Chunghwa Telecom Reports Consolidated Operating Results for the Fourth Quarter and Full Year of 2012

Chunghwa Telecom Reports Consolidated Operating Results for the Fourth Quarter
                            and Full Year of 2012

PR Newswire

TAIPEI, Taiwan, Jan. 30, 2013

TAIPEI, Taiwan, Jan.30, 2013 /PRNewswire/ --Chunghwa Telecom Co., Ltd.
(TAIEX: 2412, NYSE: CHT) ("Chunghwa" or "the Company") today reported its
unaudited operating results for the fourth quarter and full year of 2012. All
figures were prepared in accordance with generally accepted accounting
principles of the Republic of China ("ROC GAAP") on a consolidated basis.

(Comparisons, unless otherwise stated, are to the prior year period)

Fourth Quarter 2012 Financial Highlights

  oTotal net revenue increased by 2.5% to NT$56.27 billion
  oMobile communications revenue increased by 6.5% to NT$25.60 billion

       oMobile value-added services (VAS) revenue increased by 37.3% to
         NT$5.51 billion
       oHandset sales revenue increased by 15.1% to NT$7.29 billion

  oInternet revenue increased by 7.6% to NT$6.52 billion

       oInternet VAS revenue increased by 3.4% to NT$0.64 billion

  oDomestic fixed communications revenue decreased by 2.7% to NT$19.32
    billion
  oInternational fixed communications revenue increased by 4.3% to NT$3.95
    billion
  oTotal operating costs and expenses increased by 4.8% to NT$45.08 billion
  oNet income totaled NT$9.11 billion, representing a 8.9% decrease
  oBasic earnings per share (EPS) was NT$1.17

Full Year of 2012 Financial Highlights

  oTotal net revenue increased by 1.3% to NT$220.28 billion
  oMobile communications revenue increased by 8.4% to NT$100.79 billion

       oMobile VAS revenue increased by 34.3% to NT$20.45 billion
       oHandset sales revenue increased by 28.3% to NT$28.23 billion

  oInternet revenue decreased by 0.3% to NT$24.76 billion

       oInternet VAS revenue increased by 4.6% to NT$2.58 billion

  oDomestic fixed communications revenue decreased by 4.6% to NT$75.70
    billion
  oInternational fixed communications revenue increased by 0.7% to NT$15.32
    billion
  oTotal operating costs and expenses increased by 5.4% to NT$171.22 billion
  oNet income totaled NT$40.07 billion, representing a 14.9% decrease
  oBasic EPS was NT$5.16

"We are proud to announce that we met our 2012 guidance and maintained our
market leadership. As Taiwan's largest integrated telecommunications company,
2012 marked a year of tremendous strides towards the strengthening and
expansion of our drivers including Fiber broadband and wireless internet
businesses. Heading into 2013, we continue to face the headwinds associated
with on-going regulatory changes as well as increasing competition, but we
remain encouraged. We aim to leverage our capex investments by growing
mobile internet subscribers by 40 percent to 3.5 million, expand our fiber
broadband user base to over 1.5 million subscribers using 50 mbps or higher
speed connections, as well as broaden our ICT and cloud enterprise services
platform. Our goal remains to be providing retail and enterprise customers
unmatched speed and reliability in accessing the Internet network in the most
seamless way possible via any device, any location, and at any time."

Revenue

Chunghwa's total net revenue for the fourth quarter of 2012 increased by 2.5%
to NT$56.27 billion. This total was comprised of 45.5% mobile, 11.6%
internet, 34.3% domestic fixed, 7.0% international fixed, and the remainder
was from other businesses.

Total revenue growth was primarily attributable to the mobile VAS revenue
increase and the strong growth momentum in handset sales revenue. ICT project
revenue also increased during the quarter. These increases offset the decline
in mobile voice revenue due to Chunghwa's market competition and the National
Communication Committee's ("NCC") tariff reduction, local service revenue due
to mobile substitution, as well as Domestic Long Distance ("DLD"), broadband
and ISP revenue due to tariff cuts.

Total revenue for the mobile business increased to NT$25.60 billion for the
fourth quarter 2012, representing 6.5% year-on-year growth. The increase was
primarily due to growth in mobile VAS revenue and handset sales from
smartphone promotions, which offset a decline in mobile voice revenue due to
market competition and the NCC tariff reductions.

