Chunghwa Telecom Co Ltd (CHT) 2018 Q3 法說會逐字稿

Good afternoon, ladies and gentlemen. Welcome to Chunghwa Telecom conference call for the company's third quarter 2018 operating result. (Operator Instructions)

女士們、先生們，下午好。歡迎參加中華電信電話會議，了解公司 2018 年第三季度經營業績。（操作員說明）

For your information, this conference call is now being broadcasted live over the Internet. Webcast replay will be available within an hour after the conference is finished. Please visit CHT IR website, www.cht.com.tw/ir, under the IR Calendar section. Now I would like to turn it over to Ms. Fu-Fu Shen, the Director of Investor Relations. Ms. Shen, please go ahead.

供您參考，本次電話會議現通過互聯網進行現場直播。會議結束後一小時內將提供網絡直播重播。請訪問 CHT IR 網站 www.cht.com.tw/ir，在 IR 日曆部分。現在請投資者關係總監沉福福女士負責。沉女士，請講。

Thank you. This is Fu-Fu Shen, Assistant VP of Chunghwa Telecom. Welcome to our third quarter 2018 results conference call. Joining me on the call today are Mr. Sheih, our President; and Mr. Kuo, our Chief Financial Officer. During today's call, management will begin by providing an overview of our business during the quarter followed by a discussion of operational and financial highlights. And then we will move on to the QA session.

謝謝。我是沉福福，中華電信副總裁助理。歡迎參加我們的 2018 年第三季度業績電話會議。今天和我一起參加電話會議的還有我們的總裁謝赫先生；以及我們的首席財務官郭先生。在今天的電話會議中，管理層將首先概述我們本季度的業務，然後討論運營和財務亮點。然後我們將進入 QA 會議。

Now I would like to hand the call over to President Sheih. And please note our safe harbor statement on Slide 2. President Sheih, please, go ahead.

現在我把電話轉交給謝赫主席。請注意我們在幻燈片 2 上的安全港聲明。謝赫總統，請繼續。

Thank you, Fu-Fu. And hello, everyone. Welcome to our third quarter 2018 earnings call. During the third quarter of 2018 the overall market remained competitive. But we are delighted to see our successful solidification of our customer base in major segments.

謝謝你，福福。大家好。歡迎參加我們的 2018 年第三季度財報電話會議。2018年第三季度，整體市場競爭依然激烈。但我們很高興看到我們成功鞏固了主要細分市場的客戶群。

In the mobile business we saw the trend of active subscriber net adds persist from the second quarter. We also noted that the back to school promotion plan that was launched in August brought in new subscribers and upselling for existing customers which help further solidify our mobile market share and optimize the customer profile.

在移動業務中，我們看到活躍用戶淨增加的趨勢從第二季度開始持續存在。我們還注意到，8月份推出的返校促銷計劃帶來了新用戶和現有客戶的追加銷售，這有助於進一步鞏固我們的移動市場份額並優化客戶檔案。

In our broadband business we are glad to see an increase in subscribers which demonstrates the success of our strategy of promoting home-centric services that bundle broadband, WiFi, MOD and IoT services.

在我們的寬帶業務中，我們很高興看到用戶數量的增加，這表明我們推廣以家庭為中心的服務（捆綁寬帶、WiFi、MOD 和物聯網服務）的戰略取得了成功。

We are even more delighted to report that MOD subscribers exceeded 1.9 million in the third quarter. We believe that MOD subscribers will continue to increase and exceed 2 million by the end of this year and that this represent increasing advertisement opportunities on our IPTV platform.

我們更高興地報告第三季度 MOD 訂閱者超過 190 萬。我們相信，MOD 用戶將繼續增加，到今年年底將超過 200 萬，這意味著我們的 IPTV 平台上的廣告機會不斷增加。

Going forward, we will continue the strategy of increasing customer scale with exclusive content to further drive up MOD's revenue.

展望未來，我們將繼續以獨家內容擴大客戶規模的策略，進一步拉動MOD的收入。

For ICT projects we continue to see increasing demand of new applications and business from enterprise customers. Despite the decrease of ICT revenue year-over-year in the third quarter which was primarily due to increasing selectiveness for the projects that we have acquired we continue to strengthen our core capabilities in selected areas to provide more focused ICT-related solutions and to enhance margins in ICT's businesses.

對於ICT項目，我們不斷看到企業客戶對新應用和業務的需求不斷增長。儘管第三季度ICT收入同比下降，這主要是由於我們對收購的項目的選擇性增加，但我們繼續加強在選定領域的核心能力，以提供更有針對性的ICT相關解決方案並增強ICT 業務的利潤率。

For our IDC business we are encouraged by the increase of both revenue and customer traffic volume and have thus proceeded with the third phase of construction of our highest rated IDC in Banqiao. Moreover, following the successes of large smart city projects that we won in Taiwan which showcased our IoT application capabilities we continue to win smart school projects national-wide in 2018.

就我們的IDC業務而言，我們受到收入和客戶流量增長的鼓舞，因此開始在板橋建設我們評價最高的IDC的第三期建設。此外，繼我們在台灣贏得大型智慧城市項目的成功並展示了我們的物聯網應用能力之後，我們在2018年繼續贏得全國范圍內的智慧學校項目。

Going forward, we will further enhance collaboration between our sales force, research capacity and product development to enlarge internal synergies as well as continue to leverage our strengths in communication technologies, IoT, IDC, CDN and other capabilities to cater to the growing demand for comprehensive ICT solutions.

