Business Context and Reporting Period
This Form 6-K filing by Chunghwa Telecom Co., Ltd. covers corporate announcements and financial updates issued between March 16, 2009, and April 14, 2009. The filing includes unaudited financial results for March 2009 and the first quarter of 2009, alongside significant corporate governance actions, investment activities, and regulatory clarifications.
Key Financial Metrics
Revenue and Profitability (Unaudited)
- March 2009: Net sales were NT$14.68 billion (down 0.78% YoY). Operating income was NT$3.96 billion, and net income was NT$2.80 billion (EPS NT$0.29).
- First Quarter 2009: Net sales were NT$45.21 billion (down 3.25% YoY). Operating income was NT$13.77 billion, and net income was NT$10.78 billion (EPS NT$1.11).
Investments and Liquidity
- Short-term Investments: Disposed of Sinopia Alternative Funds for NT$684.2 million, realizing a gain of NT$36.3 million. Current short-term securities investment ratio to total assets is 2.7%.
- Long-term Investments: Acquired Taiwan Power Company corporate bonds totaling NT$325.8 million. Cumulative holdings in these bonds are NT$951.0 million (8.00% of shareholder equity).
- Operational Capital: Reported at NT$42.92 billion as of the most recent financial statement referenced in Exhibit 14.
Dividends and Compensation
- 2008 Dividend: Board resolved a cash dividend of NT$3.83 per share.
- Employee Bonuses: Resolved to distribute NT$1.63 billion in employee cash bonuses for 2008.
- Directors' Remuneration: Resolved to distribute NT$45.4 million for 2008.
Material Changes and Corporate Actions
- Revenue Decline: Q1 2009 revenue decreased by 3.25% compared to the prior year, with March 2009 showing a slight decline of 0.78%.
- Strategic Acquisition: Board resolved to acquire 48 million common shares of Senao International Co., Ltd. via private placement to strengthen strategic alliances.
- Capital Structure: Preferred shares issued three years prior to the Ministry of Transportation and Communications expired on April 4, 2009, and are being cancelled. Consequently, preferred share directors and supervisors representing the Ministry ceased their terms on April 5, 2009.
- Legal Settlement: A court judgment regarding land use compensation by Chunghwa Post resulted in a liability of NT$16.9 million plus interest, significantly lower than the claimed NT$767.9 million.
Outlook, Risks, and Management Commentary
Regulatory and Competitive Risks
- Interconnection Disputes: The company clarified reports regarding Taiwan Mobile (TMC) refusing to pay IP peering fees. Chunghwa stated that while it could have terminated service, it contracted bandwidth from Taiwan Fixed Network (TFN) to protect customer interests. Negotiations are ongoing, and TMC has agreed to pay the due amount via a third-party check.
- Submarine Cable Project: The company denied media reports regarding a new submarine cable (APCN3) with China, Japan, and Singapore, stating it has no comment as the project is under internal evaluation.
Management Commentary
- Management clarified that reports of a "share reduction program" were media speculation; the 2008 earnings distribution and future capital plans remain under discussion.
- The company emphasized that IP peering fees are set based on international standards and business negotiations, not strictly regulated interconnection rules.
Investor Verification Checklist
- Verify the final unit price and closing date for the private placement acquisition of Senao International Co., Ltd. shares.
- Confirm the status of the ongoing negotiation regarding IP peering fees with Taiwan Mobile and the receipt of the third-party check.
- Review the full 2008 audited financial statements to validate the dividend distribution and bonus calculations approved by the Board.
- Monitor the decision on whether to appeal the court judgment regarding the Chunghwa Post land compensation case.
- Check for future announcements regarding the potential APCN3 submarine cable project or other major capital expenditures.