Chunghwa Telecom Co Ltd (CHT) 2019 Q2 法說會逐字稿

Good afternoon, ladies and gentlemen. Welcome to Chunghwa Telecom Conference Call for the company's Second Quarter 2019 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 2019 年第二季度經營業績。（操作員說明）。

For your information, this conference call is now being broadcasted live over the Internet. A webcast replay will be available within an hour after the conference is finished.

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。

Please visit CHT IR website, www.cht.com.tw/ir, under the IR calendar section.

請訪問 CHT IR 網站 www.cht.com.tw/ir，在 IR 日曆部分。

Now I would like to turn it over to Ms. Angela Tsai, the Director of Investor Relations. Ms. Tsai, please go ahead.

現在我想把它交給投資者關係總監蔡安琪女士。蔡女士，請講。

Thank you. This is Angela Tsai, the Director of Investor Relations for Chunghwa Telecom.

謝謝。我是中華電信投資者關係總監蔡安琪 (Angela Tsai)。

Welcome to our second quarter 2019 result conference call.

歡迎參加我們的 2019 年第二季度業績電話會議。

Joining me on the call today are Harrison Kuo, our new President; and Fu-Fu Shen, the Assistant Vice President of Public Affairs department. President Kuo assumed the position on May 8 and now remains our Chief Financial Officer as well.

今天和我一起參加電話會議的是我們的新任總裁哈里森·郭 (Harrison Kuo)；沉福福，公共事務部助理副總裁。郭總裁於 5 月 8 日就任，目前仍擔任我們的首席財務官。

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'll move on to the Q&A session.

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。然後我們將進入問答環節。

Now I would like to hand the call over to President Kuo, and please note your safe harbor statements on Slide 2.

現在我想將電話轉交給郭主席，請注意幻燈片 2 上的安全港聲明。

President, please go ahead.

總統先生，請繼續。

Thank you, Angela, and hello, everyone. Welcome to our second quarter 2019 earnings result call.

謝謝你，安吉拉，大家好。歡迎參加我們的 2019 年第二季度收益電話會議。

During the quarter, the overall mobile market remained competitive. However, we continue to hold the leading market position by both mobile revenue and the subscriber revenue -- numbers in this quarter with market shares of 36.2% and 37.8% respectively.

本季度，整體移動市場仍然競爭激烈。然而，我們在移動收入和用戶收入方面繼續保持領先的市場地位——本季度的市場份額分別為 36.2% 和 37.8%。

Going forward, we will continue enhancing customer relations -- retention incentives to solidify existing subscribers and further migrating users to bundled or higher price plans for incremental ARPU to mitigate the [downfall] that happened in 2018.

展望未來，我們將繼續加強客戶關係——保留激勵措施以鞏固現有訂戶，並進一步將用戶遷移到捆綁或更高價格計劃以增加 ARPU，以緩解 2018 年發生的[下滑]。

MOD subscribers continued to increase and reached 2.08 million. Revenue grew year-over-year as well.

MOD訂閱用戶持續增長，達到208萬。收入也逐年增長。

We attribute this growth to our successful strategy of satisfying customers' demand with quality content including popular OTTs. Now over to the introduction of the free to choose channel plan, which allows customers to package in their own plan entirely based on preferences is expected to bring new experience for our existing and the new customers and further differentiate MOD from other video services in the market.

我們將這種增長歸因於我們通過優質內容（包括流行的 OTT）滿足客戶需求的成功戰略。現在介紹自由選擇頻道計劃，允許客戶完全根據喜好打包自己的計劃，預計將為我們的現有和新客戶帶來新的體驗，並進一步將 MOD 與市場上其他視頻服務區分開來。

In our broadband business, we experienced a small subscriber loss since the beginning of this year,

在我們的寬帶業務中，自今年年初以來，我們經歷了小幅用戶流失，

mainly due to continuous mobile internet in substitution and the cable competition. To mitigate the impact, we are providing home-centric digital convergence plans. That's a bundle of services including broadband, Wi-Fi and the MOD/OTT services to satisfy our customer's needs.