未來，我們將進一步加強銷售、研發、產品開發等方面的協作，擴大內部協同效應，並繼續發揮我們在通信技術、物聯網、IDC、CDN等方面的優勢，滿足日益增長的綜合需求。信息通信技術解決方案。

Now I will walk you through each of our business lines. On Slide 5. I would like to update you on our mobile business. As of September 2018, our total number of 4G subscribers has exceeded 9 million, accounting for 86.1% of total mobile users. However, we continue to guide a decline of mobile ARPU for full year 2018 over 2017 due to expected competition in the foreseeable future. Despite intense competition we are delighted to see that mobile subscriber net adds continue to stay positive in the third quarter due to improvements in customer retention and acquisition.

現在我將向您介紹我們的每條業務線。在幻燈片 5 上，我想向您介紹我們移動業務的最新情況。截至2018年9月，我們的4G用戶總數已超過900萬戶，佔移動用戶總數的86.1%。然而，由於預期未來的競爭，我們繼續預計 2018 年全年移動 ARPU 較 2017 年有所下降。儘管競爭激烈，我們很高興看到由於客戶保留和獲取的改善，第三季度移動用戶淨增加繼續保持正值。

In mid-August we rolled out back to school promotion plan to attract young users which resulted in an increase in average monthly student subscription as well as higher percentage of new student customers acquired quarter-over-quarter.

8 月中旬，我們推出了返校促銷計劃以吸引年輕用戶，這導致學生平均每月訂閱量增加，並且新學生客戶獲取比例環比上升。

Going forward, in addition to expanding our existing product portfolio, including our offerings of bundled plans, value-added services, handset insurance and other incentives, we also aim to expand new services to enhance overall mobile revenue. The NB-IoT and Cat M1 network we are developing now for IoT applications will be one area of focus.

展望未來，除了擴大我們現有的產品組合（包括提供捆綁套餐、增值服務、手機保險和其他激勵措施）外，我們還計劃擴大新服務以提高整體移動收入。我們現在正在為物聯網應用開發的 NB-IoT 和 Cat M1 網絡將是重點領域之一。

Slide 6. The performance of our broadband business. For the third quarter we are encouraged to see our broadband subscriber net adds continue to slightly grow with 0.5% increase year-over-year. In addition, we continue to see a migration of our broadband subscribers to higher speed fiber services. We are pleased with the number of users signing up for connection speeds of 100 megabit per second or higher, which grew by 10.6% year-over-year to 1.4 million in the third quarter.

幻燈片 6. 我們寬帶業務的表現。第三季度，我們欣喜地看到我們的寬帶用戶淨增量繼續小幅增長，同比增長 0.5%。此外，我們繼續看到寬帶用戶轉向更高速的光纖服務。我們對註冊每秒 100 兆或更高連接速度的用戶數量感到滿意，第三季度同比增長 10.6% 至 140 萬。

We expect to improve this number by upselling higher speed offerings, especially the fiber services and differentiating our product by bundling value-added and digital convergence services. Going forward, we will endeavor to stay ahead of our competitors by continuously encouraging higher speed adoption and enhancing user stickiness on our network through smart home services that leverage our WiFi advantage as well as MOD and OTT offerings.

我們希望通過增加銷售更高速度的產品（尤其是光纖服務）以及通過捆綁增值和數字融合服務來實現我們的產品差異化來提高這一數字。展望未來，我們將通過利用我們的 WiFi 優勢以及 MOD 和 OTT 產品的智能家居服務，不斷鼓勵更高速的採用並增強網絡上的用戶粘性，努力保持領先於競爭對手。

Moving on to Slide 7. We are glad to report another robust quarter for the IPTV business. In the third quarter our IPTV MOD platform continue to be the largest video platform in Taiwan with more than 1.9 million subscribers at end of September 2018, representing a 32.3% increase year-over-year.

轉到幻燈片 7。我們很高興地報告 IPTV 業務又一個強勁的季度。第三季度，我們的 IPTV MOD 平台繼續成為台灣最大的視頻平台，截至 2018 年 9 月，訂閱用戶數量超過 190 萬，同比增長 32.3%。

Our IPTV revenue continued its growth trajectory as well with a 37% increase year-over-year, primarily driven by the healthy growth of IPTV and SVOD subscribers.

我們的 IPTV 收入繼續保持增長軌跡，同比增長 37%，這主要得益於 IPTV 和 SVOD 用戶的健康增長。

Moreover, to leverage our subscription base and the excellent viewership we will strive to expand revenue via advertisement. As of the third quarter of 2018 accumulated advertising revenue increased 76% year-over-year.

此外，為了利用我們的訂閱基礎和出色的收視率，我們將努力通過廣告擴大收入。截至2018年第三季度累計廣告收入同比增長76%。

Going forward, we will endeavor to continue the growth dynamics in video business by acquiring popular content, including exclusive rights to sport in eSports games in order to increase subscriber base and further grow our revenue in this segment.

展望未來，我們將努力通過收購流行內容（包括電子競技遊戲的獨家體育權利）來繼續視頻業務的增長動力，以增加用戶基礎並進一步增加我們在該領域的收入。

Please turn to Slide 8 for an update on our ICT initiatives. In the third quarter of 2018 our ICT revenue decreased year-over-year due to our being selective for the projects that we acquired. We continue to see our IDC revenue increase. And year-over-year growth during the third quarter was 23.4%. Traffic volume generated by customers, especially by some major international content providers increased 1.5x year-over-year which is encouraging.

