Chunghwa Telecom Q1 2025 Earnings Results & Report

Chunghwa Telecom EPS Results

• Actual EPS: $0.38
• Consensus EPS: $0.38
• Beat/Miss: Met Expectations
• One Year Ago EPS: N/A
• EPS Beat Rate: 6 of last 7 quarters

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 (NYSE:CHT) is Taiwan’s largest integrated telecommunications provider. The company offers fixed-line and mobile voice services, broadband internet access, and data communications to consumers, businesses, and government customers.

Its business also includes information and communications technology services such as cloud computing, cybersecurity, data-center services, and enterprise networking. Chunghwa Telecom serves customers primarily in Taiwan and provides international telecommunications services through its global network and partnerships.

The company was established in 1996, when Taiwan’s telecommunications operations were separated from the government’s Directorate General of Telecommunications. Chunghwa Telecom was later privatized, though the Taiwanese government has retained an ownership interest.

Chunghwa Telecom Q1 2025 Earnings Call Transcript

Key Takeaways

• Net income and EPS rose by 4.3% year-over-year in Q1, with EPS reaching TWD 1.26 and marking the highest first-quarter net income in nine years.
• The company secured the largest mobile market share in Taiwan at 40.5% of revenue and 39.1% of subscribers, with 5G share at 38.7%, mobile service revenue up 2% YoY, and fixed broadband ARPU growing 2.5% YoY.
• Enterprise ICT revenue increased 13% year-over-year in Q1, driven by cybersecurity (+40%), IDC (+29%) and cloud (+13%) growth, and supported by a NT$1 billion 5G private network contract.
• Strategic network expansions included integrating a high-orbit satellite with a 5G base station, partnering on a dedicated micro-GEO satellite, and investing in the Trans-Pacific E2A submarine cable to boost global connectivity.
• Revenue reached TWD 55 billion (+1.6% YoY), total liabilities fell 5.5%, net debt/EBITDA remained at zero, and the current ratio stayed above 100%, underscoring a strong financial position.

Presentation

[Operator]

Good afternoon, ladies and gentlemen. Welcome to Chunghwa Telecom Conference Call for the company's first quarter 2025 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 broadcast live over the internet. Webcam replay will be available within an hour after the conference is finished. Please visit CHT IR website www.cht.com.tw/ir under the IR calendar section. And now, I would like to turn it over to Ms. Angela Tsai, Assistant Vice President of Investor Relations. Thank you. Ms. Tsai, please go ahead.

[Angela Tsai, Assistant VP of Finance at Chunghwa Telecom]

Thank you. I'm Angela Tsai. Welcome to our first quarter 2025 result conference call. Joining me on the call today are our President, Rong-Syh Lin, and our Chief Financial Officer, Audrey Hsu. 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'll move on to the question-and-answer portion of the call. 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 presidents. President Lin, please go ahead.

[Rong-Syh Lin, Senior Executive VP and CTO at Chunghwa Telecom]

Thank you, Angela, and hello everyone. Welcome to our first quarter 2025 results conference call. We are excited to report net income and EPS delivered a 4.3% year-over-year increase in the first quarter, driven by our solid operation and 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. At the same time, our strong financial performance positions us to continue investing to seize new opportunities, particularly those from enterprise customers who may be expanding their manufacturing bases globally. Meanwhile, we will continue to execute our Sea-Land-Sky Advanced Network strategy to prepare for the future and enhance network resilience, leveraging our leading technology strengths.

[Rong-Syh Lin, Senior Executive VP and CTO at Chunghwa Telecom]

In January, we collaborated with partners to successfully integrate ST-2 high-orbit satellite with 5G base station. This achievement enabled world-leading end-to-end two-way video call based on the 3GPP 5G New Radio for Non-Terrestrial Network standard communication protocol, advancing the connection between land and sky via satellite and 5G communication. Furthermore, in April, we concluded a strategic partnership with the U.S. innovator Astranis to bring a dedicated micro-GEO satellite to Taiwan, complementing our existing multi-orbit satellite architecture. 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.

[Rong-Syh Lin, Senior Executive VP and CTO at Chunghwa Telecom]

For international honors, our outstanding 5G smart port solution was recognized by Asia Telecom Awards as the Technology Innovation of the Year. We were also ranked top five for S&P Global ESG Score in the Sustainability Yearbook 2025 for the third consecutive year, and secured the highest A ranking from CDP for both climate and supplier engagement leadership for the second consecutive year. Finally, we would like to highlight that Chunghwa Telecom is the first Taiwanese telco certified under the most stringent international anti-bribery standard, showing our determination to deliver outstanding corporate governance. Going forward, Chunghwa 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 2025. Please turn to page five to review our leading position in Taiwan's mobile market.

[Rong-Syh Lin, Senior Executive VP and CTO at Chunghwa Telecom]

According to the statistics 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 exhibit the year-over-year and the quarter-over-quarter growth, reflecting our strong and healthy growth momentum. In addition, our 5G market share reached 38.7%, maintaining its leading position in the market. Our mobile service revenue in the first quarter increased about 2% year-over-year, mainly due to the subscriber number increase and continued 5G migration. In addition, we are pleased to report a 42% increase in the average monthly fee uplift from the 5G migration, contributing to the stability of our overall mobile ARPU, which delivered a slight quarter-over-quarter increase in the first quarter. Let's move on to slide six for an update of our outperforming fixed broadband business.

[Rong-Syh Lin, Senior Executive VP and CTO at Chunghwa Telecom]

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 gigabit 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 gigabit per second grew significantly. Given the continued speed upgrade from our subscribers, our fixed broadband revenue and ARPU exhibit another quarterly increase by 2.5% and 2.1% year-over-year, respectively. 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 a 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-Syh Lin, Senior Executive VP and CTO at Chunghwa Telecom]

Our multi-player package, with service offering of mobile fixed broadband and Wi-Fi, continues to deliver outstanding year-over-year growth of 33%, driven by our strong network quality and effective reward point strategy. Video business maintains 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 led to a 45% increase of Hami 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. 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.

