Chunghwa Telecom Co Ltd (CHT) 2024 Q1 法說會逐字稿

Good afternoon, ladies and gentlemen, welcome to Chunghwa Telecom conference call for the company's first quarter 2024 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、先生們下午好，歡迎參加中華電信電話會議，了解公司2024年第一季營運表現。 （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。

Now I would like to turn it over to Ms. Angela Tsai, Assistant Vice President of Investor Relations. Thank you. Ms. Tsai, please go ahead.

現在我想把它交給投資人關係助理副總裁蔡安琪女士。謝謝。蔡女士，請講。

Thank you. I'm Angela Tsai, Assistant Vice President of the Financial Departments for Chunghwa Telecom. Welcome to our first quarter 2024 result conference call.

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 2024 年第一季業績電話會議。

Joining me on the call today are our Chairman, Harrison Kuo; President, Ivan Lin; and Vincent Chen, our Chief Financial Officer.

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)；總裁，Ivan Lin；和我們的財務長 Vincent Chen。

During today's call, management will begin by providing chairman's message and our business overview in the first quarter, followed by a discussion of our segment performance and the financial results. After we'll move on to the question-and-answer portion of the call. On Slide 2, please read our disclaimers and notes concerning forward-looking statements. Now I will turn the call over to Chairman. Chairman Kuo, please go ahead.

在今天的電話會議上，管理層將首先提供主席致辭和我們第一季的業務概覽，然後討論我們的部門業績和財務業績。之後我們將進入通話的問答部分。在投影片 2 上，請閱讀我們有關前瞻性陳述的免責聲明和註釋。現在我將把電話轉給主席。郭主席請講。

Thank you, Angela, and hello, everyone. Welcome to our first quarter 2024 results conference call. In the first quarter we proudly announced our success in expanding our lead in Taiwan's telco market amidst the robust 3-player landscape. Our revenue share in Taiwan's mobile market continue to steadily grow, climbing from 40.3% to 40.4% quarter-over-quarter, while subscribers share enjoying an increase from 37.6% to 37.7%. Maintaining the growth trajectory after the market consolidation completed last quarter.

謝謝你，安吉拉，大家好。歡迎參加我們的 2024 年第一季業績電話會議。第一季度，我們很自豪地宣布，在強勁的三巨頭格局中，我們成功擴大了在台灣電信市場的領先地位。我們在台灣行動市場的營收份額持續穩定成長，較上季從 40.3% 攀升至 40.4%，而用戶市佔率則從 37.6% 成長至 37.7%。上季市場整合完成後維持成長軌跡。

Our financial performance also speaks for our business success. Total revenue in the first quarter hit a new high for the same period since 2017. Income before tax also reached a record high for the same period since 2016. On the basis of excluding the one-time item of the government compensation for ST-2 satellite recognized in the first quarter last year. To invest our leadership and the long term growth we have been establishing AI infrastructure to enhance our operations and seize opportunities in the AI megatrend. Our AI-powered network solution has been successfully used to predict network degradation and the optimized energy consumption to enhance our network efficiency and contribute to cost reduction.

我們的財務表現也說明了我們業務的成功。一季總收入創2017年以來同期新高，稅前利潤也創2016年以來同期新高。為了投資我們的領導力和長期成長，我們一直在建立人工智慧基礎設施，以增強我們的營運並抓住人工智慧大趨勢中的機會。我們的人工智慧網路解決方案已成功用於預測網路退化和優化能源消耗，以提高我們的網路效率並有助於降低成本。

In addition, generative AI is another technology that we leverage problem shooting to enhance service quality, response time and the cost efficiency in operations, particularly in relation to network maintenance and the customer service. To capture AI expansion opportunities, we actively deployed [compu] utility across cloud edge and the terminals to bring computing resources closer to our customers with an intent to access AI applications.

