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CHT(CHT) - 2019 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q4 2019, total revenues decreased by 0.5% year-over-year, while operating costs and expenses decreased by 0.6% [15] - Income from operations decreased by 2.4%, and net income decreased by 7.3% year-over-year [15] - EBITDA margin increased by 120 basis points to 34% from 32.8% in the same period of 2018 [15] Business Line Data and Key Metrics Changes - Mobile revenue and subscriber growth increased by 36.5% and 37.9% respectively, providing a solid foundation for 5G deployment [6] - Broadband business experienced a slight subscriber loss, but ARPU increased by 8% year-over-year due to migration to higher-speed services [10] - IPTV/MOD platform subscribers reached 2.08 million, with revenue growing by 10.6% year-over-year [11] - ICT revenue increased year-over-year due to new business deployments and project management capabilities [8] Market Data and Key Metrics Changes - The number of broadband subscribers decreased slightly year-over-year, but higher-speed service subscriptions increased significantly [10] - The number of users on plans with speeds of 100 Mbps or higher increased by 11.3% to 1.58 million [10] - The company plans to leverage popular events like the Tokyo Olympic Games to boost IPTV revenue [12] Company Strategy and Development Direction - The company intends to focus on 5G service launch in Q3 2020 and maintain strategies to migrate customers to higher-speed services [6][11] - Plans to enhance ICT project margins and expand in-house developed services, including cloud services and big data analysis [13] - The company is budgeting TWD30.7 billion for CapEx in 2020, primarily for 5G network deployment [18] Management Comments on Operating Environment and Future Outlook - Management acknowledged ongoing mobile Internet substitution and cable competition impacting broadband business [6] - The company expects a slight decline in ARPU in the first half of 2020 due to continued competition in the 4G market [36] - Future revenue growth is anticipated from enterprise ICT business and 5G service rollout [17] Other Important Information - The first phase of the 5G spectrum auction concluded with prices exceeding expectations, leading to a focus on 5G service launch [6] - The company plans to maintain a flexible approach to network sharing and collaboration with peers in the 5G era [52] Q&A Session Summary Question: Why did the auction pricing get so high? - Management refrained from commenting on the auction pricing dynamics [19] Question: Can you provide more guidance on the cost increase? - The increase in costs is primarily due to ICT project revenue requiring comparable costs [21] Question: What is the expected impact on margins from ICT projects? - Some government-related projects may have lower margins, but overall, the company expects to maintain profitability [23] Question: How much of the mobile CapEx is for 5G rollout? - Over 70% of the TWD9.8 billion mobile CapEx will be allocated to 5G network deployment [27] Question: What is the expected ARPU trend going into 2020? - A slight decline in ARPU is expected in the first half of 2020, with potential improvement post-5G rollout [36] Question: What is the timeline for 5G commercialization? - The company plans to deploy 5G services in the beginning of Q3 2020 [50] Question: How will the CapEx levels look beyond 2020? - CapEx for 2021 is expected to be similar to 2020, but no comments were made beyond that [50]