Chunghwa Telecom Co., Ltd.

Good afternoon, ladies and gentlemen. Welcome to Zhonghua Telecom conference call for the company's fourth quarter 2024 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 Q&A session. And for your information, this conference call is now being broadcast live over the Internet. and webcast replay will be available within an hour after the conference is finished. Please visit GSTIR website, www.gst.com.dw, slash IR, under the IR calendar section. And now I would like to turn the call over to Ms. Angela Tai, Assistant Vice President of Successful Relations. Thank you. Ms. Tai, please go ahead.

Thank you. I'm Angela Kai, Assistant Vice President of the Financial Department for Zhonghua Telecom. Welcome to our fourth quarter, 2024, is our conference call. Joining me on the call today are our President, Rongxu Lin, and our Chief Financial Officer, Audrey Xu. During today's call, management will begin by providing the CEO the recent achievements of our company and our business overview of the fourth quarter. followed by a discussion of our segment performance and the financial results. After, we will move on to the question and answer portion of the call. On slide two, please read our disclaimer and note concerning forward-looking statements. Now, without further delay, I will turn the call over to President. President Lin, please go ahead.

Thank you, Angela. To begin with, I would like to report our exceptional financial performance for year 2024. Thanks to our team's relentless efforts, Georgia Telecom's operating income, income default tax, and ETS for 2024 all exceeded the upper end of our forecast, highlighting our strong execution and effective strategic direction. Revenue-wise, our four-year revenue reached a seven-year high, driven by robust growth across all of our business sectors. Notably, our four-year ETS of $4.8 million also marked a seven-year high, continuing a streak of five consecutive years of annual growth. This achievement underscores our unwavering commitment to innovation, operational excellence, and delivering sustained value for our stakeholders. In collaboration with NTT, we showcased an ultra-low latency immersive video show in the fourth quarter via the world's first international overcoming the network connection powered by IOM technology. we successfully reduced the VR-induced sickness in the exhibition, enabling the new virtual viewing solution. Additionally, our partnership in OpenRain Corporation opens new avenues for global opportunities. China Telecom, the only telecom in Taiwan capable of offering OpenRain testing, has successfully supported Taiwanese vendors in securing funding from the US government for Open RAN development. The collaboration highlights our cutting-edge technological capability and the unique position in accelerating commercialization of the Open RAN using value chain. Furthermore, we look forward to utilizing OneWeb and SES's satellite resources to roll out commercial services by the first half of 2024, further driving the growth in satellite-related revenue. Lastly, I would like to highlight that in the fourth quarter, we once again maintained our position in 2024 Daozhong Sustainability World Index and Emerging Market Index. We also received the highest honor from the EFG. EFG corporate shared award and represents the only Taiwanese telco included in the Newsweek. Newsweek awards most trustworthy companies 2024 list. This recognition reaffirms our commitment to sustainability and leadership in the responsible business growth. Looking ahead, Moving ahead into 2024, China Telecom is confident in maintaining its leading position across all key benchmarks in our industry. Now let's move on to the business overview of the fourth quarter of 2021. Chris Tenchu's page tried to review our leading position in Taiwan's mobile market. Based on the statistics from Taiwan's Telecom Regulator of November, our overall subscriber shares of Taiwan's mobile market reached 37.9%, achieving its 11th consecutive quarter-over-quarter increase. We are happy to see ongoing subscriber growth. Even more excitingly, our 5G subscriber share surpassed our mobile subscriber share, reaching 38.8% and maintaining our position as an industry leader. We are glad to see our year-over-year growth of the post-paid subscribers increase 0.2 million with a significant growth of 0.7 million in 5G postage subscribers. Additionally, our revenue share maintained the highest in the industry at 40.3%, consistently outperforming our subscriber share and reflecting our strong and healthy growth. According to the financial disclosure of domestic industry players, we also learned that From January 2024, our quarterly subscriber net aid outperformed peers for every quarter throughout this year. Along with our steady 5G penetration, our mobile service revenue recorded a 1.7% year-over-year increase in the fourth quarter and a 3% year-over-year growth over the four years of 2020. In the fourth quarter, we are pleased to see the average monthly fee uplifted from 5G migration showing a 45% increase, maintaining its healthy momentum. Let's move on to the slide 6 for an update of our outperforming fixed broadband business. In the first quarter, our cross-tier upgrade promotion package continued to be well received as more than 70% of the package adopters choose service offering of 300 Mbps and above, including the highest speed offering of 1 Mbps. As a result, on the year-over-year basis, the number of subscribers with speed of 300 Mbps and above increased by 17%, maintaining its double-digit growth, and our subscriber net age of 1 Mbps service doubled, which is encouraging. Given the success, our total number of fixed broadband subscribers also saw an increase in the fourth quarter, Thanks to our successful speed upgrade strategy, our fixed broadband revenue and output continues to increase by 2.9% and 1.7% a year, respectively, and we are confident that this growth will persist. Now let's get a close look at the performance of our business group. Page A presents our CBG performance. In the fourth quarter, the total CBG revenue increased by 2.2% year-over-year, driven by the increase of mobile service revenue, resulting