Chunghwa Telecom Q1 2025 Earnings Report

Chunghwa Telecom EPS Results

• Actual EPS: $0.38
• Consensus EPS: $0.38
• Beat/Miss: Met Expectations
• One Year Ago EPS: N/A

Chunghwa Telecom Revenue Results

• Actual Revenue: $1.85 billion
• Expected Revenue: $56.11 billion
• Beat/Miss: Missed by -$54.27 billion
• YoY Revenue Growth: N/A

Chunghwa Telecom Announcement Details

• Quarter: Q1 2025
• Date: 5/8/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, May 8, 2025
• Conference Call Time: 3:00AM ET

Chunghwa Telecom (NYSE:CHT) Co., Ltd., together with its subsidiaries, provides telecommunication services in Taiwan and internationally. It operates through Consumer Business, Enterprise Business, International Business, and Others segments. The company offers local, domestic long distance, and international long distance fixed-line telephone services; mobile services such as prepaid and postpaid plans; broadband plans; and internet and data services. Chunghwa Telecom Co., Ltd. was incorporated in 1996 and is headquartered in Taipei City, Taiwan.

Chunghwa Telecom Q1 2025 Earnings Call Transcript

Presentation

[Operator]

Good afternoon, ladies and gentlemen. Welcome to the Zhonghua Telecom Conference Call for the Company's First Quarter twenty twenty five Operating Results. During the presentation, all lines will be in 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.

[Operator]

Webcast replay will be available within an hour after the conference is finished. Please visit CHT IR website, www.cht.com. Twir, under the IR Calendar section. And now I would like to turn it over to Ms. Angela Assistant Vice President of Investor Relations.

[Operator]

Thank you. Ms. Tsai, please go ahead.

[Angela Tsai, AVP - Investor Relations at Chunghwa Telecom]

Thank you, Angela Tsai. Welcome to our first quarter twenty twenty five results conference call. Joining me on the call today are our President, Rongxi Lin and our Chief Financial Officer, Audrey Xu. During today's call, management will begin with the recent strategic achievements and provide our business overview of the first 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.

[Angela Tsai, AVP - Investor Relations at Chunghwa Telecom]

On Slide two, please read our disclaimers and notes concerning forward looking statements. Now without further delay, I will turn the call over to our President. President Lin, please go ahead.

[Rong-Shy Lin, President at Chunghwa Telecom]

Thank you, Angela, and hello, everyone. Welcome to our first quarter twenty twenty five results conference call. We are excited to report net income and EPS delivered 4.3% year over year increase in the first quarter, driven by our solid operation and the leading position in mobile, fixed line and ICT business. Despite the first quarter's rapid change in the macroeconomic climate due to the global tariff issue, from which we believe there is no material impact. We believe that this may even present new opportunities for our international business.

[Rong-Shy Lin, President at Chunghwa Telecom]

At the same time, our strong financial performance position us to continue investing to seize new opportunities, particularly those from enterprise customer who may be expanding their manufacturing basis globally. Meanwhile, we will continue to execute our Sea, Land and Sky advanced network strategy to prepare for the future and enhance network resilience, leveraging our leading technology strengths. In January, we collaborated with partner to successfully integrate ST2 high orbit satellite with five gs base station. This achievement enable world leading end to end two way video call based on the 3GPP five gs new radio for non terrestrial network, standard communication protocol, advancing the connection between LAN and SkyVille satellite and the five gs communication. Furthermore, in April, we conclude a strategic partnership with The US innovator, Astronis, to bring a dedicated micro geo satellite to Taiwan, complementing our existing multi orbit satellite architecture.

[Rong-Shy Lin, President at Chunghwa Telecom]

As for Sea, we announced our investment in E2A, the Trans Pacific undersea cable connecting Asia to North America to meet the growing demand from OTT players and the digital transformation, including the foreseeable AI boom. To our great delight, we are proud to receive multiple awards in the first quarter acknowledging our leadership in the business and ESG performance. For international honors, our outstanding five gs smart port solution was recognized by Asia Telecom Awards as the Technology Innovation of the Year. We were also ranked top five of four S and P Global ESG score in the Sustainability Yearbook 2025 for the third consecutive years and secured the highest ranking from CDP for both climate and supply engagement leadership for the second consecutive year. Finally, I we would like to highlight that Zhongo Telecom is the first Taiwanese telecom certified under the most stringent international anti bribery standard, showing our determination to deliver outstanding corporate governance.

