Asia PR News

TAIPEI, Oct. 31 /Xinhua-PRNewswire-AsiaNet/ –

3Q Revenue Increases 3.5% on the Back of Solid Mobile and
Internet & Data Service Growth

Chunghwa Telecom Co., Ltd. (TAIEX: 2412; NYSE: CHT)
("Chunghwa" or "the Company"), today announced its unaudited operating results
for the third quarter of 2005. All figures were prepared in accordance with US
GAAP.

Net income figures listed below will be affected by the employee stock
purchase plan that was granted as a part of the Company’s privatization in
August. According to US GAAP, the discount provided to employees for the
shares to which they subscribed is considered compensation, and as such, needs
to be accounted for as operating cost and expense over the lock-up period.
Because the stock purchase plan was so well-received, the Company incurred a
NT$1.7 billion expense in the third quarter. The total amount does not affect
the Company’s cash position. Additionally, the dividend payout will be based
on ROC GAAP financials, so it will be unaffected by the US accounting treatment
of the employee stock purchases.

Highlights for the first nine months ending September 30, 2005:

— Revenue remained flat at NT$138.4 billion
— Net income was NT$35.9 billion, a 9.3 % YoY decrease
— Fully-diluted earnings per common share (EPS) was NT$3.72, or US$ 1.12
per ADS, a 9.3% YoY decrease

Highlights for the third quarter of 2005:

— Revenue was NT$47.8 billion, a 3.5 % QoQ increase
— Net income was NT$11.1billion, a 13.4% QoQ decrease
— Earnings per share (EPS) was NT$1.14, or US$0.34 per ADS, a 13.4% QoQ
decrease.

Summary
Total revenue for the first nine months of 2005 was NT$138.4bn, which was
flat compared to the same period last year. Of this, 36.4% was from fixed-line
services, 39.5% from wireless services and 22.4% from Internet and data
services. The remainder was from other services. Revenue from the Company’s
mobile, and Internet and data services grew by 3.7% and 5.6%, respectively.
Revenue for international long distance declined 4.8%, mainly due to
competition. Domestic long distance revenue declined 7.8%, mainly because of
mobile substitution and a decrease in transit revenue. Local call revenue
declined 7.1% YoY, again, mainly due to mobile substitution and a migration of
subscribers to broadband from dial-up Internet access services.

Total revenue for the third quarter of 2005 was NT$47.8bn, a 3.5% QoQ
increase. Of this, 35.5% was from fixed-line services, 39.9% was from wireless
services and 22.4% was from Internet and data services. The remainder was from
other services.

Total operating costs and expenses for first nine months 2005 increased by
4.1% YoY, mainly because of the employee stock purchase plan that was mentioned
at the top of this earnings release, and handset subsidies.

Total operating costs and expenses for the third quarter of 2005 were
NT$33.6bn, a 5.7% QoQ increase. This was mainly due again to the employee
stock purchase plan.

The Company also disclosed its ROC financial results, based on which the
dividend will be paid. For the first nine months of 2005, total revenue on ROC
GAAP was NT$136.9bn, total operating costs and expenses were NT$90.5bn and net
income was NT$38.2bn, translating to earnings per share of NT$3.96, a 2.8%
decrease YoY.

Businesses Performance Highlights

Internet and Data Services
— Internet and data revenue for first nine months increased by 5.6% YoY
to approximately NT$31.1bn. Revenue in the third quarter of 2005 was
NT$10.7bn, a 3.8% QoQ increase. This was primarily driven by a
continued increase in broadband subscriber numbers.
— The total number of Internet subscribers was about 4mn as of Sep. 30,
2005, a 7.6% YoY increase. In the third quarter of 2005, we added
94,000 subscribers.
— ADSL subscribers totaled 3.5mn as of Sep. 30, 2005, a 21% YoY increase.
We continued our growth in this business by adding 175,000 ADSL
subscribers in the third quarter of 2005.