主要是由於移動互聯網的不斷替代和有線電視的競爭。為了減輕影響，我們正在提供以家庭為中心的數字融合計劃。這是一系列服務，包括寬帶、Wi-Fi 和 MOD/OTT 服務，以滿足客戶的需求。

For the ICT business, we aim to leverage our network advantage and the technology capabilities to strengthen project acquisitions and the business's progression.

ICT業務方面，我們將利用網絡優勢和技術能力，加強項目收購和業務發展。

Currently, digital finance is one of our areas of focus and that we continue to win major Fintech projects from the financial industry and the government.

目前，數字金融是我們重點關注的領域之一，我們不斷贏得金融行業和政府的重大金融科技項目。

I'm also glad to report that our strategic investment, the Next Bank, just won the Internet bank operation license from its competition.

我還很高興地向您報告，我們的戰略投資Next Bank剛剛從競爭對手中獲得了互聯網銀行經營許可證。

We believe it will be one field where we can show our IT strength and Fintech capabilities.

我們相信這將是我們展示IT實力和金融科技能力的一個領域。

Going forward, we will further develop capabilities in cutting-edge technologies such as MEC, AR and IoT to enlarge our ICT capacity in different verticals in the upcoming 5G era.

未來，我們將進一步發展MEC、AR、IoT等前沿技術能力，在即將到來的5G時代，擴大我們在不同垂直領域的ICT能力。

Now I will walk you through each of business lines.

現在我將引導您了解每個業務線。

On Slide 5, I would like to update you on our mobile business. In the second quarter 2019, we were impacted most by the relative higher revenue base in the prior year due contract cancellation fees for 499 promotions among the big 3.

在幻燈片 5 上，我想向您介紹我們移動業務的最新情況。2019 年第二季度，我們受到上一年相對較高收入基礎的影響最大，原因是三大巨頭中 499 項促銷活動的合同取消費用。

Competition and down-selling remained in the market, causing overall market -- sorry, causing overall mobile performance to be relatively weak.

市場上的競爭和降價銷售仍然存在，導致整個市場——抱歉，導致整體移動性能相對疲軟。

To further enhance mobile performance, we maintained our strategy of guiding subscribers to adopt higher price plans during this quarter. Higher-priced bundle plan subscription increased specifically for iPhone models quarter-over-quarter. However, given that the SIM-only adoption continues to increase and as the handset replacement cycle is becoming longer, we expect mobile ARPU to decline slightly for the whole year.

為了進一步提高移動性能，我們在本季度維持了引導用戶採用更高價格計劃的策略。iPhone 機型的高價捆綁套餐訂閱量環比有所增加。然而，考慮到純SIM卡的採用率持續增加以及手機更換週期變長，我們預計全年移動ARPU將小幅下降。

Slide 6 shows the performance of our broadband business. We are delighted to see a continuing migration of our broadband subscriber to higher-speed fiber services.

幻燈片 6 顯示了我們寬帶業務的業績。我們很高興看到我們的寬帶用戶不斷遷移到更高速的光纖服務。

In the second quarter, the number of users signing up for plans with connection speeds of 100 megabits per second or higher grew by 10.6% year-over-year to 1.5 million.

第二季度，簽約每秒 100 兆或更高連接速度套餐的用戶數量同比增長 10.6%，達到 150 萬。

The number of subscribers signing up for connection speeds of 300 megabits per second or higher increased by 120% year-over-year.

註冊每秒 300 兆或更高連接速度的用戶數量同比增長 120%。

In addition, our VPN subscribers in medical field continued to migrate to higher price plan, which contribute incremental ARPU to enhance the overall broadband revenue this year.

此外，我們在醫療領域的VPN用戶繼續轉向更高的價格計劃，這為今年整體寬帶收入的提升貢獻了增量ARPU。

Going forward, we will maintain our strategy of migrating customers to higher-speed services to capture incremental ARPU and mitigate the impact of the mandatory tariff reduction from the regulator.

展望未來，我們將維持將客戶遷移到更高速服務的戰略，以獲取增量 ARPU 並減輕監管機構強制降低資費的影響。

But at the same time, we will also focus on developing smart home-related services, leveraging marketing tools such as (inaudible) points and the package more popular plans to enhance overall broadband revenue.