[Rong-Shy Lin, President at Chunghwa Telecom]

Going forward, Zhuhai Telecom will continue to maintain its leading position across all key benchmarks in the industry. Now let's move on to the business overview of the first quarter of twenty twenty five. Please turn to Page five to review our leading position in Taiwan's mobile market. According to the statistic from Taiwan's telecom regulator, by March, we had successfully acquired the largest revenue share in Taiwan's mobile market at 40.5% as well as the largest subscriber share at 39.1%, both exceeded the year over year and the quarter over quarter growth, reflecting our strong and healthy growth momentum. In addition, our five gs market share reached 38.7, maintaining its leading position in the market.

[Rong-Shy Lin, President at Chunghwa Telecom]

Our mobile service revenue in the first quarter increased about 2% year over year, mainly due to the subscriber number increase and the continued five gs migration. In addition, we are pleased to report a 42% increase in the average monthly fee uplift from the five gs migration, contributing to the stability of our overall mobile ARPU, which delivered slight quarter over quarter increase in the first quarter. Let's move on to Slide six for update of our outperforming fixed broadband business. In the first quarter, our cross tier upgrade promotion package continued to be well received with near 70% of the package adopters choosing service offering of 300 megabits per second and above, including the highest speed offering of one gigabits per second. As a result, on a year over year basis, our subscribers with speed of 300 megabits per second and above increased by 16%, while those with speeds of one gigabits per second grows significantly.

[Rong-Shy Lin, President at Chunghwa Telecom]

Given the continued speed upgrade from our subscribers, our fixed broadband revenue and ARPU is keep it another quarterly increase by 2.52.1% year over year, respectively. And we are confident that this growth will persist. Now let's take a close look at the performance of our business group. Slide six provides deep overview of highlights from our customer application services. In the first quarter, we continue to see positive growth in each value added services offering.

[Rong-Shy Lin, President at Chunghwa Telecom]

Our multiplay package with service offering of mobile fixed broadband and the WiFi continued to deliver outstanding year over year growth of 33% and driven by our strong network quality and effective reward point strategy. Video business maintained its growth trajectory. Subscriptions increased by 12.5% year over year, driven by the sports content and our exclusive release of popular dramas. Our effective content strategy lead to a 45% increase of HANMI video subscribers compared with the same quarter last year, which is encouraging. As a result, our overall video revenue in the first quarter rose steadily.

[Rong-Shy Lin, President at Chunghwa Telecom]

In addition, our consumer cybersecurity subscription also surged by 21% year over year during this quarter, steadily increasing its revenue contribution as expected. Slide six illustrated the key highlights in our enterprise ICT business. We are excited to report strong enterprise ICT business performance in the first quarter. Revenue increased by 13% year over year, driven by project revenue recognition rationalization, robust performance across our major pillars and continue the growth in recurring revenue. We believe our strategy to increase our recurring revenue is important as it can help stabilize overall ICT performance.

[Rong-Shy Lin, President at Chunghwa Telecom]

For a closer look at each emerging application service offering, in the first quarter, we are excited to see year over year revenue growth in our cybersecurity, IDC and the cloud business of 40%, twenty nine % and thirteen %, respectively. Cybersecurity revenue achieved the thirteenth consecutive quarter of year over year growth, mainly driven by the project completed for financial institution and franchise chain store client along with contribution from streaming consumer. Meanwhile, IDC and the cloud revenue were boosted by the contribution from a contribution from the smart government project, accomplished by the increasing recurring revenue from both IDC and the international public cloud service. The latter experienced particularly strong growth. Notably, as the first telecom in Taiwan to be honored as AWS premier tier service partner, we hold the most AWS certificates, demonstrating our leading cloud technology within the industry.

