Chunghwa Telecom Co., Ltd.

Good afternoon, ladies and gentlemen. Welcome to Chonghua Telecom conference call for the company's second quarter 2026 operating results. During the presentation, all lines will be on listen-only mode, and when the briefing is finished, directions for submitting your questions will be given in the question and answer session. For your 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. And now I would like to turn it over to Ms. Angela Tsai, the Vice President of Finance. Thank you. Ms. Tsai, please go ahead.

Thank you. I'm Angela Tsai, Vice President for Finance at Zhonghua Telecom. Welcome to the second quarter of the 2026 Earnings Conference Call. Joining me on the call today are Chung-Hwa's President, Rong-Shy Lin, and our Chief Financial Officer, Ou-Chi Xu. During today's call, management will begin by sharing our recent strategic achievements and providing an overview of our second quarter business results. This will be followed by a discussion of our segment performance and financial highlights. We will then open the floor for questions and answers. Please turn to slide two to review our disclaimers and forward-looking statement disclosures. Now, without further delay, I will turn the call over to Preston. Preston Lin, please go ahead.

Thank you, Angela, and hello, everyone. Welcome to our second quarter's 2026 results conference call. We are excited to announce Robust second quarter and first half results with revenue, operating income, net income, and EPSO exceeding the high ends of our guidance. Notably, total revenue for the second quarter climbed to its highest for any second quarter since 2010. Driven by the solid business growth, In addition, our ICT revenue reached its highest second quarter level since 2021. Based on our outperformance in the first half, we are confident in achieving our full-year performance targets. In 2026, we continue to invest in AI and see concrete results. In the morning today, we announced the kickoff of the Operation of our newly built AI data center in Renping, Taoyuan, which is expected to add up to 36 megawatts to our total IDC capacity upon full build-out. In July, we were pleased to sign a memorandum of understanding with Taiwan Stock Exchange. to provide dedicated collocation capacity within our new AI data center in Taichung, currently under construction, further expanding our market-leading financial collocation ecosystem in Taiwan. Both achievements demonstrate our ability to convert AI infrastructure investments into long-term financial return. Thirdly, leveraging our leading AIDC infrastructure and sea, land, sky network deployment, we are positioning China Telecom as the region's unique 3A hub for the AI era. Powered by our ION network and distributed AIDCs, the 3A hub delivers three core values. Assurance, providing resilient sea, land, sky connectivity. All photonics enabling ultra-high capacity, low latency, and energy efficient networking through Ion, an AI hub connecting distributed AI computing resources across the Asia-Pacific to support customers' AI development. In addition, in terms of Ion, we would like to highlight the Ion AI Fund, which is the financial instrument We jointly established with global partner in June. The fund aims to not only build the IOWN ecosystem, but also create new business opportunities through technology investments. As all investors believe, the optical ecosystem is essential to the AI development. Our subsidiaries also continue to seize AI-related opportunities. In the second quarter, Zhonghua Telecom Precision Tech commenced new factory construction to meet growing AI semiconductor testing demand, while Zhonghua leading photonics tech, which stands to benefit from potential opportunities in the AI supply chain. began trending on the emerging stock exchange in June. Finally, we are delighted to report ESG recognitions received in the second quarter, including the CDP's top A-list rating for the supplier engagement and the best issuer for sustainable finance and the best sustainability bond award from the assets. and the top 5% of Taiwan Stock Exchange listed companies for corporate governance. Additionally, we are proud to report that despite continued revenue growth in 2025, we remained on track with our SBTI commitments. Reducing scope 1 and scope 2 greenhouse gas emissions by 24.5% from our 2020 baseline and scope 3 emissions by 10.8% from our 2021 baseline. Now let's move on to our second quarter's 2026 results. In the second quarter, we continued our market share leadership in Taiwan's mobile market. Our mobile revenue market share continued to increase, climbing to a record high of 41.2%, while our subscriber market share rose to 39.8%, according to our telecom regulator. We would particularly like to highlight the strength of our premium revenue base as our revenue share continued to exceed our subscriber share. Our 5G performance was equally impressive. The 5G market share in Taiwan reached 39.4%. Maintaining No.1 status, while 5G penetration rate among smartphone users increased to nearly 49% as of June, the average monthly feed uplift from 5G migration remained stable at 36%, and the postpaid Chang-Rui stayed at a low level of 0.36%, reflecting strong customer loyalty. Thanks to the market-leading subscriber base, growing 5G adoption, and the increased roaming revenue on a year-over-year basis, our mobile service revenue grew by 3.2%, outperforming the industry average. In the meantime, post-paid approvals increased by 2.4% of $1380, Notably, we observed our roaming revenue increased 19% year-over-year in the second quarter, with inbound roaming revenue growing 42%, benefiting from the robust tourism demand and increasing international travel activities. Let's move on to slide 6 for our fixed broadband business update. In the second quarter, we were glad to see the number of the subscriber adoption service speeds of 300 Mbps and above reached 42% of our total fixed broadband subscriber space, and the number continued to increase quarter over quarter. Among them, subscribers adopting 1Gbps buff increased 61% year-over-year, supported by the continued success of our broadband promotion package. As a result, fixed broadband revenue in the second quarter posted a 3% increase year-over-year. While the ARPU rose year-over-year by $20 to $824 per month, fixed broadband subscribers also continued to deliver positive growth year-over-year. We will continue to keep the business up and sustainable. Page 7 highlights the