但與此同時，我們也將重點發展智能家居相關服務，利用（聽不清）積分和套餐等更受歡迎的套餐等營銷工具來提高整體寬帶收入。

Moving on to Slide 7. We are glad to report another robust quarter for the IPTV business.

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。

In the second quarter, our IPTV MOD platform maintained its position as the largest video platform in Taiwan.

第二季度，我們的IPTV MOD平台保持了台灣最大視頻平台的地位。

We reached 2.08 million subscribers, representing a 15.3% increase year-over-year.

我們的訂閱用戶數量達到 208 萬，同比增長 15.3%。

In addition, our SVOD subscribers reached 1.3 million, maintaining its growth trajectory as well.

此外，我們的 SVOD 訂閱用戶達到 130 萬，也保持了增長軌跡。

During this quarter, we continued to stay ahead of competitors in the video business.

本季度，我們在視頻業務方面繼續領先於競爭對手。

Overall, IPTV revenue continued to grow with a 9.3% increase year-over-year.

總體而言，IPTV收入繼續增長，同比增長9.3%。

To attract subscribers, we continued to enrich our content by introducing OTT services and exploring opportunities for original content investments.

為了吸引訂閱者，我們通過引入OTT服務和探索原創內容投資機會來繼續豐富我們的內容。

Going forward, we will further focus on enhancing our platform capabilities to facilitate MOD to be more favorable to [precise] advertisements for commercial buyers to pave a new revenue stream for enterprise customers and to be able to provide better multiscreen user experiences for retails customers.

未來，我們將進一步專注於提昇平台能力，讓MOD更加有利於商業買家的精準廣告，為企業客戶開闢新的收入來源，並能夠為零售客戶提供更好的多屏用戶體驗。

Please turn to Slide 8 for an update on our ICT initiatives. In the second quarter of 2019, overall ICT revenue increased year-over-year.

請參閱幻燈片 8 了解我們 ICT 計劃的最新信息。2019年第二季度，ICT整體收入同比增長。

We are delighted that our IDC revenue for the first half continued to grow, gaining 18.8% year-over-year.

我們很高興上半年的 IDC 收入持續增長，同比增長 18.8%。

Cloud revenue increased 20.9% year-over-year and the information security revenue increased 9.4% year-over-year.

雲收入同比增長20.9%，信息安全收入同比增長9.4%。

In addition, to maximize revenue and the opportunities, we will be more selective of our verticals.

此外，為了最大化收入和機會，我們將更加選擇性地選擇我們的垂直領域。

Digital finance is one of our focuses since we have advantages in IDC, information security, Big Data analysis, blockchain, Fintech patents and the capabilities to link with international [players] resources.

數字金融是我們的重點之一，因為我們在IDC、信息安全、大數據分析、區塊鏈、金融科技專利以及與國際資源對接的能力方面具有優勢。

In fact, we have acquired many Fintech projects in the financial industry.

事實上，我們在金融行業已經收購了很多Fintech項目。

Going forward, with our AI and IoT related capabilities, we will continue to reach out to other verticals such as smart industry, smart city and smart agriculture to enhance the overall ICT performance.

未來，我們將憑藉人工智能和物聯網相關能力，繼續向智慧工業、智慧城市、智慧農業等其他垂直領域延伸，提升ICT整體表現。

Now I would like to hand over the call to Fu-Fu for our financial results.

現在我想把我們的財務業績轉交給福福。

Thank you. Now I will go through our financial results in details, beginning on Slide 10.

謝謝。現在我將從幻燈片 10 開始詳細介紹我們的財務業績。

Please note that all the comparatives are made over year-over-year basis unless otherwise stated.

請注意，除非另有說明，所有比較均是逐年進行的。

Slide 10 provides you with highlights from our income statement.

幻燈片 10 為您提供了我們損益表的重點內容。

For the second quarter of 2019, total revenues decreased by 6.6% and operating costs and expenses decreased by 4.3%.

