Welcome to the Chunghwa Telecom conference call for the company’s second quarter 2014 operating results. (Operator Instructions). And now, I would like to turn it over to Fu-fu Shen, the Director of Investor Relations. Ms. Shen, please go ahead.

Thank you. This is Fu-fu Shen, the Director of Investor Relations for Chunghwa Telecom. Welcome to our second quarter 2014 earnings results conference call. Joining me on the call today are, Dr. Tsai, Chairman; and Mr. Shih, President and Mr. Chen, CFO. During today’s call, management will first discuss business, operational and financial highlights. Then we will move onto the Q&A session. On Slide number 2, please note our Safe Harbor statements. Now, I would like to turn the call over to Chairman, Tsai.

Thank you Fu-fu. Hello everyone. This is Rick, thank you again for joining our second quarter 2014 conference call. I would first like to introduce our new CFO Mr. Chen Boyong, you may have read his resume but as you can tell Bo has experiences in both banking and the technology industry. We’re confident that he will contribute significantly driving our financial performance in Chunghwa Telecom as well as improving or enhancing the investment relationship. Now let me get back to the business side of the conference. I have been with the company for six months, I have worked very hard with our management team on reviewing the company strategies and our business development. We are focusing 4G, broadband, fixed line broadband, MOD enterprise business, these are four legs of our major effort. The management and I actually have worked on comprehensive strategy development for the business in the coming 1-3 years. We have come to some conclusion and I’m pretty confident that we can achieve a better growth for our company in the years to come. We also focus on enhancing our operation and financial efficiency, by reallocating and leveraging the resources for our long term growth. As you know at the end of May we have launched 4G services and we were the first 4G operator in Taiwan. (Indiscernible) we’re accelerating our 4G development and/or deployment. We’re pulling ahead our capital expenditure for our 4G deployment. We want to offer our users a better and faster experiences not only by deploying the base stations but also by applying our technology capability in our R&D to ensure a better quality for our user experiences. In addition our mobile division has worked on very hard to on the execution side. We want to also enhance our customer’s usage experiences to…

Thank you Chairman Tsai. Moving on to slide four, regarding our second quarter operating results. We continue to outperform our competitors in attracting mobile internet subscribers. At the end of June 2014 our mobile internet subscriber base had reached 4.6 million representing 36.4% market share. We believe the growth momentum and the market leadership will continue. Due to our effort on our promotional plan, 2Gs to 3Gs migration under the 4G service launch. We continue promoting our convergence plan combining the broadband and the MOD services. The broadcasting FIFA games have the broadband and MOD subscriptions especially for high speed of fiber services. The 100 megabit a second fiber services, subscribers increased more than 500% and the MOD subscribers increased 6.3% year-over-year at the end of June 2014. Slide five, provides an update on our mobile business. During the second quarter mobile data revenue grew by 23.7% year-over-year many driven the 32.5% in increased in mobile internet revenue. Entering into the new 4G era our mobile business strategies are forecasting on 4G service promotion followed by expanding the 4G device profile from higher tier to mid and the low tier. The migration of a 2G customers to the 3G network is also part of the strategies to promote data service. Meanwhile we will accelerate 4G network deployment to cater to customers demand. Moving onto slide 6. Our promotional initiative targeting mid-to-low tier smart phone users continue to push our smart phone penetrate rate to 58% at the end of the second quarter of 2014. Net add to mobile internet subscribers are more than 700,000 for the first half of 2014. While we targeted an increase of 1.1 million mobile internet subscribers this year. The growth rate has been much higher than expected. ARPU for the second quarter decreased q-over-q many…

