Business Context and Reporting Period
Company: Chunghwa Telecom Co., Ltd. (NYSE: CHT)
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Date: August 25, 2009
Subject: Announcement regarding the redefinition of financial reporting operating segments effective September 1, 2009.
The Company, Taiwan's leading telecom service provider, is restructuring its segment reporting to align with international telecommunications industry trends. The new structure consolidates seven previous segments into five: Domestic Fixed Communications, Mobile Communications, Internet, International Fixed Communications, and Others.
Key Financial Metrics (Pro Forma)
The following data represents pro forma operating segment information for the three months ended March 31, 2009, restated under the new segment definitions. All amounts are in millions of New Taiwan Dollars (NTD).
| Item | Domestic Fixed | Mobile | Internet | Int'l Fixed | Others | Total |
|---|---|---|---|---|---|---|
| Revenues from External Customers | 17,700 | 21,773 | 5,755 | 3,633 | 259 | 49,120 |
| Total Revenues | 21,019 | 22,243 | 5,915 | 3,946 | 259 | 49,120 |
| Segment Income Before Tax | 4,575 | 7,816 | 2,321 | 488 | (210) | 14,990 |
| Income Before Tax (Consolidated) | 14,321 | |||||
| Segment Assets | 238,234 | 65,384 | 16,557 | 18,196 | 11,541 | 349,912 |
| Total Assets | 451,644 | |||||
| Depreciation & Amortization | 6,135 | 2,115 | 585 | 352 | 43 | 9,230 |
| Expenditures for Segment Assets | 3,290 | 814 | 418 | 92 | 89 | 4,703 |
Note: The filing does not provide specific data on total debt, liquidity ratios, or cash flow statements for this period.
Material Changes and Segment Redefinition
Effective September 1, 2009, the Company is reclassifying items from the old seven-segment structure to the new five-segment structure to better reflect management's assessment of performance.
- Domestic Fixed Communications: Now includes Local, Domestic Long Distance (DLD), Narrowband/Broadband Access, Leased Lines (Local/DLD), MOD, and Domestic Data services.
- Mobile Communications: Consolidates Mobile services, Paging services, and Sales of mobile handsets/data cards.
- Internet Business: Includes HiNet, Internet VAS, Data Communication services, and IDC.
- International Fixed Communications: Includes International Long Distance (ILD), International Leased Lines, International Data services, and Satellite services.
- Others: Primarily non-Telecom services.
Under the old reporting structure (pre-Sept 2009), the "Fixed line" segment reported a loss of 1,462 million NTD, whereas under the new pro forma structure, the "Domestic Fixed Communications" segment reports a profit of 4,575 million NTD due to the reclassification of profitable data and broadband services.
Outlook, Risks, and Management Commentary
Management Commentary: The redefinition is intended to facilitate management's ability to assess segment performance by conforming to international trends among telecommunications companies. The change involves redefining certain items from one operating segment to another rather than a change in underlying operations.
Risks and Contingencies: The filing does not explicitly detail new risks or contingencies associated with this specific announcement. The document focuses solely on the accounting and reporting methodology change.
Guidance: No forward-looking financial guidance or revenue projections were provided in this filing.
Key Facts for Investor Verification
- Effective Date: Confirm that financial reports issued after September 1, 2009, utilize the new five-segment structure.
- Comparability: Historical data prior to Q3 2009 will not be directly comparable to future reports without restatement; investors should rely on the pro forma data provided for Q1 2009 comparisons.
- Segment Profitability: Note the significant shift in reported profitability for fixed-line operations due to the inclusion of broadband and data services in the new "Domestic Fixed" segment.
- Missing Data: Verify debt levels, cash flow, and liquidity metrics in the Company's full Form 20-F or quarterly reports, as this 6-K filing does not contain these specific figures.