2019年第二季度，總收入下降6.6%，運營成本和費用下降4.3%。

Our income from operations decreased by 14.5% and our net income decreased by 13.1%. Our EBITDA margin increased to 38.1% in second quarter from 37.3% in the same period of '18, primarily due to the adoption of IFRS 16 in 2019.

我們的營業收入下降了 14.5%，淨利潤下降了 13.1%。我們的 EBITDA 利潤率從 18 年同期的 37.3% 增至第二季度的 38.1%，這主要是由於 2019 年採用了 IFRS 16。

Please refer to Slide 11 for revenue breakdown by business segments. The decrease in total revenue for the second quarter 2019 was mainly due to the decrease in mobile service revenue, which offset the increase of handset sales revenue and internet revenue.

請參閱幻燈片 11 了解按業務部門劃分的收入明細。2019年第二季度總收入下降主要是由於移動服務收入減少，抵消了手機銷售收入和互聯網收入的增長。

The decrease in mobile service revenue was primarily because of market competition and VoIP substitution.

移動服務收入下降的主要原因是市場競爭和VoIP替代。

Moving on to Slide 12. Our operating costs and expenses decreased by NT$ 1.8 billion or 4.3%, mainly due to lower personnel and interconnection costs and the reverse of bad debt provision.

繼續看幻燈片 12。營運成本及費用減少新台幣18億元，跌幅4.3%，主要係人員及互連成本下降及壞賬準備轉回所致。

Slide 13 shows that cash flow from operating activities for the second quarter of 2019 decreased by NT$ 1.16 billion or 6.8%. This was mainly due to a decrease in accounts payable.

幻燈片13顯示，2019年第二季度經營活動現金流量減少新台幣11.6億元，跌幅6.8%。這主要是由於應付賬款減少所致。

As of June 30, 2019, we had NT$ 36.58 billion of cash and cash equivalents.

截至2019年6月30日，我們擁有現金及現金等價物新台幣365.8億元。

Slide 14 shows our operating results as compared to our guidance.

幻燈片 14 顯示了我們的運營結果與指導的比較。

In the second quarter of 2019, revenue was lower than our second quarter guidance, mainly due to lower handset sales, mobile service revenue and ICT revenue.

2019年第二季度，收入低於我們第二季度指導，主要是由於手機銷量、移動服務收入和ICT收入下降。

Furthermore, our operating income, net income and EPS were lower than our second quarter guidance.

此外，我們的營業收入、淨利潤和每股收益低於第二季度的指導。

Moving on to Slide 15. We are budgeting CapEx of NT$ 29 billion for 2019.

繼續看幻燈片 15。2019 年資本支出預算為新台幣 290 億元。

We will focus on investment in our core business, including FTTx, 4G, IDC and service platform under our precision construction principles.

我們將按照精準建設的原則，重點投資FTTx、4G、IDC、服務平台等核心業務。

Now we are open for QA session.

現在我們開始進行 QA 會議。

(Operator Instructions) The first question coming from Billy Lee, Crédit Suisse.

（操作員說明）第一個問題來自瑞士信貸銀行的 Billy Lee。

I have a question on the competition...

我有一個關於比賽的問題...

Billy, could you approach the microphone closer? It's not really clear.

比利，你能把麥克風靠近一點嗎？還不太清楚。

Is it better now?

現在好點了嗎？

Just a little better. Could you do it again?

只是好一點而已。你能再做一次嗎？

How about now?

現在怎麼樣？

Better, I think. Please go ahead.

我認為更好。請繼續。

Okay. So it's clear, right? Okay. I'll go on. So I have a question on the competition landscape in the mobile business. So I want to know what are the change in behavior you're...

好的。所以很清楚了，對吧？好的。我會繼續。所以我有一個關於移動業務競爭格局的問題。所以我想知道你的行為有什麼變化......

I'm really sorry, Billy. It's really not clear. We cannot hear well. Could you...

我真的很抱歉，比利。實在是不清楚。我們聽不清楚。您可以...嗎...

Is it better now?

現在好點了嗎？

Just a little bit. Yes, please go ahead.

