Chunghwa Telecom : 2021 ESG Report EN

TSE:2412

NYSE:CHT

Annual Report 2021

Focus on ESG with a

Sustained Outlook

Photo by Chi Po-lin

Provided by Chi Po-lin Foundation

© Above Taiwan Cinema,Inc.

CHT annual report is available at http://www.cht.com.tw/en/home/cht/investors/annual-report

Taiwan Stock Exchange Market Observation Post System: http://mops.twse.com.tw

Printed on February 28, 2022

Respect the earth. Printed on environmentally friendly paper using soy inks.

Chairman and CEO

President

Spokesperson

Acting Spokesperson

Stock Transfer Agent

Auditor

Exchange of ADR Listing

ADR Depositary Bank

Inquiries on ADR Investment

Chi-Mau Sheih

Shui-Yi Kuo

Yu-Shen Chen

Senior Executive Vice President and CFO

Tel: [phone]

E-mail: [e-mail]

Hong-Chan Ma

Senior Executive Vice President Tel: [phone]

E-mail: [e-mail] Fu-Fu Shen

Vice President, Department of Finance Tel: [phone]

E-mail: [e-mail] Cho-Fen Tsai

Senior Director, Investor and Media Relations Tel: [phone]

E-mail: [e-mail]

Yuanta Securities Co., Ltd.

Registrar & Transfer Agency Department

B1, No. 210, Sec. 3, Chengde Rd., Taipei City 103432 Tel: [phone]

Website: http://www.yuanta.com.tw

Deloitte & Touche

CPA: Dien-Sheng Chang, Cheng-Hung Kuo

20th Floor, No. 100, Songren Rd., Xinyi Dist., Taipei City 110016

Tel: [phone]

Website: http://www.deloitte.com.tw

New York Stock Exchange

Ticker Symbol: CHT

Website: https://www.nyse.com

JPMorgan Depositary Receipts 383 Madison Ave. Floor 11 New York, NY 10179, U.S.A.

Service No. in USA: 1-866-JPM-ADRS

Website: https://www.adr.com

JPMorgan Depositary Receipts, ADR Service Toll Free in USA: 1-800-990-1135

Tel No. out of USA: 1-651-453-2128

Website: https://www.shareowneronline.com/

Ordinary mail: JPMorgan Chase Bank N.A. P.O. Box 64504

St. Paul, MN 55164-0854, U.S.A.

Express mail: JPMorgan Chase Bank N.A.

1110 Centre Pointe Curve, Suite 101 Mendota Heights, MN 55120-4100, U.S.A.

Contents

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-	Letter to Shareholders	2
-	Company Profile	14
-	Corporate Governance Report	16
-	Capital Review	88
-	Operational Highlights	96
-	Review and Analysis of Financial	120
	Position, Financial Performance,
	and Risk Management

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Special Disclosures	136
Financial Information	152

1	Letter to Shareholders
	1.	Operating Performance in 2021
	2.	Business Plan Highlights for 2022

The Leading Provider of Smart Life

and the Enabler of Digital Economy.

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Letter to Shareholders

Dear Shareholders,

As Taiwan faced the COVID-19 pandemic throughout 2021, we are extremely grateful to all our team members for their hard-work and ability to adapt to the new norms during these difficult times, alongside the Company. Our front-line staff also remained in their roles during the pandemic and continued to provide timely, high-quality services to our customers. We have delivered promising results for 2021, as both consolidated revenue and profits exceeded financial forecasts with annual growth rate increasing as well. Our financial performance hit a four-year record high in 2021, further creating value for our shareholders.

2021 Business Highlight

In 2021, we have achieved excellent operating results based on the "Transformation x 5G x Sustainability" strategy.

Successful Transformation with "Rise on, Together 2021" Plan

In response to changes in the operating environment and new business challenges, Chunghwa Telecom launched a three-year comprehensive strategic transformation plan, "Rise on, together 2021," strategy in 2019. We aimed to create fundamental changes in mindset, behavior and company culture to achieve an upward trend in financial metrics. After three years of hard work, we have successfully returned to the growth track from before recession. From 2019 to 2021, our telecom revenue turned upward, as net profit and EPS increased year-by-year. In addition, we achieved a record of EPS of NT$4.61 in 2021.

In terms of business transformation, we continued to achieve milestones in core and emerging businesses these past three years, including 5G, smart applications, information and communication technology projects. In terms of network transformation, we promoted the next generation of network transformation as well as the integration of fixed-line and mobile networks, and collaborated on cloud-network and smart network maintenance. By aligning resource utilization with flexible deployment, we reduced maintenance and operating costs, while greatly improving operating efficiency. With the leading technical 5G construction method of C-RAN architecture that centralized maintenance operations and big data analysis based construction plan, we continued to accelerate 5G construction, as our network quality has been recognized by both

domestic and international institutions.

In terms of organizational transformation, we restructured our organizational structure with a "customer-centric" concept in mind by introducing three business groups: the Consumer Business Group, the Enterprise Business Group and the International Business Group. We have also built three technical groups: the Network Technology Group, Data Communications Business Group and Telecommunications Laboratories. This new organization officially launched on January 1, 2022. We will continue to strengthen the integration of organizational resources to realize operational synergies to enhance overall competitiveness through resourceful and customized services for our customers.

5G Leads Mobile Service Revenue Turned

Upward

2021 is an important year for the Company with upward trends in the core business. In terms of mobile business, we have actively deployed 5G networks. By the end of 2021, we were the industry leader with more than 12,000 5G base stations completed. Our network quality has been recognized and awarded by professional international speed measurement agencies. Speedtest® recognized Chunghwa with "Fastest 5G" and "Fastest Mobile Network" in the first and second halves of 2021, respectively. As for Opensignal's "2021 Global User Network Experience," Chunghwa is recognized as the operator in Taiwan with the greatest number of projects entering the world's top 30 experience projects in Taiwan. Our 5G penetration rate has been promoted by excellent network quality along with

an increase in proportion of 5G high price plan adoption, successfully driving our mobile service revenue upward in 2021.

Industry-Leading 5G Enterprise Private Network

In 2021, we actively cultivated the 5G enterprise private network market. Strategically, we aimed to acquire projects from leading enterprises across various industries and established vertical application models as a basis for expanding 5G enterprise private network market at home and abroad. We have successfully achieved pioneer projects milestones in many sectors with the top completion rate in the telecom industry.

In addition to developing the domestic market, we have also made breakthroughs in the international market by signing a memorandum to cooperate with overseas telecom companies to develop international 5G enterprise private network services and technologies. Frost & Sullivan, the well-known international

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