請參閱幻燈片 8 了解我們 ICT 計劃的最新信息。2018年第三季度，由於我們對收購項目的選擇性，我們的ICT收入同比下降。我們的 IDC 收入繼續增長。第三季度同比增長23.4%。客戶（尤其是一些主要國際內容提供商）產生的流量同比增長 1.5 倍，令人鼓舞。

Going forward, we remain committed to leveraging our competitive advantages in network infrastructure, IDC and CDN to offer reliable, customized and comprehensive ICT solutions. We will continue to develop our leading-edge business, including information security, big data analysis and smart cities in order to maintain our leading positions in those areas. We will also actively step into innovative emerging business in order to expand our market and revenues.

展望未來，我們將繼續致力於利用我們在網絡基礎設施、IDC和CDN方面的競爭優勢，提供可靠、定制和全面的ICT解決方案。我們將繼續發展信息安全、大數據分析、智慧城市等前沿業務，保持在這些領域的領先地位。我們還將積極涉足創新型新興業務，以擴大我們的市場和收入。

Now I would like to hand over the call to Mr. Kuo for our financial results.

現在我想把我們的財務業績轉交給郭先生。

Thank you, President Sheih. Now I will go through our financial results in details beginning on Slide 10. Slide 10 provides you with highlights from our income statement. For the third quarter of 2018 total revenues decreased by 6.6% and the operating costs and expenses decreased by 3.9% year-over-year. Our income from operations decreased by 16.1%. And our net income decreased by 16.2% year-over-year. In addition, our EBITDA margin decreased to 34.9% in the third quarter from 35.8% in the same period of 2017.

謝謝謝主席。現在我將從幻燈片 10 開始詳細介紹我們的財務業績。幻燈片 10 為您提供了我們損益表的重點內容。2018年第三季度總收入同比下降6.6%，運營成本和費用同比下降3.9%。我們的營業收入下降了16.1%。我們的淨利潤同比下降16.2%。此外，我們的 EBITDA 利潤率從 2017 年同期的 35.8% 降至第三季度的 34.9%。

Please refer to Slide 11 for revenue breakdown by business segments. The decrease in total revenue for the third quarter 2018 was mainly due to the decrease in voice revenue and the ICT project revenue, which offset the increase of handset sales revenue. The decrease of voice revenue was primarily because of Voice over IP substitution and market competition while the increase of handset sales revenue was mainly due to the adoption of IFRS 15.

請參閱幻燈片 11 了解按業務部門劃分的收入明細。2018年第三季度總收入下降主要是由於語音收入和ICT項目收入減少，抵消了手機銷售收入的增長。語音收入的下降主要是由於IP語音替代和市場競爭，而手機銷售收入的增加主要是由於採用IFRS 15。

Moving on to the Slide 12. Our operating costs and expenses decreased by TWD 1.7 billion or 3.9% year-over-year in the third quarter mainly due to lower cost goods sold and ICT project costs.

繼續看幻燈片 12。第三季度運營成本和費用同比減少 17 億新台幣或 3.9%，主要是由於銷售成本和 ICT 項目成本下降。

Slide 13 shows that cash flow from operating activities for the third quarter of 2018 increased by TWD 2.4 billion or 12.4% compared to the same period of 2017. This was mainly because the line of provisional payment of income taxes was postponed to October 1, 2018. As of September 30, 2018, we had TWD 20.3 billion of cash and the cash equivalents.

幻燈片13顯示，2018年第三季度經營活動現金流量較2017年同期增加24億新台幣，增幅12.4%。這主要是由於所得稅暫繳期限推遲至2018年10月1日。截至2018年9月30日，我們擁有現金及現金等價物203億新台幣。

Slide 14 shows our operating results as compared to our guidance. In the third quarter of 2018 our revenue, operating income, net income and the EPS were lower than guidance for the third quarter, mainly due to the decrease in mobile revenue which resulted from the Voice over IP substitution and the market competition. We continued to enhance operational efficiency to offset the revenue loss. However, for the fourth quarter we expect the decreases in cost to be unable to offset that decrease in total revenue mainly due to lower-than-expected mobile revenue in the ICT project revenue. Thus our fourth quarter performance is expected to be below guidance.

幻燈片 14 顯示了我們的運營結果與指導的比較。2018年第三季度，我們的收入、營業收入、淨利潤和每股收益均低於第三季度指引，主要是由於IP語音替代和市場競爭導致移動收入下降。我們繼續提高運營效率以抵消收入損失。然而，我們預計第四季度成本的下降將無法抵消總收入的下降，這主要是由於ICT項目收入中的移動收入低於預期。因此，我們第四季度的業績預計將低於指導值。

Lastly, Slide 15. We are budgeting CapEx of TWD 33.1 billion for 2018 and expect the actual spending would be lower than the budget by more than 10% due to our execution of precision construction and the ongoing improvement in our operation. Going forward, we will continue to focus on investment in our core businesses including FTTx, 4G, IDC and our service platform among others under our precision construction principle.

最後，幻燈片 15。我們預計 2018 年資本支出為新台幣 331 億，由於我們精工施工的執行以及運營的持續改善，預計實際支出將比預算低 10% 以上。未來，我們將按照精準建設的原則，繼續聚焦FTTx、4G、IDC、服務平台等核心業務的投資。

Thank you for your time. We would now like to open the line for questions.

感謝您的時間。我們現在想開通提問熱線。

(Operator Instructions) Our first question is coming from Neale Anderson, HSBC.

