Good afternoon, ladies and gentlemen. Welcome to Chunghwa Telecom Conference Call for the Company's First Quarter 2024 Operating Results. During the presentation, all lines will be in a 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 website www.cht.com.tw/ir under the IR calendar section. Now, I would like to turn it over to Ms. Angela Tsai, Assistant Vice President of Investor Relations. Thank you. Ms. Tsai, please go ahead.

Thank you. I'm Angela Tsai, Assistant Vice President of the Financial Department for Chunghwa Telecom. Welcome to our first quarter 2024 results conference call. Joining me on the call today are our Chairman. Harrison Kuo; President, Ivan Lin; and Vincent Chen, our Chief Financial Officer. During today's call, management will begin by providing Chairman's message and 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. On Slide 2, please read our disclaimers and notes concerning forward-looking statements. Now I will turn the call over to Chairman. Chairman, Kuo, please go ahead.

Thank you Angela and hello everyone. Welcome to our first quarter 2024 results conference call. In the first quarter, we proudly announced our success in expanding our lead in Taiwan's telco market. Amidst the robust three player landscape, our revenue share in Taiwan's mobile market continued to steadily grow, climbing from 40.3% to 40.4% quarter-over-quarter, while subscribers share enjoying an increase from 37.6% to 37.7%, maintaining the growth trajectory after the market consolidation completed last third quarter. Our financial performance also speaks for our business success. Total revenue in the first quarter hit a new high for the same period since 2017. Income before tax also reached a record high for the same period since 2016. On the basis of excluding the one-time item of the government compensation for ST-2 satellite recognized in the first quarter last year. To invest our leadership and the long term growth, we have been establishing AI infrastructure to enhance our operations and see opportunities in the AI mega trend. Our AI powered network solution have been successfully used to predict network degradation and optimize energy consumption to enhance our network efficiency and contribute to cost reduction. In addition, generative AI is another technology that we leverage problem shooting to enhance service quality, response time and cost efficiency in operations, particularly in relation to network maintenance and customer service. To capture AI exploration opportunities, we actively deployed computability across cloud, edge and the terminals to bring computing resources closer to our customers with an intent to access AI applications. We also plan to establish AI data centers and develop GPU as a service empowering industries to complete their AI transformations. To achieve this goal, we will team up with local and global ICT partners to establish ecosystems for the AI power of the future. Another…

Thank you, Chairman Kuo and hello everyone. Now please stick to Page five for an update on our outperforming mobile business. As mentioned by the Chairman Kuo, we maintain our leading position in the Taiwan mobile market in the first quarter of 2024, with the largest subscriber share of the 37.7%. Meanwhile, our revenue share continued to stay above the 40%, hitting 40.4% by the end of March, further widening our leading against our peers. Our exceed revenue shared over the subscriber and shared 2.7% due to the exciting progress of the subscriber share gains. In addition, 5G migration and international roaming continue to drive our mobile service revenue and post-paid output, recording 5.1% and 3.4% year-over-year increased respective mobile service revenue and ARPU also continued to maintain their growth for six [ph] consecutive month and 12th consecutively the quarterly respectively. As 5G continue to penetrate sterile [ph], we sold averaged monthly feed uplift from clustering who migrate from 4G to 5G pool to 14 [ph] and 5% in the first quarter and it's rebuilding and spreading upward trajectory. Let's move on to the Slide six for an update of our fixed broadband business. In the first quarter, we are glad to see the accelerated growth in the fixed broadband sector due to our successful strategy to encourage speed upgrade and fixed broadband revenue and ARPU increased by 3.8% and 2% respectively on year-over-year basis and both expanded their year-over-year growth margin compared with light of the previous quarter. Our size up of the service of the 300 megabits per second for the higher continue to be popular among all speed mix with 29% year-over-year increase in the first quarter, maintaining its double digit growth. Now let's move on to the performance of our custom centrist business growth. Slide eight…