只是一點點。是的，請繼續。

Yes. Let me try once more. Hopefully, it's getting better. I'll try speaking louder. So I have a question on the competition landscape in the mobile business. I am curious to know, are you seeing any change in behavior from the other big 2 operators as well as from the smaller 2 players?

是的。讓我再試一次。希望情況會變得更好。我會嘗試大聲說話。所以我有一個關於移動業務競爭格局的問題。我很想知道，您是否看到其他大型 2 運營商以及較小的 2 運營商的行為有任何變化？

Your question is about the mobile landscape. Is there any behavior change of the other operators?

你的問題是關於移動領域的。其他操作員的行為是否有任何變化？

Yes, yes.

是的是的。

Okay. Yes, I think it's -- the overall landscape is continuously competitive for sure. But we -- since in last years, as you know, turbulence, I think, it's getting more stabilized. And the smaller one -- although they continue to have this low price plan, and I think totally they -- for the past quarters, they are seeking [some tiers] but very small, and overall speaking I think the whole -- overall market is getting more stabilized.

好的。是的，我認為整體格局肯定是持續競爭的。但我們——正如你所知，自去年以來，我認為動盪正在變得更加穩定。較小的一個 - 儘管他們繼續有這種低價計劃，我認為完全他們 - 在過去的幾個季度中，他們正在尋求[某些級別]，但非常小，總的來說，我認為整個市場正在變得更加穩定。

Okay. And then as a follow-up question on that, what's your outlook in the second half of 2019? I mean how confident are you in achieving your guidance?

好的。作為一個後續問題，您對 2019 年下半年的前景有何看法？我的意思是你對實現你的指導有多大信心？

Yes. For first half performance, our bottom line roughly met our guidance but the top line was still lower than the guidance. Since we expect the major revenue increase in 2019, it's ICT revenue, which usually is both -- more in the second half instead of first half. Additionally, we still anticipate the smart -- new models and the various mobile bundle promotion plans, we are careful of some revenue increase in the fourth quarter year-over-year.

是的。就上半年業績而言，我們的利潤大致符合我們的指導，但頂線仍低於指導。由於我們預計 2019 年收入的主要增長是 ICT 收入，通常兩者都是——下半年的收入比上半年的收入增長更多。此外，我們仍然預計智能新型號和各種移動捆綁促銷計劃，我們對第四季度的收入同比增長持謹慎態度。

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

下一個問題來自永豐金證券的 Jack Hsu。

I have 2 questions. First question, could you give some color about the banking business, because we -- would you agree that you -- co-operator with the -- some bank and when you start your online banking business, could you give us about -- the color about this kind of online banking. How could we [tackle it], this kind of business? How much of this kind of business will count for our revenue? This is my first question. And my second question is about the -- we see our added value, the mobile added-value business, the growth rates, the SIMs shrink in the second quarter. Could we know what has happened in this kind of business, or just 1 quarter number doesn't mean too much information?

我有 2 個問題。第一個問題，您能否介紹一下銀行業務，因為您是否同意您與某家銀行合作，當您開始開展網上銀行業務時，您能否向我們提供有關關於這種網上銀行的色彩。對於這種事情，我們該如何[處理]呢？這類業務對我們的收入有多少貢獻？這是我的第一個問題。我的第二個問題是——我們看到我們的附加值、移動附加值業務、增長率、SIM 卡在第二季度出現萎縮。我們能否知道此類業務中發生了什麼，或者僅僅 1 季度的數字並不意味著太多信息？

Jack, please repeat your second question.

傑克，請重複你的第二個問題。

Okay. My second question is, I want to know about our mobile added service business. We see the growth in the 6.9% year-over-year. And -- but in the first quarter, the growth was 30%, so I'm interested in what happened in that segment.

好的。我的第二個問題是，我想了解一下我們的移動增值服務業務。我們看到同比增長 6.9%。而且——但在第一季度，增長率為 30%，所以我對該細分市場發生的事情感興趣。

To answer your first question, we aim to leverage our telecom Big Data analysis capability, information security advantage and Fintech patents to team up with our partners to develop digital finance in innovative businesses to increase our telco revenue as well as increased customer stickiness and the increased revenue by operating our smart digital financial services.