[Rong-Syh Lin, Senior Executive VP and CTO at Chunghwa Telecom]

Revenue increased by 13% year-over-year, driven by project revenue recognition, robust performance across our major pillars, and continued growth in recurring revenue. We believe our strategy to increase our recurring revenue is important, as it can help stabilize overall ICT performance. For a close look at each emerging application service offering, in the first quarter, we are excited to see year-over-year revenue growth in our cybersecurity, IBC, and cloud business of 40%, 29%, and 13%, respectively. Cybersecurity revenue achieved the 13th consecutive quarter of year-over-year growth, mainly driven by the project completed for financial institutions and franchise chain store clients, along with contribution from streaming consumers. Meanwhile, IDC and cloud revenue were boosted by the 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.

[Rong-Syh Lin, Senior Executive VP and CTO at Chunghwa Telecom]

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. Additionally, our 5G 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 projects in finance and the retail sector. And we were delighted to report the network integration contract worth over NT 1 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.

[Rong-Syh Lin, Senior Executive VP and CTO at Chunghwa Telecom]

That is, we were honored with four major awards at the CIO Taiwan's 2025 Elite Vendor Awards, 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. 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 the Southeast Asia market. In light of the global economic landscape change, we have observed business opportunities from the growing Taiwanese investment in the United States, and so projects in our pipeline mainly progressing as a result of the relocation of AI supply chain, including the AIDC construction.

[Rong-Syh Lin, Senior Executive VP and CTO at Chunghwa Telecom]

Chunghwa Telecom Global, our subsidiary in the United States, expanded our Arizona office in April and launched a new office in May in Texas to support business development. In addition, our business in Singapore, Vietnam, and Thailand all experienced double-digit revenue growth in the first quarter, largely driven by providing ICT services for Taiwanese enterprises to build new factories in the Southeast Asia market. To support the overseas business, we announced our investment in the new submarine cable system, E2A, in March. This Trans-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 respond to the growing demand of the network services.

[Rong-Syh Lin, Senior Executive VP and CTO at Chunghwa Telecom]

Now, let's move on to page 11 for the financial performance of our three business groups. In the first quarter, our CBG 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 fixed broadband ARPU expected to continue to hold up. In addition, our ICT business continued to expand. We are delighted to see EBG 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 held to a 3.8% year-over-year decrease in the income before tax. IBG's total revenue and the income before tax both increased modestly in the first quarter due to its robust international IDC business growth and the continued strong demand for the integrated ICT services in the global market.

[Rong-Syh Lin, Senior Executive VP and CTO at Chunghwa Telecom]

Now, I would like to hand the call over to Audrey Wen-Hsin Hsu for the financial update.

[Audrey Wen-Hsin Hsu, Senior Executive VP and 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 2025. Please refer to slide 12, Income Statement Highlights. Let me walk you through the key financial metrics for the quarter. Revenue reached over TWD 55 billion, 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 5% and 4.3%, 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.

[Audrey Wen-Hsin Hsu, Senior Executive VP and CFO at Chunghwa Telecom]

Earnings per share increased by NT 1.21 to NT 1.26, reflecting consistent profitability and our disciplined cost management. 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 March 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. Property, plant and equipment declined by 1.1%, as depreciation expense exceeded net additions of fixed assets during the quarter. This reflects our continued emphasis on capital discipline and asset efficiency. Total liabilities decreased by 5.5%, mainly due to a reduction in accounts payable.

[Audrey Wen-Hsin Hsu, Senior Executive VP and CFO at Chunghwa Telecom]

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. 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 5G, 4G equipment in the first quarter. This reflects our planned mobile network enhancement schedule, with a greater portion of the build-up occurring early in the year. Importantly, we remain committed to disciplined capital management, and four-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.

[Audrey Wen-Hsin Hsu, Senior Executive VP and CFO at Chunghwa Telecom]

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 2025 guidance. For the first quarter of 2025, 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 operations and maintain disciplined cost control. This concludes the financial overview for the first quarter of 2025. We are pleased to report a solid start to the year.

[Audrey Wen-Hsin Hsu, Senior Executive VP and 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. If you have a question for any of today's speakers, please press the star key and number one on your telephone keypad, and you will enter the queue. After you are announced, please ask your question. When you are speaking, please be louder or closer to the microphone. If you find that your question has been answered before it is your turn to speak, please press the 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 Q&A from the webpage. Thank you.

[Operator]

Now, please press the star key and number one on your keypad if you would like to ask the question. Thank you. We are now in question and answer session. If you would like to ask the question, please press the star key and number one on your keypad. Thank you. Ladies and gentlemen, we are now in question and answer session. If you would like to ask your question, please press the star key, number one on your keypad. Thank you. If you would like to ask the question, please press the star key and number one on your keypad. 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 the star key, number one on your telephone keypad if you would like to ask the 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. You may press the star key and number one on your keypad if you would like to ask your question. Thank you. Okay, then if there are no further questions, I'll turn it back over to President Lin.

[Operator]

Thank you.

[Rong-Syh Lin, Senior Executive VP and CTO 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 Chunghwa Telecom's conference. There will be a webcast replay within an hour. Please visit www.cht.com.tw/ir under the IR calendar section. You may now disconnect. Thank you again. Goodbye.

Participants

Executives

• Audrey Wen-Hsin Hsu, Senior Executive VP and CFO
• Rong-Syh Lin, Senior Executive VP and CTO
• Angela Tsai, Assistant VP of Finance