Good evening, ladies and gentlemen. Welcome to the Chunghwa Telecom Conference Call for the Company’s Q1 2012 Operating Results. 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 session. For your information, this conference call is now being broadcast 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 In Focus section. Now, I would like to turn it 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 first quarter 2012 results conference call. Joining me on the call today are Dr. Lu, Chairman and the CEO; Mr. Chang, President; and Dr. Yeh, CFO. During today’s call, management will first discuss business, operational and the financial highlights then 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, please.

Thank you, Fu-Fu. Hello, everyone. This is Shyue-Ching Lu, Chairman of Chunghwa Telecom. Thank you all for joining our first quarter 2012 earnings results conference call. Before President Chang reports on business development in more detail, I have some comments regarding CHT’s progress. As an integrated service provider, we maintain our market leadership in all of our major business segments. On the first quarter, mobile value-added service continued to be our growth driver. We are optimistic about the mobile Internet market’s growth, and we offer various kind – marketing packages to meet customers’ demand. In addition to the (inaudible) we also offer discounted mobile Internet service to existing smartphone users in order to maintain and to further penetrate the market. We’re also very keen on packet markets in maximizing the potential growth of synergies. For example, beginning March this year, we began to offer mobile voice service bundled with data plan for student use. We currently anticipate this campaign to be very positive in computing future revenue growth. Along this growth mobile data usage, we are making efforts on the improvements of the network quality. Our efforts to enhance our mobile network and to promote Wi-Fi in order to offload the data traffic proved to be effective, this off-loading rate via home Wi-Fi product, along 40 times. Further, the rate for public Wi-Fi has not achieved the same rate as the home Wi-Fi. We are continuing the interface improvement in order to be more user-friendly. We are pleased to report that our IPTV service are gaining traction due to the higher subscription number. The MOD ARPU increased 15.7% year-over-year in the first quarter. Moreover, the broadcasting service of 2012 Olympic Games will be launched on July 28. 2,000 hours of games are planned to be broadcasted over the 14 high-def released channels. And there will also be 500 hours of quality main program. We are pretty optimistic that this event will drive the growth of MOD subscriptions significantly. Now, I will hand it over to President Chang for our business overview.

Thank you, Dr. Lu. Moving to slide five. On Mobile business, we’ve maintained the largest subscriber base and the lowest return rate in the market, demonstrating our market positions and the customers’ inclination. As Mobile value-added service remains to be our growth driver and the smartphone – smart devices are becoming wider-used day by day, we’re continuing the improvement of network quality in order to enhance user experience. As an integrated service leader, we’ll hold a greater value of the network quality which commands the highest priority in our daily operation. Based on our internal study, mobile data traffic is expected to increase 65% year-over-year in 2011 – in 2012. To cater to such rapid expansion of data usage, we plan to increase the base station, grow the excess capacity by 70% and then the mobile network bandwidth by 73% this year. In addition, 25% of our base stations were turned on the second carrier. Moreover, more than 50% were turned on the third carrier and will affect 80% of our topic will be carried by these base stations at the year-end. This made us aware of further ensure and enhance our overall network quality. Moving to slide six, mobile valued-added service continued its momentum with 29.2% growth rate year-over-year for first quarter 2012. This is supplemented by the growth momentum of smartphone usage which boosts mobile Internet subscribers to 1.8 million by the end of first quarter 2012 from 1.5 million in the first quarter 2011. Attributable to the strong growth momentum we increased the target number of our mobile Internet subscriber to 2.35 million by the end of 2012 reflecting a growth rate of 56% compared to last year’s. Starting March this year, we began to offer student plans to attract students and youth who are active users…