（操作員說明）我們的第一個問題來自匯豐銀行的 Neale Anderson。

I have 2 questions, please. I'm referring to Slide 11. And as you explained, weaker-than-expected mobile performance means that you're likely misguiding for the fourth quarter. In addition to voice, I guess there is couple of parts to this question, do you expect the voice decline to continue or is there some point where it starts to level off maybe supported by enterprise customers? And then secondly you're also seeing declines in mobile value-added services. And I believe that's related to the heavy competition in data pricing. Given the overall outlook and the fact that you're now forecasting lower than guidance for the full year, do you think its time to maybe change strategy with the mobile pricing and then lead prices higher for the overall market?

我有 2 個問題，請問。我指的是幻燈片 11。正如您所解釋的，移動性能低於預期意味著您可能會誤導第四季度的業績。除了語音之外，我想這個問題還有幾個部分，您是否預計語音下降會繼續下去，或者是否會在企業客戶的支持下開始趨於平穩？其次，您還看到移動增值服務的下降。我認為這與數據定價方面的激烈競爭有關。考慮到整體前景以及您現在的預測低於全年指導的事實，您是否認為是時候改變移動定價策略，然後導致整個市場的價格走高了？

For your first question about the voice, will voice continue to decline, is there any enterprise kind of parts that can really support that. We believe in according to the trend the minutes, mobile minutes continue to trend down. And we don't really expect even that enterprise part will -- can really support to compensate for the loss of the general consumer minutes usage. As for the second question, you mentioned about the pricing strategy. I think we have to emphasize that even though we -- I believe you mentioned about lower unlimited price, I don't think that's really part of our strategy. It's just countermeasures to the overall, getting more and more fierce market competition. And our strategy is we would like to see some increase of the pricing trend for, like for example, like recently we had this mobile, the iPhone high-end handset available in the market. So we tried to -- for example, like the 499 customers, the price plan, people [sit] on the 499 price plan in May. We tried to increase that -- their plan by offering them some -- we actually don't collect the cancellation -- contract cancellation fee. We would like to encourage them to use new iPhone and have their price plan to increase a bit, okay. I think that's one of the measures we are doing, try to push people up a little bit from that 499. But generally speaking, as long as we have high-end customers, high-end kind of handsets, we will do this. And at the same time, for example like the, even though we promote the (inaudible) plan. We also would like to see some increase of the price with some subsidies that can encourage people to actually migrate from low price plan to higher. I think that's the answer to your question.

對於你關於語音的第一個問題，語音會繼續下降嗎？是否有任何企業類型的部件可以真正支持這一點。我們認為，根據分鐘數趨勢，移動分鐘數繼續呈下降趨勢。我們並不真正期望企業部分能夠真正支持補償一般消費者分鐘使用的損失。關於第二個問題，你提到了定價策略。我認為我們必須強調，儘管我們——我相信您提到了較低的無限價格，但我認為這並不是我們戰略的真正一部分。這只是針對市場競爭越來越激烈的總體對策。我們的策略是，我們希望看到定價趨勢有所增長，例如，最近我們在市場上推出了這款 iPhone 高端手機。因此，我們嘗試 - 例如，像 499 客戶一樣，價格計劃，人們在 5 月份[坐在] 499 價格計劃上。我們試圖通過向他們提供一些——我們實際上不收取取消——合同取消費來增加他們的計劃。我們想鼓勵他們使用新的iPhone，並讓他們的價格計劃提高一點，好吧。我認為這是我們正在採取的措施之一，嘗試將人們從 499 的水平上提高一點。但一般來說，只要我們有高端客戶，有高端類型的手機，我們就會這樣做。與此同時，例如，即使我們推動（聽不清）計劃。我們還希望看到價格有所上漲並提供一些補貼，以鼓勵人們真正從低價計劃轉向更高價格的計劃。我想這就是你問題的答案。

Okay, thank you. Perhaps I could just follow up on the mobile side. So you mentioned that iPhone sales is pretty good and you continue to take cost out of the marketing. But net-net you're still looking at a decline in mobile family for this year. Do you think that decline is going to continue or can you see that (inaudible) around and returning to growth say next year? Perhaps you could share your views on the more medium-term outlook, that would be great.

好的謝謝。也許我可以在移動端跟進。所以你提到 iPhone 的銷量非常好，並且你繼續從營銷中削減成本。但今年移動家庭的數量仍在下降。您認為下降趨勢會持續下去嗎？或者您能看到這種情況（聽不清）並在明年恢復增長嗎？也許您可以分享您對中期前景的看法，那就太好了。

I think that the decline it's -- I would say that ARPU decline it's inevitable because of the market competition. But for Chunghwa I think we try to retain customers and we try to acquire new customers, change our customer profile. I think this is all our strategy. You can see some evidence in last two quarters. Our net add, customers for mobile continue to be there, okay.

我認為，由於市場競爭，每用戶平均收入 (ARPU) 的下降是不可避免的。但對於中華，我認為我們會努力留住客戶，並努力爭取新客戶，改變我們的客戶檔案。我認為這就是我們的全部策略。你可以在過去兩個季度看到一些證據。我們的淨增加，移動客戶仍然存在，好吧。

So the -- even though we see some -- we saw the ARPU decline a bit, the decline decreased but with some new -- with new customers acquired and with the retained our existing customers we still can maintain certain level of the revenue. But for next year you asked about any likely we can return to the growth. I think it's probably too soon to comment on that. But we feel probably we'll forecast the ARPU will continue to decline even through next year. For now this is our view.

因此，儘管我們看到了一些，但我們看到 ARPU 略有下降，下降幅度有所減少，但隨著一些新客戶的獲得和保留，我們仍然可以保持一定的收入水平。但你問到明年我們是否有可能恢復增長。我認為現在對此發表評論可能還為時過早。但我們認為，即使到明年，ARPU 也可能會繼續下降。目前這是我們的觀點。

Our next question is coming from Jack Hsu, SinoPac Security.

