Chunghwa Telecom : ★ Q4 2020 Conference Call Presentation (B)

4Q 2020 Operating Results

February 4, 2021

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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.

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Business Overview

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Fixed

Broadband

300Mbps ↑ Customers

YoY 69%

Mobile

Always

Broadband

Connected

+

Increased adoption of higher price plans

Home Wi-Fi

(Mesh)

Home Wi-Fi Devices

YoY373%

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#1 Mobile Services Provider

#1 Mobile Revenue (a)(b)

#1 Mobile Subscribers

Other,

CHT

15.5%

CHT,

38.4%

Other

Source: Company data, MOTC and NCC statistics Note :

1. Market share as of November 2020
2. Revenues are based on T-IFRSs

FET, 36.0% 24.2%

TWM,

24.3%

Better Performance in Mobile Service Revenue

Highest Subs & Lowest Churn

(Billion)

18

16

14

12

revenue	10

8

6

4

2

0

					0%
					-2%
					-4%
					-6%
					-8%
					-10%
Q4 19	Q1 20	Q2 20	Q3 20	Q4 20
CHT	TWM	FET	CHT	TWM	FET

	(Thousand)
		12,000					1.40%
rategrowthYoY adoption)15IFRS(before		10,000					1.20%
Subscribers						rateChurn
8,000					1.00%
		6,000					0.80%
						0.60%
		4,000					0.40%
		2,000					0.20%
		0					0.00%
		Jul-20	Aug-20	Sep-20	Oct-20Nov-20	Dec-20
		CHT	TWM	FET	CHT	TWM	FET

Note : For TWM and FET, mobile service revenue is derived from mobile ARPU	Note : Churn rate for postpaid subscribers
under Residual Value Method times the average subscriber number.

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Fixed Broadband Service

Broadband Revenue

												ARPU( NT$)
8,000	713		715		722	725		733
															700
7,000
															600
6,000	5,286	5,305		5,356	5,370		5,416
				500
5,000
4,000	4,515		4,499	4,530	4,528	4,578			400
3,000															300
2,000															200
1,000															100
0															0
Q4 19		Q1 20		Q2 20	Q3 20		Q4 20
(NT$ mn)		Broadband Access			Data Communications			ARPU
Note1 : Broadband ARPU is calculated as access plus ISP
Note2 : Revenue is calculated based on T-IFRSs

Fixed Broadband Subs

Fiber ≥ 300M

YoY 69.0%

4,405	4,388	4,375	4,365	4,348
36%	37%	38%	39%	43%
46%	45%	45%	44%	40%
18%	18%	17%	17%	17%
Dec 19	Mar 20	Jun 20	Sep 20	Dec 20

(Thousand) ADSL Fiber (<100M) Fiber (≥100M)

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MOD/ IPTV Service

1,200						2,100
1,100	2,082	2,086	2,085	2,080	2,069	2,050
						2,000

1,000									1,950
921		912	915	906	904
		1,900
900
								1,850
800									1,800
700									1,750
600									1,700
								1,650
500									1,600
Q4 19	Q1 20	Q2 20	Q3 20	Q4 20
(NT$ mn)			MOD revenue		MOD Subs (Thousand)

(Thousand)	1,328
1,400	1,327	1,264	1,303	1,300
1,200
1,000
800
600
400
200
0
Q4 19	Q1 20	Q2 20	Q3 20	Q4 20

SVOD：Subscription Video on Demand

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ICT Business

				YoY
				49.9%
Q4 19	Q1 20	Q2 20	Q3 20	Q4 20

雲端

cloud services

Cyber Security

YoY 75.6%

YoY 28.6%

YoY23.8%

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Financials Overview

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Financials: Income Statement Highlights

			Consolidated
(NT$bn)	Q4 2020	Q4 2019	Growth	2020	2019	Growth
%	%
Revenues	59.48	55.23	7.7	207.61	207.52	0.0
Operating Costs and	50.30	45.20	11.3	166.85	166.74	0.1
Expenses
Income from	10.50	9.93	5.7	42.36	40.65	4.2
Operations
Net Income2	8.23	7.77	5.8	33.42	32.79	1.9
EPS	1.06	1.00	5.8	4.31	4.23	1.9
EBITDA	19.89	18.75	6.1	78.70	75.82	3.8
EBITDA Margin (%)	33.44	33.94		37.91	36.54

Note:

1. Financials are prepared in accordance with T-IFRSs. Figures for 2020 are unaudited.
2. Net income attributable to owners of the parent.
3. EBITDA = operating income + Depreciation & Amortization.
4. The calculation of growth rates is based on NT$mn.