此外，生成式人工智慧是我們利用問題解決來提高服務品質、回應時間和營運成本效率的另一項技術，特別是在網路維護和客戶服務方面。為了抓住人工智慧擴充的機會，我們積極跨雲端邊緣和終端部署[compu]實用程序，使運算資源更接近客戶，從而存取人工智慧應用程式。

We also plan to establish AI data centers and develop GPU as a service, empowering industries to complete their AI transformations. To achieve this goal, we will team up with local and the global ICT partners to establish ecosystems for the AI power the future. Another value added deployment lies in the expansion of content investments. In addition to network and the platform strengths, we have been continuously investing in quality contents to win subscribers over and (inaudible) to form the largest video platform in Taiwan.

我們也計劃建立AI資料中心，開發GPU即服務，賦能各產業完成AI轉型。為了實現這一目標，我們將與本地和全球ICT合作夥伴合作，建立人工智慧驅動未來的生態系統。另一個增值部署在於內容投資的擴大。除了網路和平台優勢外，我們還不斷投資優質內容以贏得訂閱者並（聽不清楚）形成台灣最大的影片平台。

We are glad to announce that recently we have acquired exclusive broadcasting right of the 2024 Paris summer Olympic games, and the belief that this will significantly enrich our content, broadcasting our content portfolio in the incoming quarters. Moreover, following the announcement made last December, we officially set up Chunghwa Digital Culture and the Creative Capital, CDCCC, in the first quarter to scale up our investment in video content and intellectual property management. In February, our board of directors further approved the investment in fund of cultural content industry managed by CDCCC. This fund will work as an important vehicle to upgrade cultural content industry and further integrate our network platform and the content IP to deliver quality content to users.

我們很高興地宣布，最近我們獲得了 2024 年巴黎夏季奧運會的獨家轉播權，相信這將大大豐富我們的內容，在接下來的幾個季度轉播我們的內容組合。此外，繼去年12月宣布後，我們於第一季正式成立中華數位文化創意資本CDCCC，並增加對影片內容和智慧財產權管理的投資。 2月，公司董事會進一步批准中華文化中心管理的文化內容產業基金的投資。該基金將作為文化內容產業升級的重要載體，進一步整合網路平台與內容IP，為用戶提供優質內容。

Last, I'd like to share that we were saddened by the serious earthquake that happened in Taiwan in April. And in response, we offered complimentary communications to help disaster relief (inaudible) by successfully leveraging low Earth orbit satellite, LEO.

最後，我想表達的是，我們對四月台灣發生的特大地震感到悲痛。作為回應，我們提供免費通信，透過成功利用低地球軌道衛星 LEO 來幫助救災（聽不清楚）。

Going forward, in addition to GEO, the geostationary orbit and the LEO, we also plan to add MEO, the medium Earth orbit to our satellite portfolios this year to continuously strengthen our network resilience and further provide services to enterprise and the government customers.

展望未來，除了GEO（地球靜止軌道）和LEO（低地球軌道）外，我們還計劃今年將MEO（中地球軌道）納入我們的衛星組合中，以不斷增強我們的網路彈性，進一步為企業和政府客戶提供服務。

Now let me hand the call over to Ivan for the business updates on the first quarter of 2024.

現在讓我將電話轉交給 Ivan，以了解 2024 年第一季的業務最新情況。

Thank you, Chairman, Kuo, and hello, everyone.

謝謝郭主席，大家好。

Now please seek to Page 5 for an update on our performance in the mobile business. As mentioned by Chairman Kuo, we maintain our leading position in the Taiwan mobile market in the first quarter of the 2024 with the largest subscriber share of the 37.7%. Meanwhile, our revenue share continue to stay above the 40%, hitting 40.4% by the end of the March. Further widening our leading against our peers. Our exceed revenue to share over the subscriber and share was 2.7% due to the exciting progress of the subscriber share gains.

現在請參閱第 5 頁，以了解我們在行動業務方面的最新業績。正如郭董事長所提到的，我們在2024年第一季維持在台灣行動市場的領先地位，使用者份額最大，為37.7%。同時，我們的收入份額持續保持在 40% 以上，到 3 月底達到 40.4%。進一步擴大我們相對於同業的領先優勢。由於訂戶份額收益的令人興奮的進展，我們的收入超過訂戶份額，份額為 2.7%。

In addition 5G, the migration and international roaming continued to driving up our mobile service revenue and postpaid ARPU and recording a 5.1% and 3.4% year-over-year increase respectively. And mobile service revenue and ARPU also continued to maintain their goals for (inaudible) and consecutively the month and the 12th consecutively the quarterly, the respectively. As 5G continue to penetrate (inaudible) average monthly fee uplift from customer who migrate from the 5G to -- from the 4G to the 5G group to the 14.5% in the first quarter. And it's repeating and spreading upward trajectory.

