Workflow
CHT(CHT) - 2020 Q1 - Earnings Call Transcript
CHTCHT(US:CHT)2020-05-02 17:08

Financial Data and Key Metrics Changes - In Q1 2020, total revenues decreased by 6.2% year-over-year, while operating costs and expenses decreased by 8.1% [12][13] - Income from operations increased by 1.2%, and net income decreased by 0.4% year-over-year [12] - EBITDA margin increased to 40.19% from 37.33% in the same period of 2019 [12] Business Line Data and Key Metrics Changes - Mobile revenue and subscriber market share grew to 38.3% and 37.2%, respectively, providing a solid foundation for the upcoming 5G service launch [6] - Broadband business saw ARPU growth, with subscribers migrating to higher speed services; users on plans with speeds of 100 Mbps or higher increased by 11.4% year-over-year [9] - IPTV MOD platform maintained over 2.08 million subscribers, with revenue increasing by 2.9% year-over-year [10] - ICT revenue decreased year-over-year due to a higher baseline in Q1 2019, but streaming revenue contribution increased [7][11] Market Data and Key Metrics Changes - The COVID-19 pandemic impacted enterprise business and international roaming revenue due to social distancing and lockdowns [5] - Increased demand for cloud services and enterprise conferencing was noted, indicating potential growth opportunities [5] Company Strategy and Development Direction - The company aims to leverage its leading spectrum resources and ICT technology to respond to future competition and business development [5] - Focus on migrating subscribers to higher speed services and enhancing content offerings for IPTV to maintain growth trajectory [10] Management's Comments on Operating Environment and Future Outlook - Management expects mobile service revenue to decline in 2020 due to limited initial 5G subscriber adoption [53] - The company anticipates that most ICT revenue will be recognized in the second half of 2020, with a focus on improving margins through in-house solutions [11][19] Other Important Information - The company is budgeting capex of TWD 30.7 billion for 2020, focusing on growing and emerging businesses [15] - Cash and cash equivalents decreased by TWD 20.64 billion or 55.4% compared to the same period of 2019, mainly due to 5G frequency spectrum auction payments [14] Q&A Session Summary Question: What percentage of service revenue is made up of roaming revenue? - Management indicated that while the percentage is not high, international roaming revenue has been impacted due to lockdowns [16] Question: Are there plans to reduce costs in the retail distribution channel? - The company aims to enhance customer experience through digital shops, which may involve cost adjustments [17] Question: How does ICT profitability compare to traditional telecom business? - ICT profitability is generally lower than traditional telecom, but efforts are being made to improve margins through in-house solutions [19][24] Question: Will the company be ready to launch 5G by Q3 2020? - Management confirmed that the 5G service launch is still scheduled for Q3 2020, with no changes due to the pandemic [41] Question: What are the goals for 5G subscribers by the end of 2020 and 2021? - Specific subscriber goals for 2020 were not provided, but management expects limited initial adoption [28] Question: Why is there a decline in operating costs and marketing expenses? - The decline is attributed to lower-than-expected revenue, particularly in ICT, leading to reduced costs [31][32] Question: Is the handset sales business generating negative margins? - Handset sales typically have negative margins due to subsidies, impacting overall profitability [54][56]