Good evening, ladies and gentlemen. Welcome to the Chunghwa Telecom Conference Call for the Company’s First Half 2011 Operating Result. During the presentation all lines will be on listen-only mode. When the briefing is finished, directions for submitting your questions will be given in the question-and-answer section. For your information, this conference call is now being broadcasted live over the Internet. Webcast replay will be available within an hour after the conference is finished. Please visit www.cht.com.tw/ir under the Infocus section. Now, I would like to turn the call over to Fu-fu Shen, the Director of Investor Relations. Thank you, Ms. Shen, please go ahead.

Thank you. This is Fu-fu Shen, Investor Relations Director of Chunghwa Telecom. Welcome to our second quarter 2011 results conference call. Joining me on the call today are Dr. Lu, Chairman and CEO; Mr. Chang, President; and Dr. Yeh, CFO. During today’s call management will discuss business operational and financial highlights for the second quarter 2011. This will be followed by Q&A. Before we continue, please note our Safe Harbor statement on slide two. Now, I would like to turn the call over to Chairman, Lu.

Thank you, Fu-fu. Hello, everyone. This is Shyue-Ching Lu, Chairman of Chunghwa Telecom. Thank you all for joining our first half and the second quarter 2011 earnings results conference call. On slide number three, total consolidated revenue for the second quarter of 2011 amounted to NT$54.4 billion, mainly from the increase of the fixed line revenue, mobile Evaluative service under handset sales. In addition, an increase of construction in revenue from our property development subsidiary, also contributed to the revenue growth. During the second quarter 2010, we continued to enjoy growth in our traditional telecom service business and to win additional measure ICT contracts. Moving on to slide number four, which shows our cash return over the last several years. In addition to NT$18.4 billion cash returned we kept all reduction in January. On August 17, we distributed a dividend to share of NT$5.5243 amounting to a total of NT$42.9 billion dividend to our year 2010. Our continued commitment to shareholders is evidenced by our decision to distribute the highly dividend payout ratio of 19%, reason of many 10% set aside as De-gold (ph) in accordance with company law. However, once our De-Reserve (ph) reaches our (inaudible) which is expected to occur in three or four years. We’ll be exempted from this due chromed. As a result, the dividend payout ratio of over 90% is likely in three or four years. Before beginning the financial overview for the second quarter, I would like to take you through some recent developments as shown on the following three slides. Slide number six, innovative offering and the premium customer service are key elements of Chunghwa’s corporate culture. We have taken the decision to leverage this strength to further differentiate ourselves from our peers. We have therefore announced our Digital Rainforest initiative to offer…

Thank you, Chairman and a good day everyone. Thanks for joining us today. I will review our financial results in detail beginning with slide number 10. Slide number 10 shows our income statement on a consolidated basis. Our total revenue for the second quarter 2011 was NT$54.4 billion, a 9.6 % increase, compared to 2010, primarily due to an increase in fixed line revenue resulting from the shift in the pricing right of a fixed-to-mobile call from mobile operators to fixed network operators as well as mobile VAS and the handset sales. Additionally an increase of construction revenue from our property development subsidiary, also contribute to the revenue growth. Operating cost and expenses grew 12.3% to NT$39 billion. Income from operations for the second quarter of this year increased 3.4% to NT$15.4 billion. Net income for the second quarter 2011 increased 2.8% to NT$13.3 billion. EBITDA For the second quarter this year was flat at NT$23 billion. Slide 11, shows our revenue for each business segment for the second quarter of 2011. In the domestic fixed line business, local revenues increased by 33.6% year-over-year, mainly due to the shift of pricing right for fixed-to-mobile calls. The 13.9% decline in DLD revenue was due to mobile and the VoIP substitution, as well as reflecting the mandated tariff reduction. Broadband access revenue, including ADSL and FTTx increased by 3% year-over-year, although ADSL access revenue decreased as more ADSL subscribers migrated to fiber solutions, the decrease was fully offset by growth in FTTx access revenue. Mobile revenue increased by 11.1% year-over-year, the increase was mainly due to growth in mobile VAS revenue and the handset sales relating to our smartphone promotion which offset the decline in mobile VAS revenue, resulted primarily from the fixed to mobile call pricing right shift. Internet revenue rose…