回答你的第一個問題，我們的目標是利用我們的電信大數據分析能力、信息安全優勢和金融科技專利，與合作夥伴合作，在創新業務中發展數字金融，以增加我們的電信收入、增加客戶粘性和增加收入。通過運營我們的智能數字金融服務獲得收入。

Jack, and about your second question, because you know we -- since we entered into 4G business, we didn't separate out the any mobile [VS] revenue. I don't know the number you just mentioned if we had guided. But from my standing, for the mobile business in second quarter, the overall revenues declining. The mobile service revenue declined, fortunately, we understand the competitive market, that's one of the reason, in the last year, the basis for last year, we still have this cancellation -- contract cancellation fee kind of increased in last year -- in fall in April and in May and of course and the overall service revenue trends is declining. I think that's the reason for mobile service revenue declining. But for our sales, hence our smart device sales, we are doing good in the second quarter, especially, I think, our [presentation] about -- in presentation, I think our iPhone bundle plan sales are doing fine versus that of the last year, and the -- so all those [hitting] the sales. Largely because -- you probably are understanding now -- agreeing that 499 plan, because is a SIM-only plan, not a bundle plan. So we have less handset sales for sure. So in second quarter, the explanation for the mobile business, it's just like combination. Hope this answers your question.

傑克，關於你的第二個問題，因為你知道我們——自從我們進入 4G 業務以來，我們沒有分離出任何移動 [VS] 收入。如果我們有指導的話，我不知道你剛才提到的數字。但從我的立場來看，第二季度移動業務的整體收入有所下降。移動服務收入下降，幸運的是，我們了解競爭激烈的市場，這就是原因之一，在去年，在去年的基礎上，我們仍然有這種取消——合同取消費用在去年有所增加——在4 月和 5 月出現下降，當然，整體服務收入趨勢也在下降。我認為這就是移動服務收入下降的原因。但就我們的銷售而言，因此我們的智能設備銷售，我們在第二季度表現良好，特別是，我認為，我們的[演示]在演示中，我認為我們的 iPhone 捆綁計劃銷售與上一季度相比表現良好年，以及所有那些[達到]銷售額的人。很大程度上是因為——您現在可能已經明白了——同意 499 計劃，因為它是純 SIM 計劃，而不是捆綁計劃。所以我們的手機銷量肯定會減少。所以在第二季度，對於移動業務的解釋，就像組合一樣。希望這能回答您的問題。

Your next question is coming from Neale Anderson, HSBC.

你的下一個問題來自匯豐銀行的尼爾·安德森。

Two questions, please. The first one is (inaudible) breakeven. We asked about this before and it seems to be quite decent growth there. Can you give us an update on when you expect break even in MOD segment? The second one is about mobile distribution. For several years, there was a very pronounced cycle of very popular handsets and I guess mobile operator distribution evolved to match them, so a lot of stores, a lot of agents. Do you think that's going to come back or have you got more cost you can take out of your mobile distribution stores, the agent, et cetera?

請教兩個問題。第一個是（聽不清）盈虧平衡。我們之前問過這個問題，那裡的增長似乎相當不錯。您能否告訴我們您預計 MOD 業務何時實現盈虧平衡的最新情況？第二個是關於移動分發。幾年來，非常流行的手機出現了一個非常明顯的周期，我想移動運營商的分銷也隨之發展以匹配它們，所以有很多商店，很多代理商。您認為這種情況會回來嗎？或者您是否可以從移動分銷商店、代理商等方面獲得更多成本？

Okay. Our MOD business [got] break even in first half 2019. However, we still need to monitor for the following quarters for the performance this year. We do believe MOD service will help us retain our broadband subscriber in the long run.

好的。我們的 MOD 業務在 2019 年上半年實現了收支平衡。不過，今年的表現仍需關注接下來幾個季度的表現。我們相信，從長遠來看，MOD 服務將幫助我們留住寬帶用戶。

For your second question about mobile distribution, I think, you know, the -- of course for mobile, currently, we have many stores and -- but we are -- since last year, we are very focused on the Internet store. So we believe this is kind of trend in the future. So for the physical store, we review, and we -- for the location, for the manpower, we really review every month. We try to downsize, try to combine some location together. It all depend on the efficiency of individual store. We are working on this.

