Chunghwa Telecom's CEO Discusses Q1 2012 Results - Earnings Call Transcript

Chunghwa Telecom Co., Ltd (CHT)

Q1 2012 Earnings Call

April 30, 2012 5:00 AM ET


Fu-Fu Shen – Director, IR

Shyue-Ching Lu – Chairman and CEO

Shaio-Tung Chang – President

Shu Yeh – CFO


Danny Chu – Nomura

Joseph Quinn – Macquarie

Chate Benchavitvilai – Credit Suisse

May Lin – Yuanta Taipei

Lucy Liu – JP Morgan



Good evening, ladies and gentlemen. Welcome to the Chunghwa Telecom Conference Call for the Company’s Q1 2012 Operating Results. 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 session. For your information, this conference call is now being broadcast live over the Internet. Webcast replay will be available within an hour after the conference is finished. Please visit under the In Focus section.

Now, I would like to turn it 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 first quarter 2012 results conference call. Joining me on the call today are Dr. Lu, Chairman and the CEO; Mr. Chang, President; and Dr. Yeh, CFO.

During today’s call, management will first discuss business, operational and the financial highlights then 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, please.

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 quarter 2012 earnings results conference call. Before President Chang reports on business development in more detail, I have some comments regarding CHT’s progress. As an integrated service provider, we maintain our market leadership in all of our major business segments.

On the first quarter, mobile value-added service continued to be our growth driver. We are optimistic about the mobile Internet market’s growth, and we offer various kind – marketing packages to meet customers’ demand. In addition to the (inaudible) we also offer discounted mobile Internet service to existing smartphone users in order to maintain and to further penetrate the market.

We’re also very keen on packet markets in maximizing the potential growth of synergies. For example, beginning March this year, we began to offer mobile voice service bundled with data plan for student use. We currently anticipate this campaign to be very positive in computing future revenue growth.

Along this growth mobile data usage, we are making efforts on the improvements of the network quality. Our efforts to enhance our mobile network and to promote Wi-Fi in order to offload the data traffic proved to be effective, this off-loading rate via home Wi-Fi product, along 40 times. Further, the rate for public Wi-Fi has not achieved the same rate as the home Wi-Fi. We are continuing the interface improvement in order to be more user-friendly.

We are pleased to report that our IPTV service are gaining traction due to the higher subscription number. The MOD ARPU increased 15.7% year-over-year in the first quarter. Moreover, the broadcasting service of 2012 Olympic Games will be launched on July 28. 2,000 hours of games are planned to be broadcasted over the 14 high-def released channels. And there will also be 500 hours of quality main program. We are pretty optimistic that this event will drive the growth of MOD subscriptions significantly.

Now, I will hand it over to President Chang for our business overview.

Shaio-Tung Chang

Thank you, Dr. Lu. Moving to slide five. On Mobile business, we’ve maintained the largest subscriber base and the lowest return rate in the market, demonstrating our market positions and the customers’ inclination.

As Mobile value-added service remains to be our growth driver and the smartphone – smart devices are becoming wider-used day by day, we’re continuing the improvement of network quality in order to enhance user experience.

As an integrated service leader, we’ll hold a greater value of the network quality which commands the highest priority in our daily operation. Based on our internal study, mobile data traffic is expected to increase 65% year-over-year in 2011 – in 2012. To cater to such rapid expansion of data usage, we plan to increase the base station, grow the excess capacity by 70% and then the mobile network bandwidth by 73% this year.

In addition, 25% of our base stations were turned on the second carrier. Moreover, more than 50% were turned on the third carrier and will affect 80% of our topic will be carried by these base stations at the year-end. This made us aware of further ensure and enhance our overall network quality.

Moving to slide six, mobile valued-added service continued its momentum with 29.2% growth rate year-over-year for first quarter 2012. This is supplemented by the growth momentum of smartphone usage which boosts mobile Internet subscribers to 1.8 million by the end of first quarter 2012 from 1.5 million in the first quarter 2011. Attributable to the strong growth momentum we increased the target number of our mobile Internet subscriber to 2.35 million by the end of 2012 reflecting a growth rate of 56% compared to last year’s.

Starting March this year, we began to offer student plans to attract students and youth who are active users of mobile data services. We have set a several mid-to-low tier smartphone models with brand names and the extensive function is for these users to choose a package in lower rate and the cheaper models. We are confident that the student plans will be very successful.

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