Chunghwa Telecom Co. Ltd. ( CHT )
declared mixed financial results for the second quarter of 2012.
Quarterly total revenue was approximately $1,826.2 million,
remaining flat year over year. Second-quarter GAAP net income was
approximately $379.8 million, down by a whopping 15.2% year over
year. Net earnings per ADR were 49 cents, down 5.8% year over
Quarterly operating income was $486.6 million, down 6.3% year
over year. Operating margin was 26.7% compared with 28.3% in the
year-ago quarter. Second-quarter 2012 EBITDA was $761 million, down
3.6% year over year. Quarterly EBITDA margin came in at 41.7%
compared with 43% in the prior-year quarter. During the second
quarter of 2012, Chunghwa generated around $478.2 million cash from
operations, down 12.8% year over year. Capital expenditure, during
the reported quarter, was around $254.1 million, up 36% year over
At the end of the second quarter of 2012, Chunghwa had
approximately $2,348 million of cash & cash equivalents and a
little over $60 million of outstanding debt on its balance sheet
compared with $3,501.3 million of cash & cash equivalents and
$60 million of outstanding debt at the end of 2011.
Segment wise Revenue
The Mobile Communications segment accounted for approximately
$833.7 million of the total second-quarter 2012 revenue, up 10.7%
year over year. The Internet segment accounted for $202.2 million,
down 4% year over year. The Domestic Fixed-line Communications
segment generated $621.4 million in revenue, down 6.8% year over
year. International Fixed-line Communications segment generated
$130.4 million, up 0.2% year over year. Other Business segment
generated the remaining $38.4 million, down 47.6% year over
In the second quarter, Broadband access (including ADSL and
FTTx) revenue was around $161.1 million, down 7% year over year.
Mobile VAS revenue was nearly $170 million, up 33.6% year over
year. Internet VAS revenue was slightly above $23.8 million, down
6% year over year. Handset sales revenue was $224.1 million, up
34.9% year over year.
Subscriber Statistics as of June 30, 2012
Total Broadband subscriber base was more than 4.56 million, out
of which FTTx subscriber base was around 2.61 million, accounting
for 57.2% of total broadband subscriber base. Broadband subscribers
signing up for 50M connections were over 683,000. HiNet subscriber
base was 3.75 million, up 3.4% year over year. Mobile subscriber
base was 10.13 million, up 2.7% year over year. Mobile Internet
subscriber base was 2 million, up 74.3% year over year. Management
expects its mobile Internet subscriber base to reach 2.35 million
by the end of 2012. International /Domestic Fixed-line subscriber
base was 11.92 million. Multimedia-on-demand (MOD) subscriber base
was more than 1.3 million.
Chunghwa reaffirms its financial outlook for fiscal 2012,
provided in February 2012. Total revenue is estimated around $6,177
million, down 1.9% year over year. Operating costs and expenses
will be approximately $4,702 million, up 1.8% year over year.
Income from operations is estimated to be approximately $1,475
million, down 11.9% year over year. Net income will be around
$1,282 million, down 16.8% year over year. EBITDA will be
approximately $2,521 million, down 7.3% year over year. EBITDA
margin will be 40.8% compared with 43.2% in fiscal 2011.
Chunghwa faces stiff competition from Taiwan Mobile Company and
Far EasTone Telecommunications Co. Ltd. The company entered into
agreements with China Telecom Corp. Ltd. ( CHA )
and China Unicom Ltd. ( CHU ) to
access software from their application stores for providing premium
services to its subscribers. We maintain our long-term Neutral
recommendation on Chunghwa. Currently, it holds a short-term Zacks
#3 Rank (Hold) on the stock.
CHINA TELCM-ADR (CHA): Free Stock Analysis
CHUNGHWA TELECM (CHT): Free Stock Analysis
CHINA UNICOM (CHU): Free Stock Analysis Report
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