2015/7/30 1 Yvonne Li President 4904 (TWSE) 2015 2Q Investor Update Disclaimer This presentation contains forward-looking statements. These forward-looking statements are subject to risks, uncertainties and assumptions, some of which are beyond our control. Actual results may differ materially from those expressed or implied by these forward-looking statements. Because of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this presentation might not occur in the way we expect, or at all. You should not place undue reliance on any forward-looking information. In preparing the information herein, FET have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was provided to FET or which was otherwise reviewed by FET. Neither FET nor its advisors have made any representation or warranty as to the accuracy or completeness of such information and nor do they assume any undertaking to supplement such information as further information becomes available or in light of changing circumstances. None of FET, nor any of their respective affiliates, advisers or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection with this presentation. Neither this presentation nor any of its contents may be reproduced to a third party without the prior written consent of FET. 2
Transcript
2015/7/30
1
Yvonne LiPresident
4904 (TWSE)2015 2Q Investor Update
Disclaimer
This presentation contains forward-looking statemen ts. These forward-looking statements are subject to risks, uncertainties and assumptions, so me of which are beyond our control. Actual results may differ materially from those expressed or implied by these forward-looking statements. Because of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this presenta tion might not occur in the way we expect, or at all. You should not place undue reli ance on any forward-looking information.
In preparing the information herein, FET have relie d upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was provided to FET or which was otherwise re viewed by FET. Neither FET nor its advisors have made any representation or warranty a s to the accuracy or completeness of such information and nor do they assume any underta king to supplement such information as further information becomes available or in light o f changing circumstances. None of FET, nor any of their respective affiliates, advisers or rep resentatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection with this presentation. Neither this presentation nor any of its contents may be reprodu ced to a third party without the prior written consent of FET.
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Agenda3
I. A Further Step Towards Digital Convergence
II. Market Overview
III. 2015 2Q Performance and Business Update
A Further Step Towards Digital ConvergenceStrategic Alliance
Equity InvestorCorporate Bonds up to $17.1bn
4
Morgan Stanley Private Equity (“MSPE”)
Note: 1) Illustrative SPV structure.
Strategic Alliance
SPV(1)
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5
19.5%
CNS25.7%
Kbro23.1%
TFN10.0%
TBC15.1%
TOP6.6%
CNS is the Largest MSO in Taiwanwith last mile access & strong presence in urban ar ea
IndependentSOs
Taiwan Cable Subscriber Market Share (1)
Source: Mar 2015, NCC websiteNote: Market share including SO owned by affiliates.
Taiwan Cable TV Penetration: 60%- 5.0mn of total 8.4mn households in Taiwan
CNS in Most Populous & Affluent Areas
Kaohsiung
Tainan
Taoyuan
New Taipei City
KeelungTaipei � Highly attractive industry characteristics
� Largest cable operator in Taiwan
� High quality network in the most attractive areas of Taiwan
� Stable cash flow generation
� Significant growth opportunities in new and existing businesses
- 12 SOs with nearly 1.29mn CATV subscribers
- Above 80% digitization
- 100% digitization in Tainan
Benefits from Strategic Alliance
Fixed and Mobile
Convergence
Content Enrichment
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� Offer broader suite of content to customers
� Multi-screen video delivery capability for content
� Provide OTT services to customers
� Collaboration with CNS to provide high quality broa dband, fixed telephony and pay-TV offerings to FET’s existing customers
� Full Quad-play services (Mobile, Broadband, Pay TV and Voice)� Interactive Digital Television (iDTV) Services � Video on Demand contents
