Chunghwa Telecom : Q1 2020 Conference Call Presentation

1Q 2020 Operating Results

April 30, 2020

© Chunghwa Telecom TSE: 2412

NYSE: CHT

Disclaimer

STATEMENT REGARDING UNAUDITED FINANCIAL INFORMATION

The unaudited financial information under T-IFRSs in this presentation is preliminary and subject to adjustments and modifications. Adjustments and modifications to the financial statements may be identified during the course of the audit /review work, which could result in significant differences from this preliminary unaudited financial information.

NOTE CONCERNING FORWARD-LOOKING STATEMENTS

This presentation contains forward-looking statements. These statements constitute "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Statements that are not historical facts, including statements about Chunghwa's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Investors are cautioned that actual events and results could differ materially from those statements as a result of a number of factors including, but not limited to the risks outlined in Chunghwa's filings with the U.S. Securities and Exchange Commission on Forms F-1,F-3,6-K and 20-F, in each case as amended. The forward-looking statements in this presentation reflect the current belief of Chunghwa as of the date of this presentation and Chunghwa undertakes no obligation to update these forward-looking statements for events or circumstances that occur subsequent to such date, except as required under applicable law.

This presentation is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration. Any public offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from the issuer or selling security holder and that will contain detailed information about the company and management, as well as financial statements.

SPECIAL NOTE REGARDING NON-GAAP FINANCIAL MEASURES

A body of generally accepted accounting principles is commonly referred to as "GAAP". A non-GAAP financial measure is generally defined by the SEC as one that purports to measure historical or future financial performance, financial position or cash flows but excludes or includes amounts that would not be so adjusted in the most comparable U.S. GAAP measure. We disclose in this report certain non-GAAP financial measures, including EBITDA. EBITDA for any period is defined as consolidated net income (loss) excluding (i) depreciation and amortization, (ii) total net comprehensive financing cost (which is comprised of net interest expense, exchange gain or loss, monetary position gain or loss and other financing costs and derivative transactions), (iii) other expenses, net, (iv) income tax, (v) cumulative effect of change in accounting principle, net of tax and (vi) (income) loss from discontinued operations.

In managing our business we rely on EBITDA as a means of assessing our operating performance. We believe that EBITDA can be useful to facilitate comparisons of operating performance between periods and with other companies because it excludes the effect of (i) depreciation and amortization, which represents a non-cash charge to earnings, (ii) certain financing costs, which are significantly affected by external factors, including interest rates, foreign currency exchange rates and inflation rates, which have little or no bearing on our operating performance, (iii) income tax and tax on assets and statutory employee profit sharing, which is similar to a tax on income and (iv) other expenses or income not related to the operation of the business.

EBITDA is not a measure of financial performance under U.S. GAAP or T-IFRSs. EBITDA should not be considered as an alternate measure of net income or income from operations, as determined on a consolidated basis using amounts derived from statements of operations prepared in accordance with U.S. GAAP or T-IFRSs, as an indicator of operating performance or as cash flows from operating activity or as a measure of liquidity. EBITDA has material limitations that impair its value as a measure of a company's overall profitability since it does not address certain ongoing costs of our business that could significantly affect profitability such as financial expenses and income taxes, depreciation, pension plan reserves or capital expenditures and associated charges. These non-GAAP measures are not in accordance with or an alternative for GAAP financial data, the non-GAAP results should be reviewed together with the GAAP results and are not intended to serve as a substitute for results under GAAP, and may be different from non-GAAP measures used by other companies.

© Chunghwa Telecom

2

Business Overview

© Chunghwa Telecom

Chunghwa Telecom Overview

Strong Market Position (a)

Domestic Fixed

-#1 Local

• 92.4% share by subs (10.12 mn subs)

• 84.2% share by minutes

-#1 DLD

• 83.0% share by minutes

-#1 Broadband access

• 68.1% share by subs (b)(c)(4.39 mn subs)

Mobile

-#1 Mobile revenue

• 38.3% market share (d)

-#1 Mobile subscribers

• 37.2% market share (10.97 mn subs)

Internet

• #1 ISP

• 64.5% share by subs (3.99 mn subs)

