Chunghwa Telecom Co., Ltd.

Good afternoon, ladies and gentlemen. Welcome to Chunghwa Telecom Conference Call for the company's fourth quarter 2021 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 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 CHT IR website, www.cht.com.tw slash IR, under the IR calendar section. I would like to turn it over to Ms. Angela Tai, the Director of Investor Relations. Ms. Tai, please go ahead.

Thank you. This is Angela Tai, Director of Investor Relations for Zhonghai Telecom. Welcome to our fourth quarter 2021 result conference call. Joining me on the call today are Harrison Gould, our president, and Susan Chang, our chief financial officer. During today's call, management will begin by providing an overview of our business from this quarter, followed by a discussion of operational and financial highlights. After, we will move on to the question and answer portion of the call. On slide two, please notice our safe harbor statement. Now I will turn the call over to President Guo. President Guo, please go ahead.

Thank you, Angela, and hello, everyone. Welcome to our fourth quarter 2021 earnings call. Before providing an update on fourth quarter performance, I would like to begin by highlighting the ongoing success of our strategic transformation that began in 2019. Three years ago, we launched a customer-centric strategic transformation plan focused on value creation to enhance our market position. Under this plan, we sought to improve our competitive advantage by strengthening our core businesses, deploying emerging services, optimizing our cost structure and further enhancing fundamentals, such as next-generation networks, IT infrastructure, and human resource planning. We concluded our three-year plan at the end of 2021 with several key achievements, including three years of consecutive growth in EBITDA margin, net income, and EPS, Mobile service revenue turned around since the second quarter of 2021, and the return rate significantly decreased from 2019 to 2021. In addition, the compound annual growth rate of broadband revenue increased by 2%, increasing the enhancement of our core business. In regards of emerging business, we are glad to see compound annual growth rate for both IGC revenue and the cloud revenue increased by 5%, while ICT business growth profit increased to 70%. By 2021, our backbone network was 100% software-defined network-ready. and the fiber-to-the-home coverage reached approximately 88%, demonstrating our enhanced core competence. The net promoter score, NPS, of our services also increased, which reflects the increase in customer satisfaction. Revenue and profit per hectare increased 6% and 15% respectively, attributable to increased operational efficiency as a result of cost structure optimization. Along with the strategic transformation, on slide four, you can see we have an organizational transformation effective on January 1st, 2022. we transformed our business groups under customer-centric structure. We expect our consumer business group to develop individual and home-centric business, such as mobile, Facebook, Wi-Fi, MOD, and OTT services. We aim to create value and better experiences for our customers. Former enterprise business-related units have been transformed into a single business group to streamline service delivery and create a synergy. In addition, the international business group has continued its outreach as we expand our business into overseas territories. Similarly, our technologically focused units have been transformed into three groups, forming a strong foundation to support innovation and provide solutions. In fact, our headquarters will continue to maximize its functions of devising, planning, and resource allocation. In sum, We expect the new organization structure to be more customer-centric and responsive as we aim to provide a better value creation opportunities for both customers and the stakeholders. Now please turn to slide six for an overview of business from the first quarter of 2021. In the first quarter, the mobile market in Taiwan remained steady as operators focused on 5G migration and development. By the end of 2021, our 5G penetration rate reached approximately 20%, as we expect that this rate to reach 30% by the end of 2022. As we continue to lead in network quality by accelerating 5G deployment at data-based locations, we remain confident on 5G customer migration and reaching our target, maintaining our leading position in 2022. In the first quarter, 5G migration continued to drive up-to-date we observed an average of 39% uplift in monthly fees attributable to customers who renewed contracts to adopt 5G services, particularly from the contribution of iPhone 13 bundle subscribers. Our excellent home-based infrastructure was well received in the first quarter as well. The number of home Wi-Fi devices continued to soar by 167% year over year. Broadband subscriber numbers turned positive during the quarter, while revenue hit a record high in December. As