UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 20-F (Mark One) ☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 19 ...

Financial Data and Key Metrics Changes - In Q4 2022, total revenue decreased by 0.7% year-over-year, while revenue from core business increased by 2.3% [16] - Net income decreased by 2.2% primarily due to sales decline and government subsidies granted in Q4 2021 [16] - EBITDA margin increased to 35.05% from 34.82% [16] - For the full year 2022, total revenue increased by 3% compared to 2021, with net income growing by 2.1% [17] Business Line Data and Key Metrics Changes - Mobile service revenue increased by 5.8% year-over-year, marking 20 consecutive months of growth [5] - Fixed broadband revenue grew by 3.7% year-over-year, with a 51.9% increase in subscribers for speeds of 300 Mbps or higher [7] - Consumer Business Group (CBG) revenue decreased by 2.1% year-over-year, despite strong mobile service revenue growth of 7.1% [8] - Enterprise Business Group (EBG) revenue increased by 2.9% year-over-year, driven by ICT business growth [12] Market Data and Key Metrics Changes - Mobile revenue share and subscriber share reached 39.5% and 36.6%, respectively, indicating strong market leadership [5] - International Business Group (IBG) revenue decreased by 7.1% year-over-year but increased by 19.7% when excluding non-recurring impacts [15] Company Strategy and Development Direction - The company aims to build ecosystems and create long-term value for customers, focusing on maintaining its leadership in network and service quality [4] - Plans to roll out new promotion strategies and enhance service speeds to distinguish from competitors [8] - Continued emphasis on digital transformation and ICT services to meet customer demands [20] Management Comments on Operating Environment and Future Outlook - Management expressed optimism about the telecom market's recovery and growth, particularly in 5G adoption [4] - The company expects total revenue growth of 2.1% to 2.8% in 2023, driven by core business growth and ICT services [20] - Operating costs are projected to rise by 4% due to investments in infrastructure [21] Other Important Information - The company has been recognized for its ESG efforts and launched a Green ICT Supply Chain initiative [22] - Free cash flows increased by 12.4% compared to 2021, supporting long-term value creation [19] Q&A Session Summary Question: Contribution of roaming and prepaid services - Management noted that while specific numbers are not disclosed, there is a positive trend in prepaid subscriber growth due to increased demand for overseas travel [24] Question: Revenue growth expectations for 5G - Management remains optimistic about 5G revenue growth, although specific internal data is not disclosed [25] Question: Roaming service revenue recovery - Roaming service revenue is expected to recover to about 70% to 80% of pre-pandemic levels [27] Question: Margin of enterprise ICT business - The net margin for the enterprise ICT business is approximately 20% [30] Question: Expectations for ICT business investments - Management indicated that the ICT business will require ongoing investments, with expectations for margin and EBITDA numbers to be provided starting Q1 2023 [30]

Chunghwa Telecom Co., Ltd. (NYSE:CHT) Q3 2022 Earnings Conference Call November 1, 2022 3:00 AM ET Company Participants Angela Tsai - Director, Investor Relations Harrison Kuo - President Vincent Chen - Chief Financial Officer Conference Call Participants Neale Anderson - HSBC Sara Wang - UBS Operator Good afternoon, ladies and gentlemen. Welcome to Chunghwa Telecom Conference Call for the company’s Third Quarter 2022 Operating Results. [Operator Instructions] For information, this conference call is now be ...

Chunghwa Telecom Co., Ltd. (NYSE:CHT) Q2 2022 Earnings Conference Call July 29, 2022 3:00 AM ET Company Participants Cho-Fen Tsai - Senior Director of Investor & Media Relations Shui-Yi Kuo - President Yu-Shen Chen - Senior EVP of Finance & CFO Conference Call Participants Neale Anderson - HSBC Sara Wang - UBS Operator Good afternoon, ladies and gentlemen. Welcome to Chunghwa Telecom Conference Call for the company's Second Quarter 2022 Operating Results. During the presentation the lines will be on listen- ...

