Chunghwa Telecom Co Ltd (CHT) 2023 Q4 法說會逐字稿

Good afternoon, ladies and gentlemen. Welcome to Chunghwa Telecom Conference Call for the company's Fourth Quarter 2023 Operating Results. (Operator Instructions) 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.

女士們、先生們，午安。歡迎參加中華電信電話會議，了解公司 2023 年第四季營運表現。 （操作員說明）僅供參考，本次電話會議現透過網路進行現場直播。會議結束後一小時內將提供網路直播重播。請造訪 CHT IR 網站 www.cht.com.tw/ir 的 IR 日曆部分。

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

現在我想把它交給投資人關係總監蔡安琪女士。謝謝。蔡女士，請講。

Thank you. I'm Angela Tsai, Assistant Vice President of Financial Department for Chunghwa Telecom. Welcome to our Fourth Quarter 2023 results conference call. Joining me on the call today are our Chairman, Harrison Kuo; our President, Ivan Lin; and Vincent Chen, our Chief Financial Officer. During today's call, management will begin by providing the Chairman's message, our business overview, a discussion of our segment performance and the financial results followed by management guidance for 2024. After, we will move on to the question and answer portion of the call. On Slide 2, please read our disclaimers and note concerning forward-looking statements.

謝謝。我是中華電信財務部助理副總裁蔡安琪。歡迎參加我們的 2023 年第四季業績電話會議。今天和我一起參加電話會議的是我們的主席郭哈里森 (Harrison Kuo)；我們的總裁，Ivan Lin；和我們的財務長 Vincent Chen。在今天的電話會議中，管理層將首先提供主席致辭、我們的業務概述、對我們部門業績和財務業績的討論，然後是 2024 年的管理層指導。在投影片 2 上，請閱讀我們的免責聲明和有關前瞻性陳述的註釋。

Now without further delay, I will turn the call over to our Chairman. Chairman Kuo, please go ahead.

現在，不再拖延，我將把電話轉給我們的主席。郭主席請講。

Thank you, Angela, and hello everyone. Welcome to our fourth quarter results conference call and I would like to begin with our strong financial performance for 2023. We concluded 2023 with an EPS of TWD 4.76 while both revenue and EPS exceeded the high end of our full year guidance and hit 6-year highs. We are proud to beat the full year guidance and also commit to investors to give all-out efforts for this year. During the fourth quarter of last year, Taiwan's telecom industry entered a new 3-player landscape where Chunghwa Telecom continues to be the largest telco followed by the other 2 players. Our market cap represents 60% of the industry market value. Our revenue share in Taiwan's mobile market also exceeded 40%. In addition, we have the most 5G subscribers in Taiwan with more than 3 million not to mention the overall mobile subscriber number.

謝謝你，安吉拉，大家好。歡迎參加我們的第四季度業績電話會議，我想先介紹一下我們2023 年強勁的財務業績。的上限，並達到了6 年以來的最高水平高點。我們很自豪能夠超越全年指引，並承諾投資者今年會全力以赴。去年第四季度，台灣電信業進入了新的三巨頭格局，其中中華電信仍是最大的電信公司，其次是其他兩家公司。我們的市值佔產業市值的60%。我們在台灣行動市場的收入份額也超過了40%。此外，我們擁有台灣最多的5G用戶，超過300萬，更不用說整體行動用戶數了。

All the stats highlight that our leading position far outweighs our peers. At the same time, we are happy to see the domestic industry evolution and believe that under the current structure, value creation for customers will continue to remain the industry focus and the digital transformation will continue to develop and serve as one of the key growth drivers. Keeping our #1 position, we reiterate our confidence in widening our leading against peers due to our solid strengths and growth momentum. In 2023, our mobile postpaid subscriber numbers continued its year-over-year growth throughout the whole year despite the total number of mobile SIMs in Taiwan decreased in 2023. We also achieved the highest mobile service revenue in the industry.

所有統計數據都顯示我們的領先地位遠遠超過同行。同時，我們很高興看到國內產業的演變，並相信在當前的結構下，為客戶創造價值將繼續成為產業的焦點，數位轉型將繼續發展並成為關鍵的成長動力之一。在保持第一的位置的同時，我們重申，我們有信心憑藉雄厚的實力和成長勢頭擴大與同行的領先優勢。 2023年，儘管2023年台灣行動SIM卡總數有所下降，但我們的行動後付費用戶數量全年仍維持同比增長。

Our success in attracting subscribers speaks for our network strengths, including the most extensive mobile coverage, largest capacity and fastest speeds supported by our most numerous mobile base stations already in use. We believe our mobile subscriber gains and revenue growth in 2023 will continue and roll over to 2024. Our competitive advantages also come from our cross-sector business wins, including our growing fixed broadband business, accelerating technology monetization and ongoing investment in content and digital ecosystems. With our continuous efforts and business development, we maintain optimistic about positive outlook for the next year ahead. Last, I'm pleased to share that we are establishing a subsidiary in Germany in the first half of 2024, which will serve as the forerunner for international business expansion in Europe. This marks a meaningful milestone of our international expansion.