此外，5G、遷移和國際漫遊持續推動我們的行動服務收入和後付費 ARPU 年比分別成長 5.1% 和 3.4%。行動服務收入和 ARPU 也持續保持其目標（聽不清楚），連續一個月和連續第 12 個季度保持目標。隨著 5G 繼續滲透（聽不清楚），從 5G 遷移到 4G 到 5G 組的客戶的平均月費在第一季度上漲了 14.5%。而且它正在重複並蔓延向上的軌跡。

Let's move on to the Slide 6 for an update of our fixed broadband business. In the first quarter, we are great to see the accelerated growth in the fixed broadband sector due to our successful strategy to encouraging speed upgrade. And fixed broadband revenue and ARPU increased by 3.8% and 2% respectively on year-over-year basis. And both expanded year-over-year growth margin compared with light of the previous quarter. Our size up of the service of the 300 megabit per second or the higher continue to be popular among our mix with the 29% year-over-year increase in the first quarter. Maintaining is the double digital goals.

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。第一季度，我們很欣喜地看到，由於我們成功的提速策略，固定寬頻產業加速成長。固定寬頻營收和ARPU較去年同期分別成長3.8%和2%。與上一季相比，兩者的年比成長率均有所擴大。我們的每秒 300 兆位元或更高的服務規模繼續在我們的組合中受歡迎，第一季同比增長 29%。維護的是雙數字目標。

Now let's move on to the performance of our consumer (inaudible) business group. Slide 8 presents the performance of our CBG groups. In the first quarter, income before tax of the CBG increased by 3.7% year-over-year, mainly due to sustained growth of the telecom service on a year-over-year basis. Total CBG revenue increased by 1.7% mainly driving by the healthy 4.2% increase of our mobile service revenue. Owing to the continued 5G migration postpaid subscriber increased and roaming revenue. And fixed broadband performed. Whereas the revenue growth increased to 4.6%, offset by the revenue decrease of the fixed voice. Sales revenue decreased 1.5% mainly due to the higher base in first quarter last year, owing to the deferred demand resulting from the supply chain issues.

現在讓我們繼續討論消費者（聽不清楚）業務部門的表現。幻燈片 8 展示了我們 CBG 小組的表現。一季度，中國銀行稅前收入年增3.7%，主要得益於電信業務較去年同期持續成長。 CBG 總收入成長 1.7%，主要是由於我們的行動服務收入健康成長 4.2%。由於 5G 的持續遷移，後付費用戶和漫遊收入增加。並執行固定寬頻。而營收成長則增至 4.6%，但被固定語音收入下降所抵銷。銷售收入下降1.5%，主要是因為供應鏈問題導致需求遞延，導致去年第一季基數較高。

Slide 9 further illustrate our Consumer Business Group highlight. In the first quarter, our multiple-play package continued to support CBG's growth momentum. The subscriber numbers of the mobile and fixed broadband and Wi-Fi service all together demonstrate a 23.3% quarter-over-quarter growth, which achieved (inaudible) of the double-digit quarter and over quarter growth. This is attributable to the well-received promotion package and value-add service bundles.

幻燈片 9 進一步說明了我們消費者業務集團的亮點。第一季度，我們的多業務套餐繼續支持 CBG 的成長勢頭。行動、固定寬頻和Wi-Fi服務的用戶數量較上季成長23.3%，實現了（聽不清楚）季度兩位數成長和環比成長。這得歸功於廣受好評的促銷套餐和增值服務包。

In terms of the individual and home-centric applications, we remain the largest video platform in Taiwan as the subscriber number of our video service (inaudible) notably we (inaudible) acquired the exclusive broadcasting right for the 2024 Olympic game in April, which we believe will bring in a subscription and revenue increase of MOD and Hami Video. In addition, we are also exciting to see a 17% year-over-year increase in our CBG cybersecurity service and (inaudible) in the first quarter and mainly due to the increased demand from the service to avoid fishing website and block malicious connection. In addition, our service for filtering out adult content on the Internet and setting time limit on the Internet surfing has also been popular among the families and driving up the popularity of our cybersecurity service. We expect the growth trend will continue and further contribute to our CBG performance.