Thank you President and thank you Chairman, Tsai for your kind introduction. I’m very excited to join the Chunghwa Telecom team and looking forward to working with all of you. Now I will review our financial results in detail. Let’s start from slide 11, for the second quarter of 2014 total revenues decreased by 0.1% and operating cost and expenses increased by 0.6% year-over-year. Our income from operations and net income decreased by 2.6% and 0.3%. In addition the EBITDA margin increased from 36.8% to 37.3% in the second quarter as compared to the same period in 2013. Let’s refer to slide 12 for an update on our business segment revenue. For our second quarter 2014 the year-over-year decline in the total revenue was driven by the decrease in fixed and the mobile voice revenue and IDC project revenue which offset the increase in mobile, value-added service revenue and handset sales. However, we expect handset sales will be deferred to a second half this year along with the 4G service launch. Moving on to the slide 13, our second quarter operating cost and the expenses increased by 0.6% year-over-year many due to increasing depreciation and amortization expenses and personnel expense which were partially offset by a decreasing interconnection fee. To be more specific the increase in depreciation expense was mainly from 3G maintenance and cloud and IDC equipment investment. While amortization expense was mainly from amortization out of the 4G license fee. On slide 14, in the second quarter our 2014 cash flow from operating activities decreased by NT$4.95 million compared to a same period of 2013. This was mainly due to the higher operating cash flow in the second quarter of 2013 resulting from a delay of bill collection from the first quarter to the second quarter associated with the Chinese holiday season. More over to a sale rate, fiber and the network deployment, the higher payment for spare parts also explained, is part of the decrease. And for the slide 15 shows our 2014 second quarter and the half year results. It compared to the our guidance. Our revenue and cost and the expenses are lower than expected mainly due to a lower handset sales and lower cost of goods sold. However our operating income, net income EBITDA exceeded our second quarter guidance. We expect our full year net income we outperformed our guidance. Here comes our last page, our capital expenditure continue to focus on the 4G network deployment. Fiber and broadband construction, service platforms and cloud deployment which includes data center construction and that we will continue reveling our CapEx budget and the exclusion plan carefully on a regular basis and the focus on making the most of the cost effective spending decision possible. Therefore a 5% to 10% reduction in budget CapEx for this year could be expected. Thank you all for your attention and now we would like to open up for questions.

(Operator Instructions). Our first question is coming from Danny Chu, Macquarie. Go ahead please. Danny Chu – Macquarie: Just one quick question in the presentation you just mentioned it is possible that the capital spend for 2014 could be 5 to 10% lower than your budget. Can you elaborate a little bit, of which area that you’re going to spend less than your budget. Is it for the mobile business or for the domestic business on internet? And given your presentation you also mentioned that the company would like to speed up the roll out of our 4G network. So can you please help us to understand how to speed up the roll-out of the 4G note but at the same time you’re cutting your budget CapEx? Thank you.

I will answer the CapEx questions. As to 5% to 10% reduction in our slide you will see that there are four major pass – our CapEx, the 4G, 3G and then fiber to and the service platform and the cloud IDC. I think we will – survey our deployment in 4G. So I think we will be more construct precisely in the fiber broadband and also in the service platforms. As to the increase the 4G roll-out I think the President--

I think the CapEx is totally including the fixed and the mobile for to expedite the deployment of 4G. We will basically put more on the 4G but we have a reduced or consolidate on others like fixed broadband. Thank you.

Next question is from Steven Liu, Standard Chartered. Go ahead please. Steven Liu – Standard Chartered: I have a two question that is on the 4G, I think you have 50 meg on the 1800 spectrum, how many, what about the use for the 4G and what amount of the spectrum could be left for the 2G and what you’re targeting 4G population how is it coming through years? The second question, can you give me an update on dividend policy given your earnings likely above guidance. Can we expect likely stable dividend per share going forward. Thank you.

We have a 50 megahertz spectrum in 1800. So we will deploy the base stations and cover the 90% of the population but at the end of next year. So, the speed wise we have reached 100 megabits per second download and the 50 megabits per second upload. As to the dividend policy I think our historical data is around the 90% and I think we will review our dividend distributing on a yearly basis and take into consideration our earnings and capital demand, capital expenditure needs.

Next question is from Neale Anderson, HSBC. Go ahead please. Neale Anderson – HSBC: Just a follow-up question on the 4G, obviously Chunghwa is the first operator to launch. I wonder if you could share any more details, did the subscriber growth rate change at all when your competitors launched later in the quarter and also can you discus how you’re using any introductory discounts to attract customers to 4G and if so when do you expect those two to be reduced? Thank you.

We have a plan that the subscriber by the end of this year will be 600k [ph] compared to our competitors we have a slight higher than our competitors. We plan to migrate to 2G subscriber to 3G or 4G that’s another resources for the subscribers. We have our iPhone a lot of iPhone subscribers, we encourage the 3G subscribers who is on iPhone to upgrade to 4G. I think it is most differentiated to our competitors because we have a 50 megahertz spectrum in 1800 that’s already exist is ready for the existing iPhone 5 and the 5S. Neale Anderson – HSBC: And any comment on the discount plans that are being used for introductory discounts?