我們在吸引用戶方面的成功證明了我們的網路優勢，包括我們已投入使用的數量最多的行動基地台所支援的最廣泛的行動覆蓋範圍、最大的容量和最快的速度。我們相信，2023 年我們的行動用戶收益和收入成長將持續到2024 年。系統的持續投資。透過我們的持續努力和業務發展，我們對未來一年的積極前景保持樂觀。最後，我很高興地告訴大家，我們將於2024年上半年在德國設立子公司，這將作為歐洲國際業務擴張的先驅。這標誌著我們國際擴張的一個有意義的里程碑。

Now let me hand the call over to Ivan for the business updates of the fourth quarter of 2023.

現在讓我將電話轉交給 Ivan，以了解 2023 年第四季的業務最新情況。

Thank you, Chairman Kuo, and hello everyone. Now please flip to Page 5 for an update on our outperforming mobile service. As of November 2023, we maintained our leading position in Taiwan's mobile market with the largest subscriber share of 37.1%. Meanwhile, we were excited to see our revenue share reach a remarkable milestone exceeding 40% in the third quarter and hitting 40.2% by the end of last November further widening our lead against our peers. Our excess revenue share over subscriber share increased to 3.1%, which is encouraging. In addition, our mobile service revenue in fourth quarter recorded a 5.8% year-over-year increase, maintaining its growth for 33 consecutive months while our postpaid ARPU reported a 4.3% year-over-year increase, continuing its consecutive growth for 11th quarter. This increase was mainly owing to the 5G migration upsells, international roaming recovery and increase of postpaid subscriber numbers.

謝謝郭主席，大家好。現在請翻到第 5 頁，了解我們出色的行動服務的最新資訊。截至2023年11月，我們在台灣行動市場維持領先地位，最大用戶市佔率為37.1%。同時，我們很高興看到我們的營收份額在第三季達到了超過 40% 的顯著里程碑，並在去年 11 月底達到了 40.2%，進一步擴大了我們相對於同業的領先優勢。我們的超額收入份額相對於用戶份額增加到 3.1%，令人鼓舞。此外，第四季行動服務營收年增5.8%，連續33個月維持成長；後付費ARPU年增4.3%，延續第11季連續成長。這一增長主要歸因於 5G 遷移的銷售增加、國際漫遊的恢復以及後付費用戶數量的增加。

Thanks to 5G adoption, we see the average monthly fee uplift from customers who migrated from 4G to 5G increased to 49% in the fourth quarter further from 44% in the third quarter, maintaining an inspiring upward trajectory. Going forward, we expect the overall 5G penetration in Taiwan will continue to steadily develop in 2024. We believe that Chunghwa will benefit the most given our #1 position for best 5G quality ranked by the well-known international institutes. Let's move on to Slide 6 for an update on our fixed broadband business. In the fourth quarter, we're glad to see positive performance in the fixed broadband sector. Its revenue and ARPU increased by 2.6% and 1.1%, respectively, on a year-over-year basis mainly attributed to the increase of higher speed migration.

由於 5G 的採用，我們看到從 4G 遷移到 5G 的客戶的平均月費增幅從第三季的 44% 進一步增加到第四季度的 49%，保持了令人鼓舞的上升軌跡。展望未來，我們預計台灣整體 5G 滲透率將在 2024 年繼續穩定發展。讓我們繼續看投影片 6，了解我們固定寬頻業務的最新情況。第四季度，我們很高興看到固定寬頻領域的正面表現。其營收和ARPU分別較去年同期成長2.6%和1.1%，主要歸因於更高速遷移的增加。

Our signups for services of 300 megabit per second or higher continued to be popular among all speed mixes since the second quarter of 2023. Its year-over-year growth in the fourth quarter achieved 32% maintaining a double-digit growth. It's worth noting that our speed profile optimization promoted by the marketing incentives also worked in upgrading speeds from below 100 megabit per second to transition to higher speed above the 100 megabit per second. We see a 12% year-over-year increase in signups for service at 100 megabit per second or higher. As the optimization strategy will go on in 2024, we are confident in seeing the upward trend of the fixed broadband ARPU continue going forward.

自2023年第二季以來，我們的每秒300兆或更高速率的服務註冊繼續受到各種速度組合的歡迎。值得注意的是，行銷激勵措施推動的速度配置優化也起到了將速度從每秒 100 兆比特以下升級到每秒 100 兆比特以上的更高速度的作用。我們發現每秒 100 兆或更高速率的服務註冊量較去年同期成長 12%。隨著2024年優化策略的持續，我們有信心看到固定寬頻ARPU繼續保持上升趨勢。

Now let's move on to the performance of our customer-centric business groups. Slide 8 presents the performance of our CBG Group. In the fourth quarter, total CBG revenue rose by 4.4% year-over-year. The increase was mainly driven by the notable increase of our outperforming mobile service revenue at a 5.3% increase on year owing to the continued 5G migration and postpaid subscriber increase, better sales of iPhone 15 series and the stable growth of the fixed broadband revenue with 3.3% uplift on year while fixed line revenue decreased. In addition, I'd like to highlight our notable international roaming revenue in 2023, which increased by 270% year-over-year and has already surged to exceed pre-COVID-19 levels. In addition to busy international activities in 2023, our popular global roaming package also contributed to the success.

