-appropriated Earnings
0.49
3.39
3.39
Non-controlling Interest
5.86
6.37
5.68
Retained Earnings & Others3
7.53
17.27
7.22
Total Assets 153.60
155.21		 151.41
Liabilities		 89.18
82.53
Current Assets 27.10
28.60		 29.48
Current Liabilities		 49.76
39.41
- Cash & Cash Equivalents 6.77
7.84		 7.62
- ST Debts		 8.70
13.60
- Receivable & Contract Assets 14.60
14.43		 14.89
- Current Lease Liabilities1		 3.42
3.41
- Inventories 4.08
3.96		 3.58
- Other Current Liabilities		 37.63
22.40
- Other Current Assets 1.64
2.38		 3.39
Non-current Liabilities		 39.42
43.12
Non-current Assets 126.51
126.60		 121.93
- Long-term Borrowings		 28.73
32.29
- Long-term Investment 7.36
6.43		 5.87
- Non-current Lease Liabilities1		 6.19
6.37
- Property and Equipment 40.74
40.66		 43.12


- Other Non-current Liabilities
Shareholders' Equity		 4.50
64.42
4.46

72.68
- Right-of-use Assets1 9.67
9.87		 0.00
- Concession 39.12
39.82		 42.04
- Other Non-current & Contract
Assets		 29.63
29.82		 30.90 Paid-in Capital 34.68
34.34
Capital Surplus 16.65
13.47
2Q19
1Q19 2Q18

Legal Reserve		 28.92
27.56
Current Ratio 54%
73%		 61%
Treasury Shares		 (29.72)
(29.72)
Net Debt to Equity 48%
52%		 67%
Un-appropriated Earnings		 0.49
3.39
Net Debt to Pre-IFRS 16
EBITDA (x)		 1.03
1.28		 1.23 Non-controlling Interest 5.86
6.37
ROE2 (annualized) 18%
17%		 22%
  1. New items included in accordance with IFRS 16 accounting treatment of leases 3. Including accumulated profits and other equity items. 2. ROE = Accumulated Net Income (Annualized) /Average Shareholders' Equity

11

Cash Flow Analysis

NT$bn
2Q19
1Q19
2Q18		 NT$bn
2Q19
1Q19
2Q18		 NT$bn
2Q19
1Q19
2Q18		 NT$bn
2Q19
1Q19
2Q18
Operating 7.07 8.44
7.51
Investing (1.37) (2.09) (0.28)
Financing (6.76) (6.02) (7.28)
NT$bn
2Q19
1Q19 2Q18
**Pre-IFRS 16 Operating1 ** 6.12 7.47
7.51
**Cash CAPEX2 ** (1.38) (2.02) (1.69)
**Free Cash Flow2 ** 4.74 5.45
5.82

  1. “Lease expenses” previously under operating activities was reclassified into financing cash flow and investing cash flow (to a lesser extent) in accordance with IFRS 16 in 2019.

  2. Excluding 4G License Fees

12

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Event Updates

13

Awards and Recognition

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Honored with the 2019 “Annual CSR Survey – Telecom Service Industry” award and “Outstanding Solutions – Public Welfare ” award from Global . Views Monthly

Ranked among the top 5% of listed companies in the “Corporate Governance Evaluation” conducted by the Taiwan Stock Exchange and Taipei Exchange, for the fifth year in a row The only telecommunications company in Taiwan that has an approved science-based greenhouse gas emissions reduction target from the Science-Based Targets initiative (SBTi).

Recognized as “Asia's Best CEO”, “Asia's Best CFO” and “Best Investor Relations Company (Taiwan)” by the Corporate Governance Asia magazine at the 2019 Asian Excellence Awards.

14

Key Message

TWM started seeing improved fundamentals with June operating results stabilized compared with a year ago. Joining forces with digital leaders, including momo and AppWorks companies, to offer compelling service bundles will prove to be our winning strategy.

Looking forward, as we approach the tail-end of 4G deployment, we will be in a good position with more financial flexibility to make strategic moves, expand our footprint and generate healthy returns for our shareholders.

15

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Q & A

16

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