TAIPEI, Taiwan, R.O.C. January 29, 2013 - Chunghwa Telecom Co., Ltd. (TAIEX: 2412, NYSE: CHT) (“Chunghwa” or “the Company”) today reported its guidance for 2013 on a consolidated basis. All figures were prepared in accordance with Taiwan-International Financial Reporting Standards (“T-IFRSs”) on a consolidated basis.
Dr. Shyue-Ching Lu, Chairman and Chief Executive Officer, stated, “As Taiwan’s largest integrated telecommunications company, we remain focused on our core goal of maintaining and expanding one of the world’s most advanced telecommunication networks, further enabling Taiwan’s next generation of consumers, businesses, and industries. We will continue the build-out and expansion of high-speed fiber and mobile broadband networks throughout Taiwan in order to mitigate the regulation impact and stay ahead of the competition. Looking ahead at 2013, we believe this strategic focus will enable us to leverage our key future growth drivers including mobile data, multimedia-on-demand (‘MOD’), information and communication technologies (‘ICT’) services and cloud services, to continue providing the fastest, most reliable and secure communications experience available throughout Taiwan as well as expand customer base for major businesses.”
For 2013, total revenue is expected to decrease by NT$2.46 billion, or 1.1%, to NT$217.82 billion compared to the unaudited consolidated revenue for 2012. Although the persistent promotion of mobile internet, Fiber broadband and ICT including cloud services will inject growth momentum of the Company, the less construction revenue from Light Era, the property development subsidiary, a continued decline in voice revenue, the NCC-mandated tariff reductions as well as the mobile interconnection rate reduction will decrease total revenue.
Operating costs and expenses for 2013 are expected to increase by NT$1.49 billion to NT$172.71billion. The promotion and deployment of the Company’s mobile internet and broadband and cloud businesses is expected to result in higher depreciation and amortization as well as higher maintenance and material expenses. Electricity expense is expected to increase due to higher tariffs. Furthermore, the bad debt reversal for 2012 also explained this year-over-year increase. The increase in the aforementioned expenses offsets the decrease in mobile interconnection expense due to the rate reduction and the construction cost decrease from the subsidiary Light Era.
Non-operating income is expected to increase by NT$1.05 billion due to a real estate impairment charge taken during 2012. Income before income taxes is expected to be NT$46.15 billion and comprehensive income attributable to owners of the parent NT$37.59 billion, representing decreases of NT$ 2.9 billion and NT$2.48 billion respectively. Earnings per share are expected to decrease to NT$4.85.
Capex for 2013 is budgeted to increase by NT$3.89 billion from 2012, to NT$37.15 billion, primarily related to the fiber broadband, mobile network, and cloud infrastructure build-outs.
|
(NT$ billion except EPS) |
2013(F) (T-IFRSs) |
2012 (ROC GAAP unaudited) |
change |
YoY (%) |
|
Revenue |
217.82 |
220.28 |
(2.46) |
(1.1) |
|
Operating Costs and Expenses |
172.71 |
171.22 |
1.49 |
0.9 |
|
Income from Operations |
45.11 |
49.06 |
(3.95) |
(8.1) |
|
Non-operating Income |
1.04 |
(0.01) |
1.05 |
- |
|
Income before Income Tax |
46.15 |
49.05 |
(2.90) |
(5.9) |
|
Comprehensive Income attributable to owners of the parent (Note) |
37.59 |
40.07 |
(2.48) |
(6.2) |
|
EPS(NT$) |
4.85 |
5.16 |
(0.31) |
(6.1) |
|
EBITDA |
78.22 |
81.54 |
(3.32) |
(4.1) |
|
EBITDA Margin |
35.9% |
37.0% |
|
|
|
Acquisition of Property, Plant and Equipment, Long-term Investments |
37.15 |
33.26 |
3.89 |
11.7 |
Note: The figure of 2012 was Net Income attributable to owners of the parent based on ROC GAAP.
NOTE CONCERNING FORWARD-LOOKING STATEMENTS
This press release 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 press release reflect the current belief of Chunghwa as of the date of this press release 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 press release 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.
NON-GAAP FINANCIAL MEASURES
To supplement the Company’s consolidated financial statements presented in accordance with International Financial Reporting Standards, or IFRS, Chunghwa Telecom also provides EBITDA, which is a "non-GAAP financial measure”. EBITDA 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 income net, (iv) income tax, (v) (income) loss from discontinued operations.
In managing the Company’s business, Chunghwa Telecom relies on EBITDA as a means of assessing its operating performance 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 (iv) other expenses or income not related to the operation of the business.
CAUTIONS ON USE OF NON-GAAP FINANCIAL MEASURES
In addition to the consolidated financial results prepared under IFRS, Chunghwa Telecom also provide non-GAAP financial measures, including “EBITDA”. The Company believes that the non-GAAP financial measures provide investors with another method for assessing its operating results in a manner that is focused on the performance of its ongoing operations.
Chunghwa Telecom’s management believes investors will benefit from greater transparency in referring to these non-GAAP financial measures when assessing the Company’s operating results, as well as when forecasting and analyzing future periods. However, the Company recognizes that:
· these non-GAAP financial measures are limited in their usefulness and should be considered only as a supplement to the Company’s IFRS financial measures;
· these non-GAAP financial measures should not be considered in isolation from, or as a substitute for, the Company’s IFRS financial measures;
· these non-GAAP financial measures should not be considered to be superior to the Company’s IFRS financial measures; and
· these non-GAAP financial measures were not prepared in accordance with IFRS and investors should not assume that the non-GAAP financial measures presented in this earnings release were prepared under a comprehensive set of rules or principles.
Further, these non-GAAP financial measures may be unique to Chunghwa Telecom, as they may be different from non-GAAP financial measures used by other companies. As such, this presentation of non-GAAP financial measures may not enhance the comparability of the Company’s results to the results of other companies. Readers are cautioned not to view non-GAAP results on a stand-alone basis or as a substitute for results under IFRS, or as being comparable to results reported or forecasted by other companies.
A reconciliation of each non-GAAP financial measure to the most directly comparable IFRS financial measure or measures appears at the end of this press release.
About Chunghwa Telecom
Chunghwa Telecom (TAIEX: 2412, NYSE: CHT) is Taiwan’s leading telecom service provider. The Company provides fixed-line, mobile and Internet and data services to residential and business customers in Taiwan.
Contact: Fu-fu Shen
Phone: +886 2 2344 5488
Email: chtir@cht.com.tw