Financial Data and Key Metrics Changes - Total revenues increased by 2.4% year-over-year in Q1 2022, while operating costs and expenses rose by 1.7% mainly due to increased personnel expenses and depreciation from 5G network deployment [14] - Income from operations increased by 4.6%, and net income rose by 2.5%, with EPS increasing by TWD0.02 to TWD1.16 compared to the same quarter last year [14] - EBITDA margin improved to 41.51% from 41.08% in the prior year period [14] Business Line Data and Key Metrics Changes - Mobile subscriber numbers, excluding IoT SIMs, increased by 0.7% year-over-year, with mobile service revenue up by 4.9% year-over-year [5][4] - Fixed broadband revenue grew by 4.4% year-over-year, driven by higher speed service adoption, with ARPU increasing by 3.5% year-over-year [7] - Enterprise Business Group revenue increased by 2.1% due to growth in mobile and fixed broadband revenues [10] Market Data and Key Metrics Changes - The mobile market in Taiwan remained steady, with Chunghwa Telecom maintaining a 39.1% revenue market share and a 36% subscriber market share [4] - The number of fixed broadband subscribers and high LAN subscribers continued to grow year-over-year, reflecting Chunghwa's leading market share [6] Company Strategy and Development Direction - The company aims to package and deliver more customer-centric services focusing on media, sports, gaming, and virtual reality applications to expand opportunities in the consumer market [8] - The International Business Group is focusing on growing demand for IDC, cloud, and ICT services, with a strategy to cater to global clients [13] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining a leading market position despite potential changes in the competitive landscape [4] - The company remains positive about the full-year performance of its Enterprise ICT business, despite a decrease in project revenue recognition [11] Other Important Information - Chunghwa Telecom received several awards for its ESG practices and innovative digital applications, affirming its leading status in the telecom sector [17] Q&A Session Summary Question: Growth in International Business - The International Business Group has reorganized its revenue structure, and the company expects continued growth from global accounts, with a positive outlook on revenue growth [19][22] Question: Enterprise Business Growth - The Enterprise Business Group includes various revenue streams such as satellite communication and undersea cable sales, with expectations for growth [23][24] Question: 5G ARPU Increase - The company does not disclose specific numbers regarding the net increase in ARPU after accounting for handset subsidies, but acknowledges a significant increase [26][29] Question: 5G Penetration Target - The target for 5G penetration by the end of the year is set at 30%, with innovative applications expected to drive this growth [30][32] Question: Impact of Promotions and COVID-19 - Promotions are not expected to affect ARPU significantly, and the company believes that COVID-19 will not severely impact business performance due to the steady nature of the telecom industry [33][34]

Part I [Key Information](index=5&type=section&id=ITEM%203.%20KEY%20INFORMATION) This section outlines significant risks associated with the company's business, industry regulations, and securities ownership [Risk Factors](index=5&type=section&id=D.%20Risk%20Factors) The company faces substantial risks from telecommunications regulation, intense market competition, operational disruptions, and geopolitical factors - The company is subject to extensive regulation by the NCC under the Telecommunications Management Act (TMA), which limits flexibility, and as a dominant provider, faces **mandatory tariff reductions** that could adversely affect revenues[9](index=9&type=chunk)[10](index=10&type=chunk) - Intense competition from mobile and cable operators using **aggressive pricing and bundled services** could impact the company's market share and revenue[18](index=18&type=chunk)[19](index=19&type=chunk) - Operational disruptions are a key risk, with the **SJC2 submarine cable construction delayed by over two years** due to geopolitical conflicts, potentially impacting international bandwidth supply[23](index=23&type=chunk)[24](index=24&type=chunk)[26](index=26&type=chunk) - The ROC government is the largest stockholder with approximately **35.29% ownership**, giving it significant control over the board, business strategy, and dividend policy[44](index=44&type=chunk) - **Foreign ownership is capped at 49%** for direct holdings and 60% for total holdings, and violating these limits could result in fines or loss of network approval[69](index=69&type=chunk)[70](index=70&type=chunk) - The COVID-19 pandemic impacted **roaming revenue, handset supply chains, and project timelines**, potentially harming revenues from mobile and emerging services[56](index=56&type=chunk)[58](index=58&type=chunk) [Information on the Company](index=18&type=section&id=ITEM%204.