Chunghwa Telecom Reports Operating Results for the First Quarter of 2009 and the...

Chunghwa Telecom Reports Operating Results for the First Quarter of 2009 and
the Forecast for the Second Quarter of 2009

TAIPEI, April 29 /PRNewswire-Asia-FirstCall/ -- Chunghwa Telecom Co., Ltd.
(TAIEX: 2412; NYSE: CHT) ("Chunghwa" or "the Company"), today reported its
operating results for the first quarter of 2009. All figures are presented on
a consolidated basis and prepared in accordance to generally accepted
accounting principles in the Republic of China ("ROC GAAP").
(Logo: http://www.prnasia.com/xprn/sa/200707261428.JPG )
Dr. Shyue-Ching Lu, Chairman and Chief Executive Officer of Chunghwa
Telecom commented, "For the first quarter of 2009, we continued to executive
on our strategic focus of maintaining market leadership for our core services
as well as expanding our digital-converged services such as broadband and
mobile value-added services, MOD/IPTV, and key enterprise solutions. As a
result, we are able to stabilize our top-line performance under the current
adverse economic situation. In addition, I am pleased that our Board of
Directors approved a third round of capital reduction program for us to return
cash to shareholders in 2009. For this round, we estimate to return a total
of NT$9.7 billion, which is a strong testament of our continued commitment to
maximizing shareholder value.
Given the current global economic environment, decreased visibility, and
increased market volatility, we are changing our customary guidance format.
We want to be as transparent as possible, but also need to be prudent with
regard to comments about future outlook. As a result, CHT has decided not to
provide full-year guidance for 2009; instead, we will give guidance on a
quarterly basis."
(Comparisons, unless otherwise stated, are with respect to the prior year
period) Financial Highlights for 1Q09:
-- Total revenue decreased by 3.6% to NT$49.1 billion
-- Internet and data revenue decreased 0.5% to NT$12.5 billion
-- Mobile revenue decreased 3.1% to NT$17.6 billion; mobile VAS revenue
increased by 18.5%
-- Net income totaled NT$10.8 billion, representing an increase of 0.7%
-- Earnings per share ("EPS") remained flat at NT$1.11

