Good afternoon, ladies and gentlemen. Welcome to the Chunghwa Telecom Conference Call for the Company’s Fourth Quarter 2014 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 broadcasted live over the Internet. Webcast replay will be available within an hour after the conference is finished. Please visit CHT IR Web site, www.cht.com.tw/ir under the IR Calendar section. And now, I would like to turn it over to Fufu Shen, the Director of Investor Relations. Ms. Shen, please go ahead.

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

Thank you, Fufu. Hello everyone, this is Mu-Piao Shih. Thank you for joining our fourth quarter 2014 conference call. We are pleased to report that according to both our internal figures and the statistics from the NCC, we have accumulated over 1.3 million 4G subscribers as of the end of December 2014, representing 38.6% of the 4G subscriber market share in Taiwan. We will maintain our target to achieve 40% market share in 2015. In addition, not only did we remain the market leader in providing 4G services, but we also improved our market-share in terms of mobile subscribers and revenues. As of December 2014, our mobile subscriber and revenue market-share reached 37.1% and 35.7%, respectively. Furthermore, despite the fierce competition from cable operators, we still managed to maintain a stable level for our broadband market share. For 2015, one of the key focuses for us is growing our total revenue. We plan on promoting both fixed and mobile value added services, increasing our mobile Internet customer base, and also expanding the enterprise market to help bolster revenue growth. By leveraging our 4G high speed network, we will offer high quality mobile TV, music, gaming, and 3D GPS value added services as well as new products such as telematics, healthcare management, and other value-added products. Increasing the MOD revenue will also be an emphasis for us. For the enterprise market, we plan to offer ICT solutions such as cloud, IDC, mobile enterprise, and information security services to targeted customers and boost our ICT related revenue. Slide 5 provides an update on our mobile business. During the fourth quarter, mobile VAS revenue grew by 21.1% year-over-year, mainly driven by the 26.4% increase in mobile Internet revenue. For mobile operations, we are focusing on 4G service promotions and mobile Internet subscriber expansion…

Thank you President Shih. Now, I will review our financial results in detail, beginning on slide 11. Slide 11 contains our income statement highlights. For the fourth quarter of 2014, total revenues increased by 1.4% and operating costs and expenses increased by 6.7% year-over-year. Our income from operations and net income decreased by 16.1% and 12.6% respectively. In addition, our EBITDA margin decreased from 32.95% to 30.23% in the fourth quarter as compared to the same period in year 2013. Please refer to Slide 12 for an update on our business segment revenue. For the fourth quarter of 2014, the year-over-year increase in total revenue was driven by the growth in handset sales, mobile value added service revenue, and ICT project revenue, which offset the decrease in fixed and mobile voice revenue. Moving on to Slide 13, our fourth quarter operating costs and expenses increased by 6.7% year-over-year, mainly due to the higher cost of handsets, increasing depreciation and amortization expenses, and project costs for ICT. To be more specific, the increase in depreciation expense was mainly due to 4G construction, 3G maintenance, and cloud and IDC equipment investment, while amortization expense was mainly due to the amortization of the 4G license fee. On Slide 14, in the fourth quarter of 2014, cash inflow from operating activities decreased by NT$1.34 billion compared to the same period of 2013. As of December 31, 2014, we had NT$23.56 billion of cash and cash equivalents. The decrease in EBITDA margin was primarily due to 4G promotion including handset subsidies in the fourth quarter of 2014. 2014. Slide 15 shows our 2014 operating results as compared to our guidance. Although total revenue was less than our expectation mainly due to lower handset sales, operating income outperformed due to lower operating costs and expenses, and…

Thank you. We will now begin our question-and-answer session. [Operator Instructions]. Our first question comes from Peter Milliken, Deutsche Bank. Go ahead please.

I just have a couple of questions on regulation. Some of your pricing has been set by the regulator at CPI minus. How do you think that might change going forward given that CPI is so low right now and you're effectively having to have negative price provisions on some products? And the other question is, do you have any insight into sort of the longer term planning of the regulator of the industry?

The NCC has the guideline [indiscernible] annual decrease of the X should be X minus CPI. So, even the CPI is lower than that what makes the X higher a little bit.

Peter could you repeat your first question.

Yes, I'm just saying in a world of low CPI, does the CPI minus X hurt you? But I guess if it's X minus CPI, does that still become a factor? In other words, do you feel that the CPI based regulation is too stressed on you at the moment?

The CPI for last year was 1.2%, so the delta CPI minus X factor is about 5 point something, so the reduction will be like 3.8, something like 3.8% for this year, for this coming year.