我們的下一個問題來自永豐金保安公司的 Jack Hsu。

I have 2 questions. The first one. Due to our, the third quarter result little bit lower than the forecast but at -- will we change our forecast 2018? This is the first question. And my second question is, how we see the -- our tariff plan in the following quarter like the second half 2018 and for second half 2019.

我有 2 個問題。第一個。由於我們的第三季度業績略低於預測，但我們會改變 2018 年的預測嗎？這是第一個問題。我的第二個問題是，我們如何看待下個季度（例如 2018 年下半年和 2019 年下半年）的關稅計劃。

Jack, could you repeat your second question?

傑克，你能重複一下你的第二個問題嗎？

Sorry. My question is, what will -- what kind of the tariff plan will be implement in the second half 2018 and the first half 2019?

對不起。我的問題是，2018年下半年和2019年上半年將實施什麼樣的關稅計劃？

Thank you for your asking. We will not change our forecast. However, as mentioned -- as I mentioned earlier, our -- we expect the fourth -- sorry. Okay, well, we expect -- we expect the continue -- sorry. Okay. For the fourth quarter we expect the decrease in cost to be unable to offset the decrease in total revenue mainly due to a lower-than-expected mobile revenue and ICT project revenue. The fourth quarter of our -- the fourth quarter performance is expected to be below our guidance.

謝謝你的詢問。我們不會改變我們的預測。然而，正如我之前提到的，我們預計第四個，抱歉。好吧，我們期待——我們期待繼續——抱歉。好的。對於第四季度，我們預計成本的下降無法抵消總收入的下降，這主要是由於移動收入和ICT項目收入低於預期。我們第四季度的業績預計將低於我們的指導。

I think we don't need to change our forecast for 2019. As you know, according to the authority, likely say 20% kind of difference lower, but for us we just forecast we have -- we just expect to have a small miss -- okay, slightly miss, okay. So this is not really not our concern. And according -- to your second question, you -- I think probably your question is, you know, it's what kind of plan -- you mentioned about the -- are you talking about the pricing, the plan for mobile. I think mobile plan is, we usually offer various plans to cater to different group. This is the strategy we will continue for sure. But because the market is kind of dynamic we have to be nimble to change our strategy anytime. So I think that's the answer for your question.

我認為我們不需要改變 2019 年的預測。如您所知，根據權威機構的說法，可能會降低 20% 的差異，但對我們來說，我們只是預測 - 我們只是預計會有一個小偏差 - 好吧，稍微偏差，好吧。所以這並不是我們真正關心的問題。根據你的第二個問題，你——我想你的問題可能是，你知道，這是什麼類型的計劃——你提到的——你在談論定價、移動計劃。我認為移動計劃是，我們通常會提供各種計劃來迎合不同的群體。這是我們肯定會繼續執行的策略。但由於市場是動態的，我們必須隨時靈活地改變我們的策略。所以我認為這就是你問題的答案。

Yes, thank you. Thanks for your response. And just one follow-up question. What's our plan or what will we do for our enterprise customers in the 2019? Yes, because it is -- I think this is more important for the enterprise customers in the future especially for us to walk and to be stronger in the 5G. So what -- could you share some of your plan or strategy for -- with enterprise customer in 2019?

是的，謝謝。感謝您的答复。還有一個後續問題。2019年我們的計劃是什麼，或者我們將為我們的企業客戶做什麼？是的，因為它是——我覺得這對未來的企業客戶尤其是我們在5G上走得更強更重要。那麼，您能在 2019 年與企業客戶分享您的一些計劃或策略嗎？

Thank you for your asking. We'll release the 2019 guidance in next January. And well, we will let you know what our guidance.

謝謝你的詢問。我們將於明年 1 月發布 2019 年指南。好吧，我們會讓您知道我們的指導。

Since we are seeing there's more and more enterprise, when we look at our revenue profile we understand that for the past several years the percentage for our enterprise revenue is getting larger and larger. So that's why we think it's really -- it really is something we have to understand, what kind of emergent services we can offer to our customers. So that's why we've been developing our emergent services like Big Data, like information securities, like our IDC, high-rated IDC, cloud services altogether. So I think we have all this planned for the -- for our customers, especially for the enterprise customers in -- for the year to come.

由於我們看到企業越來越多，當我們查看我們的收入概況時，我們了解到在過去幾年中我們企業收入的百分比越來越大。所以這就是為什麼我們認為我們可以為客戶提供什麼樣的緊急服務，這確實是我們必須了解的事情。所以這就是為什麼我們一直在開發我們的新興服務，比如大數據，比如信息證券，比如我們的IDC，高評價的IDC，雲服務。因此，我認為我們已經為來年的客戶，特別是企業客戶制定了所有這些計劃。

Our next question is coming from Amber Lee, Yuanta.

我們的下一個問題來自元大李安伯。

I have 2 questions. They are about iPhone plan. Since this year you've lowered the unlimited data to our [cell] to 999 from 1399. Do you see an increase in demand for these plans comparing to prior years? And the second question, do you the have a ballpark figure on how much percent of the 499 users have upgraded to the iPhone plan?

我有 2 個問題。他們是關於 iPhone 計劃的。自今年以來，您已將我們[小區]的無限數據流量從 1399 降低至 999。與往年相比，您認為這些計劃的需求是否有所增加？第二個問題，您是否知道 499 名用戶中有多少人升級到了 iPhone 套餐？

As for iPhone plan, since [Apple i X] is much more expensive to them iPhone 8, the sales volume is lower, but overall sales volume is higher tier recently. And 10% of 499 users that upgrade to the iPhone X. And we expect that iPhone X, will have been -- sales will be good.