[Rong-Shy Lin, President at Chunghwa Telecom]

Additionally, our five gs private network also delivered double digit revenue growth, driven by the revenue recognition from the international client, as well as year over year revenue growth in our AIoT service business, fueled by project in finance and retail sector. And we were delighted to report the network integration contract worth over NT1 billion secured in the first quarter from a leading financial holding company, which we expect to inject revenue and profit in the near future. In addition, leveraging our leading data analysis capability, we were proud to win high power AMI expansion project again, recognizing our expertise in energy management. That is the We were honored with our with four major awards at the CIO Taiwan's twenty twenty five ELITE vendor award, including the outstanding service provider for the fourth consecutive year, where we were the exclusive winner from telecom industry. Slide nine illustrated our international subsidiary performance.

[Rong-Shy Lin, President at Chunghwa Telecom]

In the first quarter, revenue from our overseas subsidiary increased by 8.2% year over year, mainly due to the growing ICT services provided to the high-tech customers in The United States and Southeast Asia market. In light of the global economic landscape change, we have observed business opportunity from the growth growing Taiwanese investment in The United States and the sole projects in our pipeline, mainly progressing as a result of the relocation of AI supply chain, including the AIDC construction. Last year Telecom Global, our subsidiary in The United States expanded our Arizona office in April and launched a new office in May in Texas office to support the business development. In addition, our business in Singapore, Vietnam and Thailand are all experienced double digit revenue growth in the first quarter, largely driven by the providing ICT services for Taiwanese enterprise to build new factories in the Southeast Asia market. To support the overseas business, we announced our investment in the new submarine cable system, e two a in March.

[Rong-Shy Lin, President at Chunghwa Telecom]

This trend Pacific fiber optical network will connect the submarine cable system between North America and Asia. Our strategy is to enable diverse connectivity options, strengthen Taiwan's position as a key submarine cable hub in the Asia Pacific region and further enhance overall network resilience to response to the growing demand of the network services. Now let's move on to Page 11 for the financial performance of our three business groups. In the first quarter, our CVG delivered a 4.9% year over year increase of its income before tax, which is quite healthy as our mobile ARPU will steadily develop and the fixed broadband ARPU expected to continue to hold up. In addition, our SSD business continue to expand.

[Rong-Shy Lin, President at Chunghwa Telecom]

We are delighted to see EDG total revenue increased by 2.3% year over year, mainly underpinned by the strong ICT business revenue growth of 11.6% year over year. This growth was offset by continued decline in EBG fixed voice revenue, which called to a 3.8 year over year decrease in the income before tax. IPG's total revenue and the income before tax both increased modestly in the first quarter due to its robust international ITC business growth and the continued strong demand for the integrated ICT services in the global market. Now I would like to hand the call over to Audrey Phi for the financial update.

[Wen-Hsin Hsu, Senior EVP & CFO at Chunghwa Telecom]

Thank you, President. Good afternoon, everyone. It is my pleasure to present an overview of our financial results for the first quarter of twenty twenty five. Please refer to Slide 12, income statement highlights. Let me walk you through the key financial metrics for the quarter.

[Wen-Hsin Hsu, Senior EVP & CFO at Chunghwa Telecom]

Revenue reached over 55,000,000,000, making the fifth consecutive year of growth. This represents a year over year increase of 1.6%, driven primarily by the expansion of our ICT business, along with solid performance in mobile and broadband services. Income from operations and net income rose by 54.3%, respectively, compared to the same period last year. These improvements were fueled by the strong performance of our IDC Internet Data Center business and sustained growth in mobile and video service subscriptions. Earnings per share increased by TWD 1 point 2 1 to TWD 1 point 2 6, reflecting consistently profitability and our disciplined cost management.

[Wen-Hsin Hsu, Senior EVP & CFO at Chunghwa Telecom]

EBITDA and EBITDA margin both recorded modest gains during the quarter. Notably, both EBITDA and net income reached their highest level in nine years for a first quarter period, underscoring the resilience and strength of our core operations. Now let's turn to Slide 13, balance sheet highlights. Total assets increased by 0.5% as of 03/31/2025, compared to the year end 2024. The growth was primarily driven by an increase in other current monetary assets, which further strengthened our liquidity position.