就個人和家庭為中心的應用程式而言，我們仍然是台灣最大的視訊平台，因為我們的視訊服務訂閱者數量（聽不清楚）尤其是我們（聽不清楚）於4 月獲得了2024 年奧運會的獨家轉播權，我們相信將為MOD和哈密影片帶來訂閱量和收入成長。此外，我們很高興看到第一季 CBG 網路安全服務年增 17%（聽不清楚），這主要是由於避免釣魚網站和阻止惡意連線的服務需求增加。此外，我們的過濾網路成人內容、限制上網時間的服務也受到了家庭的歡迎，帶動了我們網路安全服務的普及。我們預計這種成長趨勢將持續下去，並進一步為我們的 CBG 業績做出貢獻。

Please turn to Slide 10 for an overview of our Enterprise Business Group performance. In the first quarter, the EBG revenue slightly decreased by 0.9%, primarily due to the recognition of the (inaudible) and compensations in the same period last year. Excluding the onetime item, EBG revenue increased by 1.9% on-year. Additionally, our ICT business revenue increased by 3.3%, mainly driven by the business expansion of the big data service cybersecurity and AIoT and cloud service, all of which report a mid to high single-digit year-over-year growth or higher.

請參閱投影片 10，以了解我們企業業務集團的績效概覽。第一季度，EBG 營收小幅下降 0.9%，主要是因為去年同期確認了（聽不清楚）和補償。不包括一次性項目，EBG 營收年增 1.9%。此外，ICT業務收入成長3.3%，主要得益於大數據服務網路安全、AIoT和雲端服務的業務擴張，這些業務均呈現中高個位數或更高的年成長。

Going forward, we will continue our B2B2X model to build up the ecosystem with key partners and further boost ICT performance. Furthermore, EBG mobile service revenue also demonstrated strong growth at 3.7% on year, mainly prepared by the continuing of 5G upselling as well as the growth of the international roaming revenue. We observed (inaudible) also turned positive on yield due to growing enterprise marketing demand. Although the fixed lines revenue slightly decreased, data communication revenue and (inaudible) revenue continued to grow which offset the fixed voice decline. Owing to the fixed voice decline and a higher basis -- higher base of the aforementioned onetime item recognition last year, EBG reported a 13.4% year-over-year decrease of the income before tax. However, excluding the onetime effect, EBG's income before tax decreased (inaudible) to 1.5% year-over-year.

未來，我們將持續堅持B2B2X模式，與重點合作夥伴共建生態，進一步提升ICT效能。此外，EBG行動服務收入也呈現強勁成長，較去年同期成長3.7%，主要得益於5G追加銷售的持續以及國際漫遊收入的成長。我們觀察到（聽不清楚）由於企業行銷需求不斷成長，收益率也轉為正值。儘管固定電話收入略有下降，但數據通訊收入和（聽不清楚）收入仍持續成長，抵消了固定語音的下降。由於固定語音下降和更高的基數——去年上述一次性項目識別的基數更高，EBG 報告稅前收入年減 13.4%。然而，排除一次性影響，EBG 的稅前收入較去年同期下降（聽不清楚）至 1.5%。

Slide 11 illustrates our Enterprise Business highlights. In the first quarter, we will get -- we are glad to see our total enterprise emerging application revenue increased by 5.2% on year-over-year basis. Notably, big data analysis that delivered a significant 71.6% year-over-year growth. Due to the smart energy project injection and cyber security revenue included year-over-year for the ninth consecutive quarter. And additionally, the AIoT business experienced a 6.5% growth on yield, driven by revenue injection from the green energy project. And our cloud service revenue increased by 5.8% with sustained growth of the international public cloud recurring meriting revenue at 36.8% on-year.