至於iPhone計劃，由於[Apple i X]比iPhone 8貴很多，銷量較低，但最近整體銷量較高。499 名用戶中有 10% 升級到了 iPhone X。我們預計 iPhone X 的銷量會很好。

And I think that (inaudible) the handset cycle becomes lengthy and the ecosystem of handset sales channel change this year, we can see that demand for display -- maybe about iPhone plan first, demand for plans out there, but if you compare to the -- to the prior years we put this way, okay, we found that the -- for the overall iPhone including the X models and the new models altogether, the overall handset sales actually increased. But in terms of the number of new iPhones sold this year versus that of the last year, the number is decreasing, okay. So the -- I think overall environment had some change.

我認為（聽不清）手機週期變得漫長，手機銷售渠道的生態系統今年也發生了變化，我們可以看到對顯示屏的需求——也許首先是關於 iPhone 計劃，對那裡的計劃的需求，但如果你與- 對於前幾年，我們這樣說，好吧，我們發現 - 對於整個 iPhone（包括 X 型號和新型號）來說，整體手機銷量實際上有所增加。但從今年新 iPhone 的銷量來看，與去年相比，這個數字正在減少，好吧。所以我認為整體環境發生了一些變化。

(Operator Instructions) The next question is coming from Neale Anderson, HSBC.

（操作員說明）下一個問題來自匯豐銀行的 Neale Anderson。

I'd like to ask on the MOD service please. I have 2 questions. You mentioned possible investments in content including eSports. Is it possible to give any idea of budget for that investment? And secondly a sort of bigger picture. Telcos elsewhere, my experience is the telco IPTV, the maximum EBITDA margin is around 10%, 15%, is that your view as well? In which case you're obviously seeing good growth. But it would seem that the upside from the MOD services is capped. So could you give a view on what your strategy is? Is it sell bundled services to high-end customers to other Chunghwa services or something else?

我想問一下關於MOD服務的問題。我有 2 個問題。您提到了可能對包括電子競技在內的內容進行投資。是否可以提供該投資的預算？其次是更大的圖景。其他地方的電信公司，我的經驗是電信IPTV，最大EBITDA利潤率在10%、15%左右，你也是這樣認為嗎？在這種情況下，您顯然會看到良好的增長。但 MOD 服務的優勢似乎有限。那麼您能否談談您的策略是什麼？是向高端客戶銷售與其他中華服務捆綁的服務還是其他什麼？

Regarding the sSport, you mentioned about sSport investment, right? We do investment in local eSport games for commerce. But I think that the investment amount is quite minimum. Back to your second question about the IPTV max margin, it's 10% to 15%. I think the current, our IPTV business still not breakeven yet, okay. But of course, we do anticipate, you probably notice that our number of customers increase a lot year-over-year for 2018 and relatively the -- relative the ARPU also increase a bit. So we do expect in next -- next year probably in certain months it can get breakeven in that months. But for the whole year breakeven probably have to wait a bit later. But of course, you mentioned about strategy for bundled services, I think our pricing -- in the very beginning we mentioned about we bundle IPTV with our WiFi, our broadband services altogether, so try to promote for the different business. And of course we also invite OTT service -- services on top of our MOD IPTV platform to increase the revenue and margin as well.

關於體育，您提到了體育投資，對嗎？我們對本地電子競技遊戲進行商業投資。但我認為投資金額是相當小的。回到關於IPTV最大利潤的第二個問題，它是10%到15%。我覺得目前我們的IPTV業務還沒有達到盈虧平衡，好吧。但當然，我們確實預計，您可能會注意到，2018 年我們的客戶數量同比大幅增加，相對而言，ARPU 值也略有增加。因此，我們確實預計明年的某些月份可能會實現盈虧平衡。但全年的收支平衡可能還要再等一段時間。當然，你提到了捆綁服務的策略，我認為我們的定價——一開始我們就提到我們將IPTV與我們的WiFi、我們的寬帶服務捆綁在一起，所以嘗試推廣不同的業務。當然，我們還邀請 OTT 服務——我們 MOD IPTV 平台之上的服務，以增加收入和利潤。

Our next question is coming from Varun Ahuja, Credit Suisse.

我們的下一個問題來自瑞士信貸銀行的 Varun Ahuja。

I got 2 questions. First, looks like 2018 is going to be a miss on your guidance. And obviously the performance is little bit disappointing. I think the part of the reason, as you mentioned, has been the competition and that also stems from the fact that subscriber market share has been the focus of the participants in this market. So do you think going forward in 2019 will you start focusing more on revenue and pricing or still subscriber numbers remain the key focus area for the management over the next few years? That's number one on mobile. And number two, can you -- I heard that the iPhone performance, I didn't get that part, has iPhone performance this year been below expect -- below what was there last year? Is it -- is it -- are you seeing more upgrades than you saw previous years? Because it's been a long cycle since we have seen customers move -- move, changing their iPhones being, I think, I don't think iPhone 7 or 8 was that successful. Are you seeing some change in behavior compared to previous year where you are selling lot more iPhone brands? That would be helpful. These 2 from my side.

