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Yvonne LiPresident
4904 (TWSE)2014 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
Agenda3
I. Market Overview
II. 2014 2Q Performance
III. Business Update
8.5%
1.3%
4.7%
0%
5%
10%
FET TWM CHT
10.8%
-0.3%
4.6%
-10%
0%
10%
20%
FET TWM CHT
Taiwan Mobile MarketMarket Dynamic
Market UpdateMarket Update
For 2Q 2014, despite negative Impact from MTR, FET continued growing with…
Mobile Service Rev up 2.0% YoY
Mobile Data Rev up 20.6% YoY
Overall mobile competitive landscape remains quite stable
Source: Mobile service revenues of FET, CHT, TWM, APT from company’s factsheet, Vibo ‘s from Taiwan M.O.P.S. reported revenue deduct estimated equipment revenue. Y2013 market share % has been restated.
Mobile Service Rev Share Change (1Q14 vs. 1Q13)
Mobile Service Rev Share Change (1Q14 vs. 1Q13)
TWM
CHT
FET27.6%(2Q13)
28.1% (2Q14)
34.5% (2Q14)
34.3%(2Q13)
29.0% (2Q14)
28.5%(2Q13)
8.3% (2Q14)
9.6%(2Q13)
4
EBITDA Growth (2Q14 vs. 2Q13)EBITDA Growth (2Q14 vs. 2Q13)
Net Income Growth (2Q14 vs. 2Q13)Net Income Growth (2Q14 vs. 2Q13)
APT+VIBO
Agenda5
I. Market Overview
II. 2014 2Q Performance
III. Business Update
('000)
5,190 5,341 5,583 5,698
1,503 1,528 1,543 1,553 1,553 1,565 1,571 1,576 1,583 1,615
5,7295,6415,5045,3925,249 5,437
01,000
2,0003,000
4,0005,000
6,0007,000
8,0009,000
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14
Postpaid Prepaid
Operational PerformanceIncreasing Subs
Total Subscribers – continue to grow for 50 consecutive monthsTotal Subscribers – continue to grow for 50 consecutive months
22%
78%
4%YoY
6,694 6,8846,777 6,945
6
6,990 7,069 7,154 7,2817,217 7,344
Million Minutes
3,7963,623 3,588
3,745 3,7633,540
0
1500
3000
4500
1Q13 2Q13 3Q13 4Q13 1Q14 2Q14
NT$
872 867 856864 875 849
0
250
500
750
1000
1Q13 2Q13 3Q13 4Q13 1Q14 2Q14
Operational PerformanceMOU and ARPU
Postpaid Minutes of Use(1)Postpaid Minutes of Use(1) FET’s Postpaid ARPUFET’s Postpaid ARPU
-1.9%YoY
7
-5.5%YoY
Source: Company Data(1) MOU has been adjusted by MVNO's usage starting Y2014 and re-state Y2013
($mn)
22,086 22,10023,360
22,124 22,02222,864
17,96217,71918,04718,00417,71917,344
0
5,000
10,000
15,000
20,000
25,000
1Q13 2Q13 3Q13 4Q13 1Q14 2Q14Total Revenue Service Revenue
($mn)
15,581 15,723 15,432 15,65415,34415,069
0
5,000
10,000
15,000
20,000
1Q13 2Q13 3Q13 4Q13 1Q14 2Q14
Consolidated RevenueConsolidated Revenue Mobile Service RevenueMobile Service Revenue
2%YoY
Financial PerformanceStable Top Line
8
1.4%YoY
9
($mn)
2,783
3,469
2,727
3,1103,1873,132
0
500
1,000
1,500
2,000
2,500
3,000
3,500
1Q13 2Q13 3Q13 4Q13 1Q14 2Q14
6,1426,525
6,741
6,191
7,0776,698
2,000
3,000
4,000
5,000
6,000
7,000
8,000
1Q13 2Q13 3Q13 4Q13 1Q14 2Q14
($mn)
Consolidated EBITDAConsolidated EBITDA Net Income(1)Net Income(1)
2Q14 vs.2Q138% YoY
2Q14 vs. 2Q1311% YoY
Financial PerformanceProfitability continues Growing
Source: Company Data(1) 2013 Net Income was restated due to accounting policy change for Investment Property
NT$ mn
5,695 6,030 6,358 6,626 6,866
5,462
36.3%38.7% 40.4%
43.9%42.9%
37.1%
0
2,500
5,000
7,500
10,000
1Q13 2Q13 3Q13 4Q13 1Q14 2Q140%
10%
20%
30%
40%
50%
Mobile Data Rev Mobile Data % of Service Rev
Data %
10
Mobile Data PerformanceAccelerated Mobile Data Growth
Data Service(1) Subscriber GrowthData Service(1) Subscriber GrowthFET Mobile Data Growth FET Mobile Data Growth
2Q14 vs. 2Q1321% YoY
2Q14 vs. 2Q1327% YoY
Note:(1) Data Service includes smartphone related data rate plans and datacard, broadband, GPS related products
1,109
2,9222,555
1,428
2,184
1,8101,272
1,604
1,981
2,378
2,729
3,111
3,296
3,458