Thank you, Dr. Yeh. Now let me take you through our business performance. Slide 15 shows the results for our broadband services. This year we are forecasting on promoting our 15 megabit per second FTTx services and we expect to reach 400,000 subscribers by the end of this year. We have therefore reduced our broadband tariff in June, especially for high-speed services, such as 20 megabit and 50 megabit per second to stimulate the momentum of migration and the subscription growth, the new tariff print have so far being welcomed. And we that we have received a lot of subscriptions request. Although, the low broadband tariff will have a temporary impact to our revenue, we believe the speed upgrade to well have a positive effect on our promotion of broadband value added service in the long run. Moving on to slide 17, we have seen further MOD subscriber growth in the second quarter as we continue in reaching the family package with more premium content. This has serviced accelerated the package of subscription growth. We have achieved over 930,000 MOD subscribers so far and we expect it to reach 1 million in November, almost earlier than our original year-end target. In addition, we anticipate that package services subscribers including the four, golden package and the family packages will be over 850,000 by the end of this year. We have made progress on acquiring content over Dempo with that offering Next TV news, the first of the domestic 24 hours HD news channel, MOD from August 22. Additionally, we have acquired 2012 Olympic, new media broadcasting right for all MOD, mobile and the highlight preview. Slide 18, on our mobile revenue business, we have been successful in maintaining the highest number of subscribers and the lowest churn rate in the market.…

Thank you. We would now begin our question-and-answer session. (Operator Instructions) Our first question is Danny Chu from Nomura. Please go ahead. Danny Chu – Nomura: Thank you for the presentation. Three quick questions, first, is that on the slide and that you talk about cloud computing. Can management give us some guidance in terms of like what kind of an impact we should expect to see on the ref new as far as the EBITDA from the introduction of cloud computing service for 2012 or maybe 2013? Second question is you projected there will be a very sharp jump in terms of the IPTV subscribers. Are there any special initial tips or price cuts that you’re going to do in order that can explain why the IPTV subscribers will jump very significantly for the remaining six months towards the end of this year. And the final question is that, given that, the company gets on a CapEx forecast on the mobile Internet subscribers. Do you expect the actual CapEx spend and for this year we’ll exceed the CapEx budget that the company gave out earlier this year? Thank you.

Okay. Your first question regarding the operating of cloud computing you know, especially the reason about you know, how revenue or EBITDA in 2012 or 13. It’s a little bit early you know, for us to put up significant numbers on cloud computing at this stage. So, we’ll include in our bills pending for the following years to come. So, I’m sorry and it’s a little bit early to give figures so you mentioned, okay, on cloud computing. In IPTV service, we forecasted that we would have 1 million subscribers by the end of the year. And there is today’s number is already over 930,000. We expect to reach 1 million before the end of the year. To be more specific, that could actually occur in November. And the reason that’s we have a very good growth in number of subscribers and what is our quality of service, our rich contents, you know, all this well received in Taiwan, okay. And the CapEx is within our budget, yes. Mobile, I would like to have President to answer this question.

Well, the mobile internet. And I think to this year, our target went up to 1.9 million customers of the total number.

You know, 1.4 million you know in mobile internet subscribers. And you know the mid work, you know, is we are extending the capacity of our mobile network to our comment (ph) all this mobile internet traffic which is also within our this year’s CapEx, you know, position expansion now. Danny Chu – Nomura: Thank you. So, if I may, I have a follow up additional question. Given that you mentioned that because like the broadband subscribers have increased on like I mean, quite a lot and you have been lowering tariff. Should we expect that getting into 2012, the company will aggressively lower its broadband tariffs further down in order to drive the broadband subscriber growth?

