Good afternoon, ladies and gentlemen. Welcome to Chunghwa Telecom Conference Call for the company's Fourth Quarter 2021 Operating Results. [Operator Instructions]. 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 CHT IR website, www.cht.com.tw/ir under the IR Calendar section. Now like to turn it over to Ms. Angela Tsai, the Director of Investor Relations. Ms. Tsai, please go ahead.

Thank you. This is Angela Tsai, Director of Investor Relations for Chunghwa Telecom. Welcome to our fourth quarter 2021 results conference call. Joining me on the call today are Harrison Kuo, our President; and Vincent Chen, our Chief Financial Officer. During today's call, management will begin by providing an overview of our business from this quarter, followed by a discussion of operational and the financial highlights. After, we will move on to the question-and-answer portion of the call. On Slide 2, please note our safe harbor statement. Now I will turn the call over to President Kuo. Please go ahead.

Thank you, Angela, and hello, everyone. Welcome to our first quarter 2021 earnings call. Before providing an update on fourth quarter performance, I would like to begin by highlighting the ongoing success of our strategic transformation that began in 2019. Three years ago, we launched a customer-centric transformation plan focused on value creation to enhance our market position. Under this plan, we start to improve our competitive advantage by strengthening our core businesses, deploying emerging services, optimizing our cost structure and further enhancing fundamentals such as next-generation networks, IT infrastructure and human resource training. We concluded our 3-year plan at the end of 2021 with stable key achievements, including our are 3 years of consecutive growth in EBITDA margin, net income and the EPS. Mobile service revenue turned around since the second quarter of 2021,and the churn rate significantly decreased from 2019 to 2021. In addition, the compound annual growth rate of broadband revenue increased by 2%, increasing the enhancement of our core business. Because of emerging business, we are geared to see compound earning growth rate for both IDC revenue and the cloud revenue increased by 5%. Our ICT business gross profit increased to 70%. By 2021, our broadband network was 100% software definement work-ready and fiber-to-the-home coverage reached approximately 88%, demonstrating our enhanced core competence. The net promoter score, NPS, of our services also increased, which reflects the increase in customer satisfaction. Revenue and profit per head increased 6% and 15%, respectively, attributable to increased operational efficiency as a results of cost structure optimization. Along with the strategic transformation, on Slide 4, you can see we have an organizational transformation effective on January 1, 2022. We transformed our business groups under customer-centric structure. We expect our consumer business group to develop individual and home-centric business, such as mobile…

Thank you, President Kuo, and hello, everyone. I will now walk through our fourth quarter financial results. To begin with, please turn to Slide 12 for highlights on our income statement. For the fourth quarter of 2021, on a year-over-year basis, total revenues increased by 0.7%, while operating costs and expenses decreased by 3.7%. Income from operations increased by 5.8% and our net income increased by 5.1%. In addition, our EBITDA margin increased to 34.82% from 33.45% in Q4 2020. Slide 13 provides a breakdown of revenue by business segment. In the fourth quarter of 2021, total revenue increased by 0.7% year-over-year mainly due to the increase in revenues from handset sales and mobile service revenues, driven by the 5G migration and the iPhone 13 range as well as the increase of data communications revenue and broadband access revenue as a result of the demand of broadband speed upgrade amid the work-from-home trend and stay-at-home economy, which offset the decrease of ICT part job revenue. Moving now to Slide 14. Our operating costs and expenses for the fourth quarter decreased by $1.88 billion or 3.7% year-over-year. mainly due to lower ICT project costs, partially offset by the higher cost of goods sold. As you can see in Slide 15, cash flows from operating activities for the fourth quarter of 2021 decreased by $0.66 billion or 2.4% compared to Q4 2020. This was mainly due to an increase in accounts receivable resulting from ICT projects. As of December 31, 2021, the balance of cash and cash equivalents was $39.82 billion, an increase of $9.4 billion or 30.9% compared to December 31, 2020. The increase was primarily attributable to the issuance of corporate bonds. On Page 16 you will find a table that contains our financial results with forecasts. As you can…

Thank you, Vincent. Slide 19 highlights our awards and recognition from the fourth quarter, highlighting our distinction in mobile service, 5G space and private 5G network service as well as domestic and international recognition of our ESG practices and sustainable operations. We are delighted to see our 5G services receive awards in a call like this. The speed test recognized Chunghwa as the fastest 5G and the fastest mobile network in Taiwan during the third and the fourth quarters of 2021. Similarly, we achieved the fastest 5G download speed and upload speed and regarded as the best in user experience across gaming, video and the voice IPP services in Taiwan. As we aim to expand our 5G private network solutions to the Southeast Asian market, we appreciate the Opensignal International Institute, Frost & Sullivan for awarding of the best private 5G network for customer value leadership in Taiwan. International institutes as well as those in Taiwan have acknowledged our ESG performance with top awards in the fourth quarter, which further encourages on our endeavors. Going forward, we aim to leverage our telecom capabilities and carry out digital employment to help company's digital transformation, further achieving carbon footprint reduction. Thank you for your attention. Now I would like to open the floor for questions.