現在讓我們繼續討論以客戶為中心的業務部門的績效。幻燈片 8 展示了我們 CBG 集團的業績。第四季度，CBG總營收年增4.4%。這一成長主要是由於5G持續遷移和後付費用戶成長、iPhone 15系列銷售較好以及固定寬頻收入穩定成長3.3%，導致我們的行動服務收入顯著成長，較去年同期成長5.3%。固定電話收入下降。此外，我想強調我們在 2023 年的國際漫遊收入，同比增長 270%，並且已飆升至超過 COVID-19 之前的水平。除了繁忙的國際活動外，2023年我們廣受歡迎的全球漫遊套餐也取得了成功。

We covered 125 countries to offer customers with the convenience of using 1 package to enjoy transnational data roaming during 1 trip. We expect strong demand from customers will continue to drive the growth of our roaming business in 2024. CBG's income before tax decreased by 0.2% year-over-year owing to the asset impairment loss accompanied with the phaseout of the 3G network. Excluding the onetime factor, CBG income before tax increased by 3.6% on year. Slide 9 further illustrates our Consumer Business Group highlights. In the fourth quarter, our multiple-play package continued to grow on a yearly basis. The subscriber numbers of mobile and fixed broadband and WiFi service altogether demonstrated 14% quarter-over-quarter growth entering the seventh consecutive quarter of double-digit quarter-over-quarter growth.

我們涵蓋125個國家，提供客戶一包一程跨國數據漫遊的便利。我們預期客戶的強勁需求將持續推動2024年漫遊業務的成長。剔除一次性因素，CBG稅前收入年增3.6%。幻燈片 9 進一步說明了我們消費者業務集團的亮點。在第四季度，我們的多遊戲套餐持續逐年成長。行動、固定寬頻和WiFi服務用戶數量較上季成長14%，連續第七個季度實現兩位數成長。

In terms of individual and home-centric applications, we were happy to report subscriber gains as well. Our video subscriber continued to grow steadily by 3.7% year-over-year mainly due to the rich content provided on both MOD and Hami Video, in particular the exclusive and award winning dramas. In addition, we observed an increasing demand for CBG cybersecurity services as the consumers have become accustomed to accessing the Internet across mobile and fixed broadband in the post-pandemic era. In the fourth quarter, our consumer cybersecurity signups increased by 19% year-over-year and demonstrated potential for further growth. Going forward, we will continue to develop consumer applications to grow both application and telecom revenue in the sector.

在個人和以家庭為中心的應用程式方面，我們也很高興報告用戶成長。我們的視訊訂閱用戶持續穩定成長，年增3.7%，主要得益於MOD和哈密視訊提供的豐富內容，特別是獨家且獲獎的劇集。此外，我們觀察到，隨著消費者已經習慣在後疫情時代透過行動和固定寬頻存取互聯網，對 CBG 網路安全服務的需求不斷增加。第四季度，我們的消費者網路安全註冊人數年增 19%，並顯示出進一步成長的潛力。展望未來，我們將繼續開發消費者應用程序，以增加該行業的應用程式和電信收入。

Please turn to Slide 10 for an overview of our Enterprise Business Group performance. In the fourth quarter, EBG revenue increased by 2.5% primarily attributed to a substantial 30% increase in other revenue driven by the equipment sales from subsidiaries and launch of high end mobile phones contributing to a boost in sales revenue. Additionally, ICT business revenue increased by 2.3% propelled by a rise in project revenue, sustained growth in cybersecurity service revenue and robust expansion in AIoT service revenue. Furthermore, EBG mobile services revenue increased by 3% fueled by 5G upselling and the recovery of international roaming revenue. Although fixed line revenue slightly decreased year-over-year mainly due to voice decline, data communication revenue and broadband access revenue continued to grow.

請參閱投影片 10，以了解我們企業業務集團的績效概覽。第四季，EBG營收成長2.5%，主要得益於子公司設備銷售及高階手機推出帶動銷售收入成長，帶動其他營收大幅成長30%。此外，在專案收入成長、網路安全服務收入持續成長以及AIoT服務收入強勁擴張的推動下，ICT業務收入成長2.3%。此外，在 5G 追加銷售和國際漫遊收入復甦的推動下，EBG 行動服務收入成長了 3%。儘管固網收入較去年同期略有下降，主要是由於語音下降，但數據通訊收入和寬頻接取收入仍持續成長。

In spite of revenue growth, EBG reported a 6.2% year-over-year decrease of its income before tax mainly because of fixed voice decline and asset impairment loss relating to 3G phaseout. Excluding the onetime impairment, EBG's income before tax decreased by 4.8% on year. Most importantly, ICT business revenue continued to increase and profit margin kept improving. Slide 11 illustrates our Enterprise Business highlights. In the fourth quarter, our AIoT and cybersecurity business demonstrated robust growth while total emerging enterprise business revenues of our major applications decreased by 2.7% year-over-year due to the higher base of revenue recognition in the prior year relating to e-learning and fintech projects. Specifically, cybersecurity business achieved 7.3% growth in the fourth quarter driven by increasing service demand from our enterprise clients, climbing upward for the eighth consecutive quarter on a year-over-year basis.