performance of our million subscriber consumer services. In the second quarter, Signs up of our marketplace offering, which integrates mobile fixed broadband and Wi-Fi services, continues to grow year-over-year for the 18th consecutive quarter, representing a 14% increase year-over-year and driving up our overall telecom revenue growth. Notably, our Wi-Fi administration among fixed broadband subscribers reached 57% as a solid basis for the smartphone connectivity. As of 2026, FIFA World Cup kicked off in June and ran through July. It successfully boosted video subscription number to their annual peak in July. At the same time, the introduction of datatainment, real-time match data, and highlights feature during this FIFA World Cup helped drive total views of tech-supported broadcasts across MOD and Harmony Video up. 24% compared with the previous tournament. As a result, we are glad to see our total OTT revenue in the second quarter increased 20% year-over-year. With upcoming Asia Games in the third quarter, we are optimistic about our video performance through the next quarter. Lastly, our digital services continue to deliver solid growth. The subscriber number of our consumer cybersecurity services maintained over 1 million and delivered 11% year-over-year growth, supported by the rising awareness of digital security. Meanwhile, the number of transacting users of our digital carrier billing, or DCB, increased by 4.7%. Year-over-year, as customers continue to adopt digital net content, gaming, and AI application tools, we continue to see the potential growth in DCD services going forward. Slide 8 illustrates the key developments in our enterprise ICT business. Through the collective Our ICT business delivered another strong quarter, with revenue increasing 32% year over year. Driven by the continuous expansion of emerging services, recurring ICT revenue also grew by 9%, maintaining solid momentum across major service lines, particularly IDC, cybersecurity, and international public cloud services. Among our core ICT service pillars, big data, cybersecurity, and IDC are the key growth drivers. Post-team year-over-year growth of 167%, 34%, and 14%, respectively. Big data, revenue, search, and data. The cybersecurity revenue grew strongly, driven by the recognition of large-scale projects for public sector customers, while ITC revenue growth was supported by the installation projects for the manufacturing companies. Notably, a key highlight is our second high ICT order intake. Build on the strong momentum in ICT contract acquisitions during the first quarter, our ICT order intake remained robust in the second quarter, with contract value increasing by 30% year-over-year. As a result, the total ICT contract value secured in the first half of the year has already matched Fu-Ye's total amount achieved in 2025, reflecting a strong project pipeline and reinforcing our confidence in future growth. As of June, our major contract wins in the second quarter include large-scale ARDC projects, which are expected to further increase air-related revenue, flagship Thai power energy storage project, positioning asked for additional smart grid opportunities and multiple smart surveillance projects from traditional institutions demonstrating our ability to replicate successful deployment across the sector. In addition, we became the first tech operator to provide cloud-based encryption-sharing services to the financial industry. further reinforcing our differentiated ICT market leadership. Slide 9 highlights the robust performance of our international subsidiaries and the global network performance. In the second quarter, our international subsidiaries delivered impressive performance as aggregate revenue increased 242% year-over-year, particularly due to the large-scale ICT project deliveries across the United States and Southeast Asia. In the United States, revenue increased more than 11-fold year-over-year, mainly due to the delivery of the large-scale air supply chain projects in Texas. Meanwhile, revenue in Southeast Asia doubled on-year, supported by the ongoing construction project for key customers in Singapore and Vietnam. Encouragingly, with our proven overseas IC integration expertise, we have successfully secured new projects across the United States, Singapore, and Thailand, providing strong visibility into future growth. In addition to the strong momentum of overseas ICT business, our network of resilience business continues to expand with our Asia-Pacific 3A hub strength. Satellite services revenue increased 14% year-over-year. supported by increasing adoption of satellite connectivity solutions across industry. Notably, satellite-related ICT contracts secured in the first half exceeded $280 million, highlighting the growing demand for the diversified communication infrastructure. Another key growth driver from 3A's hub Strength is the international private list circuit business whose revenue increased 8% year-over-year, mainly driven by SJC2 and APRICOT submarine cable. Looking ahead, given the run-up of the AI-driven data trading and the growing international connectivity demand, Resulting from the geopolitical uncertainty, we are well positioned to capture these opportunities supported by continued investment in submarine cable and satellite projects. Now let's move on to page 10 for the financial performance of our three business groups. In the second quarter, Our core telecom business remains strong. Growth in mobile services, fixed broadband, and handset sales drove consumers' business group revenue up 4.8% year-over-year, while income before tax increased a solid 3.6%. Beyond our core telecom business, ICT business continues to be a key growth engine. Strong ICT demand, along with the growth in mobile and broadband services, lifted the enterprise business group revenue by 3.7% year-over-year, while income before tax increased 2.1%. In the second quarter, the strongest performance came from our international business group, which saw growth across every segment, resulting in and approximately 79% increase in the revenue on-year and 31% increase in income-before-tax on-year, respectively. This was propelled by rising demand for ICT integration projects, mainly driven by the relocation of AI supply chain, contribution from the S-Station-2 and Apricot submarine cables, as well as the strong roaming revenue increase That concludes the business overview for the second quarter. Now I would like to hand the call over to Audrey for the financial update.