我有 2 個問題。首先，看起來 2018 年將是你的指導失敗的一年。顯然，表現有點令人失望。我認為，正如您提到的，部分原因是競爭，這也源於訂戶市場份額一直是該市場參與者關注的焦點。那麼，您認為在 2019 年，您會開始更多地關注收入和定價，還是用戶數量仍然是未來幾年管理層的重點關注領域？這是移動端的第一名。第二，你能——我聽說iPhone的性能，我沒有得到那部分，今年iPhone的性能是否低於預期——低於去年的水平？是嗎——是嗎——您是否看到比前幾年更多的升級？因為自從我們看到客戶移動、更換他們的 iPhone 以來，已經是一個很長的周期了，我認為 iPhone 7 或 8 並沒有那麼成功。與去年相比，您銷售的 iPhone 品牌數量大幅增加，您是否發現行為發生了一些變化？那會有幫助的。這2個是我這邊的。

First question. Yes, we do expect we're going to miss guidance, for a cycle we miss guidance this year. But (inaudible) mentioned about we pretty much focused on our market share, is there any kind of -- any kind of possibility we will change our strategy for next year, I think no. Market share is something we focus but margin also is something we focus okay? So for Chunghwa, I think we -- like we mentioned our strategy, we try to have people bundled with handset and we try to upgrade student plan to a bit higher, try to migrate people, the 499 people to higher price plan upon the new higher model available in market, okay. I think we will continue this kind of strategy. But of course we need to review the overall strategy from time-to-time to make sure it is effective. As for the iPhone performance, we have to understand that this year we mentioned about the iPhone performance, the number of handset we sold for new models this year is kind of lower than we said the number of handsets we sold last year in the first phase because we had to understand this time the availability of the handset is one issue. And another thing is the channel, the channel because the -- I mentioned about the handset, smartphone -- smartphone life cycle, it gets lengthy. So that -- which means usually we bundle people with, I think at most 30 months before. Roughly in the very beginning it's 24 months, 2 years, but now we increase to 36 months. This is to try to meet the -- try comply with the current situation. But the -- of course the things in -- there's more people than before try to get handset-only instead of bundle, I think that's the situation we face in this market.

第一個問題。是的，我們確實預計我們會錯過指導，因為今年我們錯過了一個週期。但是（聽不清）提到我們非常關注我們的市場份額，是否有任何一種 - 任何一種可能性我們會改變明年的戰略，我認為不會。市場份額是我們關注的焦點，但利潤率也是我們關注的焦點，好嗎？因此，對於中華，我認為我們 - 就像我們提到的我們的策略一樣，我們嘗試讓人們與手機捆綁在一起，我們嘗試將學生計劃升級到更高一點，嘗試遷移人員，將 499 人轉移到新的更高價格計劃市場上有更高型號的，可以。我認為我們將繼續這種策略。但當然，我們需要不時地審查整體策略，以確保其有效。至於iPhone的表現，我們要明白，今年我們提到iPhone的表現，我們今年新機型的銷量比我們去年第一階段說的銷量要低一些。因為這次我們必須明白手機的可用性是一個問題。另一件事是渠道，渠道是因為——我提到了手機、智能手機——智能手機的生命週期，它會變得很長。所以——這意味著我們通常將人們捆綁在一起，我認為最多 30 個月前。一開始大概是24個月、2年，但現在增加到36個月。這是為了嘗試滿足——嘗試遵守當前的情況。但是，當然，有比以前更多的人嘗試只購買手機而不是捆綁銷售，我認為這就是我們在這個市場上面臨的情況。

Okay. Lastly, has the competition improve since May for -- after the 499 mania? You think the competitive environment has improved or it's still the same?

好的。最後，自 5 月份以來，在 499 熱潮之後，競爭是否有所改善？您認為競爭環境有所改善還是依然如此？

In the competition, has the -- has the competition been improved since May? I think May probably as you know it's one of our peers they try to lower the unlimited data plan and this is hard to sell to the general public. But I think after May every operator actually get back to no more. We try to sell to, kind of a no price plan, we sell to specific target group. But this is, like I say, the market is dynamic. You don't know what your peers will offer, what kind of -- what kind of -- the services, okay, or plan. So we need to keep watching the market all the time.

在競爭方面，自五月份以來，競爭是否有所改善？我認為可能正如您所知，梅可能是我們的同行之一，他們試圖降低無限數據計劃，而這很難向公眾推銷。但我認為五月之後每個運營商實際上都不再恢復了。我們嘗試向特定的目標群體銷售，這是一種無價格計劃。但正如我所說，市場是動態的。你不知道你的同行會提供什麼，什麼樣的服務，或者計劃。所以我們需要時刻關注市場。

(Operator Instructions) Our next question is coming from [Johnny Chan], [CLSA].

（操作員指示）我們的下一個問題來自[Johnny Chan]，[里昂證券]。

Just 2 quick questions here. First one just on dividend. Can the company I guess reconfirm to us that the payout ratio and how do you guys think about potentially paying maybe over 100% in 2019 for 2018? The second question is with regards to Apple eSIM push. And with the new 12.1 iOS update available today I'm hearing that some of your competitors, specifically the smaller players like APTG is actively testing out the eSIMs on the market. So I've seen on some of the blog sites that they are already pushing sSIMs to a few particular -- maybe some of the users. So I just wanted to know what your view is and where is Chunghwa Telecom at the moment in terms of rolling out eSIM versus everybody else. Presumably this will be somewhat negative if people start to adopt eSIM with lower-tier plan or whatever from your competitors, so I just wanted to know what the impact you guys think will be for Chunghwa Telecom.