%20INFORMATION%20ON%20THE%20COMPANY) This section provides an overview of the company's history, business operations, competitive strengths, and strategic direction [History and Development of the Company](index=18&type=section&id=A.%20History%20and%20Development%20of%20the%20Company) The company is Taiwan's largest integrated telecommunications provider, leveraging its brand and technology to maintain market leadership - Chunghwa Telecom is **Taiwan's largest integrated telecommunications service provider**, offering domestic fixed, mobile, internet, and international fixed communications services[84](index=84&type=chunk)[85](index=85&type=chunk) FY2021 Key Financials | Metric | Amount (NT$ billion) | Amount (US$ billion) | | :--- | :--- | :--- | | Revenues | 210.5 | 7.6 | | Consolidated Net Income | 37.0 | 1.3 | | Capital Expenditures | 35.3 | 1.3 | - Key competitive strengths include its position as an **integrated full-service provider, a premium brand with a broad customer base**, extensive network coverage, and strong capital resources[89](index=89&type=chunk)[90](index=90&type=chunk)[98](index=98&type=chunk) - The business strategy focuses on a **customer-centric transformation, expansion into new growth areas like ICT and IoT**, and forming strategic alliances[102](index=102&type=chunk)[103](index=103&type=chunk)[118](index=118&type=chunk)[119](index=119&type=chunk) [Business Overview](index=24&type=section&id=B.%20Business%20Overview) The company's operations are segmented by communications type, with the mobile segment being the largest revenue contributor Revenue by Business Segment (2019-2021) | Business Segment | 2019 Revenue (NT$ B) | 2020 Revenue (NT$ B) | 2021 Revenue (NT$ B) | | :--- | :--- | :--- | :--- | | Domestic Fixed Communications | 65.7 | 69.5 | 64.8 | | Mobile Communications | 95.5 | 90.2 | 95.2 | | Internet | 30.1 | 32.1 | 33.1 | | International Fixed Communications | 11.5 | 8.7 | 9.1 | | Others | 4.7 | 7.1 | 8.3 | - Domestic fixed communications revenue decreased to **NT$64.8 billion in 2021**, driven by declines in traditional voice services, though partially offset by growth in broadband and MOD services[128](index=128&type=chunk) - Mobile communications revenue increased to **NT$95.2 billion in 2021**, supported by 5G migration and handset sales, with the company remaining Taiwan's largest mobile operator[157](index=157&type=chunk)[159](index=159&type=chunk) - Internet business revenue grew to **NT$33.1 billion in 2021**, fueled by demand for broadband upgrades, IDC, cloud, and cybersecurity services[172](index=172&type=chunk)[174](index=174&type=chunk) - The company faces robust competition from four other mobile operators and multiple cable TV providers based on price, service quality, and network reliability[199](index=199&type=chunk)[200](index=200&type=chunk)[208](index=208&type=chunk) [Organizational Structure](index=49&type=section&id=C.%20Organizational%20Structure) The company's organizational structure is detailed in a diagram, with a list of subsidiaries provided in Exhibit 8.1 - A diagram of the company's organizational structure as of March 31, 2022 is provided, with a detailed list of subsidiaries available in **Exhibit 8.1**[299](index=299&type=chunk) [Property, Plant and Equipment](index=49&type=section&id=D.%20Property%2C%20Plant%20and%20Equipment) The company's assets primarily consist of telecommunications equipment, land, and buildings used for operations and investment - The company's main property, plant, and equipment are telecommunications equipment, land, and buildings in Taiwan, mostly for operational use[239](index=239&type=chunk) - In 2021, the company generated approximately **NT$863.7 million (US$31.1 million) in rental income** from its properties[241](index=241&type=chunk) - The company is developing new properties to **enhance asset value and support human resources**[241](index=241&type=chunk) [Operating and Financial Review and Prospects](index=49&type=section&id=ITEM%205.%20OPERATING%20AND%20FINANCIAL%20REVIEW%20AND%20PROSPECTS) This section analyzes the company's financial performance, key revenue drivers, capital expenditures, and critical accounting estimates [Operating Results](index=53&type=section&id=A.%20Operating%20Results) In 2021, total revenues and operating income increased, driven by growth in mobile communications and internet services Consolidated Financial Highlights (in NT$ billions) | Metric | 2019 | 2020 | 2021 | | :--- | :--- | :--- | :--- | | Total Revenues | 207.5 | 207.6 | 210.5 | | Income from Operations | 40.7 | 42.4 | 44.9 | | Consolidated Net Income | 33.9 | 34.7 | 37.0 | | Net Income (Parent) | 32.9 | 33.4 | 35.6 | - In 2021, revenue growth was primarily driven by a **5.6% increase in mobile communications revenue** and a **3.0% increase in internet services revenue**[334](index=334&type=chunk)[337](index=337&type=chunk) - Domestic fixed communications revenue **decreased by 6.7% in 2021** to NT$64.8 billion, mainly due to lower ICT project revenue and declines in traditional voice services[327](index=327&type=chunk) - Operating costs and expenses **decreased by 1.0% in 2021** to NT$165.2 billion, primarily due to the completion of large ICT projects and lower personnel costs[345](index=345&type=chunk) - In 2020, revenues remained stable as growth in domestic fixed and internet services was offset by a **5.5% decline in mobile communications revenue** due to competition and COVID-19 impacts[360](index=360&type=chunk)[361](index=361&type=chunk)[366](index=366&type=chunk)[368](index=368&type=chunk) [Liquidity and Capital Resources](index=63&type=section&id=B.