Chunghwa's internet business revenue increased by 7.6% year-over-year to
NT$6.52 billion in the fourth quarter of 2012. The increase was primarily
attributable to ICT project revenue growth which offset the HiNet ISP revenue
decline due to tariff reduction.

For the fourth quarter of 2012, domestic fixed revenue totaled NT$19.32
billion, representing a 2.7% year-over-year decrease. Local service revenue
decreased by 5.0% year-over-year mainly due to mobile substitution. Moreover,
the 35.3% revenue decline in the DLD business was mainly due to the tariff
reductions that began this year.

Broadband access revenue, including ADSL and Fiber connections ("FTTx"),
decreased by 4.2% year-over-year to NT$4.84 billion, primarily due to tariff
reductions. 

International fixed line revenue increased by 4.3% to NT$3.95 billion
primarily due to an increase in leased-line revenue which offset the
international long distance service revenue decrease because of market
competition.

Other revenue decreased by 23.0%, primarily due to less construction revenue
from the property development subsidiary, Light Era.

For the full year of 2012, total revenue was NT$220.28 billion, a 1.3%
increase compared to 2011. This total was comprised of 45.8% mobile, 11.2%
Internet, 34.4% domestic fixed, 7.0% international fixed, and the remainder
was from other businesses.

Operating Costs and Expenses

Total operating costs and expenses for the fourth quarter of 2012 amounted to
NT$45.08 billion, an increase of 4.8% compared to the same period of 2011.
This increase was mainly the rising cost of handsets sold and higher ICT
project costs.

Total operating costs and expenses for full year of 2012 increased by 5.4%
year-over-year to NT$171.22 billion, mainly due to the higher cost of handsets
sold.

Income Tax

Income tax expense for the fourth quarter of 2012 was NT$1.82 billion,
representing a 3.6% decrease, compared to NT$1.89 billion for the same period
of 2011. 

Operating Income and Net Income

Income from operations decreased by 5.6% to NT$11.19 billion for the fourth
quarter. The operating margin was 19.9%, compared to 21.6% in the same period
of 2011. Net income decreased by 8.9% year-over-year to NT$9.11 billion. Basic
earnings per share decreased to NT$1.17.

Cash Flow and EBITDA

Cash flow from operating activities for the fourth quarter of 2012 decreased
by 19.1% year-over-year to NT$24.53 billion, mainly due to a decline in income
from operations, an increase in inventories acquired by our property
development subsidiary as well as the exemption of deposits for mobile VIP
customers.

EBITDA for the fourth quarter of 2012 decreased by 3.6% to NT$19.30 billion.
The EBITDA margin was 34.30% compared to 36.47% in the same period of 2011.
The lower EBITDA margin was primarily due to decreased income from operations.

Capital Expenditure ("Capex")

Total capex for the fourth quarter of 2012 amounted to NT$10.78 billion,
representing a 4.7% year-over-year increase. Total capex was comprised of:
63.5% domestic fixed communications, 18.5% mobile, 9.7% internet, 5.5%
international fixed communications, and the remainder was for other uses.

Business and Operational Highlights

Broadband/HiNet

  oThis year, the Company is continuing to execute its strategy of
    encouraging FTTx migration. As of December 31st, the number of FTTx
    subscribers reached 2.72 million, accounting for 59.7% of total broadband
    users. Moreover, the number of subscribers signing up for 50M connections
    reached 905 thousand. 
  oHiNet broadband subscribers totaled 3.77 million at the end of December
    2012, representing a year-over-year increase of 2.2%. 

Mobile

  oAs of December 31st, 2012, Chunghwa had 10.27 million mobile subscribers,
    representing a 2.0% year-over-year increase.
  oAs of December 31st, 2012, the Company had 2.48 million mobile internet
    subscribers, demonstrating strong growth of 64.9% year-over-year and
    surpassing its subscriber target of 2.45 million due to strong growth
    momentum.
  oMobile VAS revenue for the fourth quarter of 2012 increased by 37.3%
    year-over-year to NT$5.51 billion, with mobile internet revenue, the
    largest contributor to VAS revenue, increasing 63.7% year-over-year. 