International Fixed

• #1 ILD
• • 51.5% share by minutes

Operational Strategies

Streamline services and strengthen profitability

Capitalize and remain at the forefront of digital convergence trends

Continue to invest in talent and R&D Broaden corporate governance initiatives

Continue a customer-centric value creation transformation plan to move upward via strengthen core, deploy more, optimize cost and enhance fundamentals

Mobile Subs Market Share

Others

14.8%

Source: Company data, MOTC, and NCC statistics

1. Market share as of Feb. 2020
2. CHT access circuits were not included
3. Excluding PWLAN subscriber numbers
4. Revenues are based onT-IFRSs

FET24.0%

37.2% CHT

24.0%

TWM
© Chunghwa Telecom	4

Number One Mobile Services Provider

Mobile Service Revenue

Billion
		18						0%
		16						-2%
revenue	14						-4%	rategrowthYoY	adoption)15IFRS(before
		12						-6%
		10						-8%
		8
		6						-10%
		4						-12%
		2						-14%
		0						-16%
		2019Q1	2019Q2	2019Q3	2019Q4	2020Q1
		CHT	TWM	FET	CHT		TWM	FET
		Highest Subs & Lowest Churn
Thousand
	12,000						1.6%
	10,000						1.4%	postpaidforrate
Subscribers
	4,000						1.2%
		8,000						1.0%
		6,000						0.8%
								0.6%
								0.4%	Churn
		2,000						0.2%
		0						0.0%
		O-19	N-19	D-19	J-20	F-20	M-20
		CHT	TWM	FET	CHT		TWM	FET

Strategy

Expand IoT services over NB-IoT and Cat-M1 network

Offer diversified rate plans and product portfolio to satisfy customer demands

Enhance brand image

Strengthen subscriber retention and acquisition initiatives

Promote VAS and new applications

Grow enterprise customers revenues

Note : Churn rate for postpaid subscribers

© Chunghwa Telecom

5

Fixed Broadband and Internet Services

Performance

		Broadband Access Revenue		ARPU NT$
NT$ mn	702
705	703	713		715
5,000	4,201	4,231	4,192	4,254		4,246	600
2,500							400
						200
	294	280	269	261	253
0							0
	Q1 19	Q2 19	Q3 19	Q4 19	Q1 20
		ADSL		Fiber

Note1 : Broadband ARPU is calculated as access plus ISP

Note2 : Revenue is calculated based on T-IFRSs

Note3 : Revenue starting from 2018 are calculated in accordance with IFRS 15

Fixed Broadband Subs

Thousand

5,000	4,473	4,455	4,434	4,405	4,388

4,000	1,457	1,500	1,543	1,582	1,624
3,000
2,000	2,160	2,127	2,088	2,037	1,994
1,000	856	828	803	786	770
0
	Mar 19	Jun 19	Sep 19	Dec 19	Mar 20
		ADSL	Fiber (<100M)	Fiber (≧100M)

Strategy

Leverage network capability to offer high-speed upload service

Leverage Big Data capability for precision marketing and precision network construction

Leverage mobile, broadband and Wi-Fi capabilities to offer seamless internet services

Expedite CDN construction and OTT promotion to enhance digital convergence product competitiveness Continue to execute the strategy of encouraging FTTx migration to 300Mbps or higher

© Chunghwa Telecom

6

MOD/ IPTV Service

Performance

Subscription for 1Q 2020 grew 1.8% YoY Revenue for 1Q 2020 grew 2.9% YoY

Revenue from advertisement for 1Q 2020 grew 53% YoY

Subscriber market share (CATV+IPTV) grew to 29.5% in Q4 2019

NT$ mm	MOD subscribers and revenue		thousand
900		2,049	2,082	2,090	2,082	2,086		2,100
850		886	896	902	921	912		2,000
800
750									1,900
700									1,800
650
600
550								1,700
500									1,600
	Q1 19	Q2 19	Q3 19	Q4 19	Q1 20
			MOD revenue			Subs

Note : Revenue starting from 2018 are calculated in accordance with IFRS 15

Strategy

Continue to enrich content, including movies, drama and TV series for SVOD

Leverage the existing broadband and 4G mobile subscriber base to grow MOD subscribers

