Business Context and Reporting Period
This Form 6-K filing by Chunghwa Telecom Co., Ltd. is dated November 11, 2019. The report covers operating results for October 2019 and the year-to-date period ending October 2019. It also discloses a related-party asset acquisition by a subsidiary and a regulatory raid by the Ministry of Justice Agency against Corruption.
Key Financial Metrics
Revenue and Profit (October 2019)
- Net Sales: NT$17.54 billion (Consolidated).
- Operating Costs and Expenses: NT$14.36 billion.
- Operating Income: NT$3.18 billion.
- Income Before Tax: NT$3.23 billion.
- Net Income (Parent Company): NT$2.50 billion.
- Earnings Per Share (EPS): NT$0.32.
Year-to-Date Performance (Jan-Oct 2019)
- Net Sales: NT$169.83 billion.
Financial Derivatives and Guarantees
- Outstanding Forward Contracts (Non-trading): NT$106.04 million (Total amount).
- Unrealized Loss (Non-trading): NT$0.69 million recognized this year.
- Realized Loss (Non-trading): NT$4.05 million recognized this year.
- Accumulated Guarantees (Subsidiaries): NT$2.87 billion.
- Funds Lent to Others: NT$0.
Material Changes Versus Prior Period
- October 2019 Revenue: Decreased by NT$233.7 million (-1.31%) compared to October 2018.
- YTD Revenue: Decreased by NT$7.94 billion (-4.47%) compared to the same period in 2018.
- Revenue Drivers: Declines in fixed-line voice, mobile service (due to competition and VoIP substitution), and ICT project revenue were partially offset by growth in mobile handset sales (driven by iPhone 11) and MOD revenue.
Guidance, Risks, and Unusual Items
Regulatory Investigation
On November 11, 2019, the Agency against Corruption, Ministry of Justice, raided the staff office of the Taipei Branch, Northern Taiwan Business Group. The company stated it fully supports the investigation and reported no immediate effect on finances or business operations.
Related Party Transaction
Subsidiary CHT Security Co., Ltd. acquired right-of-use assets (office premises) from the parent company, Chunghwa Telecom Co., Ltd. The total transaction amount was NT$11.76 million, with a lease period from January 1, 2020, to December 31, 2020. The transaction was approved by the Board of Directors.
Outlook
The filing does not provide specific forward-looking guidance or management commentary beyond the explanation of current revenue drivers.
Key Facts for Investor Verification
- Verify the long-term financial impact of the Ministry of Justice raid on the Northern Taiwan Business Group.
- Monitor the trend of mobile service revenue decline due to VoIP substitution and market competition.
- Confirm the sustainability of mobile handset sales growth driven by specific product launches (e.g., iPhone 11).
- Review the details of the related-party lease agreement to ensure pricing aligns with market rates.
- Track the exposure and performance of financial derivative contracts, noting the realized and unrealized losses reported.