Business Context and Reporting Period
This Form 6-K filing by Chunghwa Telecom Co., Ltd. is dated April 10, 2020. The report primarily discloses operating results for March 2020 and the first quarter (January through March) 2020. It also includes clarifications regarding media speculation on 5G infrastructure investment and corporate bond issuance plans.
Key Financial Metrics
Revenue and Profit (March 2020)
- Net Sales: NT$15.58 billion (Consolidated).
- Operating Costs and Expenses: NT$12.16 billion.
- Operating Income: NT$3.42 billion.
- Income Before Tax: NT$3.50 billion.
- Net Income (Parent Company): NT$2.68 billion.
- Earnings Per Share (EPS): NT$0.35.
Quarterly Performance (Jan-Mar 2020)
- Net Sales: NT$48.15 billion.
Liquidity and Derivatives
- Funds Lent: No funds lent to other parties in March 2020.
- Guarantees: Subsidiaries held accumulated guarantees of NT$2.92 billion.
- Financial Derivatives: Outstanding forward contracts totaled NT$35.9 million with a fair value of -NT$0.57 million. Realized losses for the year on settled positions were NT$1.94 million (non-trading) and NT$0.71 million (hedge accounting).
Material Changes vs. Prior Period
- March 2020 Revenue: Decreased by 9.36% year-over-year (YoY) to NT$15.58 billion from NT$17.18 billion in March 2019.
- Q1 2020 Revenue: Decreased by 6.20% YoY to NT$48.15 billion from NT$51.33 billion in Q1 2019.
- Revenue Drivers: The decline was attributed to lower handset sales, ICT project revenue, international fixed-line voice revenue, and mobile service revenue.
- Cost Reduction: Operating costs decreased YoY due to declines in ICT project costs, cost of goods sold, and interconnection expenses.
- Performance vs. Guidance: Operating income, pretax income, and EPS for March 2020 all exceeded previously announced guidance.
Outlook, Risks, and Management Commentary
Media Clarifications
- 5G Investment: The company clarified that media reports regarding a plan to build 18,000 5G base stations with an investment of over NT$40 billion were speculation. The company stated it evaluates every investment project internally and will make official announcements only after procedures are completed.
- Corporate Bonds: Reports suggesting plans to issue NT$20-30 billion in corporate bonds for 5G investment were clarified as unconfirmed. Financing plans remain under evaluation, with official announcements to follow regulations if necessary.
Investor Relations
- A conference call for Q1 2020 results is scheduled for April 30, 2020, at 15:00 Taipei time.
Key Facts for Investor Verification
- Verify the specific drivers behind the 9.36% monthly revenue decline, particularly the impact of handset sales and ICT projects.
- Confirm the status of 5G capital expenditure plans, as the company has explicitly denied recent media speculation regarding specific investment amounts and base station counts.
- Monitor the upcoming April 30 conference call for updated guidance on full-year 2020 performance given the Q1 revenue contraction.
- Review the company's financing strategy, as potential bond issuances for 5G are currently under evaluation but not confirmed.