Enhance MOD platform to carry OTTs and APPs to become the smart home hub

Facilitate MOD platform to be favorable for advertisements and marketing

Differentiate products by acquiring sports contents including eSports

thousand		SVOD Subscribers
1,400	1,313	1,338	1,347	1,327	1,328
1,200
1,000
800
600
	Q1 19	Q2 19	Q3 19	Q4 19	Q1 20

SVOD：Subscription Video on Demand

© Chunghwa Telecom

7

Enterprise ICT Initiatives

Performance

Cloud revenue grew 26.9% YoY for 1Q20

ICT streaming revenue continued to grow

Strategy

Leverage our advantage on network infrastructure, IDC, CDN, ect. to expand ICT business

Deploy nationwide NB-IoT/Cat M1 dual network to provide high-efficiency and quality IoT service via our IoT Platform

Launch highest-rated cloud IDC to further explore business opportunities in finance, ISP and ICP/OTT industries

Offer ICT total solutions by integrating our capabilities on cloud, information security, big data analysis, IoT, AI, block chain and customization

Cooperate with partners to develop an ecosystem to provide IoT services across various industries

© Chunghwa Telecom

8

Financials Overview

Financials: Income Statement Highlights

			Consolidated
(NT$bn)	Q1 2020	Q1 2019	Growth	2019	2018	Growth
%	%
Revenues	48.15	51.33	(6.2)	207.52	215.48	(3.7)
Operating Costs and	37.62	40.93	(8.1)	166.75	171.95	(3.0)
Expenses
Income from	10.53	10.40	1.2	40.66	43.64	(6.9)
Operations
Net Income2	8.32	8.36	(0.4)	32.79	35.50	(7.6)
Net Income Margin3	17.82	16.61	-	16.27	16.92	-
(%)
EPS	1.07	1.08	(0.4)	4.23	4.58	(7.6)
EBITDA	19.35	19.16	1.0	75.82	75.51	(0.4)
EBITDA Margin (%)	40.19	37.33	-	36.54	35.04

Note:

1. Financials are prepared in accordance withT-IFRSs. Figures for 2020 are unaudited.
2. Net income attributable to owners of the parent.
3. Net income margin is based on consolidated net income (including net income attributable to NCI).
4. EBITDA = operating income + Depreciation & Amortization.
5. The calculation of growth rates is based on NT$mn.

© 2016 Chunghwa Telecom 10

Financials: Business Segment Revenues

(NT$bn)	Q1 2020	Q1 2019	Growth	2019	2018	Growth
%	%
Domestic Fixed	14.69	15.75	(6.7)	65.73	66.60	(1.3)
Local	6.11	6.42	(4.8)	25.73	27.57	(6.7)
DLD	0.50	0.55	(8.1)	2.20	2.43	(9.5)
Broadband Access	4.50	4.50	0.1	17.98	18.30	(1.8)
MOD	0.91	0.89	2.9	3.60	3.26	10.6
Mobile	22.54	24.48	(7.9)	95.47	101.07	(5.5)
Mobile Service Revenue	14.29	14.72	(3.0)	58.70	64.04	(8.3)
Sales of Mobile Handsets,	8.00	9.48	(15.6)	35.55	35.70	(0.4)
and Data Cards
Internet	7.51	7.51	0.0	30.09	29.83	0.9
Data Communications	5.31	5.25	1.1	21.00	21.14	(0.6)
Application VAS	1.49	1.63	(8.7)	6.44	6.06	6.2
International Fixed	2.24	2.72	(17.6)	11.49	13.43	(14.5)
ILD	0.54	1.12	(51.6)	4.58	6.56	(30.1)
Leased line	0.54	0.69	(22.1)	2.49	2.17	14.7
Others	1.17	0.87	33.9	4.75	4.55	4.4
Total	48.15	51.33	(6.2)	207.52	215.48	(3.7)
Note:

1. Financials are prepared in accordance withT-IFRSs. Figures for 2020 are unaudited.
2. The calculation of growth rates is based on NT$ mn.
3. Businesses shown under each segment are highlighted; therefore, sum of the highlighted revenues is not equal to the total.

