Profile: Chunghwa Telecom Co Ltd (CHT.N)

Chunghwa Telecom Co., Ltd. (Chunghwa), incorporated on July 1, 1996, is a telecommunications service provider in Taiwan. The Company has five segments: domestic fixed communications business, mobile communications business, Internet business, international fixed communications business and others. Domestic fixed communications business is engaged in the provision of local telephone services, domestic long distance telephone services, broadband access, and related services; Mobile communications business is engaged in the provision of mobile services, sales of mobile handsets and data cards, and related services; Internet Business is engaged the provision of HiNet services and related services; International fixed communications business is engaged in the provision of international long distance telephone services and related services, and Others engaged in the provision of non-telecom services and the corporate related items not allocated to reportable segments.

The Company also focuses on selected Information and Communication Technology (ICT) service and advanced development, such as cloud computing. Its ICT service includes integrated services such as its Intelligent Energy Network (iEN), and its Intelligent Transportation System (ITS), services. Its iEN service helps companies and corporations implement energy saving measures through computer analysis of data. Its ITS service provides navigation, real-time traffic information and infotainment through mobile devices for cars and drivers. In addition to developing ICT businesses, such as iEN, ITS, IS, Call Center, Internet data center (IDC).

Domestic Fixed Communications Business

Domestic fixed communications services include local and domestic long distance telephone services, broadband access services, local and domestic long distance leased line services, multimedia on demand (MOD), services, domestic data services and domestic other services. Its domestic fixed communications business includes local and domestic long distance telephone services, broadband access services, local and domestic long distance leased line services, multimedia on demand services, and domestic other services. The Company also provides interconnection with its fixed line network to other mobile and fixed line operators. As of December 31, 2010, the Company provided local telephone services to approximately 12.31 million customers in Taiwan.

The Company provides broadband Internet access through connections based on asymmetric digital subscriber line (ADSL) and the FTTx technology. FTTx generally offers a faster access medium for its Internet customers compared to ADSL by using fiber optic technology. The Company provides ADSL access services to other Internet service providers that do not have their own network infrastructure. The Company provides FTTx Internet services, with downlink speeds of 10, 20, 50 and 100 megabit per second, during the year ended December 31, 2010. The Company also provides FTTx access services to other Internet service providers that do not have their own network infrastructure. Of the approximately 2.04 million FTTx customers as of December 31, 2010, approximately 1.8 million were also its HiNet subscribers. Its ADSL service offers downlink speeds that range from 256 kilobits per second to eight megabit per second and uplink speeds that range from 64 kilobits per second to 640 kilobits per second.

Leased line services involve offering exclusive lines that allow point-to-point connection for voice and data traffic. Leased lines are used by business customers to assemble their own private networks and by telecommunications service providers to establish networks to offer telecommunications services. The Company provides data transmission services to major corporate customers in Taiwan. The Company also provides leased lines to other mobile and fixed line service operators for interconnection with its fixed line network and for connection within their networks. As of December 31, 2010, the Company had a total of approximately 63,577 residential and business customers that lease its access points. In addition, the Company has established 10,146 hot spots in public areas, such as convenience stores, airports and international convention centers, where individuals can access its wireless local area network. Its domestic other services include information and communication technology services, corporate solution and bill handling services.

The Company competes with Taiwan Fixed Network, New Century Infocomm Tech. Co., Ltd., Asia Pacific Telecom Co. Ltd., East Asia Netcom Taiwan, Reach Global Services Ltd., FLAG Telecom and Taiwan International Gateway Corporation, kbro Co., Ltd., China Network System Co., Ltd., Taiwan Broadband Communications Co., Ltd., Pacific Broadband Co., Ltd., Taiwan Infrastructure Technology Co., Ltd.