%20Liquidity%20and%20Capital%20Resources) The company's liquidity is primarily sourced from strong operating cash flow, which funds capital expenditures and dividends Summary of Cash Flows (in NT$ billions) | Cash Flow | 2019 | 2020 | 2021 | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | 72.4 | 74.5 | 74.9 | | Net cash used in investing activities | (27.1) | (68.3) | (31.2) | | Net cash used in financing activities | (38.9) | (9.8) | (34.3) | | Cash and cash equivalents at end of year | 34.1 | 30.4 | 39.8 | Capital Expenditures by Business (in NT$ billions) | Business Segment | 2019 | 2020 | 2021 | 2022 (Planned) | | :--- | :--- | :--- | :--- | :--- | | Mobile communications | 7.8 | 8.8 | 16.8 | 14.5 | | Domestic fixed communications | 12.1 | 11.5 | 13.3 | \* | | Internet | 1.4 | 1.4 | 2.9 | \* | | International fixed communications | 1.1 | 0.8 | 0.5 | \* | | Others | 1.8 | 1.0 | 1.8 | 22.3 (incl. others) | | **Total** | **24.2** | **23.5** | **35.3** | **36.8** | - As of December 31, 2021, the company had **NT$39.8 billion in cash and cash equivalents** and unused credit lines of NT$61.7 billion[398](index=398&type=chunk) - The company has commitments of **NT$21.6 billion for telecommunications equipment** and NT$0.6 billion for land and buildings as of year-end 2021[394](index=394&type=chunk) [Research and Development, Patents and Licenses](index=67&type=section&id=C.%20Research%20and%20Development%2C%20Patents%20and%20Licenses) The company's R&D focuses on next-generation networks and emerging technologies, resulting in 161 patent filings in 2021 - Key R&D achievements in 2021 include advancements in **5G Standalone (SA) networks, 5G edge computing, multi-cloud management**, and AIoT applications[415](index=415&type=chunk) - The company is developing innovative applications in **smart transportation, digital convergence, AI, and cybersecurity**[416](index=416&type=chunk) - In 2021, the company **filed for 161 patents and was granted 167 patents**, reflecting its R&D output[416](index=416&type=chunk) [Critical Accounting Estimates](index=68&type=section&id=E.%20Critical%20Accounting%20Estimates) This section details key accounting judgments, including revenue recognition, impairment of assets, and pension benefit calculations - **Revenue recognition requires significant judgment**, especially in allocating transaction prices for bundled offerings and determining principal versus agent roles[421](index=421&type=chunk)[425](index=425&type=chunk)[429](index=429&type=chunk) - The company assesses impairment of trade receivables using an **expected credit loss (ECL) model**, which relies on assumptions about default risk and loss rates[451](index=451&type=chunk)[452](index=452&type=chunk) - Estimating the useful lives and assessing impairment of **long-lived assets involves subjective judgments** about technology, market conditions, and future cash flows[456](index=456&type=chunk)[457](index=457&type=chunk) - In 2021, the company recognized an **impairment loss of NT$420 million** on certain right-of-use assets and a NT$29 million impairment loss on goodwill[464](index=464&type=chunk)[467](index=467&type=chunk) - **Pension benefit calculations rely on actuarial assumptions** such as discount rates, employee turnover, and future salary increases[469](index=469&type=chunk) [Directors, Senior Management and Employees](index=74&type=section&id=ITEM%206.%20DIRECTORS%2C%20SENIOR%20MANAGEMENT%20AND%20EMPLOYEES) This section provides information on the company's leadership, compensation, board structure, and workforce [Directors and Senior Management](index=74&type=section&id=A.%20Directors%20and%20Senior%20Management) The company is led by an experienced board and executive team, with non-independent directors representing the MOTC - The Board of Directors consists of **13 members, including 5 independent directors**, with all non-independent directors representing the MOTC[478](index=478&type=chunk)[516](index=516&type=chunk) - Chi-Mau Sheih serves as the **Chairman and Chief Executive Officer**, and Shui-Yi Kuo serves as the President[479](index=479&type=chunk)[480](index=480&type=chunk) [Compensation](index=78&type=section&id=B.