Thank you, President Chang, and a good day, everyone. Thanks for joining us today. I will review our financial results in detail, beginning with slide 12. The following discussion is focused on the first quarter of this year. Slide 12 shows our incomes payment on a consolidated basis. While total revenue for the first quarter increased by 5.6% compared to same period last year, operating cost and expenses reported a 14.4% increase year-over-year. As a result, net income and the EBITDA increased 19.8% and 11.8% respectively. The EBITDA margin decreased year-over-year due primarily to the higher handset sales such as iPhone 4S and the higher handset sales from our subsidiaries spin-off through open channels, as well as the growth of corporate solutions and the ICT business. EBITDA margin of this particular business are relatively lower than the traditional telecom services. You can refer to slide 13 for our business segment revenue. The revenue growth for the first quarter was primarily due to the 29.2% increase in mobile VAS revenue and 53.7% increase in handset sales. However, the increase was offset by the decline in mobile voice revenue attributable to the fixed-to-mobile call pricing right shift, the marketing campaign and NCC tariff reduction. Additionally, the decline in DLD and the broadband revenue due to tariff cost also partially offset the overall growth. Slide 14 shows the breakdown of operating cost and expenses. The operating cost and the expenses increased in first quarter consist of three components. First, the cost of handsets sold representing 69.8% of the increase. Secondly, the increase of fiber-related solution and ICT project cost accounted for 14.6%. And finally, the increase of maintenance and the material expenses for broadband service promotion was about 6.1%. As shown on slide 15, cash flow from operating activities increased by 34.9% year-over-year…

Thank you. We will now begin our question-and-answer session. (Operator Instructions) The first question is from Danny Chu from Nomura. Danny Chu – Nomura: Hi. Thank you, management, for the presentation. Actually, I just have one quick question. In one of the slide, you mentioned that, like, despite the EBITDA and the net profit for 1Q fell short of the company’s initial guidance. But right now, the company is still maintaining its guidance for the full year. Like, what should we expect to happen in 2Q or 3Q in order for the company to deliver on its full-year guidance? Thank you.

Okay. I think we still maintain the same guidance for the whole year. One of important events for the lower EBITDA or net income in our guidance is because the iPhone 4S sales is higher than our expectations. And I think it’s more like a coming issue. We didn’t expect that much of iPhone 4S sales. And since these sales, we would expect that we’ll have lower handset subsidy in the later quarters. So, that’s why we are still maintaining our full-year guidance. Danny Chu – Nomura: Thank you.

Thank you. Our next question is from Joseph Quinn from Macquarie. Joseph Quinn – Macquarie: Thank you for the call and an opportunity to ask some questions. I have four questions, if I may. The first one is on your mobile side. I noticed on a Q-on-Q basis that your mobile additions seemed to be slower versus your peers. And also, your smartphone revenue had dropped Q-on-Q. I was just wondering what was the drivers behind that, especially as you’re mentioning before, us being a higher attraction than you previously expected. The second question is on the business front. Both Far EasTone and Taiwan Mobile have commented quite a lot about increasing their SMB businesses, increasing their market share. I just wonder if you got any comments on that in terms of how you’re feeling competition and what the plans are to combat that. Thirdly is on the broadband front. We are seeing cable broadband players continue to see increases in their subscribers. I’m just wondering how you’re seeing that affecting you. And also, we’ve seen from the likes of the TVC announcing a lot more free set-top boxes and bundling that with their broadband. I’m just wondering what packages or difference in your packages you’re planning in 2012? I could stop that sort of growth from them. And the last question is more related to your 20-F filling actually. On your 20-F, it seemed that all of your businesses faced significant margin erosion in 2011. I was just wondering what your views are for 2012 in terms of which business lines will be stronger and which business lines will potentially see more weakness. Thank you.

Okay. Let me answer your first question for the mobile synergies. Sorry, you are right. Our – we are slightly a little bit on the mobile services because last – the mobile congestion – traffic congestion happened in last August. So, we don’t have to promote our mobile service. After several months of construction, I think our network quality is okay to promote again. So, we have some promotion plans that will be launched in the coming months. So, we think the market will come back to our side. On your second question about competition with our peers, are you addressing certain specific market or just the general competition in Taiwan? Joseph Quinn – Macquarie: No. This is specifically on the SMB business, so you’re more enterprise-focused business.

Okay. Yeah. So, well, we believe Taiwan enterprise market is still going from our own pace. We believe we are still growing in our enterprise market. So, we are happy to see that our peers also have certain increase in their operation. That’s a good indication for the market. Your third question is about the cable competition. According to our statistics for the last year, our cable – our broadband customer increased their budget for customers. For cable, there are only – we increased about 124,000 customers. Cable has increased about 86,000. So, we don’t lose this market. And for the last two months, we increased about to 18,000 customers. Cables only increased 9,000. So, in this area, we think we are confident this still very – we are – comparability, it’s still very strong. And the second part is we will increase our speed to enhance our speed. We will launch the 100 megabits per second in the coming months. So, I think that we can keep business. Thank you. Joseph Quinn – Macquarie: But in terms of your broadband subscriber growth in 2011, do you have any – can you give us any idea of how much of that has been driven from the consumer side, and how much of that’s been driven from your business customers?

