TAIPEI, Taiwan, R.O.C. January 27, 2016 - Chunghwa Telecom Co., Ltd. (TAIEX: 2412, NYSE: CHT) (“Chunghwa” or “the Company”) today reported its guidance for 2016 on a consolidated basis. All figures were prepared in accordance with Taiwan-International Financial Reporting Standards (“T-IFRSs”).

 

Dr. Rick L. Tsai, Chairman and CEO of Chunghwa Telecom stated, “We are pleased to report impressive operating results for 2015. We will continue to strive to further enhance our performance in future periods. Entering into 2016, we will continue focusing on 4G, value-added and ICT services. We expect to add 2 million additional 4G subscribers and expand our ICT business by leveraging our advantages as an integrated telecom service provider. With our comprehensive network infrastructure, marketing resources and R&D capacity, we are confident that we will continue to maintain our leading market position in all our major businesses and boost growth momentum in 2016.”

 

For 2016, the Company expects total revenue to increase by NT$1.70 billion, or 0.7%, to NT$233.49 billion as compared to the un-audited consolidated revenue for 2015. Expected increases in revenue are due to the on-going growth of mobile Internet and mobile value-added customers, expansion of the ICT business and continual migration of fixed broadband customers. Increased revenue contribution from these growing businesses is expected to offset the projected decrease in voice service revenue attributed to VoIP substitution and market competition.

 

Operating costs and expenses for 2016 are expected to increase by NT$4.23 billion, or 2.3%, to NT$185.53 billion as compared to the prior year.  Expenses associated with expanding mobile Internet services, ICT projects and value-added services are expected to increase. Amortization expenses primarily resulting from the 4G license acquisition are also expected to increase.

 

Income from operations is expected to decrease by NT$ 2.64 billion, or 5.2%, year-over-year. Non-operating income is expected to decrease by NT$0.51 billion year-over-year mainly due to declines in investment income under the equity method and other income. Income before income tax and net income attributable to stockholders of the parent are expected to be NT$48.84 billion and NT$39.98 billion, respectively, representing decreases of NT$3.15 billion and NT$2.84 billion, respectively. Earnings per share for 2016 is expected to decrease by NT$0.37 to NT$5.15, as compared to the prior year.

 

Acquisition for property, plant and equipment in 2016, including the 2015 deferred projects, is expected to increase by NT$5.55 billion to NT$30.63 billion as compared to the prior year. However, due to the Company’s acquisition of the 2500MHz/2600MHz frequency band license at the cost of NT$9.96 billion in 2015, total spending in 2016 for acquisitions of material assets is expected to be NT$4.44 billion lower than that in 2015. 

 

(NT$ billion except EPS)	2016(F)	2015 (un-audited)	change	YoY (%)
Revenue	233.49	231.79	1.70	0.7
Operating Costs and Expenses	185.53	181.30	4.23	2.3
Other Income and Expense	(0.21)	(0.10)	(0.11)	(96.1)
Income from Operations	47.75	50.39	(2.64)	(5.2)
Non-operating Income	1.09	1.60	(0.51)	(32.3)
Income before Income Tax	48.84	51.99	(3.15)	(6.1)
Net Income Attributable to Stockholders of The Parent	39.98	42.82	(2.84)	(6.6)
EPS(NT$)	5.15	5.52	(0.37)	(6.6)
EBITDA	82.24	83.84	(1.60)	(1.9)
EBITDA Margin	35.2%	36.2%
Acquisition of Material Assets	30.63	35.07	(4.44)	(12.7)
Acquisition of Property, Plant and Equipment	30.63	25.08	5.55	22.1
Others	-	9.99	(9.99)	(100.0)
Disposal of Material Assets	0.18	0.06	0.12	176.8

 

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 pursuant to the requirements of the Financial Supervisory Commission, or T-IFRSs, 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 T-IFRSs, 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:

n  these non-GAAP financial measures are limited in their usefulness and should be considered only as a supplement to the Company’s T-IFRSs financial measures;

n  these non-GAAP financial measures should not be considered in isolation from, or as a substitute for, the Company’s T-IFRSs financial measures;

n  these non-GAAP financial measures should not be considered to be superior to the Company’s T-IFRSs financial measures; and

n  these non-GAAP financial measures were not prepared in accordance with T-IFRSs 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 principle.

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 as a substitute for results under T-IFRSs, or as being comparable to results reported or forecasted by other companies.

 

About Chunghwa Telecom

Chunghwa Telecom (TAIEX 2412, NYSE: CHT) is Taiwan’s largest integrated telecommunications services company that provides fixed-line, mobile, broadband, and internet services. The Company also provides information and communication technology services to corporate customers and is expanding its cloud computing services. In recent years, Chunghwa has been actively involved in corporate social responsibility and has won domestic and international awards and recognition. For more information, please visit our website at www.cht.com.tw.

 

Contact:            Fu-fu Shen

Phone:              +886 2 2344 5488

Email:              chtir@cht.com.tw