CHUNGHWA TELECOM CO LTD Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Financial Performance in 2024: Chunghwa Telecom’s operating income, income before tax, and EPS for 2024 all exceeded the upper end of forecast. Full-year revenue reached a seven-year high, and full-year EPS of NT$4.8 marked a seven-year high with five consecutive years of annual growth.
• Business Overview Q4 2024: In Taiwan's mobile market, overall subscriber share was 37.9% (11th consecutive quarter increase), 5G subscriber share was 38.8%. Fixed broadband cross-tier upgrade promotion was well-received, with 300Mbps+ subscribers up 17% year-over-year.
• Collaborations and Innovations: Partnered with NTT for ultra-low latency immersive video via all-photonic network, Open RAN cooperation, and utilization of satellite resources for commercial services. Recognized for sustainability and ESG, including inclusion in Dow Jones Sustainability Indices and Newsweek’s World’s Most Trustworthy Companies list.

Segment Performance

• Consumer Business Group (CBG): Fourth quarter total revenue increased by 2.2% year-over-year, driven by mobile service revenue from 5G migration and subscriber growth, and fixed broadband revenue from successful speed upgrade strategy. Income before taxes grew NT$0.077 billion year-over-year.
• Enterprise Business Group (EBG): Fourth quarter total revenue increased by 10.2% year-over-year, primarily due to a 24.1% year-over-year growth in ICT business revenue. Emerging business revenue increased 23% year-over-year. IDC, cloud, and cybersecurity services saw year-over-year revenue growth of 62%, 46%, and 56% respectively.
• International Business Group (IBG): Fourth quarter total revenue dipped slightly by 2.3% year-over-year due to decline in international voice revenue, but income before tax increased year-over-year. IDC business grew, and a contract with a global hyperscaler was closed.

Guidance

• 2025 total revenue expected to grow 1.2%-1.6% compared to 2024, driven by core business and ICT. Operating costs and expenses expected to rise 2.4%. EPS expected to be in the range of NT$4.62-NT$4.82. CapEx budgeted at NT$32.36 billion, with mobile CapEx down 13.3% and non-mobile CapEx up 25.2% for AI, IDC, and submarine cables.

Risks

• No specific risks discussed in detail in the transcript.

Question and Answer

Q: Elaborate on how much is being invested in AI and key initiatives or revenue opportunities this year?

A: For non-mobile CapEx, there is an increase in AIDC center investment. The company is fully committed to leveraging AI to enhance operations and drive digital transformation, including sovereign AI services, AI factory, and collaboration with academic institutions, research centers, cloud providers, and NVIDIA.

Q: Outlook for the ICT business in 2025?

A: Focus on improving ICT project margin and increasing recurring revenue to stabilize and increase overall ICT margin.

Q: Plans to improve shareholder return, like raising the payout?

A: Maximum shareholder returns are a key objective. The dividend policy is consistent, and with EPS growth, dividends are expected to increase following the consistent policy.

Q: Details on CapEx breakdown?

A: Mobile CapEx continues to decline, while non-mobile CapEx increases mainly for fixed line, IDC, and undersea cables due to market demand for increased capacity and secured contracts with hyperscalers.