I think the – we combined our MOD and our cable together. It’s very good for us. Joseph Quinn – Macquarie: Sorry, maybe I’ll ask it another way. I’m trying to understand, when you give us your broadband numbers, the combined number of both business and consumers, I’m just wondering have you got an idea of what the mixture of your growth was last year? Is it coming more from the personal consumer at home connection, or is it coming more from the business connection?

Both of them are – both. Joseph Quinn – Macquarie: Okay. Thanks.

Thank you. (Operator Instructions) Joseph Quinn – Macquarie: Sorry. Just one final question...

Yes. Number one – number four, okay. No, the decline of the EBITDA margin was caused primarily by the handset subsidy and the handset sales cost of our subsidiary signal to open channel. And also, it’s caused by the terrible reduction as a result of the competition and regulation. So, you can refer to our guidance about our view for the margin of this year. Thank you. Joseph Quinn – Macquarie: Yes. So, I just want to follow up on that because in the 20-F, it’s quite clear that every single one of your segments that being domestic, mobile, fixed and your Internet are all seeing margin declines. So, what I’m more interested is, in 2012, what areas do you feel will be stronger, thus won’t see as much margin impacts, and which areas do you feel will have the most weakness? Thanks.

I think you can refer to the different regulations in tariff and to figure out. Okay, so different segment phase, different label, different extend of regulations. And so, our tariff reduction would vary. Okay, that’s all what we offer now. Thank you. Joseph Quinn – Macquarie: Okay. Thank you.

Thank you. (Operator Instructions) Our next question is from Chate Ben from Credit Suisse. Chate Benchavitvilai – Credit Suisse: Thank you very much for the opportunity to ask question. Good afternoon. I have, in total, three questions. The first question is regarding your broadband business that you mentioned during the call that the recovery in ARPU or revenue is slightly behind schedule. Would you kindly remind us again what’s the schedule in terms of the revenue recovery in broadband is right now and what might be the main cause of this delay in the recovery? Is it because of competition or is it because of network rollout? The second question is regarding the discount you provide on the mobile Internet for the lower usage of subscribers. I understand that the discount, the current discount would come to an expiration at the end of this year, do you think given your intention to continue to drive penetration that discount should be continued or do you think that you do not actually need that once expired, it’s gone? The third question is regarding the dividend. Apology if I missed any announcement but is there an announcement for FY 2011 dividend or in term of the regular and special dividend? Thank you very much.

Okay. About your first question is the because we have bundled our MOD service with broadband together to sell. But at the beginning of this year, our MOD second platform is delayed because of the NTC. No. we cannot promote them together. So, we have a little bit delay for this broadband. And so that’s in question. Chate Benchavitvilai – Credit Suisse: Yes. Can you remind us again in terms of the broadband recovery timetable or when should we expect the revenue to come back to the same level again? Is it the second quarter of 2013?

Maybe to third quarter. Chate Benchavitvilai – Credit Suisse: Just the second question regarding the mobile data discount and the third question is regarding the dividends.

The second question on mobile Internet discount, for those customers whose data volume is less than 1 gigabyte, we offer discount. This will be a special offer until it’s the end of this year, and we have no intention to continue this special offering, yeah.

Okay. For the third question, we proposed TWD5.46 per share dividends to be approved by the AGM. Thank you. Chate Benchavitvilai – Credit Suisse: Thank you very much.

Thank you. Our next question is from May Lin from Yuanta Taipei. May Lin – Yuanta Taipei: Hi. Thanks for taking my question. I have three question. First is follow-up on the dividend side. I know the actual 2011 dividend distribution has been announced, but do you have any guidance for the forward-looking dividend payout policy? One of our peer has raised our payout – their payout ratio guidance to 100% going forward, at least. So, not sure if any update from Chunghwa. My second question is about a mandatory tariff cost site. In the year, we’ll start another cycle for the new proposal. Do you see any potential risk for the mandatory tariff cost for the next three-year cycle on the fiber site of broadband service? My last question is about smartphone volume sales mix. Do you have any update or add more color on the smartphone high-end, mid-end, low-end mix for first quarter and a forward-looking target? Thanks.