儘管收入成長，但EBG的稅前收入年減6.2%，主要是由於固定話音下降以及與3G淘汰相關的資產減損損失。剔除一次性減損，EBG稅前收入較去年同期下降4.8%。最重要的是，ICT業務收入持續成長，利潤率不斷提高。幻燈片 11 展示了我們的企業業務亮點。第四季度，我們的AIoT和網路安全業務呈現強勁成長，但由於上一年與電子學習和網路相關的收入確認基數較高，我們主要應用的新興企業業務總收入年減2.7%。 。其中，網路安全業務在企業客戶服務需求成長的帶動下，第四季網路安全業務實現7.3%的成長，較去年同期連續第八個季度成長。

Furthermore, our AIoT business also experienced a year-over-year increase owing to the revenue injection from a large project relating to smart energy and intelligent buildings. Furthermore, although our cloud service revenue and IDC revenue decreased on a year base due to onetime projects recognized last year that created a high revenue base, we are glad to see our recurring revenue of these 2 services delivered stable growth. On year-over-year basis, recurring revenue from international public cloud services vibrantly grew by 20% while recurring revenue of IDC grew 15% in the fourth quarter. In terms of applications, in the fourth quarter we achieved a milestone by establishing Taiwan's most extensive 5G network slicing verification field in Kaohsiung to support innovation development and successfully deliver the multiple innovative cybersecurity and encrypted divided storage cloud solutions catering to the diverse needs of our clients.

此外，由於智慧能源和智慧建築相關的大型專案的收入註入，我們的AIoT業務也實現了同比增長。此外，儘管我們的雲端服務收入和IDC收入由於去年認可的一次性項目創造了較高的收入基礎而同比下降，但我們很高興看到這兩項服務的經常性收入實​​現了穩定增長。與去年同期相比，國際公有雲服務的經常性收入強勁增長了20%，而IDC的經常性收入在第四季度增長了15%。在應用方面，第四季度我們實現了里程碑，在高雄建立了台灣最廣泛的5G網路切片驗證場，以支持創新發展，並成功交付了多種創新的網路安全和加密分割儲存雲解決方案，以滿足客戶的多樣化需求。

Slide 12 illustrates our International Business performance. In the fourth quarter, total revenue and income before tax of IBG increased about 33% and 39% year-over-year respectively. The impressive growth was mainly fueled by the growing demand for emerging business, including IDC and cloud services, from our global clients. During the quarter, we see ICT project completion and continued to find growing opportunities. For global expansion, we are glad to announce that we signed an MOU with NTT Corporation in the fourth quarter aiming to accelerate the realization of the Innovative Optical and Wireless Network service. Looking forward, we are optimistic to see the growth momentum roll over into 2024. In addition, as the SJC2 international undersea cable is expected to launch service this year, we're looking forward to capitalizing our undersea cable assets amid growing opportunities from international OTT service providers.

幻燈片 12 展示了我們的國際業務績效。第四季度，IBG總營收和稅前利潤分別年增約33%和39%。令人印象深刻的成長主要是由於我們的全球客戶對新興業務（包括IDC和雲端服務）不斷增長的需求所推動的。在本季度，我們看到 ICT 專案已完成，並繼續尋找成長機會。對於全球擴張，我們很高興地宣布，我們在第四季度與 NTT Corporation 簽署了諒解備忘錄，旨在加速實現創新光和無線網路服務。展望未來，我們樂觀地看到成長勢頭延續到 2024 年。

Now l would like to turn the call to Vincent.

現在我想把電話轉給文森。

Thank you, President Ivan. Good afternoon, everyone. Now I will present a financial summary of our fourth quarter results in 2023 and financial guidance for 2024. Let's begin with Slide 14, income statement highlights. During the fourth quarter in 2023, total revenue increased by 4% compared to the same quarter last year primarily attributed by growing ICT business revenue, sales revenue, mobile service revenue and broadband service revenue. Income from operations and net income decreased by 4.6% and 1.7% on year, respectively mainly due to the impairment loss of telecom equipment caused by the phaseout of 3G network and the impairment loss of investment property. Excluding the impact of aforementioned onetime impairment losses, income from operations and net income increased by 2.2% and 7.2% on year, respectively.

謝謝伊凡總統。大家下午好。現在，我將介紹 2023 年第四季業績的財務摘要和 2024 年的財務指引。 2023年第四季，總營收較去年同期成長4%，主要得益於ICT業務收入、銷售收入、行動服務收入及寬頻服務收入的成長。營業收入和淨利潤較去年同期分別下降4.6%和1.7%，主要是由於3G網路淘汰導致電信設備減損損失和投資性房地產減損損失。剔除上述一次性減損損失的影響，營業收入和淨利分別年增2.2%和7.2%。

For the full year results, total revenue increased by 3% year-over-year as a result of solid growth of our mobile, ICT and broadband services. Income from operations decreased by 1% due to the onetime impairment losses mentioned above. Excluding the onetime effect, income from operations grew by 0.6%. Net income increased by 1.2% on year. EPS rose from TWD 4.7 to TWD 4.76. It's noteworthy that both of our revenue and EPS reached a 6-year high and have maintained growth momentum for 4 consecutive years. Now move on to Page 15 for balance sheet highlights. As of December 31 of 2023, total assets increased by 0.2% on year mainly due to the increase in current assets, long-term Investments and other assets, which offset the decrease in intangible assets. Total liabilities decreased mildly on year primarily attributable to the decrease in accounts payable.

