Chunghwa Telecom Co. Ltd.
) declared weak financial results for the third quarter of 2012.
Quarterly total revenue was approximately $1,822.4 million,
showing a 2.3% drop year over year. Third-quarter GAAP net income
was approximately $341.7 million, down by 14.6% year over year.
Net earnings per ADR were 45 cents, down 10% year over
Quarterly operating income was $405.4 million, down 12.8% year
over year. Operating margin was 22.2% compared with 24.9% in the
year-ago quarter. Third-quarter 2012 EBITDA was $679 million,
down 7.6% year over year. Quarterly EBITDA margin came in at
37.3% compared with 39.4% in the prior-year quarter. During the
third quarter of 2012, Chunghwa generated around $528.3 million
cash from operations, down 17.2% year over year. Capital
expenditure during the reported quarter, was around $279 million,
up 25% year over year.
At the end of the third quarter of 2012, Chunghwa had
approximately $1,300.6 million of cash & cash equivalents and
a little over $56 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
Segment wise Revenue
The Mobile Communications segment accounted for approximately
$833.5 million of the total third-quarter 2012 revenue, up 4.7%
year over year. The Internet segment accounted for $202.7
million, down 6.1% year over year. The Domestic Fixed-line
Communications segment generated $634.5 million in revenue, down
7.7% year over year. International Fixed-line Communications
segment generated $129.3 million, up 2.2% year over year. Other
Business segment generated the remaining $22.4 million, down by a
whopping 44.3% year over year.
In the third quarter, Broadband access (including ADSL and
FTTx) revenue was around $161.5 million, down 3.7% year over
year. Mobile VAS revenue was nearly $179.2 million, up 36.5% year
over year. Internet VAS revenue was around $21.8 million, up 5.4%
year over year. Handset sales revenue was $214.1 million, up 14%
year over year.
Subscriber Statistics as of September 30, 2012
Total Broadband subscriber base was more than 4.564 million,
out of which FTTx subscriber base was around 2.67 million,
accounting for 58.5% of total broadband subscriber base.
Broadband subscribers signing up for 50M connections were over
818,000. HiNet subscriber base was 3.77 million, up 2.6% year
over year. Mobile subscriber base was 10.21 million, up 2.5% year
over year. Mobile Internet subscriber base was 2.22 million, up
by a significant 68.5% year over year. Management expects its
mobile Internet subscriber base to reach 2.45 million by the end
of 2012. International /Domestic Fixed-line subscriber base was
11.85 million. Multimedia-on-demand (MOD) subscriber base was
more than 1.17 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.
China Unicom Ltd.
) 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
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