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
%
ItemUnit: NT$ mn, except for EPS
2Q14Actual
2Q13Actual
YoY %2Q14
ForecastAchieve-
ment %
▶ Total Revenue 22,022 22,101 0.4% 22,401 98%
▶ Service Revenue 17,962 17,719 1% 17,918 100%
▶ EBITDA 7,077 6,525 8% 6,642 107%
▶ Net Income(1) 3,469 3,132 11% 2,997 116%
▶ EPS(2) $1.06 $0.96 11% $0.92 116%
Source: Company Data(1) 2013 Net Income and EPS were restated due to accounting policy change for Investment Property(2) EPS was based on current outstanding shares of 3,258,501K
Consolidated Financial Achievement2Q’14 Actual vs. Forecast
11
ItemUnit: NT$ mn, except for EPS
1H14Actual
1H13Actual
YoY %1H14
ForecastAchieve-
ment %
▶ Total Revenue 44,887 44,186 2% 45,460 99%
▶ Service Revenue 35,681 35,063 2% 35,653 100%
▶ EBITDA 13,775 12,666 9% 13,169 105%
▶ Net Income 6,579 5,915 11% 5,871 112%
▶ EPS(1) $2.02 $1.82 11% $1.80 112%
Consolidated Financial Achievement1H’14 Actual vs. Forecast
12
Source: Company Data(1) 2013 Net Income and EPS were restated due to accounting policy change for Investment Property(2) EPS was based on current outstanding shares of 3,258,501K
As of 1Q14
Consolidated Financial2Q14 Financial Stats
As of 2Q14
Cash & Cash EquivalentsAvailable-for-Sale Financial Assets & Derivatives
Total BorrowingNet Debt(1)
Shareholders’ Equity
Debt/Capitalization Ratio¾ Gross (%)
¾ Net (%)
Free Cashflows – YTD(2)
Cash-based Capex – YTD
EPS(NT$) – YTD
(NT$ mm unless otherwise stated)
13
(1) Net Debt= Total Borrowing – (Cash and Cash Equivalent +Available-for-Sale Financial Assets & Derivatives +Debt investments with no active market )
(2) Free Cashflows = Operating Cash flow- acquisition of fixed-asset & intangible asset(3) 2013 EPS was restated due to accounting policy change for Investment Property
19,482
751
30,58710,353
68,507
30.9% 10.4%
7,5026,317
$2.02
8,226
838
22,24713,183
77,380
22.3% 13.2%
4,2013,196
$0.95
Agenda14
I. Market Overview
II. 2014 2Q Performance
III. Business Update
37%
54%51%47%44%
41%
0%
25%
50%
75%
1Q13 2Q13 3Q13 4Q13 1Q14 2Q14
True smartphone penetration
Smartphone Revenue and Profit Grow Together with Penetration Growth
Note: * smartphone penetration means iOS, Andriod & WM8 smartphone users with data rate plan as % of total postpaid subs excluding data only subs
15
($mn)
15,581 15,723 15,432 15,65415,34415,069
0
5,000
10,000
15,000
20,000
1Q13 2Q13 3Q13 4Q13 1Q14 2Q14
Mobile Service RevenueMobile Service Revenue
($mn)
2,783
3,469
2,7273,1103,1873,132
0500
1,0001,5002,0002,5003,0003,500
1Q13 2Q13 3Q13 4Q13 1Q14 2Q14
Net IncomeNet Income
+3%YoY
Smartphone Penetration* (%)Smartphone Penetration* (%)
+16%YoY
+15%YoY
+12%YoY
+12%YoY
+11%YoY+4%
YoY
+3%YoY
+3%YoY
+2%YoY
+2%YoY
+2%YoY
4G Update
FET launched 4G on June 3rd, 2014
– Band: launch on 700MHz first with widest coverage and penetration
– Devices: more than 20 4G LTE devices, including Samsung, hTC, LG,
SONY…etc
– Initial coverage: 7 metro cities and 16 scenery spots
– Pricing: volume based data tier-pricing + limited voice
– Roaming: allied with Vodafone + Conexus for international roaming
in 7 regions
4G Deployment Plan and Target
– Will soon have 1800MHz band before end of Sep
– Will reach around 95% population coverage by end of 2014
– Optimistic on ARPU uplift
– Subscriber target: expect to reach 400-500K subscribers by end of
2014
Q & AWebsites email
Investor Relations [email protected] Investor Relations [email protected]
http://corporate.fetnet.nethttp://www.fetnet.nethttp://corporate.fetnet.nethttp://www.fetnet.net
For Further Information:
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