Mobile Communications Business

Mobile communications services includes mobile and paging services, sales of mobile handsets and data cards and mobile other services. The Company offers digital mobile service through its dual band global system for mobile communications (GSM) network. The Company has been allocated 15 megahertz in the 900 megahertz frequency band and 11.25 megahertz in the 1800 megahertz frequency band for GSM services and general packet-switched radio services (GPRS), and 15 megahertz paired spectrum plus five megahertz unpaired spectrum in the two megahertz frequency band for third generation (3G) mobile services. The Company also offers the international roaming network among Taiwan mobile service providers. In particular, its second generation (2G) customers have access to 338 networks in 179 countries through its GSM service roaming network and 227 networks in 113 countries through its general packet radio service (GPRS) roaming network. In addition, its 3G service system includes 101 networks in 52 countries.

In addition to its basic mobile services, the Company also offers a range of value-added telecommunications and information services. Its value added services include financial information, transaction services, emergency services access numbers, directory information, time, weather and traffic reports. In addition, the Company launched other mobile value-added services, such as JAVA games, unstructured supplementary service data, mobile Internet and multimedia messaging services. After the launch of its 3G mobile services, the Company began providing video phone, video-on-demand and other related 3G mobile value-added services as well. The Company is engaged in the distribution and sales of mobile handsets for use on its mobile network to customers through its directly-owned stores and also through third-party retailers. Its mobile other services include information and communication technology services, corporate solution and bill handling services.

Internet Business

Internet services include HiNet, its Internet service provider, Internet value-added services, data communication services, Internet data center services, and Internet other services. The Company is an Internet service provider (ISP), in Taiwan. Its HiNet portal at www.hinet.net provides value-added services to its customers, such as network security, Blog, travel, games, e-learning, financial information, music, video, anti-virus and links to other portals. The Company charges fees for some of these services. The Company also receives commissions for transactions completed on some of these other portals. Its Internet video portal at www.hichannel.hinet.net offers online entertainment services through the Internet. In particular, its HiNet broadband (ADSL and FTTx) subscribers can access music, television programs, movies and other multi-media content on demand.

The Company provides a range of managed data services, including frame relay services, asynchronous transfer mode services, and virtual private networks (VPN) services. Frame relay services provide high-speed data communications linking remote sites. Asynchronous transfer mode services are used to handle high-bandwidth, integrated voice, video, data and Internet traffic between sites. The Company offers co-location, Web hosting and application service provider services. The Company offered customers hicloud CaaS (Compute as a Service) and StaaS (Storage as a Service). It’s Internet other services include government services, corporate solution and information and communications technology (ICT), services.

The Company competes with SeedNet, Asia Pacific Online.

International Fixed Communications Business

International fixed communications services include international long distance telephone services, international leased line services, international data services, satellite services and international other services. The Company provides international long distance telephone services in Taiwan. Its international long distance services consist primarily of international direct dial services. Under Super eCall, it uses voice over Internet protocol (VoIP) technology through international dedicated circuits which connect to its major correspondent carriers that route calls internationally. In 2010, The Company sold 1,360.0 million of wholesale outgoing minutes. Leased line services involve offering exclusive lines that allow point-to-point connection for voice and data traffic. Leased lines are used by business customers to assemble their own private networks and by telecommunications service providers to establish networks to offer telecommunications services.

The Company’s international data services include international IP VPN services and Taiwan Internet gateway services. The Company is a 50% owner of the ST-1 telecommunications satellite. The Company leases its transponder capacity on ST-1 and provide satellite lease circuits. In addition, it has two satellite communication centers that enable the Company to provide satellite value-added services and backup systems for use in major emergencies. The Company also provides satellite services to Southeast Asia. The Company is constructing the ST-2 telecommunications satellite together with Singapore Telecommunications Ltd. Its international other services include corporate solution service.

The Company competes with Skype.

Others

The Company’s others business segment include revenues from its non-telecom services include its educational training programs and technology transfer income. The Company provides interconnection of its fixed line network with other mobile operators.