幻燈片 11 展示了我們的企業業務亮點。在第一季度，我們很高興看到我們的企業新興應用總收入年增 5.2%。值得注意的是，大數據分析年增71.6%。由於智慧能源專案注入和網路安全收入連續第九個季度年增。此外，在綠色能源專案收入註入的推動下，AIoT業務的收益率成長了6.5%。雲端服務收入成長5.8%，國際公有雲經常性收益較去年同期持續成長36.8%。

Although our IDC revenue decreased on a year basis due to the recognition of onetime (inaudible) in the same period last year we are glad to report our recurring revenue of IDC service delivered a stable growth in the 7.6%. This quarter we successfully expand our national expertise into the global market with the position of our first overseas data center construction project. Furthermore, we are proud to announce that we are the first company in Taiwan to successfully introduced an automatic vehicle identification, AVI, and vehicle detection with the system to monitor overtime packing in the few service area, which we believe is (inaudible) the success like could be an extend to other (inaudible).

儘管由於去年同期的一次性（聽不清楚）確認，我們的 IDC 收入同比下降，但我們很高興地報告，我們的 IDC 服務經常性收入實​​現了 7.6% 的穩定增長。本季度，我們憑藉第一個海外資料中心建設項目，成功將國內專業知識擴展到全球市場。此外，我們很自豪地宣布，我們是台灣第一家成功引入自動車輛識別、AVI 和車輛檢測系統的公司，以監控少數服務區域的超時打包，我們相信這是（聽不清楚）的成功like 可以是對其他的擴展（聽不清楚）。

Then Slide 12 illustrates our international business performance. In the first quarter, both the income before tax and total revenue for the IBG report positive and double-digit growth on a year basis at 23.5% and 13.3% respective. And the impressive growth was mainly fueled by the growing demand for overseas ICT project as our trends. Expand our global footprint and which offset the year-over-year decrease of the fixed line revenue, the result from the service portfolio change. During this quarter, we partnered with EXATEL, a poland telecom operator to launch the 5G Zone in Warsaw, where our innovative 5G smart application are showcased to attract business opportunities also service as the foundation for local touch and business expansion in Europe.

然後投影片 12 展示了我們的國際業務績效。第一季度，IBG稅前收入和總收入均達到兩位數正成長，年比分別成長23.5%和13.3%。令人印象深刻的成長主要是由於我們對海外ICT專案的需求不斷增長作為我們的趨勢。擴大我們的全球足跡，抵消了服務組合變化導致的固網收入年減。本季，我們與波蘭電信業者EXATEL合作，在華沙推出5G專區，展示我們創新的5G智慧應用，吸引商機，為歐洲在地化和業務拓展奠定基礎。

In addition, we (inaudible) the 2024 Smart City Innovation Application Award for our smart transportation solution and (inaudible). We also won a 2024 system integration award in Kaohsiung Smart City Expo for our successful overseas smart healthcare solutions, proving our successful in the Internet of the medical things globally.

此外，我們的智慧交通解決方案（聽不清楚）也獲得了 2024 年智慧城市創新應用獎（聽不清楚）。我們也憑藉著在海外成功的智慧醫療解決方案，在高雄智慧城市博覽會上獲得了2024年系統整合獎，證明了我們在全球醫療物聯網方面的成功。

Now I would like to turn the call to Vincent for our financial highlights.

現在我想請文森特來了解我們的財務亮點。

Thank you, President, Ivan. Good afternoon, everyone. Now I will present a financial summary of our first quarter results in 2024. Let's begin with Slide 14, income statement highlights.

謝謝伊凡總統。大家下午好。現在，我將介紹 2024 年第一季業績的財務摘要。

During the first quarter in 2024, revenue was about $55 billion, which hit an 8-year high for the same period. Compared to the same quarter last year, revenue increased by 1.4%, primarily driven by higher mobile service revenue, growing ICT business revenue and broadband service revenue. Income from operations and net income decreased by 2.2% and 2.6% on-year respectively, mainly due to the high base from last year as a result of government compensation related to ST-2 satellite. Excluding this onetime item, year-over-year changes in income from operations and net income remained in positive territory, which demonstrates the healthy growth momentum of our core and ICT businesses. EPS for Q1 is $1.21. EBITDA and EBITDA margin remained steady.

