Business Context and Reporting Period
This Form 6-K filing by Chunghwa Telecom Co., Ltd. is dated November 12, 2009. The document summarizes a series of corporate announcements made between October 13, 2009, and November 10, 2009. Key activities include capital reduction procedures, strategic alliances, infrastructure procurement, and the release of unaudited financial results for October 2009 and the first ten months of the fiscal year.
Key Financial Metrics
Revenue and Profitability (Unaudited)
- October 2009: Net sales were NT$15.59 billion, an increase of 1.2% year-over-year. Operating income was NT$4.56 billion, with net income of NT$3.55 billion and earnings per share (EPS) of NT$0.37.
- First 10 Months of 2009: Net sales totaled NT$152.19 billion, a decrease of 2.1% year-over-year. Operating income was NT$46.71 billion, net income was NT$36.73 billion, and EPS was NT$3.79.
- First 9 Months (GAAP Comparison): Under ROC GAAP, net income was NT$33.18 billion (EPS NT$3.42). Under US GAAP, net income was NT$35.27 billion (EPS NT$3.64). The variance is attributed to depreciation, asset sales, and tax provisions.
Capital Expenditure and Procurement
- Capital Expenditure (CapEx): The company expects to spend approximately NT$30 billion in 2009, with plans to maintain this level for the next two to three years.
- Recent Procurements:
- NT$510.2 million for Foam-Skin Jelly-Filled LAP City Telephone Cable (TATUNG.CO.).
- NT$516.5 million for Airblock Cable (Tai Tung Communication Co., Ltd.).
- NT$453.2 million for servers and peripherals (Chunghwa System Integration Co., Ltd., a related party).
Capital Structure
- Capital Reduction: The board approved a capital reduction of NT$9.70 billion (969.68 million shares), representing a reduction ratio of approximately 9.09%. The record date was set for October 26, 2009, with new shares expected to list on February 8, 2010.
Material Changes and Strategic Developments
- Strategic Alliances: Signed a Memorandum of Understanding (MOU) with Microsoft Corporation on November 4, 2009, to develop cloud computing applications (SaaS, PaaS, IaaS) integrating computer, mobile, and television platforms.
- Investment Plans: Addressed media reports regarding potential investments in Asia Pacific Telecom and property development. The company stated it follows internal evaluation processes and made no official commitment to the Asia Pacific Telecom investment at the time of filing.
- Partnerships: Clarified reports regarding a partnership with Fujitsu on e-commerce, noting that while a steering committee meeting was scheduled, no MOU was expected to be signed immediately.
Guidance, Outlook, and Risks
- Outlook: Management indicated a commitment to substantial investment in broadband business, targeting NT$30 billion in annual CapEx for the current and subsequent two to three years, subject to operating environment changes.
- Financial Forecast: A voluntary financial forecast for the fourth quarter of 2009 was prepared on October 22, 2009. The filing notes that projections are subject to significant uncertainties and contingencies.
- Risks and Contingencies: The filing highlights standard risks associated with financial forecasts and the operational uncertainties inherent in large-scale infrastructure deployment and strategic alliances.
Investor Verification Checklist
- Verify the final listing date and share conversion details for the capital reduction scheduled for February 2010.
- Confirm the actual execution of the NT$30 billion annual CapEx plan in subsequent quarterly reports.
- Monitor the progress of the Microsoft strategic alliance and the commercialization of the agreed cloud computing applications.
- Review the full Q3 2009 financial statements referenced in the investor conference call (Exhibit 7) for detailed segment performance.
- Track the status of the reported potential investment in Asia Pacific Telecom for any future official announcements.