%20Compensation) Aggregate compensation for directors and executives was NT$106.5 million in 2021, overseen by the compensation committee Aggregate Compensation (2019-2021) | Year | Aggregate Compensation (NT$) | | :--- | :--- | | 2019 | 115,079,161 | | 2020 | 117,485,681 | | 2021 | 106,456,778 | - The 2021 aggregate compensation of **NT$106.5 million** includes NT$63.2 million in salary and NT$43.3 million in bonuses[509](index=509&type=chunk) - Bonuses for non-independent directors, amounting to **NT$35.8 million in 2021**, were paid directly to the MOTC as these directors are its legal representatives[510](index=510&type=chunk) [Board Practices](index=80&type=section&id=C.%20Board%20Practices) The board includes five independent directors and operates with Audit, Corporate Strategy, and Compensation committees - The company has a **13-member board of directors**, including five independent directors, with terms lasting until June 20, 2022[516](index=516&type=chunk) - An **Audit Committee, composed of all five independent directors**, was established to replace supervisors, with Lo-Yu Yen designated as the financial expert[518](index=518&type=chunk)[523](index=523&type=chunk) - A **Compensation Committee**, composed of three independent directors, is responsible for reviewing compensation policies for directors and managers[525](index=525&type=chunk) - A **Corporate Strategy Committee**, with eight director members, advises on long-term goals and major investments[524](index=524&type=chunk) [Employees](index=81&type=section&id=D.%20Employees) The company had 31,812 employees on a consolidated basis in 2021, with a highly educated workforce and strong union membership Consolidated Employee Headcount (2019-2021) | Category | 2019 | 2020 | 2021 | | :--- | :--- | :--- | :--- | | Technical | 15,633 | 16,352 | 16,150 | | Operations | 14,513 | 14,031 | 13,852 | | Administrative | 1,746 | 1,835 | 1,810 | | **Total** | **31,892** | **32,218** | **31,812** | - As of December 31, 2021, **85.8% of employees at the parent company** held bachelor, master, or doctoral degrees[530](index=530&type=chunk) - Approximately **99% of employees on a non-consolidated basis** are members of the principal labor union, and the company maintains good relations with them[531](index=531&type=chunk) - Employees are entitled to **1.7% to 4.3% of distributable earnings** as compensation, with NT$1.2 billion distributed in Q3 2021[532](index=532&type=chunk) [Share Ownership](index=82&type=section&id=E.%20Share%20Ownership) Directors and executives hold a negligible percentage of shares, while several subsidiaries have employee stock option plans - As of February 28, 2022, directors and executive officers beneficially owned an aggregate of 381,182 common shares, representing approximately **0.005% of total outstanding shares**[533](index=533&type=chunk) - The company's consolidated subsidiaries, including CHIEF, CHTSC, and CLPT, have **active employee stock option plans**[536](index=536&type=chunk)[537](index=537&type=chunk)[540](index=540&type=chunk) [Major Stockholders and Related Party Transactions](index=84&type=section&id=ITEM%207.%20MAJOR%20STOCKHOLDERS%20AND%20RELATED%20PARTY%20TRANSACTIONS) The MOTC is the largest stockholder, and the company engages in significant arm's-length transactions with its subsidiaries [Major Stockholders](index=84&type=section&id=A.%20Major%20Stockholders) The Ministry of Transportation and Communications (MOTC) is the largest stockholder with a 35.29% holding Major Stockholders' Ownership Percentage | Stockholder | As of Feb 28, 2022 (%) | | :--- | :--- | | The MOTC | 35.29% | | Shin Kong Life Insurance Co., Ltd | 6.36% | - As of February 28, 2022, 20,602,198 ADSs were held by 30 record holders, representing about **2.7% of total outstanding common shares**[543](index=543&type=chunk) [Related Party Transactions](index=84&type=section&id=B.%20Related%20Party%20Transactions) The company engages in significant arm's-length transactions with related parties, primarily its subsidiaries - The company has an exclusive agreement with its subsidiary SENAO for mobile handset distribution, from which SENAO received **NT$6.0 billion** in 2021[547](index=547&type=chunk) - In 2021, Chunghwa paid its subsidiary Honghwa approximately **NT$6.3 billion** for on-site sales and equipment installation services[549](index=549&type=chunk) - The company purchased network equipment and supplies worth approximately **NT$1.5 billion** from its subsidiary Chunghwa System Integration in 2021[549](index=549&type=chunk) - **No loans, credit, or guarantees** for borrowings have been provided to any directors or executive officers[545](index=545&type=chunk) [Financial Information](index=85&type=section&id=ITEM%208.%20FINANCIAL%20INFORMATION) This section covers the company's dividend policy and legal proceedings, highlighting a proposed dividend of NT$4.608 per share for 2021 Annual Dividends per Common Share (2017-2021) | Year Ended | Dividend per Share (NT$) | | :--- | :--- | | Dec 31, 2017 | 4.7960 | | Dec 31, 2018 | 4.4790 | | Dec 31, 2019 | 4.2260 | | Dec 31, 2020 | 4.3060 | | Dec 31, 2021 | 4.6080 | - The dividend for 2021, proposed at **NT$4.608 per share**, is subject to approval and represents a payout ratio of 99.98%[554](index=554&type=chunk) - The company is **not currently involved in any material litigation** or other proceedings that would have a significant effect on its financial position[553](index=553&type=chunk) [The Offer and Listing](index=86&type=section&id=ITEM%209.