2024年第一季營收約550億美元，創8年同期新高。與去年同期相比，營收成長1.4%，主要受到行動服務收入增加、ICT業務收入和寬頻服務收入成長的推動。營業收入和淨利潤年減2.2%和2.6%，主要是ST-2衛星相關政府補償導致前年基數較高。剔除此一次性項目，營業收入和淨利潤同比變動均維持正值，反映了我們核心業務和ICT業務的健康成長動能。第一季每股收益為 1.21 美元。 EBITDA 和 EBITDA 利潤率保持穩定。

Now moving on to Page 15 for balance sheet highlights. As of March 31, 2024, total assets increased by 0.9% compared to the year end of 2023. This increase was mainly caused by the increase in current assets and long-term investments, which offset the decrease in property, plant and equipment. Total liabilities decreased by 4.1%, primarily attributable to the decrease in accounts payable. Additionally, debt ratio decreased by 1 percentage point, and the net debt over EBITDA remained 0.

現在轉到第 15 頁了解資產負債表要點。截至2024年3月31日，總資產較2023年底成長0.9%。負債總額下降4.1%，主要是應付帳款減少所致。此外，負債比率下降1個百分點，淨負債與EBITDA比率仍為0。

Page 16 provides a summary of our cash flows. For the first quarter in 2024, we generated solid cash flows as cash flows from operating activities grew by 26.1% compared to the same quarter last year. The increase was mainly attributable to a decrease in settlement of accounts payable and payments for inventory. Regarding capital investment, the amount of CapEx declined by 6.9% on-year, of which mobile-related CapEx decreased by 50%, while nonmobile CapEx increased by 9.1%. The latter was primarily due to FTTH deployment and asset vitalization. On top of that, free cash flows increased by 56.9% on-year. Taken together, we maintain solid balance sheet and keep generating strong operating cash flows, most of which are underpinnings to support our business expansion and (inaudible) digital opportunities.

第 16 頁提供了我們現金流量的摘要。 2024年第一季度，我們產生了穩健的現金流，經營活動現金流較去年同期成長了26.1%。增加的主要原因是應付帳款結算和存貨付款減少。資本投資方面，資本支出金額較去年同期下降6.9%，其中行動相關資本支出下降50%，非行動資本支出成長9.1%。後者主要是由於FTTH部署和資產盤活。除此之外，自由現金流年增 56.9%。總而言之，我們維持穩健的資產負債表，並持續產生強勁的營運現金流，其中大部分是支持我們業務擴張和（聽不清楚）數位機會的基礎。

On Slide 17, let's turn to the table that presents operating performance against our forecast. In the first quarter of 2024, revenue was about in line with our estimate. For performance measures, income from operations, net income, EPS and EBITDA all beat our forecast by a modest margin. The better-than-expected performance was primarily driven by the steady growth of core business and improved profitability of ICT business.

在投影片 17 上，讓我們來看看根據我們的預測顯示營運績效的表格。 2024 年第一季度，營收與我們的預期基本一致。就業績效指標而言，營運收入、淨利、每股盈餘和 EBITDA 均小幅超出我們的預測。業績優於預期主要得益於核心業務的穩定成長和ICT業務獲利能力的提升。

That concludes the first quarter financial results. Let me turn the call over to Chairman Harrison.

第一季財務業績到此結束。讓我把電話轉給哈里森主席。

Thank you, Vincent. On Slide 18 you can see our awards and ESG achievement highlights from the first quarter of this year. First, I'd like to report that relative to 2020, our revenue of the parent company increased about 5.7%, while the carbon emissions experienced a downward trend by decreasing 14% in 2023. The inverse relationship between revenue growth and the carbon emission trend highlights the effectiveness of our dual-track approach to operations and sustainable development.