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Financials: Business Segment Revenues

(NT$bn)	Q4 2020	Q4 2019	Growth %	2020	2019	Growth %
Domestic Fixed	20.24	18.36	10.2	69.47	65.59	5.9
Local	6.04	6.27	(3.6)	24.46	25.56	(4.3)
DLD	0.49	0.54	(9.5)	2.02	2.20	(8.2)
	4.58	4.52	1.4	18.14	17.98	0.9
Broadband Access
MOD	0.90	0.92	(1.8)	3.64	3.60	0.9
ICT and Other Services	7.11	5.06	40.7	16.94	12.07	40.4
Mobile	24.96	24.46	2.0	90.23	95.47	(5.5)
Mobile Service Revenue	14.21	14.59	(2.6)	56.72	58.70	(3.4)
Sales of Mobile Handsets	10.30	9.51	8.4	32.11	35.55	(9.7)
and Wearable Devices
ICT and Other Services	0.45	0.37	22.2	1.39	1.22	14.2
Internet	9.72	8.22	18.3	32.12	30.45	5.5
Data Communications	5.42	5.29	2.5	21.45	21.03	2.0
Application VAS	3.55	2.13	66.2	8.33	6.77	23.0
Services Provided to the	0.76	0.80	(5.0)	2.34	2.65	(11.8)
government
International Fixed	2.14	2.62	(18.5)	8.70	11.27	(22.8)
ILD	0.26	0.87	(70.2)	1.53	4.58	(66.5)
Leased line	0.58	0.53	9.6	2.35	2.49	(5.4)
ICT and Other Services	0.64	0.59	8.3	2.24	1.76	27.1
Others	2.43	1.57	55.1	7.10	4.75	49.6
Total	59.48	55.23	7.7	207.61	207.52	0.0

Note:

1. Financials are prepared in accordance with T-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.

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Financials: Costs & Expenses

			Consolidated
(NT$bn)	Q4 2020	Q4 2019	Growth	2020	2019	Growth
%	%
Operating Costs	42.33	37.18	13.8	137.03	135.95	0.8
Operating Expenses	7.97	8.02	(0.5)	29.82	30.79	(3.2)
Marketing	5.50	5.72	(3.7)	20.96	22.09	(5.1)
General and	1.50	1.32	13.3	5.01	4.76	5.3
Administrative
R&D Expense	0.97	0.98	(0.6)	3.85	3.94	(2.3)
Total	50.30	45.20	11.3	166.85	166.74	0.1

Note:

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

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Financials: Cash Flow

			Consolidated
(NT$bn)	Q4 2020	Q4 2019	Growth	2020	2019	Growth
%	%
Net Cash Flow from	27.40	23.58	16.2	74.31	72.43	2.6
Operating Activities
CapEx	9.28	7.81	18.9	23.31	24.17	(3.5)
Free Cash Flow	18.12	15.77	14.9	51.00	48.26	5.7
Cash and Cash Equivalents	30.44	34.05	(10.6)	30.44	34.05	(10.6)
at the end of period

Note:

1. Financials are prepared in accordance with T-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.

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Operating Results vs. Forecast

Consolidated

(NT$bn)	Q4 2020	Q4 2020	Achieving	2020	2020	Achieving
(A)	（E）	%	(A)	(E)		%
Revenues	59.48	59.42	~ 59.80	99.5 ~ 100.1	207.61	214.10 ~ 215.29	96.4	~ 97.0
Operating
Costs and	50.31	50.00	~ 50.06	100.5 ~ 100.6	166.85	175.51 ~ 175.83	94.9	~ 95.1
Expenses
Income
from	10.50	9.49	~ 10.04	104.6 ~ 10.6	42.36	38.54 ~ 40.25	105.2	~ 109.9
Operations
Net	8.23	7.57 ~ 8.02	102.6 ~ 108.6	33.42	30.91 ~ 32.47	102.9~ 108.1
Income2
EPS	1.06	0.98~ 1.03	102.6 ~ 108.6	4.31	3.99 ~ 4.19	102.9~ 108.1
EBITDA	19.89	18.92	~ 19.44	102.4 ~ 105.2	78.70	74.91 ~ 76.53	102.8	~ 105.1
EBITDA
33.44	31.84 ~ 32.50	-	37.91	34.99 ~ 35.55		-
Margin (%)