Revenue
Given the global economic condition and the increasing market competition,
Chunghwa's total revenue for the first quarter of 2009 decreased by 3.6% year-
over-year to NT$49.1 billion, of which 26.7% was from fixed-line services,
35.8% was from mobile services, 25.4% was from Internet and data services, and
the remainder was mainly from handset sales from Chunghwa's subsidiary SENAO
on a consolidated basis.
For the mobile business, total revenue for the first quarter of 2009
amounted to NT$17.6 billion, representing a decline of 3.1% year-over-year.
We made progress by increasing our subscriber numbers by 2.9% and by enhancing
our VAS service revenues by 18.5% compared to 1Q2008.
However, these successes were offset by the economic downturn and the
market competition.
The Internet and data revenue slightly decreased by 0.5% year-over-year to
NT$12.5 billion, mainly because of the tariff cut for ISP and ADSL services.
The fixed-line revenue totaled NT$13.1 billion, decreasing 8.9% year-over-
year. The local and domestic long distance revenues were decreased by 6.2%
and 10.1% respectively, for the first quarter of 2009. These decreases were
mainly due to the overall economic downturn, mobile and VOIP substitution. The
international long distance revenue was decreased by 14.4% year-over-year, as
a result of the overall economic downturn, VOIP substitution and the market
competition.
Other revenue increased by 1.1% mainly due to the reclassification of non-
core value added service from Internet and data service.
Costs and expenses
For the first quarter of 2009, total operating costs and expenses
increased year-over-year by 1.3% to NT$35.0 billion, primarily due to the
increase in personnel expense. This personnel expense increase was mainly
because the Company increased the ceiling of performance-based bonus in order
to encourage its employees.
Income tax
The Company's income tax for the first quarter of 2009 was NT$3.3 billion,
representing a 4.2% decrease compared to NT$3.5 billion for the first quarter
of 2008. This was primarily due to the decrease in the taxable income
resulted from the decline of operating profit.
EBITDA and net income
EBITDA for the first quarter of 2009 decreased by10.7% year-over-year to
NT$23.4 billion, resulting in an EBITDA margin of 47.6%, down from 51.3% for
the first quarter of 2008. The EBITDA decline was primarily due to the
decrease in revenue and the increase in operating expenses. Net income for
the first quarter of 2009 was NT$10.8 billion, representing an increase of
0.7% year-over-year. This net income growth was primarily attributable to the
increase in the non-operating income and decrease in the income tax.
Capital Expenditure ("Capex")
The capex for the first quarter of 2009 amounted NT$4.7 billion, a 13.8%
decrease compared to that for the same period in 2008. Among the NT$4.7
billion capex, 73.6% was for wireline and 17.0% was for wireless.
Cash Flows
Net cash flow from operating activities decreased by 13.6% to NT$16.1
billion year-over year. The decrease was primarily because of the decline in
EBIT year-over-year. Similarly, free cash flow for the first quarter of 2009
also decreased by 13.6% compared to the first quarter of 2008.
The Company's cash and cash equivalents amounted to NT$69.2billion as of
the end of the first quarter of 2009.
Business Performance Highlights:
Internet and Data Services
By the end of March 2009, total HiNet subscribers decreased 0.4% year-
over-year. Overall, the Company had 4.3 billion broadband subscribers
(including ADSL and FTTx subscribers) at the end of March 2009, representing a
0.6% growth year-over-year. By the end of the first quarter of 2009, FTTx
subscriptions with an average service speed of 10Mbps reached 1.19 million,
representing 27.7% of total broadband subscribers.
As of the end of the first quarter of 2009, Chunghwa had 686,000 MOD
subscribers, equivalent to 57.6% year-over-year increase.
Mobile Services
As of March 31, 2009, Chunghwa had 8.98 million mobile subscribers, up
2.9% compared to 8.72 million as of the first quarter of 2008.
Chunghwa remained the leading mobile operator in Taiwan. According to
statistics published by the ROC National Communications Commission, the
Company's total subscriber market share (including 2G, 3G and PHS) was 35.1%,
while the Company's mobile revenue share was 34.0% as of the end of February
2009.
As of March 31, 2009, Chunghwa had 3.85 million 3G subscribers,
representing a 48.9% increase as compared to that of the end of March 2008.
Mobile VAS revenue for the first quarter of 2009 was NT$2.05 billion,
posting a 18.5% increase year-over-year. Of this increase, SMS revenue was up
12.9% and mobile Internet revenue increased by 49.6% year-over-year,
respectively.
Fixed-line Services
As of the end of the first quarter of 2009, the Company maintained its
leading fixed-line market position, with fixed-line subscribers totaling 12.66
million. According to statistics published by the ROC National Communications
Commission, the Company's fixed line subscriber market share was 97.3%.
Forecast for the Second Quarter 2009
Chunghwa will not provide full-year guidance for 2009 due to the current
global economic environment, decreased visibility, and increased market
volatility. Chunghwa will instead issue guidance on a quarterly basis for
2009. With this change, Chunghwa believes it will be able to provide the
market with the most accurate and relevant information regarding future
outlook.

Chunghwa Telecom 2Q 2009 Financial Forecast on a Non-Consolidated Basis

2Q09E 1Q09A 2Q08A %Changes
Item (NT$ (NT$ (NT$ QoQ YoY
billion) billion) billion)
Revenue 45.60 45.21 46.64 0.86 (2.24)
Gross Profit 21.59 21.45 23.78 0.65 (9.22)
Operating Expenses 7.76 7.68 8.25 1.13 (5.95)
Operating Profit 13.82 13.77 15.53 0.38 (10.96)
Profit before Tax 14.03 14.02 15.93 0.05 (11.93)
EPS $1.11 $1.11 $1.29 0.05 (13.94)
EBITDA 22.98 22.93 25.01 0.23 (8.09)
EBITDA Margin% 50.41 50.72 53.61 (0.63) (5.99)
Acquisition of
property, plant and
equipment, long- term
investments 7.27 4.47 5.91 62.69 22.96
Disposal of property,
plant and equipment,
long-term investments -- -- 1.82 -- (100.00)