對於你關於移動分銷的第二個問題，我想，你知道，當然對於移動，目前我們有很多商店，而且自去年以來，我們非常專注於互聯網商店。所以我們相信這是未來的趨勢。因此，對於實體店，我們會進行審查，對於地點、人力，我們每個月都會進行審查。我們嘗試縮小規模，嘗試將一些位置合併在一起。這一切都取決於各個商店的效率。我們正在努力解決這個問題。

(Operator Instructions) The next question is coming from Billy Lee, Crédit Suisse.

（操作員說明）下一個問題來自瑞士信貸銀行的 Billy Lee。

Yes, yes, okay. So I have a question on 5G. May I know what’s your latest thinking about the timeline of 5G development, particularly first on the spectrum auction as well as the second thing, the commercialization? And regarding the spectrum auction, what's the bidding strategy for Chunghwa Telecom? And do you have any expectation of budget in the upcoming auction?

是的，是的，好的。所以我有一個關於5G的問題。我能否知道您對 5G 發展時間表的最新想法是什麼，特別是首先是頻譜拍賣，其次是商業化？那麼對於頻譜拍賣，中華電信的競標策略是什麼？您對即將到來的拍賣預算有什麼期望嗎？

5G auction will be held in December of 2019. We expect it will be completed early next year. For deployment of revenues 3.5 gigahertz is better than 28 gigahertz. In addition, according to NCC's plan, the interfering section of 3.5 gigahertz will be cleaned up by April next year. So if any operator wins 3.5 gigahertz band -- spectrum, the service is likely to be launched in 6 months after license acquired.

5G拍賣將於2019年12月舉行。我們預計它將在明年初完成。對於收入部署而言，3.5 GHz 優於 28 GHz。另外，根據NCC的計劃，明年4月之前將清理掉3.5GHz的干擾段。因此，如果任何運營商贏得 3.5 GHz 頻段，該服務很可能在獲得許可證後 6 個月內推出。

Billy, your last question is about the strategy and budget for the auction, right?

比利，你的最後一個問題是關於拍賣的策略和預算，對吧？

Yes, yes.

是的是的。

Strategy wise, of course -- first of all, for the price, this is a kind of internal kind of figures, we are not to disclose. Strategy wise, the bandwidth seems a bit limited for 5 players. We understand that part and internally, we are thinking about what's the optimal size for us. Yes, that's the current situation.

當然，策略方面——首先，對於價格，這是一種內部數字，我們不宜透露。從策略上看，帶寬對於 5 名玩家來說似乎有點有限。我們了解這一點，並且在內部我們正在考慮對我們來說最佳的尺寸。是的，目前的情況就是這樣。

Your next question is coming from Amber Lee, Yuanta.

你的下一個問題是來自元大李安伯。

I have to -- first to follow-up on Billy's question. So how would you describe the competition landscape specifically on the spectrum auction? Do you think it's going to be more competitive than the 4G one, or it's going to be less competitive? Just try to map out how the auction costs is going to be like. And then secondly, I think over the past few months, there have been some countries starting to provide 5G services to just subscribers. If we take a look at how they're doing right now, do you think that would somehow affect your strategy on 5G including the timeline that I just mentioned or the amount of investment in -- or other aspects with that regard?

我必須——首先跟進比利的問題。那麼您如何描述頻譜拍賣方面的競爭格局？您認為它會比 4G 更具競爭力，還是會更弱？只需嘗試繪製出拍賣成本將如何。其次，我認為在過去的幾個月裡，有些國家開始只向用戶提供 5G 服務。如果我們看看他們現在的表現，您認為這是否會在某種程度上影響您的 5G 戰略，包括我剛才提到的時間表或投資金額，或與此相關的其他方面？

Sorry, can you be a little bit louder for the second question?

抱歉，第二個問題你能大聲一點嗎？

Okay. So the second one is that there have been a lot of countries starting to provide 5G services to their subscribers, and if we take a look at how they are doing by now, do you think that would somehow affect this overall timeline on 5G, say, we should take a more conservative tone on it or something like that?