Currently we do not have this plan. Maybe it’s your anticipation. We back to monitor the market reaction to the service and you know, to see if what will be the tariff, you know for our next year or year after. Danny Chu – Nomura: Okay. Thank you.

The next question is Ken Goh from GIC. Please go ahead. Ken Goh – GIC: Hi, good evening. Thanks very much for the call. I just got one question on your operational data, the market share for mobile by subscribers is going up. But the market share for by revenues is coming down. I’m just wondering what do you think is explaining the difference in the trends in those market shares? Thank you.

I think the one, the revenue I recognize for our mobile segment is affected by the shift in the pricing right of the call, the fixed to mobile call. And other operators, they recognize the interconnection fee, we give to them. So, however, our mobile segment don’t include the internal transfer pricing of their revenue here. Ken Goh – GIC: Okay, all right. Thank you.

The next question is Terry Chan (ph) from Credit Suisse. Please go ahead. Shed (ph) – Credit Suisse: Hi, it’s Shed (ph) here from Credit Suisse. I have five questions for you. Number one, regarding your current plan about both mobile and also on the internet side, should we expect some operating expense increase in a significant way into second half to achieve that? And my second question is regarding the other revenue from construction, what kind of revenue shape we should expect going forward because it’s quite a significant spike in the second quarter. The third question is regarding your CapEx budget, you mentioned acceleration of CapEx budget into medium term. Can you give us a rough guidance of how we should look at CapEx into 2012 or ‘13? And regarding the capital management, you mentioned that there would be a change in payout ratio from the current 90% possibly over the next three to four years. In the meantime, should we assume that there would be no further capital management or is there any trick that we should be looking at? The last question is regarding your guidance. I think your first half result is running quite ahead of your published guidance currently. Should we expect that to at the end of the year to beat the guidance or actually are you expecting some charge or some expense to into be going to the second half that only align to meet your original guidance? And thank you so much.

So many questions. Let’s see, I think so far we think our guidance is valid. And we don’t see any reason to change the guidance, okay. And for the tiptoe management issue, at this stage, we don’t know what would happen in the future, okay. But it looks like the CapEx would be a factor effect, the need of our cash, okay. So, but for the CapEx budgets will next few years, we don’t have that number yet, okay. But we would give you the number from we have then available, okay. And for the revenue from the construction, I think that our current policy is the lend policy is for lease, not for sale. And the revenue we recognize this year for all our subsidiary are from lend. We put our – while we started business. So, we will see a development that they would get. But at this stage, the parent company, that China Telecom has not lent to give them more land to develop, okay. And again, the first question is that whether the OpEx to increase significantly in the second half. My answer to your last question is about the guidance. We are thinking the guidance is still valid. So far, we think that we would think our OpEx to control our OpEx. Thanks. Shed (ph) – Credit Suisse: Thank you very much. Just to follow up on regarding the revenue from the other income from construction basically. So just to be clear again, if the revenue you record in the second quarter could be considered a recurring revenue or is it just one quarter spike and it would be turned to something below what is in the next quarter to come?

Those are related to some projects, some of them is still under construction. And some of them has completed. So, for this year, you can, I think the issue is not specifically which quarter, you can refer to our original forecast. Our forecast is still valid at this stage. So, it’s a good idea, go back to our original guidance to look into this issue. Shed (ph) – Credit Suisse: Thank you so much.