就全年業績而言，由於我們的行動、ICT 和寬頻服務的穩健成長，總收入年增 3%。由於上述一次性減損損失，營業收入下降1%。剔除一次性影響，營運收入成長0.6%。淨利潤年增1.2%。 EPS 從新台幣 4.7 升至新台幣 4.76。值得注意的是，我們的營收和每股盈餘均創六年來新高，並連續四年維持成長動能。現在請翻到第 15 頁了解資產負債表要點。截至2023年12月31日，總資產年增0.2%，主要是流動資產、長期投資和其他資產的增加，抵銷了無形資產的減少。負債總額較去年小幅下降，主要是應付帳款減少。

Additionally, debt ratio decreased slightly and net debt over EBITDA remained 0. Altogether, we continue to maintain a strong balance sheet with great financial flexibility to fully support our operations and business expansions and swiftly adapt to fast changing macroeconomic climate. Page 16 provides the summary of our cash flows. For 2023, we continue to generate stable and solid cash flows from operations. While our operating cash flows were down by 1.8% relative to the prior year, the decrease was mainly due to income tax payments and settlement of accounts payable. Capital expenditures decreased by 2.5% on year, of which, mobile-related CapEx was reduced by 19.3% whereas non-mobile CapEx increased by 10.6%. The latter was largely attributable to greater IDC investment. On top of that, free cash flows decreased by 1.4% on year.

此外，負債比率小幅下降，淨負債與EBITDA 比率仍為0。宏觀經濟環境。第 16 頁提供了我們現金流量的摘要。 2023年，我們將持續產生穩定、穩健的營運現金流。雖然我們的經營現金流較前一年下降1.8%，但下降的主要原因是繳納所得稅和應付帳款結算。資本支出較去年同期下降2.5%，其中行動相關資本支出下降19.3%，非行動資本支出成長10.6%。後者主要歸功於IDC 投資的增加。除此之外，自由現金流年減 1.4%。

Collectively, our robust balance sheet together with solid operating cash flows enable us to seize business opportunities amidst trends of digital and sustainability transformations and further create sustainable and long-term value for our shareholders. On Slide 17, the table presents financial results against management guidance. In the fourth quarter of 2023, total revenue was about on par with our revenue projection. Profit related metrics fell short of our expectations largely attributed to the higher maintenance and material expenses, impairment losses on the phaseout of 3G network and investment property. For the full year results, our revenue and profit related measures mostly exceeded the high-end target of our full year guidance driven by our steady growing core business and improved margin of ICT business. That concludes the overview of our 2023 financial results.

總的來說，我們穩健的資產負債表和穩健的經營現金流使我們能夠在數位化和永續發展轉型趨勢中抓住商機，並進一步為股東創造可持續和長期的價值。在投影片 17 中，表格列出了對照管理層指導的財務結果。 2023 年第四季度，總營收與我們的營收預測基本持平。利潤相關指標未達到我們的預期，主要是由於維護和材料費用增加、逐步淘汰 3G 網路和投資物業的減損損失。就全年業績而言，在我們的核心業務穩定成長和ICT業務利潤率改善的推動下，我們的收入和利潤相關指標大多超過了全年指引的高端目標。我們 2023 年財務表現的概述到此結束。

Moving on to Slide 18, please see our guidance for 2024. Looking ahead, total revenue for 2024 compared to 2023 is expected to increase by between 2.4% and 3.1%, primarily driven by growth momentum in our core business. Well-received 5G services and speed upgrade promotion packages of fixed broadband are expected to continuously lift subscriber numbers and ARPU. ICT business also contributes as we expect growing emerging services to cater to customers' demands for digital transformation. Operating costs and expenses are expected to rise between 4% and 4.6% as a result of the investments in talents and infrastructure that support future business development in core and emerging businesses. Given these projections, we expect our EPS to be in the range between TWD 4.6 and TWD 4.8.

轉到投影片18，請參閱我們對2024 年的指引。 。廣受好評的5G服務和固定寬頻提速促銷套餐預計將持續提升用戶數和ARPU值。 ICT 業務也做出了貢獻，因為我們預計不斷成長的新興服務將滿足客戶對數位轉型的需求。由於支持核心業務和新興業務未來業務發展的人才和基礎設施投資，營運成本和費用預計將上漲 4% 至 4.6%。鑑於這些預測，我們預計每股收益將在新台幣 4.6 至新台幣 4.8 之間。

As for capital spending, we budget about TWD 34 billion for 2024 as our 5G network is close to its full deployment and its #1 quality has been consistently endorsed by OpenSignal and Speedtest for consecutive years. Mobile related CapEx is expected to decrease by 14% on year, which continues its downtrend since 2021 for 3 consecutive years. Non-mobile related CapEx; which consists of investments in fixed line network, IDC and submarine cables; is expected to increase by 24.7% on year to support business expansion in emerging business.

至於資本支出，我們在 2024 年的預算約為 340 億新台幣，因為我們的 5G 網路已接近全面部署，且其 #1 的品質連續多年獲得 OpenSignal 和 Speedtest 的認可。行動相關資本支出預計將年減 14%，延續自 2021 年以來連續 3 年的下降趨勢。非移動相關的資本支出；其中包括固網、IDC和海底電纜的投資；預計年增24.7%，支持新興業務業務拓展。

Now I would like to turn the call over to Chairman Harrison for awards and recognitions.

