Good afternoon, ladies and gentlemen. Welcome to Chunghwa Telecom Conference Call for the company's First Quarter 2023 Operating Results. [Operator Instructions] 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 website, www.cht.com.tw/ir under the IR Calendar section. And now I would 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 first quarter 2023 results conference call. Joining me on the call today are Harrison Kuo, our Chairman and CEO; and Vincent Chen, our Chief Financial Officer. During today's call, management will begin by providing the highlights in our business overview in the first quarter, followed by a discussion of our segment performance and the financial results. After, we will move on to the question-and-answer portion of the call. I'd like to please note the safe harbor statement. Now I will turn the call over to our Chairman. Chairman, Kuo, please go ahead.

Thank you, Angela, and hello, everyone. Welcome to our first quarter results conference call. As this is the first time I'm speaking to investors, as the Chairman and the CEO of Chunghwa. I would like to thank all our investors for your long-term support over the past years. And looking forward to continuing our relationship going forward. Chunghwa Telecom is truly a trustworthy company with growth opportunities and strong corporate governance. Now please flip to Slide 4 for the highlights of the first quarter. For beginning, we would like to bring to your attention that NCC, our regulator get its conditional approval of the mergers among our peers in the first quarter, which we believe is a positive move for shipping healthy market competition in Taiwan. Based on the steady 5G penetration and the future industry landscape, we expect stable mobile market development that will further support our revenue growth momentum going forward. For the results of the first quarter 2023, we were pleased that we beat all financial targets despite the uncertainties in the macroeconomic context. Thanks to the vibrant growth of our three business groups, which all delivered positive year-over-year increases in each segment's revenue and profits. In addition, with our consistent business strategies that drive our mobile and broadband services. Our telecom services continued to deliver robust performance in the first quarter, including our 6.6% year-over-year mobile service revenue growth, that outperformed to lead the industry as well as the increasing fixed broadband high-speed 300 megabits per second and above. Service subscriptions exceeded the record of 1 billion. Our technology capabilities also continue to feel the performance of innovative applications. As a result, EBG's emerging enterprise application revenue demonstrated strong growth and was up by more than 40% year-over-year. For CBG subscription and advertisement revenue from MOD…

Thank you, Chairman, Kuo. Good afternoon, everyone. I will now walk you through our first quarter financial results. Let's start with Slide 14, income statement highlights. For the first quarter of 2023, total revenues increased by 5.7% to TWD54.21 billion from TWD51.30 billion compared to same quarter last year. The increase was primarily driven by robust mobile service and ICT revenues. Income from operations grew by 4.4% to TWD12.17 billion, mainly attributable to higher profits from ICT business and government compensation related to ST-2. EPS increased by 6.4% to TWD1.24 from TWD1.17 on year and EBITDA also grew by 3.3%. EBITDA margin continued to stay at above 40%. Now move on to Page 15 for balance sheet highlights. Compared to the end of 2022, total assets on March 31, 2023, grew by TWD1.38 billion, mainly due to an increase in current assets. Total liabilities were tied by 6.4%, primarily attributable to the decrease of accounts payable. This brings now our debt ratio of around 24% to 23%. On top of that, net debt over EBITDA remains zero. Altogether, this ratio showcase how robust our balance sheet is. Page 16 presents the summary of our cash flows. Cash flows from operating activities decreased by 5.2% on year, mainly due to the settlement of salary payable and payments to suppliers and maintenance contractors. As for capital expenditure, the total amount of cash outlays increased by 3.6%. Specifically, mobile-related CapEx was lowered by 35% on year, whereas non-mobile related CapEx increased by 33% on year, mainly attributable to IDC investments. In addition, free cash flows decreased by 12.2% on a year-over-year basis. Overall, our strong balance together with robust cash flows from operations, lay out solid foundation for us to sail through economic uncertainty and to remain committed to driving operational growth and creating long-run value for our shareholders. On Slide 17, the table reports financial results against our financial guidance. In the first quarter of 2023, all performance measures, including revenue, income from operations, net income, EBITDA and EBITDA margin exceeded our financial forecast. Notably, profit-related performance measures, such as income from operations, net income and EBITDA, beat our guidance by a modest margin attributable to continuously strong performance in core and ICT businesses. That concludes the overview of our Q1 financial results. Let me turn the call over to Harrison.