By the end of September we have lot to promotional plan to including the so called (indiscernible) is including a lot of the apps and also we will give more better quantity in additional to original allocations.

Our next question is from Gopakumar Pullaikodi, Nomura. Please ask your question. Gopakumar Pullaikodi – Nomura: This is a question regarding the current promotions which you mentioned in the 4G plans, is there any decision on discontinuing your promotions on 4G after September? Also one more question, in case the new entrants decide to introduce unlimited 4G in the next few quarters either on voice or data, will we see your promotions be continued further? Thank you.

Currently we have no decision yet on the promotional plan after September but we will – it depends on the competition situation at that time. So we think we will be more flexible on our promotion. Thank you. Gopakumar Pullaikodi – Nomura: Just a follow-up question if I may, can you please share some color on the number of 4G subscribers that you have signed up so for since your launch? And also which rate plan is seen relatively higher sign-ups? Thank you.

We have a six plan to most attractive plan is NT$1336 that is the most popular. Gopakumar Pullaikodi – Nomura: And how many 4G subscribers will you have? Is it possible to share that?

We have a more than 100K but we didn’t expose the particular numbers but we already announced with the subscriber is more than a 100k.

Next question is from (indiscernible). Go ahead please.

A question on financial forecast right now and this is the first question and then the second question what are our strategy when we first look at the competition on the other two companies because they also get 50 megahertz, the 1800 megahertz spectrum and what is our strategy and how do we see in the future? Thank you.

I will answer in the financial focus, currently we will not revise our financial focus. I just mentioned that. I think that we will outnumber our net income which is our EPS, as to the strategy differentiation from competition for 4G and President?

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Next question is from Sydney Zhang from Bank of America Merrill Lynch. Go ahead please. Sydney Zhang – Bank of America Merrill Lynch: I have three questions. The first question is on the page seven, you have the internet revenue, you have VAS [ph] as a percent of internet revenue certainly in increase to 15.9% in the second quarter just want to find out what’s the reason for that sudden changes and what’s the reason? My second question is regards the mobile voice revenue, we also noticed that voice revenue declined as being accelerated in the latest in the recent months. Can we explain what’s the reason, you said because of any tariff changes and third question is on the regulation. They have any updates on this last mile on bundling from a fixed range side any updates on the regulation? Thank you.

Internet revenue has come from the value added service for government so that’s a 15.9% compared to 13.4% last quarter. Sydney Zhang – Bank of America Merrill Lynch: What do you mean from the government? Can you explain it more?

Our data business group got a big, I think it's a big project from the government. Sydney Zhang – Bank of America Merrill Lynch: It's like the least lined [ph]?

No. It's value-added service. Sydney Zhang – Bank of America Merrill Lynch: Is this is a one-time or--?

Most of them are declined [ph] basically because it's getting so popular on the line. So some of the voice and SMSs decline. That’s very similar the our competitors in this industry. So that question is opted on the last mile. So far there is no further news from our regulatory. So it's very peaceful right now on the (indiscernible).

Our next question is from Danny Chu, Macquarie. Please ask your question. Danny Chu – Macquarie: Can I just have a feel for questions. First is you mentioned that the company is targeting to have a 90% population coverage by the end of next year if I hear that correctly but your competitors are targeting to have like 90% to 95% population coverage by the end of this year. So do you think we will put the company in this event this position compare to the peers? Second question is should we assume the bulk of the 4G level will be completed the end of 2015 next year? And then the last question which is a very minor one. I just wanted to double check, since you launched 4G surface in late June, so did the company one full month of the amortization expense of the 4G concession fee or the company has pro rata debt amount? Thank you.

Regarding the carriage, we have a very conservative prediction that 90% population coverage by the end of next year because we use 1800 megahertz spectrum so we predicted in more conservative way but we will expedite that deployment of our base station to cover the country. We are not being totally stopped by end of next year, we will enhance after 2015 so this is but most of the base station more than 10,000 base station will be completed by the end of next year but after we will increase slightly.

For license and amortization expenses we launched 4G services in June per month [ph] for 1800 megahertz, NT$113 million per month.