Okay. We don’t have any update of dividend payout policy yet. But in the past, we pay out as much as permitted under – by the law. And I think we already explained this in the past, okay. But in the future, if there would be some change, we will make announcements. Thank you.

Your second question, we have an idea about – to hear anything about the NCC total GAAP or the cut – the tariff cut about the fiber. And then your third question is about smartphone. Our high-end, middle-end and the lower-end, the duration is about 36% to 46% to 32% to 22%. May Lin – Yuanta Taipei: Okay. This is for first quarter, the smartphone mix?

Yes. May Lin – Yuanta Taipei: Do we have any – sorry?

This quarter. May Lin – Yuanta Taipei: Yes. And do we have any target for the like long-term smartphone mix we would like to achieve maybe for manage our subsidy expense?

Yeah. We tried to make the middle and the lower end higher. We don’t have the definitive figures. May Lin – Yuanta Taipei: Understood, understood. Thank you. And about the NCC tariff cut, if I didn’t get it round, you mean, we don’t have any signals in whether we will any tariff cut on the fiber side, is that correct?

No. We don’t have any particulars, right. May Lin – Yuanta Taipei: Understood. Understood. Thank you.

Thank you. (Operator Instructions) Our next question is from Lucy Liu from JP Morgan. Lucy Liu – JP Morgan: Hi. Thank you very much for the call. I just have two – single question. One is your ICT margin. You mentioned that the plan in the margin dilution is 182 (inaudible) the ICT. So, just wondered what’s the absolute level of the ICT business margin? And the second to this on 4G business. So, just wondered what’s your generous thought in terms of the upcoming 4G licensing and also our strategy in bidding for the spectrum in terms of proposed 4G and the 2G Reforming Spectrum? Thank you.

We don’t disclose that. It’s a new business, and we would – of course, one is the beginning (inaudible) and the most stable stage. Thank you.

And regarding to the 4G licensing strategy, we have heard from MCC that they will start preparing for the bidding guideline sometime next year. But the company, we have already started in certain working group to work on this. We will be ready as long as MCC release any specific guidance on the bidding. Lucy Liu – JP Morgan: Okay. Sir, can I have one more follow-up question, sir? You mentioned also earlier that you see the Olympics broadcasting as one of the catalyst in second half for your MOD/IPTV service. I just wondered regarding the contents. So, whether if you have any exclusive contents that a cable TV won’t have, or basically pretty much the same? Thank you.

Well, at Chunghwa Telecom, we have obtained rights for the so-called new media, okay? And this is the licensing – the rights in Taiwan market is obtained by one of our partner and we have secured the rights for the new media. That’s all I can say about this. Lucy Liu – JP Morgan: Okay. So, the last question. So, after you basically reached the deal with China Airlines, so any new updates in terms of cooperation or synergies on that?

We made some progress. But still, we have to wait for some time to report more concrete result. But we talked about some business and we’ve reported to the board members. Thank you. Lucy Liu – JP Morgan: Thank you.

Thank you. (Operator Instructions) Our next question is from (inaudible) from Merrill Lynch.

Hi. I have one question on the iPhone plans. I know that your competitors are focused a lot on the one-year iPhone plan and package plans and that actually can reduce the subsidy. What’s your plan on that? And what’s the percentage of your iPhone package on one-year plans? Thanks.

We do have the one-year package for iPhones per say, but we don’t have the percentage.

Do you have plan for the future to roll out one-year plan?

Yes. We already launched that. We launched that about one month ago.

Okay.

The percentage is about 6%.

In the last one month, 6%?

Yes. Totally, the customer chose this package, about 6% of total.

Okay. Thanks.

We launched in last month.

Okay.

Thank you. (Operator Instructions)

Okay. Thank you very much for joining our conference call for the operating results of the first quarter of 2012. Thank you very much. Good night.

Thank you. Thank you for your participation in Chunghwa Telecom’s 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.