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Chunghwa's CEO Discusses Q1 2011 Results - Earnings Call Transcript

Net income for the first quarter 2011 decreased 1.9% to NT$11.8 billion. EBITDA For the first quarter 2011 decreased 6.6% to NT$22 billion, mainly as a result of the negative impact on income from operations resulting from the shift in the pricing right of fixed-to-mobile call. The increase in costs of handsets sold and the early retirement expense.

Slide number six shows our revenue for each business segment for the first quarter of 2011. In the domestic fixed line business, local revenues increased by 24.3% year-over-year, mainly due to the shift of pricing right for fixed-to-mobile calls.

The 13.2% decline in DLD revenue was due to mobile and VoIP substitution, as well as reflecting the mandated tariff reduction.

Broadband access revenue, including ADSL and FTTx increased by 3% year-over-year, although ADSL access revenue decreased as more ADSL subscribers migrated to fiber solutions, the decrease was fully offset by growth in FTTx access revenue.

Mobile revenue increased by 2.8% year-over-year, mainly due to growth in mobile VAS revenue related to our smartphone promotion and handset sales.

Internet revenue rose by 3.6%, mainly due to Internet service growth, which was driven by the increase in broadband subscribers and the migration of ADSL subscriber to fiber solutions.

International fixed line revenue decreased by 4.5%, mainly due to the decrease in leased line revenue and satellite service revenue resulting from the expiration of ST-1 contract at the end of January 2011.

Slide seven shows the breakdown of operating costs and expenses. The increase in operating costs and expenses in the first quarter 2011 was mainly due to the increase in interconnection costs and transition fee resulting from the shift in the pricing right of fixed-to-mobile calls, the higher cost of handsets sold and the early retirement expenses.

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