subscriber migration to our broadband services of 300 megabits per second or higher increased by 45% year-over-year. Our broadband approach also continued to increase year-over-year. In line with expectations, MOD approach also grew on a year-over-year basis as a result of successful upsell during the quarter. Looking ahead, we will strive to develop video services by providing more popular content and leveraging 5G to create immersive viewing experiences. We are pleased to announce our ICT business achieved its four-year revenue and margin by the end of 2021. In particular, the ICT project margin for 2021 continues to grow, which is reflective of our overall performance and demonstrating that our enterprise business is on track and expects to do well in the future. Allow me to walk you through each of our business slides. Turning to slide 7, you may find updates on our mobile business. In the first quarter, we maintained our leading position in the mobile market. As both revenue and subscriber market share, excluding IoT themes, increased to $1. 38.9% and 36.1% respectively. During the quarter, our mobile customer NetX and post-pay NetX both ranked highest among the big three majors. As post-pay subscriber numbers increased year over year, and the 5G migration enhanced adoption of high-price plans. Our mobile service revenue maintained its upward trend, resulting in a year-over-year increase of our post-pay approval. Looking ahead, we will guide our services with a key focus on our customers, rolling out popular bundled services for innovative 5G applications to further drive up 5G migration and mobile output. Please turn to slide 8 for an update on our broadband business in the first quarter. During the quarter, our high net subscriber net edge continue to increase year-over-year. And broadband subscribers, net X, turned positive year-over-year, which reflects the market's growing demand for fixed broadband. We were also pleased to see that our broadband accrual increased by 3% year-over-year. attributable to our success in migrating subscribers to adopt higher speed services. In addition, the number of subscribers that sign up for connection speeds of 300 megabits per second or higher increased by 45% year over year. Looking ahead, we are confident that we will maintain the overall upward trend in our broadband business, as we believe our digital transformation trend is most likely turning back. As our consumer business group prepares to develop smart solutions, we expect to introduce more popular home-centric services in the future to enhance customer user experience. Slide 9. It illustrates our MLD business performance. In the first quarter of 2021, MLD subscriber numbers decreased slightly. Their family video subscriber number increased by 20% year-over-year. Despite this, MLD revenue maintained its growth trend and increased 2% year-over-year. as a result of our pricing strategy. The SVOD OKS package that rolled out in the first quarter of 2021 quickly accumulated a great subscription number and successfully strengthened SVOD revenue growth for four consecutive quarters. Channel revenues continue to increase year-over-year, as 90% of subscribers opted for the highest price package among the tier pricing schemes. As a result, MLB APU achieved a year-over-year increase in the first quarter. Moving forward, we will make investments in content development, to further enhance our video service performance on different viewing platforms to maintain our leading position as the largest video platform in Taiwan. Please turn to slide 10 for an update on our ICT business. In the fourth quarter, both ICT project margin and the gross profit increased year over year as a result of our effort to take on projects with high returns, which is positive to our overall bottom line. Excluding the large project impact from 2020, IDC revenue in the first quarter increased by 20-20% year-over-year, mainly due to revenue recognition from financial projects, and the cloud revenue increased 3% year-over-year. Revenues from cybersecurity decreased year-over-year due to delays in project revenue recognition. However, we remain positive that the information business will grow at a double-digit rate in 2020. In 2021, sorry, 2022, in 2021, we were glad to see the 5G project network reach a billion-dollar value as a result of our recent efforts. such as introducing the first 5G small steel factory in Taiwan. In addition, we were proud to report some indicative ICT projects, such as building the first bus emergency signal control system in Taiwan, big data analysis programs for large public service companies, as well as the network test field for 5G open RAN vendors. Looking ahead in 2022, we are pleased to see that the number of orders taken has exceeded our annual guidance, many attributable to opportunities from the government, enterprises, retail stores, and the tourism industry. Now, I would like to turn the call over to our CFO, Vincent Chen, who will review our financial results.