謝謝你，文森。在幻燈片 18 上，您可以看到我們今年第一季的獎項和 ESG 成就亮點。首先，我想報告一下，相對於2020年，我們母公司的營收成長了約5.7%，而碳排放量呈下降趨勢，2023年減少了14%。營運和永續發展雙軌方法的有效性。

Moving forward, we will intensify our carbon reduction efforts by enhancing energy efficiency with innovative technology and the usage of renewable energy. Additionally, we are the first telecom company in Taiwan to receive approval from EV100 and committed to transitioning 100% of our corporate fleet to electric vehicles by the year 2030. Besides we once again ranked in the top 5 of companies in S&P Global's Sustainability Yearbook 2024 and was honored with the highest leadership level. The A-ranking recognition in both the CDP climate change assessment and supplier engagement rating.

展望未來，我們將透過創新技術和再生能源的使用提高能源效率，加大減碳力度。此外，我們是台灣第一家獲得 EV100 批准的電信公司，並承諾在 2030 年將我們的企業車隊 100% 轉換為電動車。榮獲最高領導階層榮譽。在 CDP 氣候變遷評估和供應商敬業度評級中均獲得 A 級認可。

In addition, we were the leading telco in Taiwan receiving top awards for most committed to ESG and the best Investor Relations from finance issue. This (inaudible) attests to our position as an international industry leader with outstanding performance in all aspects of sustainable development.

此外，我們是台灣領先的電信公司，因最致力於 ESG 和財務問題的最佳投資者關係而獲得最高獎項。這（聽不清楚）證明了我們作為國際產業領導者的地位，在永續發展的各個方面都表現出色。

Furthermore, we clinched the first price for overall ESG performance for 3 consecutive years from Global Views Monthly one of the most prestigious ESG awards in Taiwan, which exempted us from competing in the same category for the next 3 additions. This outstanding outcome demonstrates a track record of long-term and stable performance in ESG evaluations and its future on the annual honor role. This concludes our prepared remarks. Thank you for your attention.

此外，我們連續三年獲得台灣最負盛名的 ESG 獎項之一《環球視野月刊》的整體 ESG 表現第一名，這使我們免於在接下來的 3 個獎項中參加同一類別的競爭。這一出色的成績表明了其在ESG評估方面的長期穩定表現以及其在年度榮譽角色上的未來。我們準備好的演講到此結束。感謝您的關注。

At this time, I would like to open our conference call for questions.

現在，我想開始我們的電話會議以提問。

(Operator Instructions) The first question, Neale Anderson of HSBC.

（操作員指示）第一個問題，匯豐銀行的尼爾安德森（Neale Anderson）。

I had a few questions relating to Slide #11, please, the emerging enterprise applications. So with the percentage numbers, it's a little bit hard to get a sense of the absolute contribution and growth in these business areas. So would it be possible to give us any more detail and say which is the largest one on an absolute basis and where you -- which business area you think has the capacity to be again larger in a few years time again on an absolute basis rather than percentage-wise. And the other question is relating to the revenue and the margin trends in the data center and the cloud business because we're getting something of a mixed picture from other telcos in this area. So it would be great to get your views on that. Thank you.

我有幾個與幻燈片 #11 新興企業應用程式相關的問題。因此，透過百分比數字，很難了解這些業務領域的絕對貢獻和成長。因此，是否可以向我們提供更多詳細信息，並說明哪一個是絕對意義上最大的業務領域，以及您認為哪個業務領域有能力在幾年內再次在絕對基礎上變得更大，而不是比按百分比計算。另一個問題與資料中心和雲端業務的收入和利潤趨勢有關，因為我們從該領域的其他電信公司得到的情況好壞參半。因此，很高興了解您對此的看法。謝謝。

Okay. Thank you, Neale, for your questions. So regarding the contribution of the emerging application revenues. So basically, we don't disclose detailed information. What we will share is that the IDC contributed the most and followed by cybersecurities and AIoT. So these are the key pillars. This is just for the first quarter. Yes. And for the revenue and margin trends on data center, okay? So what we say the revenue trend, what we see because for the IDC, right, sometimes we will have the onetime setup service revenue, but we focus more on the recurring revenues. And we attach a greater weight on this. So what we can share is that for the recurring revenue of our IDC, the growth has been increasing. As we mentioned, now the recurring revenue of IDC for this quarter year-over-year change is almost 8%. And we think -- actually, the recurring revenue makes up a big chunk of the total IDC revenue, and it's on a healthy trajectory.