%20THE%20OFFER%20AND%20LISTING) The company's common shares are listed on the TWSE and its ADSs are listed on the NYSE - Common shares are listed on the **Taiwan Stock Exchange (TWSE)** under code "2412"[558](index=558&type=chunk) - American Depositary Shares (ADSs) are listed on the **New York Stock Exchange (NYSE)** under the symbol "CHT", with each ADS representing ten common shares[558](index=558&type=chunk) Closing Prices on April 6, 2022 | Security | Exchange | Closing Price | | :--- | :--- | :--- | | Common Shares | TWSE | NT$127 | | ADSs | NYSE | US$44.5 | [Additional Information](index=86&type=section&id=ITEM%2010.%20ADDITIONAL%20INFORMATION) This section covers the articles of incorporation, exchange controls, and tax implications for investors [Memorandum and Articles of Incorporation](index=87&type=section&id=B.%20Memorandum%20and%20Articles%20of%20Incorporation) The articles of incorporation specify authorized capital, board structure, dividend policy, and shareholder rights - The company's authorized capital is **NT$120 billion**, divided into 12 billion common shares[564](index=564&type=chunk) - The dividend policy mandates that **at least 50% of distributable net income** be distributed as dividends, with at least 50% of that in cash[573](index=573&type=chunk) - When issuing new shares for cash, **10% to 15% must be reserved for employees**, and existing shareholders have preemptive rights for the remainder[578](index=578&type=chunk) - Major corporate actions like amending the Articles of Incorporation require approval by **at least two-thirds of shares represented** at a meeting[583](index=583&type=chunk)[584](index=584&type=chunk) [Exchange Controls](index=93&type=section&id=D.%20Exchange%20Controls) Taiwan's exchange controls require registration for foreign investors and have annual remittance limits - Foreign exchange transactions must be handled by designated banks, with annual non-trade remittance limits of **US$50 million for companies** and US$5 million for individuals[623](index=623&type=chunk)[624](index=624&type=chunk) - Foreign investors must **register with the TWSE** to invest in Taiwan's securities market, and direct investment in telecommunications requires specific approval[611](index=611&type=chunk)[615](index=615&type=chunk) - ADS holders can convert proceeds into foreign currency, but withdrawing underlying shares requires the holder to **register as a foreign investor in Taiwan**[618](index=618&type=chunk)[621](index=621&type=chunk) [Taxation](index=96&type=section&id=E.%20Taxation) This section outlines ROC and U.S. tax implications for investors, including withholding tax on dividends - **ROC Taxation:** Dividends distributed to non-resident holders are subject to a **21% withholding tax**, while capital gains from share sales are exempt from income tax[629](index=629&type=chunk)[632](index=632&type=chunk) - **ROC Taxation:** A **securities transaction tax of 0.3%** is payable by the seller on the sale of common shares in Taiwan, but not on transfers of ADSs[637](index=637&type=chunk) - **U.S. Federal Income Tax:** For U.S. holders, distributions are generally treated as dividend income and may be eligible for **reduced "qualified dividend income" tax rates**[646](index=646&type=chunk)[648](index=648&type=chunk) - **U.S. Federal Income Tax:** The company believes it was **not a Passive Foreign Investment Company (PFIC)** for the 2021 taxable year[656](index=656&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=101&type=section&id=ITEM%2011.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company is exposed to interest rate, foreign currency, and equity price risks, which are actively managed - The company's primary market risks are **interest rate, foreign currency, and equity price risk**[666](index=666&type=chunk) - A **0.25% change in interest rates** would impact 2021 pre-tax profit by approximately NT$31.3 million[669](index=669&type=chunk) - Foreign currency risk is managed through **forward exchange contracts** to hedge against fluctuations, particularly for Euro-denominated purchases[670](index=670&type=chunk)[671](index=671&type=chunk) - A **5% change in equity prices** would impact 2021 pre-tax profit by NT$46 million and other comprehensive income by NT$181 million[674](index=674&type=chunk) [Description of Securities Other than Equity Securities](index=102&type=section&id=ITEM%2012.