[Wen-Hsin Hsu, Senior EVP & CFO at Chunghwa Telecom]

Property, plant and equipment declined by 1.1% as depreciation expense exceeded net additions of fixed asset during the quarter. This reflects our continued emphasis on capital discipline and asset efficiency. Total liability decreased by 5.5%, mainly due to a reduction in accounts payable. Our current ratio improved further and remained above 100%, highlighting healthy short term liquidity and financial flexibility. In addition, the debt ratio declined slightly and net debt over EBITDA remains at zero.

[Wen-Hsin Hsu, Senior EVP & CFO at Chunghwa Telecom]

Taken together, these metrics highlight our solid financial position and prudent capital structure. Now let's move to Slide 14, cash flow summary. Cash flows from operating activities decreased by 8.6% year over year, primarily due to higher settlements of accounts payable during the quarter. Capital expenditures increased by 7.2 year over year, primarily due to the front loaded deployment of five gs, four gs equipment in the first quarter. This reflects our planning mobile network enhancement schedule with a greater portion of the build up occurring early in the year.

[Wen-Hsin Hsu, Senior EVP & CFO at Chunghwa Telecom]

Importantly, we remain committed to disciplined capital management and full year mobile related CapEx is still expected to be lower than in 2024. As a result of these factors, free cash flow declined by 17.4% year over year. This was in line with expectations given the investment timing. We continue to maintain a strong cash position and stable operating inflows, which provides a solid foundation to support business growth and shareholder return. So now let's turn to Slide 15, performance relative to Q1 twenty twenty five guidance.

[Wen-Hsin Hsu, Senior EVP & CFO at Chunghwa Telecom]

For the first quarter of twenty twenty five, revenue was broadly in line with the guidance we provided earlier this year. Meanwhile, income from operations, net income, EPS and EBITDA all surpassed our Q1 guidance by a modest margin. This outperformance was primarily driven by the steady growth of our core business, improved profitability in our ICT business and lower than expected operating costs, reflecting our ongoing efforts to optimize operation and maintain disciplined cost control. This concludes the financial overview for the first quarter of twenty twenty five. We are pleased to report a solid start to the year.

[Wen-Hsin Hsu, Senior EVP & CFO at Chunghwa Telecom]

So we now open the floor for questions and welcome your insights.

[Operator]

Yes. Thank you. Ladies and gentlemen, we will now begin our question and answer session. After you are announced, please ask your question. When you are speaking, please be louder or closer to the microphone.

[Operator]

If you find that your question has been answered before it is your turn to speak, please press star key, number two, to cancel the question. And you are also welcome to send questions via chat box on the webcast page. We will begin with the questions from telephone line and then move to the queries from the webpage. Thank you. Now please press star key and number one on your keypad if you would like to ask the question.

[Operator]

Thank you. We are now in question and answer session. If you would like to ask a question, please press star key and number one on your keypad. Thank you. Ladies and gentlemen, we are now in question and answer session.

[Operator]

If you would like to ask your question, please press star key number one on your keypad. Thank you. Or you may also submit your questions through the chat box on the webcast page. Thank you. If you are now on the call, you may press star key, number one on your telephone keypad if you would like to ask a question.

[Operator]

If you are on the webcast page, you may also submit your questions through the chat box on the page. Thank you. Ladies and gentlemen, we are now in question and answer session. May press

[Operator]

Okay. Then if there are no further questions, I'll turn it back over to President Lin. Thank you.

[Rong-Shy Lin, President at Chunghwa Telecom]

Okay. If there's no question, then thank you for your participation. Thank you.

[Operator]

Thank you, President Lin. And ladies and gentlemen, we thank you for your participation in Chungha Telecom's conference. There will be a webcast replay within an hour. Please visit www.cht.com. Twir under the IR calendar section.

[Operator]

You may now disconnect. Thank you again. Goodbye.

Participants

Executives

• Angela Tsai, AVP - Investor Relations
• Rong-Shy Lin, President
• Wen-Hsin Hsu, Senior EVP & CFO