Our next question is coming from Tina Hou, Goldman Sachs. Go ahead please. Tina Hou – Goldman Sachs: I have two questions, first just for your 4G plans I wonder how you record your revenue between data and voice since you have the bundle with both data and voice inside and then second question is regarding your fiber broadband roll out. I understand that you will be focusing on the 300 mbps coverage going forward. So wondering what if your current 300 mbps coverage and your target in the next three years and also local news reported that Chunghwa plans NT$20 billion in CapEx for the fiber broadband roll out. I wonder like how the CapEx will be allocated? Thank you.

For your first question, it's difference, we don’t disclose that numbers.

For the 300 megabit per second the fiber broadband, we plan to have a 40,000 subscriber by the end of this year as our target. Currently we’re very precisely do some data mining that who is our potential customer for 300 megabits per second. So it's quite good so far. So we will encourage you to currently 300 megabits of fiber upgrade to 300 megabit per second.

20 billion CapEx you were asking what is the allocation? Tina Hou – Goldman Sachs: Yes for the 20 billion for 300.

The allocation is basically similar to our chart year 2014 is I mean (multiple speaker) the ratio percentage is similar.

(Operator Instructions). And the next question is from Steven Liu, Standard Chartered. Go ahead please. Steven Liu – Standard Chartered: I just have a question on the CapEx, do you felt that plan to reach of the 2G network (indiscernible) and 3Q still invest in 3G network already stopped CapEx on 3G is mainly on 4G. Thank you.

We are still do operation on the 2G network until the license expire at 2017. So currently we keep the 2G network working very healthy. Steven Liu – Standard Chartered: Are you still investing in 3G network?

Yes we will slightly improve the coverage because in some rural area the 2G, the 3G is still another – as good as 2G. So we still invest case by case on the 3G network. But we will focus on the 4G. So 3G case by case.

The next question is from Gary Yu, Morgan Stanley. Go ahead please. Gary Yu – Morgan Stanley: Just one question from my side on your remaining 900 and 1800 megahertz spectrum, when can you expect you can do far more spectrum for 4G when your 2G subscriber base becomes smaller and when it becomes appropriate to bring far more spectrum do you prioritize the 900 megahertz spectrum first or the other 1800 then first? Thank you.

So currently we plan to allocate 5 megahertz on this 900 spectrum to carry application with 1800, 50 megahertz. So we can reach – we have 20 megahertz spectrum for carrier allocation [ph]. So highest is the download speed, we have reached a 140 megabit per second. So the timing will be by the end of the next August. Gary Yu – Morgan Stanley: So the end of mid-August, so after one year you plan to allocate 5 megahertz?

Because the 2G subscriber we have still have 2 million 2G subscriber so we will upgrade 2G to 3G then the spectrum, the 10 megahertz in 900 can be reduced to minimum of 5 megahertz so we can allocate a 5 megahertz to carry application with 1800 to make the 4G 20 megahertz. Gary Yu – Morgan Stanley: And just one follow-up question to that, when you return your original 900 megahertz spectrum to the government did that also mean that Chunghwa will be able to use that 5 megahertz as well given that you need to return the original spectrum before you can resubmit for 4G rights?

We will not return the 900 megahertz to the government because it's already B2, B2 is already awarded of our telecom for the 4G. So currently we will use it for 2G and later on we will upgrade to 4G.

The next question is from Tina Hou, Goldman Sachs. Please ask your question. Tina Hou – Goldman Sachs: Just two follow-up questions. First is that after the 5% to 10% CapEx reduction this year. Should we still expect 2014 to be the CapEx year and then the second is that does the 900 hertz spend in Taiwan will support iPhone 5S? Thank you.

This question is difficult, hard to answer that because it is also associated – our focus for the year 2015. So I think currently we’re saying that a 5% to 10% CapEx return is here, is that a peak compared to year 2015? As I mentioned that as of now we don’t have the number. We’re still doing the focus so we are not able to answer this question.

Tina are you asking about the 700 megahertz -- Tina Hou – Goldman Sachs: Sorry the 900.

Yes the iPhone 5S is supporting both the 1800 and the 900.

I will comment on the CapEx, overall we will now see for sure whether 2014 is a peak year or not but I would say we will work hard not to increase our CapEx next year compared to this year.

(Operator Instructions). If there are no further questions I will turn it back over to Chairman Tsai for closing remarks. Go ahead please.

Thank you for joining us today. You have a good evening. Thank you. Bye.