[Operator Instructions]. Our first question is coming from HSBC, Neale Anderson.

Two questions, please. So the first one relates to the 5G network coverage. And I was wondering if you have any targets for this year in terms of the number of base stations or population coverage that you can share with us. The second question is on 5G service adoption. I'm interested to hear, now that you've had 5G in the market for some time, if you can share your thoughts on which areas -- which business customers are likely to adopt 5G first.

I think talking about 5G network coverage in terms of population. I think we, previously, mentioned this is a lot of different kind of ways to calculate it, okay? So it's really difficult for us to really give the number. At Chunghwa why we are leading brand, currently. Unless 90% of the population coverage we can give the number. But you have to understand that there's different ways to calculate it. But for Chunghwa a leading brand, I think earlier in the presentation, we mentioned that we actually are a lot of internationally in the domestic in the road now. So we are pretty confident we have a pretty good network quality. Thank you.

To answer your question number two, the end of the 2021, we have more than 12,000 base station island wide. And for the 5G market, the government and the enterprise business segment will be the -- and they deploy first. And the vertical small solutions will be deployed very -- so as we accumulate a hard year customer focus feedback. Thank you.

The next question is coming from UBS. Sara Wang.

So my question is regarding guidance for 2022. So it seems the implied growth is lower than 2021 for revenue, EBITDA and net profit. I mean actually for net profit, is skewed towards negative growth. So may I ask, what is the key reason here?

So basically, when we prepare our budget, we take a prudent approach in the sense that China to be overly optimistic. We try to be cautiously optimistic. And also, we only focus on -- not only -- we basically focus on the income from our operations and recurring items. So that's why for some of the gains on investments, actually, China to be to emphasizing on these items. So that's why when we look at the forecast numbers, it's up between 4.4% and 4.55% in. But having said that, it doesn't mean we -- our target is to hit 4.4%. Actually, we are still -- we'll try very hard, and we will start to hit the high boundary of our forecast. Thank you.

[Operator Instructions]. The next question is coming from UBS. Sara Wang.

So just one quick question on ICT business. So we have been disclosing the growth rate for several quarters. But what would be percentage in terms of contribution to total revenue? And then how is the margin profile of the, say, overall ICT revenue?

So entirely for the ICT business, it accounts for 12% of our total revenues. And for the gross margin, it's about double-digit. It's about 10% plus. And we expect that those will still be moderate.

And then so going forward, are we also like counting 5G enterprise projects inside this ICT revenue?

Yes.

The next question is coming from Deutsche Bank, Peter Milliken.

My question is about the impact of the merger that we have been proposed in the market. Do you have any views on how that may impact or the industry in the medium term and what opportunities and the challenge will come from it?

Peter, could you repeat your question?

Sure. Yes, I was asking about the merger in the market that's been proposed between T Star and Taiwan Mobile, what challenges and opportunities you see presenting to Chunghwa as a result of that merger? And whether you think there will be other industry impacts from it?

We think -- the decrease of the number of mobile operators will be really helpful for a healthy market in the midterm. And we think Chunghwa has the -- not just the 5G plus 4G spectrum resources to serve our enterprise and our retail customers and the program on non-standalone network structure. That is very important. Currently, we have built more than 12,000 5G base station as I mentioned earlier, including more than 10,000 consecutive 20-megawatt hertz -- 3.5 gigahertz with the largest spectrum provides excellent user experience. As for the 5G private network. We have been opening quite a few projects for leading companies and government entities in Taiwan for smart solutions, might -- smart manufacturing, et cetera, as I mentioned earlier. And our 5G ecosystem is relatively mature and ready in terms of devices, equipment, et cetera. And actually, it takes time to integrate our network and mentioned synergies of such integrations. Yes.

[Operator Instructions]. There are no further questions, I will turn it back over to President Kuo. Go ahead, please.

Thank you for your participation, and happy Chinese New Year. Goodbye.

Thank you, President Kuo. 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 IR calendar section. You may now disconnect. Goodbye.