Domestic/International Fixed-line

  oAs of December 31st, 2012, the Company maintained its leading position in
    the fixed-line market, with total 11.79 million subscribers.
  oAs of December 31st, 2012, Chunghwa's Multimedia-on-Demand (MOD)
    subscriber base exceeded 1.19 million subscribers.

2013 Guidance

For 2013, total revenue is expected to decrease by NT$2.46 billion, or 1.1%,
to NT$217.82 billion compared to the unaudited consolidated revenue for 2012.
Although the persistent promotion of mobile internet, Fiber broadband and ICT
including cloud services will inject growth momentum of the Company, the less
construction revenue from Light Era, the property development subsidiary, a
continued decline in voice revenue, the NCC-mandated tariff reductions as well
as the mobile interconnection rate reduction will decrease total revenue.

Operating costs and expenses for 2013 are expected to increase by NT$1.49
billion to NT$172.71billion. The promotion and deployment of the Company's
mobile internet and broadband and cloud businesses is expected to result in
higher depreciation and amortization as well as higher maintenance and
material expenses. Electricity expense is expected to increase due to higher
tariffs. Furthermore, the bad debt reversal for 2012 also explained this
year-over-year increase. The increase in the aforementioned expenses offsets
the decrease in mobile interconnection expense due to the rate reduction and
the construction cost decrease from the subsidiary Light Era.

Non-operating income is expected to increase by NT$1.05 billion due to a real
estate impairment charge taken during 2012. Income before income taxes is
expected to be NT$46.15 billion and comprehensive income attributable to
owners of the parent NT$37.59 billion, representing decreases of NT$ 2.9
billion and NT$2.48 billion respectively. Earnings per share are expected to
decrease to NT$4.85.

Capex for 2013 is budgeted to increase by NT$3.89 billion from 2012, to
NT$37.15 billion, primarily related to the fiber broadband, mobile network,
and cloud infrastructure build-outs.

                                        2013(F)  2012                 YoY
(NT$ billion except EPS)                            (ROC GAAP    change  (%)
                                        (T-IFRSs)   unaudited)
Revenue                                 217.82      220.28       (2.46)  (1.1)
Operating Costs and Expenses            172.71      171.22       1.49    0.9
Income from Operations                  45.11       49.06        (3.95)  (8.1)
Non-operating Income                    1.04        (0.01)       1.05    -
Income before Income Tax                46.15       49.05        (2.90)  (5.9)
Comprehensive Income attributable to    37.59       40.07        (2.48)  (6.2)
owners of the parent (Note)
EPS(NT$)                                4.85        5.16         (0.31)  (6.1)
EBITDA                                  78.22       81.54        (3.32)  (4.1)
EBITDA Margin                           35.9%       37.0%
Acquisition of Property, Plant and      37.15       33.26        3.89    11.7
Equipment, Long-term Investments
Note: The figure of 2012 was Net Income attributable to owners of the parent
based on ROC GAAP.

Financial Statements

Financial statements and additional operational data can be found on the
Company's website at http://www.cht.com.tw/en/ir/stockit-earningsit.html.

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.
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 the risks
outlined in Chunghwa's filings with the U.S. Securities and Exchange
Commission on Forms F-1, F-3, 6-K and 20-F, in each case as amended. The
forward-looking statements in this press release reflect the current belief of
Chunghwa as of the date of this press release and Chunghwa undertakes no
obligation to update these forward-looking statements for events or
circumstances that occur subsequent to such date, except as required under
applicable law.

This press 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 income,
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 (iv) other expenses or
income not related to the operation of the business.

EBITDA is not a measure of financial performance under U.S. GAAP or 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 U.S. GAAP or 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.

About Chunghwa Telecom

Chunghwa Telecom (TAIEX: 2412, NYSE: CHT) is Taiwan's leading telecom service
provider. Chunghwa provides fixed line, mobile, broadband access, and internet
services. The Company also provides information and communication technology
services to corporate customers.

Media Contact:

Fu-fu Shen
Phone:+886-2-2344-5488
Email:chtir@cht.com.tw

SOURCE Chunghwa Telecom Co., Ltd.

Website: http://www.cht.com.tw/en/
Website: http://www.cht.com.tw/en/ir/stockit-earningsit.html