Mobile Service
— Mobile revenue for the first nine months of 2005 increased by 3.7% YoY
to NT$54.7bn due to an increase in minute usage and increased VAS
revenue. For the third quarter of 2005, mobile revenue increased by
4.4%. This was due to typical seasonal spikes in usage.
— At the end of September 2005, the total number of mobile subscribers
was 8.1mn. The 2.1% YoY decrease was primarily due to our clean-up of
inactive prepaid subscribers.
— Our blended Average Revenue per User (ARPU) was NT$744 for the first
nine months of the year. ARPU for the third quarter this year
increased by 4.8% QoQ to NT$781 due to seasonal spikes in usage.
— Chunghwa continues to be the leading mobile operator in Taiwan in both
revenue and subscriber market share with 35.2% and 39.6% respectively
as of the end of August 2005, according to data announced on the
Directorate General of Telecommunications’ (DGT) website.
— Mobile Number Portability (MNP) became effective on October 15th this
year. To date, only a minimum number of subscribers have switched to
other service providers. We believe that a number of mobile
subscribers will switch to Chunghwa and that our business will benefit
from the new regulation.
— We rolled out 3G services on July 26th 2005. To date, we have around
265,000 3G subscribers.

Fixed Line Services
— Total fixed line revenues for the first nine months 2005 declined by
6.7% to NT$50.4bn, mainly due to fixed-line competition, mobile
substitution and a continuous migration of dial-up subscribers to ADSL
broadband services. Fixed-line revenue for the third quarter of 2005
was NT$17.0bn, a increase of 0.8% QoQ.
— Chunghwa’s total fixed line subscriber base stood at approximately
13.3mn as of Sep. 30, 2005, a 0.4% YoY increase.

Financial Statements
Financial statements and additional operating data can be found on our
website at www.cht.com.tw/ir/filedownload

About Chunghwa Telecom
Chunghwa Telecom (TAIEX 2412; NYSE: CHT) is the leading telecom service
provider in Taiwan. Chunghwa Telecom provides fixed line, mobile, and Internet
and data services to residential and business customers in Taiwan.

Note Concerning Forward-looking Statements
Except for statements in respect of historical matters, the statements made
in this press conference contain "forward-looking statements" within the
meaning of Section 27A of the U.S. Securities Act of 1933 and Section 21E of
the U.S. Securities Exchange Act of 1934. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors that may cause
the actual performance, financial condition or results of operations of
Chunghwa Telecom to be materially different from what may be implied by such
forward-looking statements. Investors are cautioned that actual events and
results could differ materially from those statements as a result of a number
of factors including, among other things: extensive regulation of state owned
enterprises by the ROC government and extensive regulation of telecom industry;
the intensely competitive telecom industry; our relationship with our labor
union; general economic and political conditions, including those related to
the telecom industry; possible disruptions in commercial activities caused by
natural and human induced events and disasters, including terrorist activity,
armed conflict and highly contagious diseases, such as SARS; and those risks
identified in the section entitled "Risk Factors" in Chunghwa Telecom’s Form
F-1 and F-3 filed with the U.S. Securities and Exchange Commission in
connection with our U.S. initial and secondary public offering.

The financial statements included in this press conference were unaudited,
and prepared and published in accordance with U.S. GAAP. Chunghwa Telecom also
prepared certain financial statements for the same periods discussed in this
press conference under ROC GAAP. Investors are cautioned that there are many
differences between ROC GAAP and U.S. GAAP. As a result, our results under
U.S. GAAP and ROC GAAP may in many events be substantially different.

The forward-looking statements in this press conference reflect the current
belief of Chunghwa Telecom as of the date of this press conference and we
undertake no obligation to update these forward-looking statements for events
or circumstances that occur subsequent to such date.

For inquiries:

Fufu Shen,
Investor Relations
Tel: +886-2-2344-5488
Email: chtir@cht.com.tw

SOURCE: Chunghwa Telecom