© Chunghwa Telecom

11

Financials: Costs & Expenses

			Consolidated
(NT$bn)	Q1 2020	Q1 2019	Growth	2019	2018	Growth
%	%
Operating Costs	30.39	33.48	(9.2)	135.95	139.55	(2.6)
Operating Expenses	7.23	7.45	(2.9)	30.80	32.40	(5.0)
Marketing	5.08	5.36	(5.1)	22.10	24.08	(8.2)
General and	1.21	1.17	3.4	4.76	4.60	3.3
Administrative
R&D Expense	0.94	0.92	1.6	3.94	3.72	5.8
Total	37.62	40.93	(8.1)	166.75	171.95	(3.0)

Note:

1. Financials are prepared in accordance withT-IFRSs. Figures for 2020 are unaudited.
2. The calculation of growth rates is based on NT$ mn.

© 2016 Chunghwa Telecom 12

Financials: Cash Flow

			Consolidated
(NT$bn)	Q1 2020	Q1 2019	Growth	2019	2018	Growth
%	%
Net Cash Flow from	13.33	13.22	0.8	72.43	66.36	9.1
Operating Activities
CapEx	3.73	4.49	(17.0)	24.17	28.56	(15.4)
Free Cash Flow	9.6	8.73	10.0	48.26	37.80	27.6
Cash and Cash Equivalents	16.59	37.23	(55.4)	34.05	27.65	23.2
at the end of period

Note:

1. Financials are prepared in accordance withT-IFRSs. Figures for 2020 are unaudited.
2. The calculation of growth rates is based on NT$ mn.
3. Free cash flow is calculated by subtracting CapEx from Net Cash Flows from Operating Activities.

© 2016 Chunghwa Telecom 13

Operating Results vs. Forecast

Consolidated

(NT$bn)	Q1 2020	Q1 2020	Achieving	2020	Achieving
(A)	（E）	%	(E)	%
Revenues	48.15	50.47 ~ 50.69	95.0~95.4	214.10~215.29	22.4~22.5
Operating
Costs and	37.62	40.70 ~ 40.79	92.2~92.4	175.51~175.83	21.4~21.4
Expenses
Income
from	10.53	9.67~9.99	105.4~108.9	38.54~40.25	26.2~27.3
Operations
Net	8.32	7.71~7.97	104.4~107.9	30.91~32.47	25.6~26.9
Income2
EPS	1.07	0.99~1.03	104.4~107.9	3.99~4.19	25.6~26.9
EBITDA	19.35	18.49~18.76	103.1~104.7	74.91~76.53	25.3~25.8
EBITDA	40.19	36.63~37.01	-	34.99~35.55	-
Margin (%)

Note:

1. Financials are prepared in accordance withT-IFRSs. Figures for 2020 are unaudited.
2. Net income attributable to owners of the parent.
3. EBITDA = operating income + Depreciation & Amortization.

© 2016 Chunghwa Telecom 14

Effective and Efficient Capital Expenditure

Capital Expenditure

NT$ bn

	50
	45									20%
				14.3%
		11.9%	13.2%
		11.7%
	40					8.8%	7.7%	10%
	35				30.7
Capex		26.9	28.6		1.9					0%	Revenueof%
30
		24.2
			1.1	1.5
		1.2	1.3		2.9
	25
	1.6	2.8
	1.8
		2.8							-10%	as
			1.1
										Capex
	20			1.4	9.8
			10.7
		9.7
	15		7.8						-20%
								4.5	3.7
	10								0.1
					14.6			0.3	-30%
			12.7				0.1	0.1
		11.6	12.1
	5
							0.1	0.2
								1.6
								0.7
	0							2.4	2.5	-40%
		2017	2018	2019	2020 (E)			Q1 2019	Q1 2020
		Domestic Fixed	Mobile	Internet	International Fixed	Others

Budgeted capex for 2020: NT$30.7 bn

Continue to focus on core businesses for future investments

• FTTx
• 5G
• IDC/ Cloud
• Service Platforms

© 2016 Chunghwa Telecom 15

Q&A

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