現在我想將獎項和表彰轉給哈里森主席。

Thank you, Vincent. On Slide 19 is our awards and ESG achievement highlights in the fourth quarter. In 2023, Chunghwa Telecom was recognized by the Dow Jones Sustainability World Index as #1 of the world-class telecommunication sustainability leaders as well as the Emerging Market Index reflecting recognition from investors for our ESG practices. We also received AA ESG rating from MSCI.

謝謝你，文森。第 19 張投影片是我們在第四季獲得的獎項和 ESG 成就亮點。 2023年，中華電信被道瓊永續發展世界指數評為世界級電信永續發展領導者以及新興市場指數第一名，反映了投資者對我們的ESG實踐的認可。我們也獲得了 MSCI 的 AA ESG 評級。

In addition, we were reaffirmed the highest AA credit rating by S&P Global Ratings, continuing our exclusive leading position among global telcos. Besides to enhance interest alignment between top management team and shareholders, we are the only telecom operator in Taiwan to follow the international best practice of implementing the Incentive Compensation Clawback Policy. In addition, as we implemented an internal carbon pricing mechanism of TWD 1,600 per ton in 2023, we are delighted to report that internal carbon fee collected for 2023 was approximately TWD 1 billion, all used to encourage carbon reduction initiatives and technologies. In the fourth quarter, we also completed carbon credit procurement to further utilize product carbon neutralization. Meanwhile, we initiated the first environmental footprint standard of network equipment in Taiwan to facilitate a low carbon supply chain.

此外，我們還獲得標準普爾全球評級公司的最高AA信用評級，並繼續在全球電信營運商中保持領先地位。除了加強高階管理團隊與股東之間的利益協調外，我們也是台灣唯一一家遵循國際最佳實務實施激勵性薪酬回撥政策的電信業者。此外，隨著我們在2023 年實施每噸1,600 新台幣的內部碳定價機制，我們很高興地報告，2023 年收取的內部碳費約為10 億新台幣，全部用於鼓勵減碳舉措和技術。第四季度，我們也完成了碳信用額採購，進一步利用產品碳中和。同時，我們發起了台灣首個網路設備環境足跡標準，以促進低碳供應鏈。

This concludes our prepared remarks. Thank you for your attention. At this time, I would like to open our conference call for questions.

我們準備好的演講到此結束。感謝您的關注。現在，我想開始我們的電話會議以提問。

(Operator Instructions) We will begin with the questions from telephone line and then move to the queries from the web page. (Operator Instructions) And our first question is coming from Neale Anderson of HSBC.

（操作員說明） 我們將從電話線路提問開始，然後轉向網頁提問。 （操作員說明）我們的第一個問題來自匯豐銀行的 Neale Anderson。

I have two questions, please. The first one is on revenue and specifically on the Enterprise Business Group and the emerging enterprise application revenue. So that fell last year I think because you had a high base of onetime revenue in 2022. Do you face the same situation for this year or do you think that can return to growth with a large amount of recurring revenue without the onetime factor? So that's the first question. And the second one is on the guidance for the cost increase and the investment in growth business. Are you able to give any more color on -- I assume most of that would be going to the Enterprise Business Group. But I also wonder how much is going to the International Business Group given that you're opening up in Germany and I think other markets as well. So could you give any additional comments on that?

我有兩個問題，請問。第一個是收入，特別是企業業務組和新興企業應用程式收入。我認為去年的下降是因為你在 2022 年的一次性收入基數很高。這是第一個問題。第二個是關於成本增加和成長性業務投資的指導。您能否提供更多資訊—我認為其中大部分將由企業業務集團負責。但我也想知道，鑑於你們正在德國以及其他市場開展業務，國際業務集團將獲得多少資金。您能否對此提出任何補充意見？

So thanks, Neale, for your questions. So for the first question about the revenue in the Enterprise Business segment, right? So in 2022, we have a high base because we have several big projects and for the 2024, whether we will face such situation again. So we think this situation will moderate. So for the ICT in the Enterprise Business Group, we expect it's going to grow in quite a reasonable rate. So this is for the answer for your questions. The second one is the guidance for the cost increases, right? So what we will say is, as I just mentioned in the PowerPoint, for the 2024 we will keep investing in talent and infrastructures and also we will make an investment in content because that will attract more subscribers and that will help to develop our own platforms and attract more customers and return more customers.

謝謝尼爾提出的問題。那麼第一個問題是關於企業業務部門的收入，對嗎？所以在2022年，我們有一個很高的基數，因為我們有幾個大項目，而到2024年，我們是否會再次面臨這樣的情況。所以我們認為這種情況將會緩和。因此，對於企業業務部門的ICT，我們預期它將以相當合理的速度成長。所以這是為了回答你的問題。第二個是成本上漲的指導，對嗎？所以我們要說的是，正如我剛才在PowerPoint 中提到的，到2024 年，我們將繼續投資於人才和基礎設施，我們還將投資於內容，因為這將吸引更多訂閱者，並將有助於開發我們自己的平台並吸引更多的客戶並返回更多的客戶。

So this is the area where we will put in our resources. So the cost in relation to content will also go up and some of the cost will go up is related to revenue, for example like sales revenue such that our cost of goods sold will also go up. And for the International business, actually we will expect the International business segment will also grow very well because we have the footprint in Europe and we expect there will be more demand from our customers from overseas markets.