Note:

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

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2021 Forecast

	Consolidated
(NT$bn)	2021（E）	2020	Growth
%
Revenues	209.26~209.72	207.61	0.8~1.0
Operating Costs and Expenses
167.58~167.66	166.85	0.4~0.5
Income from Operations
41.72~42.51	42.36	-1.5~0.4
Net Income2
32.60~34.09	33.42	-2.5~2.0
EPS	4.20~4.40	4.31	-2.5~2.0
EBITDA
79.90~80.65	78.70	1.5~2.5
EBITDA Margin (%)	38.18~38.46	37.91	-

Note :

1. Financials are prepared in accordance with T-IFRSs. Figures for 2020 are unaudited.
2. Net income attributable to owners of the parent.
3. The information therein is predictive and will not necessarily be fully realized in the future, and that reference to the company's significant accounting policy and summary of basic assumptions shall be made for further details.

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Effective and Efficient Capital Expenditure

Capital Expenditure

NT$ bn

Budgeted capex for 2021: NT$43.1 bn

Continue to focus on core businesses

Capex

50

45

40

35

30

25

20

15

10

5

0

11.9%	13.3%

28.6

27.0

1.1

1.31.3

1.62.8

2.8

10.7 9.7

11.612.7

2017	2018
Domestic Fixed	Mobile

11.7%

24.2

1.8

1.1 1.4

7.8

12.1

2019 Internet

	20.6%
	43.1	20%
11.2%	1.7
2.2
		10%
	8.8		Revenueof
23.3		0%
0.8		-10%	%
15.7	as
0.8
1.4			Capex
8.8
	-20%
11.5	14.7	-30%
		-40%
2020	2021(E)
International Fixed	Others

for future investments

• 5G
• FTTx
• IDC/ Cloud
• Submarine cable

Note: Actual capital expenditure are cash-based.

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2021 Strategic Focuses - 5G + Transformation

Accelerate 5G network deployment, assure leading network speed and enhance mobile service revenue

Expand 5G enterprise network and strengthen partnership to develop smart applications by leveraging the second phase of Forward-looking Infrastructure Development Program to grow ICT business

Continue fixed broadband migration and Always Broadband Connected strategy to enhance fixed broadband revenue

Build industrial ecosystem to provide cybersecurity, IDC/cloud and AIoT services by Acquiring, Building and Collaborating with partners

Build Asia Pacific region submarine cable double rings and become Asia Pacific submarine cable center

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Awards and Recognition

Recognized as Brand of the Year Award at the World Branding Forum for 6th consecutive year

Received recognition in corporate governance and sustainability:

• Won Platinum Award at the Asset ESG Corporate Awards for 8th consecutive year and only Taiwan-basedaward winner.
• Listed as Top Ten Sustainable Model Enterprise at 2020 Taiwan Corporate Sustainability Awards

Best-in-Class Services Validated by Amazon and Microsoft

• Only operator in Taiwan with both AWS MSP and AWS Direct Connect validation
• First operator to obtain Microsoft Azure Expert MSP in greater China
• Only service provider with Azure Expert MSP and Direct Connect ExpressRoute in Taiwan.

Received Frost & Sullivan Best Practice Awards in multiple categories:

• Named as Taiwan Data Center Service Provider of the Year and Taiwan Mobile Data Service Provider of the Year
• Named as Taiwan Cloud Infrastructure Service Provider of the Year for the first time Recognized by Speedtest as the No.1 Mobile Network Speed and Coverage:
• Received prizes for Fastest Mobile Network, Best Coverage Mobile Network and Fastest Mobile Network for iPhone 12 in the second half of 2020

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Q&A

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