News Column

Chunghwa Telecom Reports 2014 Guidance

February 5, 2014

Chunghwa Telecom Co. recently reported guidance for 2014 on a consolidated basis.

In a release, the Company said that all figures were prepared in accordance with Taiwan-International Financial Reporting Standards ("T-IFRSs") on a consolidated basis.

"We are glad to report to you that we ended 2013 with strong operational results in both growing our mobile business and upgrading customers to higher speed services," said Dr. Rick L. Tsai, Chairman and CEO of Chunghwa Telecom. "Our chief focus for 2014 is on the seamless rollout of 4G services in the second half of the year, with the aim to be not only the first 4G operator in Taiwan, but also the best 4G operator in terms of service and network quality. Facing market saturation and competition on broadband business, we will continue to support growth through offering attractive convergence plans and facilitating higher-speed migration. Lastly, we plan to launch ground-breaking 300Mbps speed services, helping us to solidify our technological superiority and maintain our market leading position."

The company reported that total revenue in 2014 is expected to slightly increase by NT$0.23 billion, or 0.1 percent, to NT$228.23 billion compared to the unaudited consolidated revenue for 2013. Expected increases in revenue due to on-going promotions for mobile internet and growth in handset sales as well as ICT projects will likely be offset by the expected voice revenue decline and tariff reductions. Broadband revenue is expected to be flat year-over-year due to market competition.

Additionally, operating costs and expenses for 2014 are expected to increase by NT$4.21 billion to NT$184.70 billion. Costs of handset sold are expected to increase along with the promotion of mobile internet packages and customers' migration to 3G. Increase in CAPEX for the Company's fixed and mobile broadband businesses is expected to result in higher depreciation and maintenance expenses. The 4G license acquisition will also increase amortization expenses.

Non-operating income is expected to decrease by NT$0.88 billion due to declines in both interest income and gains on disposal of financial assets. Income before income tax and comprehensive income attributable to stockholders of the parent are expected to be NT$44.20 billion and NT$35.84 billion, respectively, representing decreases of NT$4.94 billion and NT$2.86 billion, respectively. Earnings per share is expected to decrease to NT$4.62.

Not counting for the 4G license payment of NT$39.08 billion, CAPEX for 2014 is budgeted to increase by NT$3.72 billion year-over- year to NT$40.13 billion, primarily due to costs associated with the build-out of the 4G network, fiber broadband, mobile network, and cloud infrastructure.

Chunghwa Telecom is a telecom service provider. The Company provides fixed-line, mobile and Internet and data services to residential and business customers in Taiwan.

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