所以這是我們將投入資源的領域。因此，與內容相關的成本也會上升，其中一些成本的上升與收入有關，例如銷售收入，這樣我們的銷售成本也會上升。對於國際業務，實際上我們預期國際業務部門也將成長得非常好，因為我們在歐洲擁有足跡，並且我們預期海外市場的客戶會有更多需求。

Next question is from Xinyi Wang, UBS.

下一個問題來自瑞銀集團的Xinyi Wang。

I have two questions. First is on EBG revenue. So I think management just mentioned that the ICT revenue in fourth quarter increased as well as the margin. So just wondering why the income before tax is holding the 3G impairment still declined by mid-single digit? And then second question is on the CapEx guidance for 2024. So I noticed that non-mobile CapEx is guided to increase quite meaningfully. So could you elaborate more on where are the key investment area?

我有兩個問題。首先是 EBG 收入。因此，我認為管理層剛剛提到第四季度的 ICT 收入和利潤率均有所增長。那麼只是想知道為什麼持有 3G 減損的稅前收入仍然下降了中個位數？第二個問題是關於 2024 年的資本支出指引。能否詳細介紹一下重點投資領域在哪裡？

Okay. For the EBG, right? In fact for the ICT business for the revenue and also for the margin actually is improving. But why the overall segment profit declined? One, as we just mentioned, the 3G impairment and also the long distance call; that also matters. Also we charge internally -- we have the internal carbon fees. That also affect the bottom line in the Enterprise Business segment. So that's for your question 1. So for your second question for the CapEx guidance, right, for the 2024. So basically for the non-mobile CapEx because it increased a lot, that's mainly attributed to IDC because we have several construction ongoing. So that actually accounts for a big chunk of the investments. And also, as I just mentioned, the submarine cables and also for the fixed line network, that's also the regular items we have for the non-mobile CapEx.

好的。對於 EBG，對嗎？事實上，ICT 業務的收入和利潤率實際上都在改善。但為何整體分部利潤下降呢？一，剛才我們提到了，3G障礙和長途電話；這也很重要。我們還內部收費——我們有內部碳費。這也影響了企業業務部門的利潤。這就是您的問題 1。因此，這實際上佔了投資的很大一部分。而且，正如我剛才提到的，海底電纜和固定線路網絡，這也是我們非行動資本支出的常規項目。

Got it. Just a quick follow-up on the IDC revenue. So in fourth quarter, the total IDC revenue declined although the recurring IDC revenue increased. So just wondering could you give an example of like what's the nonrecurring IDC revenue?

知道了。只是 IDC 收入的快速跟進。因此，在第四季度，儘管IDC經常性收入有所增加，但IDC總收入卻有所下降。所以只是想知道您能否舉個例子，例如非經常性 IDC 收入是多少？

For the onetime because some are set up the revenue for our customers. For example for some switch office, the cloud of switch office. So that's one of the examples.

暫時因為有些是為我們的客戶設定的收入。例如一些交換機局，交換機局的雲。這就是例子之一。

Got it. So theoretically for the IDC CapEx, that will bring recurring revenue, right?

知道了。理論上，對於 IDC 資本支出來說，這會帶來經常性收入，對嗎？

Yes, yes.

是的，是的。

Okay. Next question comes from our Internet from Rob Lowe. Could you please elaborate more on the business plan for the German office? Does the company plan to team up with European telecom companies for business expansion or the company plans to expand the exposure to European ICT services, et cetera?

好的。下一個問題來自我們的互聯網，來自 Rob Lowe。能否詳細介紹一下德國辦事處的商業計劃？公司是否計劃與歐洲電信公司合作拓展業務，或公司計劃擴大歐洲ICT服務業務等？

Thank you for your question. For 2024, we will continue to expand international outreach by mainly following Taiwanese clients global footprint and replicate our successful use cases in 5G private networks and smart cities to overseas market. In addition, Europe will be a new focus in 2024 as we have seen growing ICT demand from clients global expansion in Europe. Therefore, we plan to set up a subsidiary in Frankfurt to provide business support and we don't rule out the possibility to increase offices in different locations in Europe.

謝謝你的提問。 2024年，我們將繼續擴大國際業務，主要關注台灣客戶的全球足跡，並將我們在5G專網和智慧城市的成功用例複製到海外市場。此外，歐洲將成為 2024 年的新焦點，因為我們看到歐洲客戶的全球擴張對 ICT 的需求不斷增長。因此，我們計劃在法蘭克福設立子公司來提供業務支持，並且不排除在歐洲不同地點增加辦事處的可能性。

(Operator Instructions) We have another question, which is from Rajesh Panjwani, JPMorgan.

（操作員說明）我們還有另一個問題，來自摩根大通的 Rajesh Panjwani。

A couple of questions. First one, you mentioned that the increase in the non-mobile CapEx in 2024 is mainly due to IDC CapEx. Can you just give us some idea about what proportion of the total CapEx is going in IDC in 2024 versus 2023? Second, do you expect the non-mobile CapEx to remain at an elevated level after 2024 or do you expect it to decline after that? Lastly, can you give us some more idea about your international business expansion? What exactly are the kind of projects you are targeting in international markets?