Financial Statements
Financial statements and additional operational data can be found on the
Company's website at http://www.cht.com.tw/ir/filedownload .
About Chunghwa Telecom
Chunghwa Telecom (TAIEX: 2412; NYSE: CHT) is the leading telecom service
provider in Taiwan. Chunghwa Telecom provides fixed-line, mobile and Internet
and data services to residential and business customers in Taiwan.
Note Concerning Forward-looking Statements
This press release contains forward-looking statements. These statements
constitute "forward-looking" statements within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, and as defined in the U.S. Private
Securities Litigation Reform Act of 1995. These forward-looking statements can
be identified by terminology such as "will," "expects," "anticipates,"
"future," "intends," "plans," "believes," "estimates" and similar statements.
Chunghwa may also make written or oral forward-looking statements in its
periodic reports to the U.S. Securities and Exchange Commission on forms 20-F
and 6-K., in its annual report to shareholders, in press releases and other
written materials and in oral statements made by its officers, directors or
employees to third parties. Statements that are not historical facts,
including statements about Chunghwa's beliefs and expectations, are forward-
looking statements. Forward-looking statements involve inherent risks and
uncertainties that could cause actual results to differ materially from the
forward-looking statements. A number of important factors could cause actual
results to differ materially from those contained in any forward-looking
statement. Investors are cautioned that actual events and results could
differ materially from those statements as a result of a number of factors
including, but not limited to: extensive regulation of telecom industry; the
intensely competitive telecom industry; our relationship with our labor union;
general economic and political conditions, including those related to the
telecom industry; possible disruptions in commercial activities caused by
natural and human induced events and disasters, including terrorist activity,
armed conflict and highly contagious diseases, such as SARS; and those risks
outlined in Chunghwa's filings with the U.S. Securities and Exchange
Commission, including its registration statements on Form F-1, F-3, F-6 and
20-F, in each case as amended. Chunghwa does not undertake any obligation to
update any forward-looking statement, except as required under applicable law.
This release is not an offer of securities for sale in the United States.
Securities may not be offered or sold in the United States absent registration
or an exemption from registration. Any public offering of securities to be
made in the United States will be made by means of a prospectus that may be
obtained from the issuer or selling security holder and that will contain
detailed information about the company and management, as well as financial
statements.
Special Note Regarding Non-GAAP Financial Measures
A body of generally accepted accounting principles is commonly referred to
as "GAAP". A non-GAAP financial measure is generally defined by the SEC as one
that purports to measure historical or future financial performance, financial
position or cash flows but excludes or includes amounts that would not be so
adjusted in the most comparable U.S. GAAP measure. We disclose in this report
certain non-GAAP financial measures, including EBITDA. EBITDA for any period
is defined as consolidated net income (loss) excluding (i) depreciation and
amortization, (ii) total net comprehensive financing cost (which is comprised
of net interest expense, exchange gain or loss, monetary position gain or loss
and other financing costs and derivative transactions), (iii) other expenses,
net, (iv) income tax, (v) cumulative effect of change in accounting principle,
net of tax and (vi) (income) loss from discontinued operations.
In managing our business we rely on EBITDA as a means of assessing our
operating performance. We believe that EBITDA can be useful to facilitate
comparisons of operating performance between periods and with other companies
because it excludes the effect of (i) depreciation and amortization, which
represents a non-cash charge to earnings, (ii) certain financing costs, which
are significantly affected by external factors, including interest rates,
foreign currency exchange rates and inflation rates, which have little or no
bearing on our operating performance, (iii) income tax and tax on assets and
statutory employee profit sharing, which is similar to a tax on income and
(iv)
other expenses or income not related to the operation of the business.
EBITDA is not a measure of financial performance under ROC GAAP. EBITDA
should not be considered as an alternate measure of net income or operating
income, as determined on a consolidated basis using amounts derived from
statements of operations prepared in accordance with ROC GAAP, as an indicator
of operating performance or as cash flows from operating activity or as a
measure of liquidity. EBITDA has material limitations that impair its value as
a measure of a company's overall profitability since it does not address
certain ongoing costs of our business that could significantly affect
profitability such as financial expenses and income taxes, depreciation,
pension plan reserves or capital expenditures and associated charges. These
non-GAAP measures are not in accordance with or an alternative for GAAP
financial data, the non-GAAP results should be reviewed together with the GAAP
results and are not intended to serve as a substitute for results under GAAP,
and may be different from non-GAAP measures used by other companies. For more
information on these non-GAAP financial measures, please see the tables
captioned set forth at the end of this release and which shall be read
together with the accompanying financial statements prepared under ROC GAAP.
If you have any questions in connection with the change of accounting
policy, please contact the following person:
Contact:

Ms. Fu-fu Shen
Phone: +886-2-2344-5488
Fax: +886-2-3393-8188
Email: ffshen@cht.com.tw
Address: CHUNGHWA TELECOM CO., LTD.
21-3 Hsinyi Road, Section 1,
Taipei, Taiwan,
Republic of China

SOURCE Chunghwa Telecom Co., Ltd.

Fu-fu Shen, Investor Relations of CHT, +886-2-2344-5488, fax, +886-2-3393-8188
or chtir@cht.com.tw