%20DESCRIPTION%20OF%20SECURITIES%20OTHER%20THAN%20EQUITY%20SECURITIES) This section details the fees and charges associated with the company's American Depositary Shares (ADSs) ADS Depositary Service Fees | Service | Fee | | :--- | :--- | | Issuance of ADSs | Up to US$5.00 per 100 ADSs issued | | Cancellation of ADSs | Up to US$5.00 per 100 ADSs cancelled | | Distribution of cash dividends | Up to US$2.00 per 100 ADSs held | | Distribution of stock dividends/rights | Up to US$5.00 per 100 ADSs held | - In 2021, the company received **US$0.6 million in net payments** from the depositary, JPMorgan Chase Bank, N.A., to cover expenses related to the ADR program[683](index=683&type=chunk) Part II [Controls and Procedures](index=105&type=section&id=ITEM%2015.%20CONTROLS%20AND%20PROCEDURES) Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of year-end 2021 - Management concluded that the company's **disclosure controls and procedures were effective** as of the end of the period covered by the annual report[686](index=686&type=chunk) - Management's annual report on internal control over financial reporting concluded that the **internal controls were effective** as of December 31, 2021[687](index=687&type=chunk)[690](index=690&type=chunk) - The independent auditor, Deloitte & Touche, issued an **unqualified opinion on the effectiveness** of the company's internal control over financial reporting[691](index=691&type=chunk)[694](index=694&type=chunk) - There were **no material changes** in internal control over financial reporting during the year ended December 31, 2021[701](index=701&type=chunk) [Audit Committee Financial Expert](index=107&type=section&id=ITEM%2016A.%20AUDIT%20COMMITTEE%20FINANCIAL%20EXPERT) The company has designated Lo-Yu Yen, an independent director, as its audit committee financial expert - **Lo-Yu Yen**, an independent director, is designated as the audit committee financial expert[702](index=702&type=chunk) [Code of Ethics](index=107&type=section&id=ITEM%2016B.%20CODE%20OF%20ETHICS) The company has adopted a Code of Ethics applicable to all directors, managers, and employees - A **Code of Ethics** and Ethical Corporate Management Best Practice Principles has been adopted for all directors, managers, and employees[703](index=703&type=chunk) [Principal Accountant Fees and Services](index=107&type=section&id=ITEM%2016C.%20PRINCIPAL%20ACCOUNTANT%20FEES%20AND%20SERVICES) Total fees paid to the principal accountant, Deloitte & Touche, amounted to NT$49.6 million in 2021 Accountant Fees (in NT$ millions) | Fee Category | 2020 | 2021 | | :--- | :--- | :--- | | Audit fees | 43.4 | 49.3 | | Audit-related fees | — | — | | Tax fees | — | — | | All other fees | 0.4 | 0.3 | - All audit and non-audit services provided by the principal accountant were **pre-approved by the company's audit committee**[708](index=708&type=chunk) [Corporate Governance](index=108&type=section&id=ITEM%2016G.%20CORPORATE%20GOVERNANCE) The company follows ROC corporate governance practices, which differ in some respects from NYSE standards for domestic issuers - The company follows **ROC corporate governance practices**, which differ from NYSE standards, particularly regarding director independence and committee structure[710](index=710&type=chunk)[712](index=712&type=chunk) - Unlike NYSE rules, ROC law does not require a majority of independent directors; the company has **five independent directors on its thirteen-member board**[713](index=713&type=chunk) - The company has an **Audit Committee and a Compensation Committee** composed of independent directors, complying with both ROC and applicable NYSE rules[718](index=718&type=chunk)[723](index=723&type=chunk) - The company **does not have a dedicated nominating/corporate governance committee**; instead, directors are elected by stockholders[719](index=719&type=chunk)[720](index=720&type=chunk) Part III [Financial Statements](index=111&type=section&id=ITEM%2018.%20FINANCIAL%20STATEMENTS) This section lists the consolidated financial statements and the independent auditor's report included in the annual report - The report includes the **consolidated financial statements** and the report of the independent registered public accounting firm[732](index=732&type=chunk) Consolidated Financial Statements [Report of Independent Registered Public Accounting Firm](index=115&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Deloitte & Touche issued unqualified opinions on the financial statements and internal controls, identifying mobile service revenue recognition as a critical audit matter - The auditor, Deloitte & Touche, expressed an **unqualified opinion** on the consolidated financial statements for the years ended December 31, 2019, 2020, and 2021[738](index=738&type=chunk) - An **unqualified opinion** was also issued on the effectiveness of the company's internal control over financial reporting as of December 31, 2021[739](index=739&type=chunk) - A **Critical Audit Matter** was identified concerning Revenue Recognition on Mobile Service, highlighting the complexity of auditing highly automated systems[741](index=741&type=chunk)[742](index=742&type=chunk)[743](index=743&type=chunk) [Consolidated Financial Statements Tables](index=117&type=section&id=Consolidated%20Financial%20Statements%20Tables) The financial statements show asset growth to NT$512.9 billion and net income growth to NT$37.0 billion in 