So I should expect that sort of discounted CPI should continue going forward? There's no sense that that might change in a low-inflation environment?

Peter, the last round for the mandatory tariff reductions are [indiscernible] in April 2013, because this is going to last [indiscernible]. four years, so 2013. So I think I am not quite getting your question because you know this is a result of the CPI last year that was actually 1.2%, so we’ll have to follow this.

And then the other question on the longer term view of the telecommunication structure in Thailand, is there any progress on that?

It is a trend that NCC will announce the digital convergence law after the Chinese New Year. So, the trending of the digital convergence law is completed by the end of this year, but we’re still not very clear about the details of it, no, they said they’ll make another new law except besides the currently three laws, that means telecom law, and the broadcasting law, and others -- satellite laws, satellite broadcasting law. And we are prepared -- we are well prepared to the new digital convergence laws.

Next question is from Gary Yu, Morgan Stanley. Go ahead please.

Thank you for the opportunity to ask questions. I have three questions from my side. First, on the mobile business, some of the competitors have mentioned that they are willing to remove unlimited data after Chunghwa has taken the initiative. So from that perspective, when do we think it's a better time for us to remove the flat-rate plans on 4G? Second on CapEx, we've seen two consecutive years of declining CapEx in both 2014 and 2015 budget. How should we look at longer-term CapEx going forward? Shall we continue to see a decline in CapEx from 2016 given most of the 4G deployment will be completed by this year? And lastly on dividend, we're very pleased to see the higher dividend payout for 2014. How should we look at the dividend policy going forward? Do we have a more stable payout or absolute dividend target that management wants to maintain?

The first question regarding the fare rate, we expect unlimited data plan where we'll move until the end of the day. However, it depends on the market sentiment and the competitiveness landscape. In 2014, 4G operators offer unlimited plan to expand the 4G customer base, shift the launch 4G [indiscernible] unlimited data in early December last year to test the water. We’ll continue expanding our 4G customer base through each economy of scale and enjoy the cost advantages of our mobile business. So we think we will remove the unlimited data plan at the appropriate time, but we cannot decide that so far. Regarding our long-term CapEx plans, I think by the end of this year, our 4G coverage will be in a very stable condition. So, I can tell you that next -- I mean long-term overall the CapEx will be reduced. And regarding the dividend policy, it’s still subject to our financial operating final results and also we need to consider the other capital expenditure situation so -- like the current standards.

The next question is from Anand Ramachandran, Barclays. Please ask your question.

I had a couple of questions. Firstly, on 4G subscriber take up, could you talk to us a little bit about relative ARPU revenue generation data usage? I mean do you expect this to drive revenues up into 2015? And could I also check what kind of 4G subscriber target you have as an absolute number for end 2015? Secondly, to follow-up on Gary's question, dividend for 2014, has that been announced? And with CapEx now obviously trending down, should we be thinking about potentially going back to what Chunghwa Telecom was doing earlier in terms of repaying on top of earnings to shareholders?

The data usage for 4G subscriber is around 7 gigabyte for now. So we think the blended ARPU [indiscernible]mildly increased in the future by value added service and bundles.

Can I get how much is the 4G ARPU now related to the overall ARPU, how much is it higher, or is it about the same?

ARPU will be slightly higher.

And do you have an absolute 4G subscriber target for year-end 2015?

The target for 2015 is 40% of the total subscribers, more than 3.2 million.

And dividends for 2014?

Regarding the dividend, I think as you’ve just mentioned, it is part of all the CapEx reduction next year, and I think under [indiscernible] operating results, I think the dividend policy probably in more a policy weight to think about that.

Next question is from Gupta, Nomura. Go ahead please.

Regarding your 2% revenue growth guidance for this year, how much growth do you expect in the mobile service revenues? That's question number one. Also in fixed segment since you have said that you will have mandatory price cuts going forward this year as well, do you expect growth to come back in that segment, and if so what are the drivers please?

The mobile service revenue grows by around 5% this year, compared to last year.

And the fixed segment?

Could you repeat your second question?

In the fixed segment since you said that you would have mandatory price cuts this year as well, what's the growth outlook there?

We are already effecting this mandatory price cuts for 2015, already effecting to our forecast for this year. So, I think any other question related to that?

No.

[Operator Instructions]. There are no further questions; I will turn it back over to President Shih for closing remarks. Go ahead please.

Thank you for joining the conference call. And as Chinese New Year is coming, so Happy New Year everyone.

Thank you, President Shih and thank you all 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 IR Calendar section. You may now disconnect. Good bye.