Thank you, Vincent. On Slide 18 is our awards and ESG recognitions received in the first quarter. In the Sustainability Yearbook 2023, we were awarded the prestigious Top 5% S&P Global ESG Score, competing against over 7,800 companies worldwide. Our impressive performance also placed us the top 5% and the 3rd ranking in the Telecommunications group. At the FinanceAsia Awards, we proudly received three Gold Awards for Best Overall Company, Best Telecommunications Company, and Best Corporate ESG Strategy. I would like to thank investors again for your encouraging support. Moreover, our commitment to corporate governance excellence was acknowledged by Taiwan Stock Exchange, recognizing us as one of the TOP 5% companies. This marks our 8th time receiving awards for best corporate governance Taiwanese companies in 2022. Our subsidiaries, Chief Telecom and Chunghwa Precision Test, also received the TOP 5% recognition for their corporate governance, showcasing the consolidated strengths of the CHT Group. These achievements solidify our position as a leader in the telecommunications industry and exemplify our unwavering commitment to sustainability, ethical practices, and corporate excellence. Guided by responsible business principles, we remain dedicated to delivering long-term value for our stakeholders. This concludes our prepared remarks. Thank you for your attention. At this time, I would like to open up our conference call for questions.

[Operator Instructions] And our first question comes from Neale Anderson of HSBC. Go ahead please.

Thank you. good afternoon. Two questions, please, on the International Business Group. So the revenue growth was quite good. Do you expect that to continue through this year? I'm trying to understand how much is seasonal or how consistent and recurring you expect that to be? And the second one relates to the Japanese subsidiary and the possibility of large telecom construction projects in Japan. I understand that's a pretty competitive market. So I'm just wondering what you feel Chunghwa's competitive edge is in Japan and in other markets outside Taiwan? Thank you.

So for the first question about the International Business segment and whether their performance will be consistent and how we expect in the future. So what we can share is that we are still very optimistic about the performance of our IPG. And so we have the two strategies, which is bringing the world to Taiwan and the other one is to bring Taiwan to the world. So, so far, we think the business in terms of the combination is quite well, and we expect actually for each of the strategy will persist and continue to grow in the future. And for your second question about the Japanese about the construction license, right? So the advantage for us is to provide a more comprehensive ICT solution to our customers. So that will for in the intermediate term, that will definitely benefit our Taiwanese customers, which explore business opportunities in Japan. So it is as long as we build up our reputations in Japan, we can see small future and more opportunities from global clients. Thank you.

Thank you. Understood.

Thank you. [Operator Instructions] Next question is from [indiscernible], JPMorgan. Go ahead, please.

Hi. Your costs have risen a bit faster than revenues. Can you talk about what is the reason for that? And what is the outlook going forward? Thanks.

Okay. So basically, for -- if we look at the growth, right, of our revenue, it's about 5.7%. And for the net income, it's about 4.4%, I mean, income from operations. So basically, it's due to the greater depreciation and amortization because we acquired a spectrum from the [indiscernible]. Also, we invest in the talent attraction. We invest in talent. So that's why the main power costs also arise. So that's basically the two primary reasons. Thank you.

Okay, thanks. But these costs should remain higher in the coming quarters as well. This is a more sustainable cost increase, right?

Yes. These costs and it will become stabilized in the future.

Okay. Thank you. And can you talk a bit about your CapEx in the longer run. I believe this year, your CapEx is going to be a bit higher because of some special projects. Can you talk about CapEx beyond 2023?

So for the first quarter, because in terms of the CapEx, basically, if we take a longer perspective, then that will be more [indiscernible] -- it will be more precise. So for the first quarter, the increase is basically from the non-mobile CapEx, which attributed to the IDC and the fixed line. So these are within our expectation. So for the full year guidance, now we remain unchanged. Thank you.

Can you talk about corporate CapEx beyond 2023?

We -- so for now, we still -- we will see how business progress. So we will reduce our CapEx at the end of the year or for the -- in the early next year.

Okay. Thanks.

Thank you. [Operator Instructions] Next question, [Indiscernible] of JPMorgan. Go ahead, please.

Hello. So if I look at all your peers, their CapEx is going down this year, your CapEx is going up, and that's mainly because of the non-mobile CapEx. So can you provide some longer term? I know you don't want to provide exact numbers, but directionally, is this non-mobile CapEx up this year because of one-off reasons? And does it go down going forward or not?

Okay. So basically our mobile-related CapEx was peaked. So the mobile CapEx will be going down in the future. So we will expect a downward trend for mobile related CapEx. Thanks.

What about non-mobile?

Non-mobile, actually, it depends because it depends on the order taking and the demand from the customers. So it's very hard for us to make a forecast for the next few years.

Okay. But if I look at 2023, your non-mobile CapEx is more than 2x your mobile CapEx, right?

That's for the first quarter, yes. We still -- having said that, for the non-mobile CapEx, we expect the IDC and for the supplemental cables, these are two important items. And we still see -- still very highly of the business opportunities from these two lines of businesses. So this is what we can share for the moment.

Okay. Thanks.

Thank you. [Operator Instructions] Thank you. If there are no further questions, then I will turn it back over to President, Kuo. Go ahead, please.

Thank you for your participation. Goodbye.

Thank you, President, Kuo. We 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.