這裡只有兩個簡單的問題。第一個只是股息。我想該公司能否向我們再次確認支付率以及你們如何看待 2019 年 2018 年可能支付超過 100% 的可能性？第二個問題是關於蘋果eSIM推送的。隨著今天發布的新 12.1 iOS 更新，我聽說您的一些競爭對手，特別是像 APTG 這樣的小型廠商正在積極測試市場上的 eSIM。因此，我在一些博客網站上看到，他們已經將 sSIM 推向了一些特定人群——也許是一些用戶。所以我只是想知道您的看法以及中華電信目前在推出 eSIM 方面與其他公司相比處於什麼位置。如果人們開始採用低端套餐或競爭對手的 eSIM，想必這會產生一些負面影響，所以我只是想知道你們認為這會對中華電信產生什麼影響。

Thank you for your asking. Our dividend payout depends on the operational performance and CapEx spending, and the final decision up to the board's approval. The additional dividend distribution is also up to the board. Currently there is no discussion internally.

謝謝你的詢問。我們的股息支付取決於運營績效和資本支出，以及董事會批准的最終決定。額外股息分配也由董事會決定。目前內部還沒有討論。

For the Apple eSIM, yes, I think we already -- we are about announcing just now. We're going to -- we're going to -- the eSIM going to be available for our customers starting from November 7, okay? So there was -- I think this we're going to have some kind of setting, setting fee in the beginning. But we're going to reach that part, okay. Yes.

對於 Apple eSIM，是的，我想我們已經——我們即將宣布。我們將從 11 月 7 日起向我們的客戶提供 eSIM，好嗎？所以我認為我們將會有某種設置，一開始就設置費用。但我們會到達那部分，好吧。是的。

Okay, so you -- sorry, I mean you guys anticipate -- I mean, have you guys -- are you guys getting a lot questions regarding [lease] adoption and so on and so forth and any potential impact to your, I guess, earnings forecast at the moment? Or maybe a bit too early?

好吧，所以你們 - 抱歉，我的意思是你們預計 - 我的意思是，你們是否有很多關於[租賃]採用等問題以及對您的任何潛在影響，我想，目前的盈利預測？或者也許有點太早了？

Sorry, you say regarding the eSIM any impact on earnings -- earnings forecast?

抱歉，您說 eSIM 對盈利有什麼影響——盈利預測嗎？

Yes -- yes, you said there will be -- you guys might think about charging a setting fee or so on and so forth. I'm just wondering, is that -- did you guys any -- make any sort of forecast at the moment or is it still too early?

是的——是的，你說會有——你們可能會考慮收取設置費等等。我只是想知道，你們現在是否做出了任何預測，還是還為時過早？

I think still too early. I think in the first wave we're going to waive that fee, okay. So this -- I think you need further discussion for the -- are we going to charge in future. Yes, I think it's still uncertain, yes.

我覺得還為時過早。我認為在第一波中我們將免除這筆費用，好吧。因此，我認為您需要進一步討論我們將來是否要收費。是的，我認為這仍然不確定，是的。

The next question is coming from Jack Hsu, SinoPac Security.

下一個問題來自永豐金保安公司的 Jack Hsu。

I have 2 questions. My first question is could you elaborate if our -- if the result is a little bit lower than our guidance or what were -- what kind of vision -- I mean what -- what vision is the major -- the major result? It's the mobile or the fixed line. This is the first question. And my second question is we have introduced the AWS Direct, so could you give some view or some color for this kind of business. And what's our strategy for the -- on the AWS Direct service in Taiwan?

我有 2 個問題。我的第一個問題是，你能否詳細說明一下，如果我們的結果比我們的指導稍低一些，或者是什麼樣的願景，我的意思是，什麼願景是主要的主要結果？這是移動電話或固定電話。這是第一個問題。我的第二個問題是我們已經推出了AWS Direct，那麼您能否對此類業務提供一些看法或一些看法。我們在台灣的 AWS Direct 服務的策略是什麼？

Okay, thank you for your asking. Our net income and EPS was -- were lower than guidance for the third quarter many due to the decrease in mobile revenue, so the mobile business profit is lower than our guidance.

好的，謝謝你的提問。由於移動收入下降，我們的淨利潤和每股收益低於第三季度的指導，因此移動業務利潤低於我們的指導。

For Amazon web services, AWS Direct service, I think we are currently under discussion and we -- once we're ready, we will announce soon.

對於亞馬遜網絡服務、AWS Direct 服務，我認為我們目前正在討論，一旦準備好，我們將很快宣布。

So are there any customers right now -- are there any customers right now that started to subscribe AWS Direct services through Chunghwa Telecom?

那麼現在有沒有客戶 - 現在有沒有客戶開始通過中華電信訂閱 AWS Direct 服務？

Because the service is not ready yet, so I think we don't have existing customer right now, but we do believe that we'll have huge potential customers.

因為服務還沒有準備好，所以我認為我們現在沒有現有客戶，但我們相信我們會有巨大的潛在客戶。

So could we -- so we have this kind of -- will we introduce this kind of services in 2019?

那麼我們可以——所以我們有這種——我們會在 2019 年推出這種服務嗎？

Yes, roughly early next year.

是的，大約明年初。

As there's no further questions, I will turn it back over to President Sheih. Go ahead, please.

由於沒有其他問題了，我將把它轉回給謝赫總統。請繼續。

All right. Thank you for your attending. See you next time.

好的。感謝您的出席。下次見。

Thank you, President Sheih. Thank you for your participation in Chunghwa Telecom's conference. There will be a webcast replay within an hour. Please visit www.cht.com.tw/ir under the IR calendar section. You may now disconnect. Goodbye.

謝謝謝主席。感謝您參加中華電信的會議。一小時內將進行網絡廣播重播。請訪問 www.cht.com.tw/ir 的 IR 日曆部分。您現在可以斷開連接。再見。