from 5G migration, and the subscriber growth. Along with the increased fixed broadband revenue, owing to the successful speed upgrade strategy, in addition, sales revenue rose year-over-year, mainly due to the stronger smartphone sales. Our CVG's income before tax grew 0.77 billion year over year, primarily due to the strong performance of our core business and a one-time impairment loss recognized in the fourth quarter of 2023. Slide 9 further illustrates our consumer business growth highlights. In the fourth quarter, our multiple play packages with service offering of mobile, fixed broadband and Wi-Fi altogether continued to deliver outstanding year-over-year growth of 57%. This success is attributable to the strength of our quality networks and the effectiveness of our reward point strategy. In the fourth quarter, we were extremely proud to see that Taiwan won the World Basketball Softball Confederation Premium 12 for the first time. This remarkable event, following the popular Olympic Games, in the third quarter further boosted our video service subscription which reached a regular high with a 13.2% year-over-year increase with particular growth from our OTT brand HamiVideo Revenue from both subscription and advertisement on the platform continued to grow as well and we are committed to maintain the productive momentum by consistently investing in the popular content going forward. In addition, our consumer cybersecurity subscription also surged by 22 years over years in the fourth quarter, steadily increasing its revenue contribution as expected. Thanks to our ongoing efforts in the business mentioned, we have reached a milestone of 3 million subscribers as of December 2024, including around 2 million Wi-Fi device subscriptions, more than 1 million subscriptions of home videos and consumer cybersecurity services. We are optimistic with the continued growth in the coming year. Please turn to slide 10 for an overview of our enterprise business group performance. In the fourth quarter, EDG's total revenue increased by 10.2% year-over-year, primarily driven by a robust 10G 4.1 year-over-year growth in ICT business revenue. Major growth drivers, such as IBC, cloud, and cybersecurity services, all delivered strong performance and demonstrated around 50% year-over-year growth, fueled by both project and recurring revenues. Despite the ongoing 5G migration and the fixed broadband field upgrades, which continued to positively contribute to related service revenue, the decline in mobile voice revenue and fixed voice revenue resulted in relatively flat year-over-year performance in our EDG core business. This, in turn, contributed to a decline in EDG's income before tax on a year-over-year basis. Slide 11 illustrated our enterprise business highlights. We are excited to report the strong performance of our IC emerging business in the fourth quarter, with its revenue increased by 23% year-over-year The growth was driven by strong performance across our major pillars and the recurring revenue growth from all service offerings. For our ITC cloud and cybersecurity business, we saw a year-over-year revenue increase of 62%, 46%, and 56%, respectively. For IDC business, we were happy to see revenue contributions from several large projects completed for the high-tech companies in Taiwan, as well as the successful construction of the first overseas AIDC in Mexico for our enterprise customers. Additionally, higher margin rates and the new IDC in operation also contributed to recurring revenue, ensuring the group maintains a stable consolidated IDC market share in Taiwan at more than 50%. Also, in the fourth quarter, our cybersecurity business achieved its 12th consecutive quarter of year-over-year growth, including subsidiary contributions. For the fourth quarter, we are proud to report that the successful development of Taiwan First 5G unmanned vehicle solution for smart harbor inspection. This solution are capable of operating across land, sea, and sky. In every robot to handle port transportation, unmanned vehicles to clean marine pollution and drones to rescue in water, We expect to further extend this application into other sectors, including firefighting, coastal patrolling, forest ecosystem protection, etc. Lastly, we remain optimistic about AI-driven opportunities this year. We have leveraged generative AI technology to deliver projects in smart government and healthcare sectors enhancing efficiency and reducing manpower costs. Through checkbox for troubleshooting and information retrieval. Additionally, we are utilizing AI medical assistance to generate medical summaries and receive paperwork. We believe that more generated AI applications will emerge to create opportunities in the future. Slide 12 illustrates our international business group performance. In the first quarter, IBC's total revenue dipped slightly by 2.3%, mainly due to the decline in international voice revenue. However, As our robust IBC business grew and its demand continued to increase, IBG's income before tax increased year over year. As we continue to expand our IBC business to capture the increasing demand, in the fourth quarter, we are glad to close the contract with a well-known global hyperscale. This agreement secures capacity in our under-construction IDC for the higher scale and ensures the long-term stable revenue generation of China Telecom. Additionally, our overseas subsidiaries have achieved a remarkable business success worldwide in 2024 by providing our ICD solution to high-tech companies in Japan and the United States as well as providing accidental solutions to the PCB industry in Southeast Asia, and providing our exceptional capabilities. More excitingly, our state-of-the-art orientation in undersea cables has also yielded positive results. Although the S-State II and APRICOT international submarine cables are still awaiting Currently, 80% of the capacity we invested in was sold in the fourth quarter of 2024. This is expected to bring revenue in the second half of this year, reflecting strong demand for the international boundaries and the success of our investment strategy. Now, I would like to turn the call to Audrey for our financial highlights.