有幾個問題。第一個，您提到2024年非行動資本支出的增加主要是由於IDC資本支出。您能否告訴我們 2024 年與 2023 年 IDC 資本支出總額的比例是多少？其次，您預計 2024 年後非行動資本支出將維持在高水準還是會下降？最後，您能給我們更多關於您的國際業務拓展的想法嗎？您在國際市場上瞄準的專案類型到底是什麼？

Okay. So for the first question for the non-mobile, right? So actually, the IDC investment increased by about 10% and more. So that's the increase in the non-mobile CapEx. And for the international projection and targets so actually we don't disclose figures, but we do have some orders in hand. That's why we deploy our staff and resources overseas.

好的。那麼對於非行動裝置的第一個問題，對吧？所以實際上IDC投資增加了10%左右甚至更多。這就是非移動資本支出的增加。對於國際預測和目標，實際上我們沒有透露數字，但我們手頭上確實有一些訂單。這就是我們將員工和資源部署到海外的原因。

Just a follow-up on this. So I'm not asking for numbers. I'm like what is the kind of projects that you are likely to do in the international markets going forward? Can you give us some idea of that? And also you said the IDC investment has increased by 10%, but your non-mobile CapEx is going up by 25%, which means that investment in non-IDC areas is probably even higher. So can you give us some breakup of that? And also whether the CapEx is likely to remain at an elevated level beyond 2024 also?

只是對此的後續行動。所以我不要求數字。我想知道你們未來可能在國際市場上做什麼樣的項目？您能給我們一些想法嗎？而且您也說IDC投資增加了10%，但您的非行動資本支出卻增加了25%，這意味著非IDC領域的投資可能會更高。那你能給我們一些解釋嗎？ 2024 年之後資本支出是否也可能維持在高水準？

For the CapEx, right, actually the undersea cable also increased a lot. So these are the 2 big ones. For the regular like fixed lines, actually it just increased at a steady rate. As for the international projects, right, so basically we help our customers to deploy not only the CT but also ICT business in Europe and in U.S. and in Japan, in these overseas areas. So currently we cater to many Chinese clients, but also we are expecting there will be more foreign customers, clients to use our ICT services. So these are the main areas for the IBG.

對於資本支出來說，對吧，實際上海底電纜也增加了很多。這是兩個大問題。對於固定線路等常規線路，實際上只是以穩定的速度成長。至於國際項目，對吧，所以基本上我們不僅幫助我們的客戶在歐洲、美國、日本這些海外地區部署CT業務，還幫助客戶部署ICT業務。所以目前我們迎合了許多中國客戶，但我們也預期會有更多的外國客戶、客戶使用我們的ICT服務。這些是 IBG 的主要領域。

Got it. And can you also comment on whether the CapEx is likely to remain at elevated level beyond 2024 or once your subsea cables is commissioned, CapEx will fall in 2025?

知道了。您能否評論一下資本支出是否可能在 2024 年後保持在較高水平，或者一旦您的海底電纜投入使用，資本支出將在 2025 年下降？

Because for the 2025 and outwards, we haven't finalized the numbers so we cannot give any indication or any prediction for the moment.

因為對於 2025 年及以後的情況，我們還沒有最終確定數字，所以我們暫時無法給出任何指示或任何預測。

(Operator Instructions)

（操作員說明）

Now we have another question from our chat box. Could you please give us the ICT business outlook for 2024?

現在我們的聊天框中又提出了一個問題。您能否為我們介紹一下2024年ICT業務展望？

We will continue to cultivate in our 3 major billion dollar service and in many pro-IDC cybersecurity and IoT service in emerging sectors. We also work on 5G applications and AI solutions to capture the increasing demand. And looking forward to 2024, we maintain culturally an optimistic outlook for our ICT business and are positive about achieving our full year guidance as we are continuing to see healthy order intake and project completion and we will continue leveraging our ICT capabilities to further enhance our ICT margin. And given the order intake in our pipeline, we expect the ICT revenue to deliver the positive growth on year in 2024. Thanks for your questions.

我們將繼續培育我們的三大十億美元服務以及許多支援IDC的網路安全和新興領域的物聯網服務。我們也致力於 5G 應用和人工智慧解決方案，以滿足不斷增長的需求。展望2024 年，我們對ICT 業務保持文化上的樂觀前景，並對實現全年指引持積極態度，因為我們繼續看到健康的訂單接收和項目完成，我們將繼續利用我們的ICT 能力進一步增強我們的ICT利潤。考慮到我們的訂單量，我們預計 2024 年 ICT 營收將實現年比正成長。

(Operator Instructions) Thank you. If there are no further questions at this point, I will turn it back over to Chairman Kuo. Chairman Kuo, please proceed.

（操作員說明）謝謝。如果此時沒有其他問題，我會轉回給郭主席。郭主席請繼續。

Thank you for your participation. Happy New Year. Goodbye.

感謝您的參與。新年快樂。再見。

Thank you, Chairman Kuo. And ladies and gentlemen, we thank you for your participation in Chunghwa Telecom 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. Thank you and goodbye.

謝謝郭主席。女士們、先生們，我們感謝你們參加中華電信會議。一小時內將進行網路廣播重播。請造訪 www.cht.com.tw/ir 的 IR 日曆部分。您現在可以斷開連線。謝謝你，再見。