(Operator Instructions) The next question is Joseph Quinn from Macquarie. Please go ahead. Joseph Quinn – Macquarie: And thank you for the opportunity to ask a few questions. I’ve got three main questions. The first one is actually on your CapEx again. I know some of the, all the speakers are asking in terms of what you’re CapEx is for 2012 and 2013. And while you may not be able to give an exact figure, you have made clear statements in local press to spend over NT$200 billion in the next 10 years on Taiwan’s broadband and restructure obviously for your own customers etcetera. Can you maybe give a bit more color exactly how we should expect that in terms of impacting your CapEx, should we expect CapEx to increase given the sort of statements? The second question is more focused on your mobile subs at the moment. It does seem that your mobile subs growth has been slowing, and in particular it seems that both Phased (ph) and China Mobile have been gaining against Chunghwa Telecom. And when we look in a bit deeper into your numbers, those seem in particular actually your value added services are slowing in terms of the ARPU number. So can you talk a little bit about that, are you facing more competition on that side of your business at the moment from both of these players? And then the last one is on your MOD service, your IPTV, at the moment, it’s obvious that you’re getting quite good momentum in terms of subscriber growth. But have you a number in terms of when that business will actually make a breakeven point and what do you think about that? Thank you.

The CapEx trend in and the year following, we have referred to some newspaper’s report about you know, we mentioned about 200 billion over next 10 years. Well, 200 billion in 10 years average 100 billion a year. And our CapEx is along 3 billion, you know, average. So, it’s really that significant that different from what we spend, you know, this year. But because we would like to accelerate or expedite the raw out of higher speed broadband access so, we may you know, raise a little bit of the CapEx you know, to meet this needs in our raw out of higher speed broadband access. And it will not be significantly higher. Okay? We offer guidance on our performance in our forecast, we saw in the following years. And every year we will improve CapEx in that forecast. Let me take the sole question you know, in more detail. Yes, the company has a very good momentum. And I believe the mission policy of moving forward to physical conversions helps to you know, stimulate the market and as I mentioned earlier that also with good quality of service and rich content in MOD. So, we refer this very good subscriber growth. The breakeven point you know, probably would occur if we double our number of subscribers. And this is likely to occur in maybe two years. About the mobile subscriber growth slowing, you’re right. Actually from the figure of the number of number integrity (ph) it seems that we are losing some customers from this game. But we do have the confidence that we can achieve to 10 million customers at the end of the year. The major reason, our growth is slowed because of the two major competitors provide a tariff plans in that free. And we all have some counter majors to face that. As to the value added service ARPU, according to our figures we are growing a little bit. Joseph Quinn – Macquarie: Can I just follow up, sorry, just in terms of your saying the value added service. What I noticed is the actual value for your value added services seems to have really flattened in terms of sort of March, April timeframe, they start to really slower divers ability. That’s before the sort of plan that you just mention as far as China Mobile announced they’ve only just reached in their stores. I’m just wondering, you know, if this is something that’s been happening over a few months now, it’s not just something that happened the last month. So, I’m just wondering, is there anything else in particular you’ve seen them do differently that maybe has been a reason for users porting over? Thanks.

According to our figures, for this Q2, value added service growth compared to last year it’s 40% success (ph). So, I don’t know if your figures are right or not. Joseph Quinn – Macquarie: Sorry, I’m not referring to the exact bad growth on the actual year-on-year. I’m looking at the actual ARPU on your value added service bases that you get from your subscribers. I’m happy to share my numbers with you outside they’re based on your own numbers. Thank you.

Our next question is Steve Lie from SCB. Please go ahead. Steve Liu – SCB: I have two questions. One is regarding your cooperation with China Telecom, understanding your Twain (ph) corporation on a Wi-Fi roaming. Can you provide more details about the current corporation and the future plans that corporation with China Telecom. And second is, can you be a brick down in the EBITDA margin, it just gives me the mobile especially in the EBITDA margin based on the mobile subsidy revenue. Thanks.

Okay. About the Wi-Fi roaming, we have the tough launch this service for less than one month. So, as to see how is the revenue, and that becomes our forecast is to give our customer more convenience not for revenue concern. Steve Liu – SCB: So, do you have other plans to like the roaming, like Taiwan is going to China for some province for the roaming. As the close roaming partner is China Telecom. So, this is like this. Are the ICT related to services. And I understand the Phase tone (ph) is working with China Mobile like while CT and IT solutions, a wide range of corporation. What are you plans with China Telecom in China markets?