2021 Consolidated Balance Sheet Highlights (as of Dec 31) | (In NT$ Millions) | 2020 | 2021 | | :--- | :--- | :--- | | **Total Current Assets** | 81,803 | 91,021 | | **Total Noncurrent Assets** | 424,377 | 421,854 | | **Total Assets** | **506,180** | **512,875** | | **Total Current Liabilities** | 73,223 | 66,229 | | **Total Noncurrent Liabilities** | 45,684 | 57,516 | | **Total Liabilities** | **118,907** | **123,745** | | **Total Equity** | **387,273** | **389,130** | Consolidated Statement of Comprehensive Income Highlights | (In NT$ Millions) | 2019 | 2020 | 2021 | | :--- | :--- | :--- | :--- | | **Revenues** | 207,520 | 207,609 | 210,478 | | **Gross Profit** | 71,567 | 70,580 | 75,367 | | **Income from Operations** | 40,646 | 42,361 | 44,930 | | **Net Income** | 33,921 | 34,704 | 37,047 | | **Total Comprehensive Income** | 35,249 | 35,994 | 36,081 | Consolidated Statement of Cash Flows Highlights | (In NT$ Millions) | 2019 | 2020 | 2021 | | :--- | :--- | :--- | :--- | | **Net cash provided by operating activities** | 72,427 | 74,456 | 74,858 | | **Net cash used in investing activities** | (27,127) | (68,254) | (31,172) | | **Net cash used in financing activities** | (38,934) | (9,802) | (34,314) | | **Net increase (decrease) in cash** | 6,405 | (3,630) | 9,359 | [Notes to Consolidated Financial Statements](index=127&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations of accounting policies, segment information, and specific financial statement items - The financial statements are prepared in conformity with **International Financial Reporting Standards (IFRSs)** as issued by the IASB[773](index=773&type=chunk) - Revenue from bundled contracts is allocated based on **relative standalone selling prices**, while project business revenue is recognized over time or upon completion[844](index=844&type=chunk)[847](index=847&type=chunk) - The company acquired a controlling interest in **International Integrated Systems, Inc. (IISI)** on July 1, 2020, which is accounted for as a business combination[940](index=940&type=chunk) - In February 2020, the company paid **NT$48,373 million to acquire 5G mobile broadband licenses**, which are recorded as intangible assets[1005](index=1005&type=chunk) - The company has both defined contribution and defined benefit retirement plans, with the **net defined benefit liability at NT$2,288 million** as of year-end 2021[1040](index=1040&type=chunk)[1044](index=1044&type=chunk)

[Chunghwa Telecom Form 6-K Filing (April 15, 2022)](index=1&type=section&id=Chunghwa%20Telecom%20Form%206-K%20Filing%20(April%2015%2C%202022)) [Reconciliation of 2021 Financial Statements (Taiwan-IFRSs vs. IFRSs)](index=3&type=section&id=Reconciliation%20of%202021%20Financial%20Statements%20(Taiwan-IFRSs%20vs.%20IFRSs)) The report reconciles 2021 financial statements under Taiwan-IFRSs and IFRSs, highlighting differences in income tax and historical revenue recognition [Financial Results under Taiwan-IFRSs (Year 2021)](index=3&type=section&id=Financial%20Results%20under%20Taiwan-IFRSs%20(Year%202021)) The company reported a consolidated net income of NT$37,195 million and total equity of NT$391,262 million under Taiwan-IFRSs for 2021 Financial Metrics (Taiwan-IFRSs) | Financial Metric | Amount (NT$ thousands) | | :--- | :--- | | Consolidated Net Income | 37,194,879 | | Net Income Attributable to Parent | 35,753,579 | | Basic Earnings Per Share | NT$4.61 | | Total Consolidated Assets | 513,070,360 | | Total Consolidated Liabilities | 121,807,910 | | Total Consolidated Equity | 391,262,450 | [Financial Results under IFRSs (Year 2021)](index=4&type=section&id=Financial%20Results%20under%20IFRSs%20(Year%202021)) The company reported a consolidated net income of NT$37,047 million and total equity of NT$389,130 million under IFRSs for 2021 Financial Metrics (IFRSs) | Financial Metric | Amount (NT$ millions) | | :--- | :--- | | Consolidated Net Income | 37,047 | | Net Income Attributable to Parent | 35,616 | | Basic Earnings Per Share | NT$4.59 | | Total Consolidated Assets | 512,875 | | Total Consolidated Liabilities | 123,745 | | Total Consolidated Equity | 389,130 | [Explanation of Differences](index=4&type=section&id=Explanation%20of%20Differences) Discrepancies between standards stem from the timing of income tax recognition and historical revenue recognition methods - The main difference stems from the timing of recognizing income tax on unappropriated earnings[5](index=5&type=chunk) - Historical differences in revenue recognition for fixed-line connection fees and prepaid phone cards prior to incorporation also contribute, though this reclassification **did not affect total equity**[5](index=5&type=chunk) [Basis for Earnings Distribution](index=4&type=section&id=Basis%20for%20Earnings%20Distribution) Earnings distribution and equity matters are governed by financial statements prepared under Taiwan-IFRSs - Chunghwa Telecom's earnings distribution and stockholders' equity matters are determined in accordance with **Taiwan-IFRSs**[6](index=6&type=chunk)