CHUNGHWA TELECOM CO LTD Q3 FY2024 earnings call

Strategic Achievements

• Continued lead in Taiwan's mobile market with highest 5G penetration in Q3. Achieved third-quarter revenue record. Successful collaboration with NTT for world’s first IOWN all-photonic communication link. OneWeb coverage in Taiwan reached 90% in Q3, expected to be 100% in Q4. Transitioning to liquid-cooled solutions for AI servers. Received SBTi verification for Net Zero greenhouse gas emissions target.

Business Overview Q3 2024

• Mobile market share reached 37.8%, 5G share 38.8%, revenue share 40.3%. Mobile service revenue up 2% year-over-year for 14 consecutive quarters. Fixed broadband subscriber net-adds for 1Gbps service doubled. Fixed broadband revenue up 3.4% year-over-year, ARPU up 1.5% year-over-year.

Consumer Business Group (CBG)

• Total revenue increased by 2.1% year-over-year. Driven by mobile service revenue growth from 5G migration and postpaid subscribers, fixed broadband revenue growth, and OTT revenue from Paris Olympics broadcast. iPhone 16 series launch boosted sales revenue by 1.3%. Multiple-play packages grew 65% year-over-year. Video business revenue saw double-digit year-over-year growth due to Paris Olympics. Consumer cybersecurity subscription up 16% year-over-year.

Enterprise Business Group (EBG)

• Total revenue increased by 5.9% year-over-year. Robust growth in ICT business, with revenue up 22% year-over-year. AIoT, cloud, and IDC revenues up 44%, 24%, and 21% respectively. Cybersecurity revenue achieved 24% year-over-year growth for 11 consecutive quarters.

International Business Group (IBG)

• Total revenue and income before tax increased by 1.4% and 11% year-over-year respectively. European subsidiary in Frankfurt began operations. Joined IoT World Alliance.

Guidance

• Revenue in third quarter 2024 closely met target. First nine months of 2024 revenue aligned with expectations. Income from operations, net income, EBITDA, and EBITDA margin all outperformed guidance, driven by steady core business growth and improved ICT profitability.

Risks

• Higher manpower costs impacting income. Increased broadcast rights fees for Olympic Games. Higher utility costs due to electricity price hikes in Taiwan.

Q: Why did profit before tax decline for consumer and enterprise segments?

A: Higher manpower costs, increased broadcast rights fees for the Olympics, higher utility costs, and strategic investments in content such as the Paris Olympics broadcast are the main reasons.

Q: What is the contribution of emerging enterprise application revenue to total enterprise revenue?

A: Angela Tsai mentioned that the percentage contribution of enterprise emerging application revenues versus total ICT revenue was announced separately.

Q: What is the revenue increase strategy going forward?

A: Focus on high-margin products/services, streamline operations (e.g., automating processes, using AI, renegotiating supplier contracts), implement loyalty programs with bundling of additional services (e.g., streaming, cloud storage, IoT devices), and continue to drive 5G penetration to increase revenue and profits.