� New revenue areas by offering smart solutions for S ecurity, Healthcare, Gaming and energy saving opportunities
� Increased high speed broadband access to sustain pe netration growth
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Comprehensive Suite of Services for Consumers
Fixed Line Wireless Telephony High Speed Broadband
Cable TV / IPTVOTT
(Over-the-top)Smart Home Solutions
Financial Implications8
Current stage
� No significant impact on P/L (FET invests into a bond
with a 3% annual return while borrows at a lower cost)
� Dividend—no impact on ability to pay dividend (even
after consideration of 2.6GHz spectrum fee)
After the law is amended
� FET intends to redeem the bond and invest in equity
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Agenda9
I. A Further Step Towards Digital Convergence
II. Market Overview
III. 2015 2Q Performance and Business Update
NT$739NT$608
NT$728NT$861NT$890
0100200300400500600700800900
1,000
FETPostpaid
FETBlended
Peer2Postpaid
Peer2Blended
Peer1Blended
1.1%
4.0%2.8%
1.5%2.9%
-6%
-4%
-2%
0%
2%
4%
6%
FETPostpaid
FETBlended
Peer2Postpaid
Peer2Blended
Peer1Blended
Taiwan Mobile MarketMarket Dynamic
Market Update
� For 2Q15, despite negative Impact from MTR, FET continued growing with…
� Total Revenue Rev up 7.3% YoY
� Mobile Service Rev up 2.8% YoY
� Overall mobile competitive landscape remains quite stable
Source: Companies ‘ factsheets , MOPS and NCC websites
Mobile Service Rev Share Change (2Q15 vs. 2Q14)
TWM
CHT
FET28.1%����(2Q14)
28.3%(2Q15)
35.7% (2Q15)
34.5%����
(2Q14)
28.9% (2Q15)
29.0%����(2Q14)
7.1%(2Q15)
8.3% ����(2Q14)
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Mobile ARPU Comparison (2Q15)
APT+VIBO/T-Star
Mobile ARPU Growth (2Q15 vs. 2Q14)
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Agenda11
I. A Further Step Towards Digital Convergence
II. Market Overview
III. 2015 2Q Performance and Business Update
('000)
5,729 5,741
1,615 1,638 1,648 1,649 1,738
5,7105,757 5,673
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2Q14 3Q14 4Q14 1Q15 2Q15
Postpaid Prepaid
('000)
630 554 488 292 143
6,691 6,431 5,9845,593
5,226
23 410 917 1,474 2,042
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2Q14 3Q14 4Q14 1Q15 2Q15
2G 3G 4G
12
���� 1%YoY
28%
70%
7,344 7,395 7,389 7,359
2%
Operational PerformanceStabilized Total Subs with Increasing 4G Users
More Subs Upgraded to 4G
7,411
Subscriber Breakdown
23%
77%
7,344 7,395 7,389 7,359 7,411
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NT$
871 874856 885 890
0
250
500
750
1000
2Q14 3Q14 4Q14 1Q15 2Q15
FET’s Postpaid ARPU
Growth % YoY
-1%
3%
-2%
2%
4%
Postpaid ARPU Growth (%)
Operational PerformanceARPU: Continued Growth Supported by Strong 4G
NT$mn
23,24924,784
22,02226,040
23,637
0
10,000
20,000
30,000
2Q14 3Q14 4Q14 1Q15 2Q15
Consolidated Total Revenue
Growth % YoY
7.3%
11.5%
-0.4%
8.4%5.1%
Mobile Service Revenue
Financial PerformanceTop Line: Sustain the Growth Momentum
NT$mn16,08816,35515,654 15,96015,984
0
6,000
12,000
18,000
2Q14 3Q14 4Q14 1Q15 2Q15
Growth % YoY
2.8%4.0%
2.0%
3.4%2.6%
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NT$ mn
7,077 7,1536,529
5,4406,386
32.1%
20.9%
26.4%27.5%30.3%
0
4,000
8,000
12,000
2Q14 3Q14 4Q14 1Q15 2Q150%
5%
10%
15%
20%
25%
30%
35%
EBITDA EBITDA%
Margin %
EBITDA and Margin %
Growth % YoY
-5.3%-2.5%
8.5%
-12.1%
1.1%
EBITDA Growth (%)
Financial PerformanceAbsolute EBITDA and Margin Returns to Grow
ItemUnit: NT$ mn, except for EPS
2Q15Actual
2Q14Actual
YoY % 2Q15 Forecast
Achieve-ment %
▶ Total Revenue 23,637 22,022 ����7% 23,356 101%
▶Service Revenue 18,252 17,962 ����2% 18,340 100%
▶EBITDA 7,153 7,077 ����1% 6,658 107%
▶Net Income 3,158 3,469 ����9% 2,777 114%
▶EPS(1) 0.97 $1.06 ����9% $0.85 114%
Source: Company Data(1) EPS was based on current outstanding shares of 3,258,501K
Consolidated Financial Achievement2Q’15 Actual vs. Forecast
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As of 1Q15
Consolidated Financial2Q15 Financial Stats
As of 2Q15Cash & Cash EquivalentsAvailable-for-Sale Financial Assets & Derivatives
Total BorrowingNet Debt (1)
Shareholders’ Equity
Debt/Capitalization Ratio Gross (%) Net (%)
Free Cashflows – YTD (2)
Cash-based Capex – YTD
EPS(NT$) – YTD
(NT$ mm unless otherwise stated)
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(1) Net Debt= Total Borrowing – (Cash and Cash Equivalent +Available-for-Sale Financial Assets & Derivatives +Debt investments with no active market )
