Chunghwa Telecom's CEO Discusses Q2 2011 Results - Earnings Call Transcript

Chunghwa Telecom Co., Ltd (CHT)

Q2 2011 Earnings Call

August 26, 2011 6:00 AM ET

Executives

Fu-fu Shen – Director, IR

Shyue-Ching Lu – Chairman and CEO

Yeh Shu – CFO

Shaio-Tung Chang – President

Analysts

Danny Chu – Nomura

Ken Goh – GIC

Shed (ph) – Credit Suisse

Joseph Quinn – Macquarie

Steve Liu – SCB

Gary Yu – Morgan Stanley

Lucy Lee – JP Morgan

Presentation

Operator

Good evening, ladies and gentlemen. Welcome to the Chunghwa Telecom Conference Call for the Company’s First Half 2011 Operating Result. During the presentation all lines will be on listen-only mode. When the briefing is finished, directions for submitting your questions will be given in the question-and-answer section.

For your information, this conference call is now being broadcasted live over the Internet. Webcast replay will be available within an hour after the conference is finished. Please visit www.cht.com.tw/ir under the Infocus section.

Now, I would like to turn the call over to Fu-fu Shen, the Director of Investor Relations. Thank you, Ms. Shen, please go ahead.

Fu-fu Shen

Thank you. This is Fu-fu Shen, Investor Relations Director of Chunghwa Telecom. Welcome to our second quarter 2011 results conference call. Joining me on the call today are Dr. Lu, Chairman and CEO; Mr. Chang, President; and Dr. Yeh, CFO.

During today’s call management will discuss business operational and financial highlights for the second quarter 2011. This will be followed by Q&A. Before we continue, please note our Safe Harbor statement on slide two.

Now, I would like to turn the call over to Chairman, Lu.

Shyue-Ching Lu

Thank you, Fu-fu. Hello, everyone. This is Shyue-Ching Lu, Chairman of Chunghwa Telecom. Thank you all for joining our first half and the second quarter 2011 earnings results conference call. On slide number three, total consolidated revenue for the second quarter of 2011 amounted to NT$54.4 billion, mainly from the increase of the fixed line revenue, mobile Evaluative service under handset sales.

In addition, an increase of construction in revenue from our property development subsidiary, also contributed to the revenue growth. During the second quarter 2010, we continued to enjoy growth in our traditional telecom service business and to win additional measure ICT contracts.

Moving on to slide number four, which shows our cash return over the last several years. In addition to NT$18.4 billion cash returned we kept all reduction in January. On August 17, we distributed a dividend to share of NT$5.5243 amounting to a total of NT$42.9 billion dividend to our year 2010.

Our continued commitment to shareholders is evidenced by our decision to distribute the highly dividend payout ratio of 19%, reason of many 10% set aside as De-gold (ph) in accordance with company law. However, once our De-Reserve (ph) reaches our (inaudible) which is expected to occur in three or four years. We’ll be exempted from this due chromed. As a result, the dividend payout ratio of over 90% is likely in three or four years.

Before beginning the financial overview for the second quarter, I would like to take you through some recent developments as shown on the following three slides.

Slide number six, innovative offering and the premium customer service are key elements of Chunghwa’s corporate culture. We have taken the decision to leverage this strength to further differentiate ourselves from our peers. We have therefore announced our Digital Rainforest initiative to offer a cutting edge broadband service to address customer’s desire or even higher speeds, the cloud computing platform to a cattish innovation.

In regard to the service platforms for up and (inaudible) to develop Garmin (ph) applications, under a strong pace. And so whereas corporations with vendors and international operators, on carbon emission reduction to promote sustainability. In order to provide superior customer service, we are innovating our service channels under audits to offer an enhanced user experience. We anticipate that these efforts in which the growing of the industry and the result in win-win situation for Chunghwa is part of news under customers.

Slide number seven, we illustrate our cloud computing business. Our cloud computing service, one of our new businesses, that has attracted considerable attention. This B to B to C initiative involves Chunghwa and its partners working together to offer a developing platform, hicloud PaaS or independence of their vendors to develop Cloud applications that are then provided to customers in the hicloud X small.

We’re also collaborating with governmental communication entities and the independence of their vendors to promote innovative cloud services under applications. We expect to have over 1,000 SME customers by the end of this year.

Slide number eight, demonstrates our service channel transformation initiative. As a service provider we are keen to focus on including the quality of all customer service. ECHP is the kind of name for that we are using to establish a brand new spectrum of disputed channels. E stands for user experience. In this innovative service channels we trend to create optimum user experience by communicating on the shared services with our customers. C stands for caring. We print or demonstrate our care by pleasing the dislocate (ph) and offering customized services to people of different ages and in different areas. H stands for holistic. We tend to offer integrated and diversify our telecom services up to customer use. P stands for top priority. We will provide the principle and quality services to retain customer royalty.

We plan to establish over 20 service channels in this year, over 100 in the next year, under 50 both 2013 and 2014. Of course, we will monitor in our fit that effectively of this new channel service centers and adjust our approach if necessary.

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