好的。謝謝尼爾的提問。關於新興應用收入的貢獻。所以基本上我們不會透露詳細資訊。我們要分享的是IDC貢獻最大，其次是網路安全和AIoT。所以這些都是關鍵支柱。這只是第一季的情況。是的。至於資料中心的收入和利潤趨勢，好嗎？所以我們所說的收入趨勢，我們所看到的，因為對於IDC來說，有時我們會有一次性設定服務收入，但我們更專注於經常性收入。我們對此更加重視。所以我們可以分享的是，我們IDC的經常性收入，成長一直在增加。正如我們所提到的，目前IDC本季的經常性收入年增率接近8%。我們認為，實際上，經常性收入佔 IDC 總收入的很大一部分，而且處於健康的軌道上。

Any comment on the margin side or competition in the IDC and the cloud area, please?

請問對IDC和雲端領域的利潤率或競爭有什麼評論嗎？

Okay. So basically, for the margin, for the data center -- actually, when we see IDC business, we take a holistic view (inaudible) because for clients using our data center normally they will use our services. So when we look at the profit, we will take as a holistic view. This is unlike our competitors. And because their main advantage is or their main business is on data center per se, but they don't provide integrated services to the clients. So what we'll see is together with our subsidiary, Chief Telecom, actually we are still the largest IDC service providers, and we are way ahead of our competitors, and we are very confident that we can maintain our lead in this line of business. Thank you.

好的。所以基本上，對於利潤，對於資料中心——實際上，當我們看到IDC業務時，我們會採取整體觀點（聽不清楚），因為對於通常使用我們資料中心的客戶來說，他們會使用我們的服務。所以我們看利潤的時候，會整體考慮。這與我們的競爭對手不同。因為他們的主要優勢是或他們的主要業務是資料中心本身，但他們不向客戶提供整合服務。所以我們會看到的是，和我們的子公司Chief Telecom一起，實際上我們仍然是最大的IDC服務供應商，我們遠遠領先於我們的競爭對手，我們非常有信心能夠在這個業務領域保持領先地位。謝謝。

(Operator Instructions).

（操作員說明）。

Okay. Maybe we have the first question from the platform. (inaudible) as the government announced the policy of raising the electricity fee, could Chunghwa Telecom management share the impacts to Chunghwa Telecom?

好的。也許我們有來自平台的第一個問題。 （聽不清楚）隨著政府宣布調高電費政策，中華電信管理階層是否可以分擔中華電信的影響？

Okay. Thank you. We don't anticipate a significant impact from the increase in electricity fees as we have continued to invest in energy efficiency. For example, our centralized RAN architecture and the retirement of 3G networks are all constantly contribute to energy savings. In addition, we have take some countermeasures to response to the electricity cost increase as well. For the energy-intensive services like IDC, we have factored the electricity fee issue into our service contracts, including transferring the markup of the electricity fees to our clients. Thus for us, the electricity fee increase is generally manageable. In the long run, we will still continue to invest in the initiatives of carbon emission reduction, aiming to control the overall energy cost as well as to response to ESG goals. Thank you.

好的。謝謝。我們預計電費上漲不會產生重大影響，因為我們將繼續投資能源效率。例如，我們的集中式RAN架構和3G網路的退役都在持續地為節能做出貢獻。另外，針對電費上漲，我們也採取了一些對策。對於IDC等能源密集型服務，我們已將電費問題納入服務合同，包括將電費加價轉移給客戶。因此對我們來說，電費上漲總體上是可控的。長遠來看，我們仍會持續投資減碳舉措，旨在控制整體能源成本，並響應ESG目標。謝謝。

(Operator Instructions) And ladies and gentlemen, we thank you for your questions. If there are no further questions at this point, I'll turn it back over to Chairman Kuo for closing comment. Thank you.

（操作員說明）女士們、先生們，我們感謝您提出的問題。如果此時沒有其他問題，我會將其轉回給郭主席進行總結評論。謝謝。

Thank you for your participation. Goodbye.

感謝您的參與。再見。

Thank you, Chairman Kuo. We 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. Thank you, and goodbye.

謝謝郭主席。感謝您參加中華電信的會議。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，再見。