Chunghwa Telecom Co., Ltd.

Good afternoon, ladies and gentlemen. Welcome to Chunghwa Telecom conference call for the company's first quarter 2022 operating results. During the presentation, all lines will be on listen-only mode. When the briefing is finished, the reactions for submitting your questions will be given in the question and answer session. For information, this conference call is now being broadcasted 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. Now I'd like to turn it over to Ms. Angela Tsai, the Director of Investor Relations. Ms. Tsai, please go ahead.

Thank you. This is Angela Tsai, Director of Investor Relations for Zhonghua Telecom. Welcome to our first quarter 2022 results conference call. Joining me on the call today are Harrison Guo, our president, and Vincent Cheng, our chief financial officer. During today's call, management will begin by providing an overview of our business in the first quarter, followed by a discussion of our segment performance and financial highlights. After, we will move on to the question and answer portion of the call. Before I do, please note our safe harbor statements. Now I will turn the call over to President Guo. President Guo, please go ahead.

Thank you, Angela, and hello, everyone. Welcome to our first quarter 2022 earnings call. As an integrated telecom service provider, we achieved strong performance in the first quarter in terms of mobile, fixed broadband, and ICT businesses. under our new corporate structure. Let's begin on slide four for an overview of our business. In the first quarter, the mobile market in Taiwan remains steady, although the competitive landscape may change as our peers announce their major plans. We were pleased to see the market consolidation and believe the new market structure could lead to healthier competition in Taiwan. For Zhonghua, with our most extensive networks for services, we are fully confident in maintaining our leading position in the market going forward. Our revenue and subscriber market share is good in IoT themes, continue to outperform peers in the first quarter by reaching 39.1% and 36% respectively, currently in the leading status. Slide five presents our overall mobile business performance. As our mobile subscriber number is grouping IoT since increased by 0.7% year-over-year, with the successful upsell from existing subscribers, our mobile service revenue increased by 4.9% year-over-year and maintained its upward trend. In addition, 5G penetration developed steadily during the quarter, which helped to enhance the post-pay-up pool to achieve a 3.2% year-over-year increase. Meanwhile, we observed an average 35% uplift in monthly fees attributable to customers who renewed contracts to adopt 5G services. Moving on to slide six for an overview of our overall fixed broadband business. In the first quarter, we are pleased to see both of fixed broadband subscriber number and the high-end subscriber number continue to grow year over year, reflecting our leading market share in Taiwan's fixed broadband market. Facebook's revenue in the first quarter continued to increase by 4.4% year-over-year due to the ongoing growth on higher-speed service adoption driven by digital opportunities. The number of sign-ups for convention speeds of 300 Mbps or higher increased by 41% year-over-year owing to work-from-home lifestyle. Sixth broadband, Apu, also continued the growth trend for the 10th executive quarters, increasing by 3.5% year-over-year, further enhancing our overall performance. Now let's move on to the performance of our customer-centric business groups. Slide 8 illustrates the revenue picture of our consumer business group, our CBG. CBG revenue in the first quarter increased by 2.2% year-over-year, reflecting our success in satisfying customers' needs during the quarter. Mobile service revenue for the consumer group grew 4.9% year-over-year, mainly due to the increase in postpaid subscriber numbers and the 5G migration. 6.9% service revenue maintained its upward trend during the quarter, attributable to additional stay-at-home digital opportunities that encourage higher-speed service adoption. sales revenue decreased year-over-year, mainly due to the health-safety supply issue under COVID-19. Entertainment demand at home and from consumers continued to drive up the group's other revenues, say, MLD and Honey Media, to achieve a 5.2% year-over-year increase during the quarter. Looking ahead, to further expand opportunities in the consumer market, we will package and deliver more customer-centric services to increase market demand, focusing on media, sports, gaming, and augmented reality or virtual reality applications. Slide 9 further demonstrates our highlights of consumer business groups, including MOD, Family Media, and the Triple Play program that promotes six broadband mobile and Wi-Fi services. In January, catering to work-from-home demand and stay-at-home opportunities, we rolled out a triple-play program to encourage consumers to enjoy seamless broadband connections by adopting our mobile fixed broadband and Wi-Fi services together. At the same time, sign-ups of home Wi-Fi devices continue to grow by 29% year-over-year to sustain the popularity of our home-centric applications. In terms of our IPTV and OTT businesses, we are glad to report that the total subscriber number of MOD and HEMI video who paid monthly fee on a yearly basis, instead of one-time sign-ups, increased to approximately $2.6 million during the quarter, remaining the largest media platform in Taiwan. MOD revenue maintained its upward trajectory as SDOD revenue grew by the 6th as consecutive quarters, driven by up-sale, and the channel service continued to increase year-over-year, which was due to 90% sign-up of highest package among the tier pricing schemes. In addition, Honey Media subscriber number boosted in the first quarter thanks to popular journal packages and international badminton games held during the quarter. We expect the growth trend to continue for this year as popular international sports events will be held one after another to attract subscribers such as the Asia Games and FIFA World Cup held in the second half. Please turn to slide 10 for our enterprise business group performance. In the first quarter, enterprise business group revenue increased 2.1% due to the year-over-year growth of mobile and fixed-program revenues. and the enterprise customers increased communication usage in the new normal. In addition, overseas Taiwanese small and medium enterprises that shift their operations and investments back home also brought in fixed broadband demand and related revenues. For enterprises, ICT business, we are glad to see the total gross margin and the profits increased year-over-year in the first quarter. The revenue decreased year-over-year owing to certain differs of project revenue recognition. However, we remain positive about the four-year performance of our enterprise ICT business. Slide 11 demonstrates our enterprise business highlights. We are glad to report growth momentum of our emerging enterprise applications. In the first quarter, 5G enterprise private network revenue tripled its growth year over year, affirming our strong progress ahead of our peers. On a year-over-year basis, mobile ICT revenue and IDC revenue increased in the first quarter due to compression of large projects, while cybersecurity revenue reached double-digit growth attributable to an increase in both project and recurring revenue. Our efforts to develop capabilities of big data analysis work out and achieve the 9% revenue growth. For ICT project performance, we work with subsidiaries, the Zhonghua System Integration and Zhonghua Security International, to successfully acquire the first smart harbor project in Taiwan to realize 5G unmanned vehicle inspection. We also acquired a large integrated smart health project, which translates our strong network and ICT capabilities into long-term recurring revenues. Going forward, we will continue to leverage company resources and technologies to further develop our enterprise business opportunities. Slide 12 demonstrates our international business performance to duplicate our successful solutions and services to the overseas market. For decades, our international business group has continued to develop a localized approach in many overseas markets and serves global clients to deliver services in Taiwan, which is a unique advantage for Zhonghua among peers in Taiwan. In the first quarter, our international business group revenues increased 13.8%, mainly from growing demand of our IBC cloud and ICT services offering for global clients, including some of global OTT service providers. Our strategy is to cater to the growing business opportunities and provide opportunities quotable service including phase 9, undersea cable, IDC, and high net period to sustain revenue growth. I would like to highlight our investment in international undersea cables. In particular, primarily in the SJC2 and the airport, appropriate consortiums. that enable us to capitalize on growing opportunities from international OTT service providers. Now, I would like to turn the call to Vincent for our financial highlights.