好的。第二個是，已經有很多國家開始向其用戶提供 5G 服務，如果我們看看他們現在的表現，您認為這會以某種方式影響 5G 的總體時間表嗎？ ，我們應該採取更保守的語氣還是類似的？

The first, we aim to acquire adequate bandwidth at a reasonable price for the upcoming 5G auction.

首先，我們的目標是為即將到來的 5G 拍賣以合理的價格獲得足夠的帶寬。

Yes, for your second question, Amber, you know, so we understand that in, like, Korea, they actually give some targeting for the operator for the 5G deployment. But after the service launch, the overall poor service quality has not meet the customer demand. So the regulating ask them to do a bit more for the coverage and everything. And of course, right now, we will follow the NCC's regulation because we already have a pre, kind of, detail regulation disclosed. So we will follow the regulation to do the deployment. So currently, we don't really have any comment on this.

是的，對於你的第二個問題，Amber，你知道，所以我們了解到，在韓國，他們實際上為運營商的 5G 部署提供了一些目標。但服務推出後，整體服務質量較差，未能滿足客戶需求。因此，監管要求他們在覆蓋範圍和其他方面多做一點。當然，現在我們將遵循 NCC 的規定，因為我們已經披露了預先的、某種詳細的規定。所以我們會按照規定進行部署。所以目前我們對此沒有任何評論。

(Operator Instructions) The next question is coming from Billy Lee, Crédit Suisse.

（操作員說明）下一個問題來自瑞士信貸銀行的 Billy Lee。

Last question. Two actually. One is what's your dividend payout policy at the moment? And secondly, what CapEx will look like potentially going to 2020?

最後一個問題。實際上是兩個。一是你目前的股息支付政策是什麼？其次，到 2020 年，資本支出可能會是什麼樣子？

For dividend, of course, you know, I think you know it's -- though we don't really have dividend policy. Actually we have, according to our articles of corporation, we have to pay more than 50% of our earnings as dividend. But for the past years, the track record, we pay -- after we don't have to set aside the special (inaudible). We actually pay them -- how much we earn, we pay the whole -- close to 100% payout ratio. So this policy, I think this is not really a policy but I would say that you know every year, we have to submit it, our proposal, to the Board and to the AGM for approval. But most reasonably kind of guessing, we will continue (technical difficulty)

當然，對於股息，你知道，我想你知道，儘管我們並沒有真正的股息政策。實際上，根據我們的公司章程，我們必須支付超過 50% 的收入作為股息。但就過去幾年的業績記錄而言，我們付了錢——之後我們不必留出特別費用（聽不清）。我們實際上付給他們——我們賺多少錢，我們付全部——接近100%的支付率。所以這項政策，我認為這並不是真正的政策，但我想說，你知道，每年，我們都必須將其、我們的提案提交給董事會和年度股東大會批准。但最合理的猜測，我們將繼續（技術難度）

(Operator Instructions) The next question is coming from Billy Lee, Crédit Suisse.

（操作員說明）下一個問題來自瑞士信貸銀行的 Billy Lee。

Sorry for asking again. I think there was some disconnection just now. Yes, I am sorry, I couldn't hear your response on the second question about the CapEx outlook into 2020.

抱歉再次詢問。我認為剛才有一些斷線。是的，很抱歉，我無法聽到您對有關 2020 年資本支出展望的第二個問題的答复。

Yes. I think I will restate the statement. The overall CapEx for our next few years will kind of stable versus of that of this year. Starting from 2020 to '24, we believe that the 5G CapEx peak will be between '22 to '24. That's our current expectation.

是的。我想我會重申一下這一聲明。未來幾年的整體資本支出將與今年相比保持穩定。從2020年到24年，我們認為5G資本支出峰值將在22年到24年之間。這是我們目前的期望。

(Operator Instructions)

（操作員說明）

If there is no further questions, thank you for joining us. Bye-bye.

如果沒有其他問題，感謝您加入我們。再見。

Thank you, President Kuo. 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.

謝謝郭會長。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。