• Revenue: Exceeded $55 billion, marking a seven-year high, with a 3.6% increase from the same quarter last year.
• Net Income: Slight decline of 1% year over year.
• Earnings Per Share (EPS): Stood at 1.16 for the quarter.
• Mobile Service Revenue: Recorded a 2% year over year increase.
• Fixed Broadband Revenue: Increased by 3.4% year over year.
• ICT Business Revenue: Saw a 22% year over year increase.
• Consumer Business Group (CBG) Revenue: Increased by 2.1% year over year.
• Enterprise Business Group (EBG) Revenue: Increased by 5.9% year over year.
• International Business Group (IBG) Revenue: Increased by 1.4% year over year.
• Free Cash Flow: Increased by 8.7% compared to the previous year.
• Capital Expenditure (CapEx): Declined by 15.1% year over year.

• Warning! GuruFocus has detected 5 Warning Sign with FRA:18LB.

Release Date: November 06, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Chunghwa Telecom Co Ltd (NYSE:CHT) achieved a new single quarter revenue record for the third quarter, the highest in the last seven years.
• The company reported a 2% year-over-year increase in mobile service revenue, marking 14 consecutive quarters of growth.
• 5G subscriber market share reached 38.8%, surpassing overall mobile subscriber share.
• Fixed broadband revenue and ARPU increased by 3.4% and 1.5% year-over-year, respectively.
• ICT business revenue saw a significant 22% year-over-year increase, driven by strong performance in emerging services.

Negative Points

• Income from operations and net income saw slight declines of 0.8% and 1% respectively, due to higher manpower costs and increased broadcast rights fees for the Olympic Games.
• Profit before tax declined for consumer and enterprise segments, partly due to increased electricity costs and investment in video content.
• Despite revenue growth, the company faced challenges in offsetting declines in mobile voice and fixed line voice revenues.
• Higher operational expenses were noted due to increased utility costs following a government decision to raise electricity prices.
• The company did not disclose the specific contribution of emerging enterprise application revenue to total enterprise revenue.

Q & A Highlights

Q: Why did profit before tax decline for the consumer and enterprise segments despite revenue growth? A: Wen-Hsin Hsu, CFO, explained that the decline was due to several factors: the high base from last year's government subsidy, increased employee costs as part of a strategy to improve the talent pool, higher electricity costs, and investments in video content for the Olympics. These are seen as strategic investments for future growth rather than just expenses.

Q: What is the contribution of emerging enterprise application revenue to total enterprise revenue? A: Angela Tsai, Assistant Vice President of Finance, stated that the company does not separately disclose the percentage of emerging enterprise application revenues within the total ICT revenue.

Q: What is Chunghwa Telecom's strategy to increase revenue going forward? A: Wen-Hsin Hsu, CFO, outlined several strategies: focusing on high-margin products, streamlining operations to improve efficiency, and enhancing customer loyalty through rewards and bundling services. The company also plans to leverage the launch of new products like the iPhone 16 to boost 5G adoption.

Q: Are there any low-profit services that Chunghwa Telecom plans to discontinue? A: Wen-Hsin Hsu, CFO, mentioned that while iPhone sales under bundle programs might appear low-profit, they are part of a broader strategy. The company focuses on contract-based profitability rather than per-unit sales and aims to streamline operations to enhance profitability across segments.

Q: How does Chunghwa Telecom plan to handle increased operational costs, such as electricity? A: Wen-Hsin Hsu, CFO, noted that the company is working on improving operational efficiency through automation and renegotiating supplier contracts. These efforts are part of a broader strategy to manage costs and improve profitability.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.