We do have provided the service to call to sim to travel that our customer if they’re roaming to China, we have relation with China Mobile and to Hong Kong, Singapore to several countries with one sim card. So, that is something like corporation with China Mobile. We’ll have the other arrangement. Steve Liu – SCB: Okay, thanks. How about your EBITDA margin for mobile phone business, the mobile service revenue business?

We don’t provide EBITDA margin by segment. Steve Liu – SCB: Okay, thanks.

(Operator Instructions) The next question is Gary Yu from Morgan Stanley. Please go ahead. Gary Yu – Morgan Stanley: Hi, thanks for the opportunity for me to ask the questions. I have two questions from my side. First of all, what’s management feud on data Tier pricing? Is there any talk between Chunghwa and the NCC in terms of moving to unlimited data plan to Tier pricing on mobile internet? Second question is just for my book keeping reference, what is the rough revenue amount Chunghwa booked in second quarter from your property construction project? Thank you.

For mobile Internet, you know, of course it’s better to have you know, Tier pricing. This is more reasonable because of limited resources available from mobile spectrum. But you know, as of now in Chunghwa Telecom, our priority is to expand our network capacity to meet the needs of our customers in our full mobile internet access. If we reach to seventh stage of you know, extension, then probably we’ll consider along the lines up to some of our NCC commissions promoting to shift from unlimited to Tier pricing. We will consider, yeah.

Regarding to the property construction project, as I mentioned on slide 11, the segment of other revenue, most of the increase came from the property construction revenue. So you can see through the number approximately from there. Thanks.

And something about the ARPU of our mobile services. As Q1 last year, our ARPU after data VAS is $91. In Q2 this year is about $128 for your reference.

Hi, Gary, do you have any follow-up? Gary Yu – Morgan Stanley: No, thanks. Thanks management.

(Operator Instructions) Our next question is Lucy Lee from JP Morgan. Please go ahead. Lucy Lee – JP Morgan: Hi, thank you. I have two questions. One is on the smartphone handset pipeline for install, just the window what’s your strategy going forward. Are you intending to promote to more MAC markets like mid-ends or low-ends muffle or just you’re targeting at you know, that you meet your high-end. And secondly you know, we heard that some – for instance your competitors debt, NCC basically perceives Taiwan Telco to use the Chinese equivalent vendors in the co-network part. So, just a window what’s the impact potentially on your network and roughly any CapEx implication? Thank you.

Smartphone has that, I think it’s the first stage – on the high-end customers such as iPhone or HTC handset. But because high-end customer well be separated, it’s only later. So, in the near future, we’re forecast our middle layer, that means the handset price is about to life in $300 this area. That well, be more customer enjoyed.

(Operator Instructions).

Excuse me, your second question is about. You have heard of NCC’s some stiffening. And… Lucy Lee – JP Morgan: No, basically I think we heard that NCC as that they, if you try they do not allow to use Chinese equivalent vendors in terms of the co-network do that. So, that’s your knowledge, some other competitors mentioned they need to replace part of the co-network’s CapEx, transmission part of network to the other vendors besides, beyond China. So, do you heard of things, things like that or do you have such a player well?

It (inaudible) we procure our equipments from the open market and you know, often it’s competitive beaten us. So, you know, and this it’s a very clear official requirements. We procure our equipments from the, you know, open tender basis, yes. Lucy Lee – JP Morgan: Okay. Okay, thank you.

(Operator Instructions) Chairman, do you have any further closing comments.

Well, thank you very much for your participation in our conference call for the first half 2011 results. Thank you very much.

Thank you, Chairman Lu. Thank you for your participation in Chunghwa Telecom conference. There will be a webcast replay within an hour. Please visit www.cht.com.tw/ir under the in-focus section. You may now disconnect. Good bye.