CHT

Strategic AI Infrastructure Progress

• The new 36 megawatt AI data center in Renping, Taoyuan has commenced operations, with a second AI data center under construction in Taichung that will provide dedicated collocation capacity for Taiwan Stock Exchange
• Chung-Hwa Telecom holds a 78% combined IDC market share in Taiwan as of Q2 2026, maintaining its market leading position
• The company has positioned itself as the Asia-Pacific region's 3A AI hub, focused on three core value pillars: resilient multi-terrain connectivity (Assurance), ultra-high capacity low-latency all-photonic networking (All photonics), and distributed cross-APAC AI computing resource connectivity (AI hub)

Core Telecom Consumer Performance

• Mobile revenue market share in Taiwan reached a record high 41.2%, subscriber market share hit 39.8%, and 5G market share remained number one at 39.4%; 5G penetration among smartphone users reached nearly 49% as of June 2026
• 42% of fixed broadband subscribers now use 300 Mbps+ speed tiers, with 1Gbps subscriber count growing 61% year-over-year; fixed broadband ARPU rose NT$20 year-over-year to NT$824 per month
• Bundled marketplace service sign-ups grew 14% year-over-year for the 18th consecutive quarter; OTT revenue grew 20% year-over-year boosted by the 2026 FIFA World Cup, with total viewership up 24% compared to the previous tournament

Enterprise and International Growth

• H1 2026 ICT order intake already matched the full-year order intake achieved in 2025, with Q2 2026 contract value growing 30% year-over-year; key Q2 wins include large AIDC projects, a Thai smart grid energy storage project, and multiple smart surveillance projects
• The company became the first tech operator to offer cloud-based encryption-sharing services for Taiwan's financial industry, reinforcing differentiated ICT market leadership
• New large-scale AI supply chain ICT projects are underway in the U.S. (Texas) and Southeast Asia (Singapore, Vietnam), with new contracts already secured across all three markets for future growth

Subsidiary and Ecosystem Developments

• The ION AI Fund was launched in June 2026 with a global partner to build out the IOWN all-photonic ecosystem and generate new AI-related business opportunities
• Zhonghua Telecom Precision Tech began construction of a new factory to meet growing AI semiconductor testing demand; Zhonghua Leading Photonics Tech began trading on Taiwan's emerging stock exchange in June 2026
• The company received multiple top ESG recognitions in Q2, and remains on track to meet its SBTi emissions reduction commitments: a 24.5% reduction in scope 1/2 emissions from a 2020 baseline, and a 10.8% reduction in scope 3 emissions from a 2021 baseline

Financial Health

• Consolidated Q2 2026 revenue was the highest Q2 top line since 2010; all key profitability metrics exceeded the high end of management's prior guidance
• Adjusted debt ratio improved to 23.72% as of June 30 2026, interest-bearing debt remains around 5%, and net debt to EBITDA is zero, reflecting a very strong, low-leverage balance sheet
• H1 2026 capex was NT$9.85 billion, down 14.3% year-over-year as 5G network deployment investment normalizes after the peak build phase

• Management reaffirmed full-year 2026 performance targets, stating confidence in achieving full-year goals after outperforming guidance in the first half of the year
• Management expects the historical pattern of quarterly ICT revenue volatility to continue in 2026, and remains confident that full-year 2026 ICT revenue will exceed internal targets
• The company expects a greater share of annual capital expenditure to be deployed in the second half of 2026
• Management identifies several billion NT dollars of AI-related international project opportunities across the U.S. and Southeast Asia over the next 2-3 years, aligned with global AI infrastructure growth trends
• IOWN ecosystem development remains in the early investment stage, with material revenue contribution not expected in the near term, but the investment is expected to build long-term competitive advantage for AI services

Chung-Hwa Telecom reports three business segments for Q2 2026: 1. Consumer Business Group: Revenue increased 4.8% year-over-year, with income before tax rising 3.6% year-over-year. This segment, which includes mobile services, fixed broadband, and handset sales, is the company's core business and contributes the majority of total consolidated revenue. Mobile service revenue grew 3.2% year-over-year, and fixed broadband revenue grew 3% year-over-year. 2. Enterprise Business Group: Revenue increased 3.7% year-over-year, with income before tax rising 2.1% year-over-year. The enterprise ICT sub-segment drove growth, with ICT revenue increasing 32% year-over-year (the highest Q2 ICT revenue since 2021), recurring ICT revenue growing 9% year-over-year, and big data, cybersecurity, and IDC sub-segments growing 167%, 34%, and 14% year-over-year respectively. 3. International Business Group: This was the fastest-growing segment, with revenue increasing approximately 79% year-over-year and income before tax increasing 31% year-over-year. Aggregate revenue from international subsidiaries grew 242% year-over-year, with U.S. revenue increasing more than 11-fold year-over-year and Southeast Asia revenue doubling year-over-year. Satellite services revenue grew 14% year-over-year, and international private leased circuit revenue grew 8% year-over-year. Overall consolidated Q2 2026 revenue reached NT$61.36 billion, an 8.2% year-over-year increase.

No explicit material risks or operational failures were discussed by management during this earnings call.

Q: An analyst asks for long-term visibility and guidance on the high-growth international segment, including breakdowns by region and project type. / A: Management states that growing AI development globally is driving sustained demand for AI infrastructure, international connectivity, and data center services in both the U.S. and Southeast Asia, aligned with long-term AI growth trends. While Taiwan remains the company's primary market, management notes several billion NT dollars of AI supply chain-related project opportunities in these regions over the next 2-3 years.

Q: An analyst asks for the total capital investment required for the new 36 megawatt Renping AI data center, as well as the project's expected IRR. / A: Management declines to disclose specific capital expenditure or IRR figures for individual projects, noting the 36 megawatts of capacity will be built out in phases with incremental investment. The company confirms all projects follow a disciplined capital allocation framework that meets strict financial return requirements to protect long-term shareholder value, and highlights the company's 78% leading IDC market share in Taiwan to contextualize market opportunity.

Q: An analyst asks for details on IOWN investments, required capital, revenue opportunities, and impact on the financial outlook. / A: Management explains IOWN is an early-stage initiative to connect distributed domestic and international AIDC capacity via all-photonic networking, a key technology for next-generation AI data centers. The company expects IOWN to take time to generate material revenue, but views it as a critical strategic investment to build long-term competitive advantage for AI services, leveraging the company's leading position in Taiwan's IDC market and cross-Asia-Pacific customer base.

Q: An analyst asks what drives the common quarterly volatility in enterprise ICT revenue, and if the pattern will continue this year. / A: Management confirms the quarterly volatility pattern will follow historical trends seen in prior years, matching expectations. Despite this volatility, management reaffirms confidence that full-year 2026 ICT revenue will hit and exceed the company's annual targets.