Thank you, President, Ivan. Good afternoon, everyone. Now I will present a financial summary of our first quarter results in 2024. Let's begin with Slide 14 income statement highlights. During the first quarter in 2024, revenue was about $55 billion, which hit an eight-year high for the same period. Compared to the same quarter last year, revenue increased by 1.4%, primarily driven by higher mobile service revenue, growing ICT business revenue and broadband service revenue. Income from operations and net income decreased by 2.2% and 2.6% on year respectively, mainly due to the high base from last year as a result of government compensation related to ST2 satellite. Excluding this one-time item, year-over-year changes in income from operation and net income remained in positive territory, which demonstrates the healthy growth momentum of our core and ICD businesses. EPS for Q1 is NT$1.21, EBITDA and EBITDA margin remains steady. Now move on to Page 15 for balance sheet highlights; as of March 31, 2024, total assets increased by 0.9% compared to the year end of 2023. This increase was mainly caused by the increase in current assets and long term investments, which offset the decrease in property, plant and equipment. Total liabilities decreased by 4.1%, primarily attributable to the decrease in accounts payable. Additionally, debt ratio decreased by one percentage point and the net debt over EBITDA remained zero. Page 16 provides the summary of our cash flows. For the first quarter in 2024, we generated solid cash flows as cash flows from operating activities grew by 26.1% compared to the same quarter last year. The increase was mainly attributable to a decrease in settlement of accounts payable and payments for inventory. Regarding capital investment, the amount of CapEx declined by 6.9% on year, of which mobile related CapEx decreased by 50%, while non-mobile CapEx increased by 9.1%. The latter was primarily due to FTTH deployment and asset vitalization. On top of that, free cash flows increased by 56.9% on year. Taken together, we maintain solid balance sheet and keep generating strong operating cash flows, both of which are underpinnings to support our business expansion and to seize digital opportunities. On Slide 17, let's turn to the table that presents operating performance against our forecast. In the first quarter of 2024, revenue was about in line with our estimate. For performance measures, income from operations, net income, EPS and EBITDA all beat our forecasts by a modest margin. The better-than-expected performance was primarily driven by the steady growth of core business and improved profitability of ICT business. That concludes the first quarter financial results. Let me turn the call over to Chairman, Harrison.

Thank you, Vincent. On Slide 18 you can see our awards and ESG achievement highlights from the first quarter of this year. First, I'd like to report that relative to 2020, our revenue of the parent company increased about 5.7%, while the carbon emissions experienced a downward trend by decreasing 40% in 2023. The inverse relationship between revenue growth and the carbon emissions trend, highlights the effectiveness of our dual track approach to operations and sustainable development. Moving forward, we will intensify our carbon reduction efforts by enhancing energy efficiency with innovative technology and the usage of renewable energy. Additionally, we are the first telecom company in Taiwan to receive approval from EV100 and committed to transitioning 100% of our corporate fleet to electric vehicles by the year 2030. Besides, we once again ranked in the top five of companies in S&P Global Sustainability Yearbook 2024 and was honoured with the highest leadership level. The A ranking recognition involved the CDP climate change assessment and supplier engagement rating. In addition, we were the leading telco in Taiwan, receiving top awards for most committed to ESG and best Investor Relations from Finance Asia. This accolade attest to our position as an international industry leader with outstanding performance in all aspects of sustainable development. Furthermore, we cringed the first prize for overall ESG performance for three consecutive years from Global Views Monthly, one of the most prejudiced ESG awards in Taiwan, which exempted us from competing in the same category for the next three editions. This outstanding outcome demonstrates a track record of long term and stable performance in ESG evaluations and is featured on the annual honor roll. This concludes our prepared remarks. Thank you for your attention. At this time, I would like to open our conference call for questions.

The first question, Neale Anderson of HSBC. Go ahead please.

Thank you. Good afternoon. Thanks for the presentation. I had a few questions relating to Slide number 11 please, the emerging enterprise applications. So with the percentage numbers it's a little bit hard to get a sense of the absolute contribution and growth in these business areas. So would it be possible to give us any more detail and say which is the largest one on an absolute basis and which business area you think has the capacity to be again larger in a few years' time, again on an absolute basis rather than percentage wise? And the other question is relating to the revenue and the margin trends in the data center and the cloud business because we're getting something of a mixed picture from other telcos in this area. So it'd be great to get your views on that. Thank you.

Okay. Thank you, Neale for your questions. So regarding the contribution of the emerging application revenues, so basically we don't disclose detailed information, but what we will share is that the IDC contribute the most and followed by cybersecurity and AIoT. So these are the key pillars. This is just for the first quarter. Yes. And for the revenue and margin trend on data center, okay, so what we'll say the revenue trend, what we see, because, for the IDC, right. Sometimes we will have the one time setup service revenue, but we focus more on the recurring revenues and we attach a greater weight on this. So what we can share is that for the recurring revenue of our IDC, the growth has been increased. As we mentioned, now, the recurring revenue of IDC for this quarter year change is almost 8% and we think actually the recurring revenue makes up a big chunk of the total IDC revenue and it's on a healthy trajectory.

Thank you. Any comment on the margin side or competition in the IDC in the cloud area, please.

Okay, so basically for the margin for data center, actually when we see IDC business, we take a holistic view to see this, because for client using our data center, normally they will use our other services. So when we look at the profit we will take as a holistic view. This is unlike our competitors and because their main advantage is, or their main business is on data center per se, but they don't provide integrated services to the clients. So what we'll see is together with our subsidiary, Chief Telecom, actually we are still the largest IDC service providers and we are way ahead of our competitors and we are very confident that we can maintain our lead in this line of business.

Okay, maybe we have the first question from the platform. It is about that as the government announced the policy of raising the electricity fee, could Chunghwa Telecom Management share the impact to Chunghwa Telecom?

Okay, thank you. We don't anticipate a significant impact from the increase in electricity fees as we have continued to invest in energy efficiency. For example, our centralized ran architecture and the retirement of 3G networks all constantly contribute to energy savings. In addition, we have taken some countermeasures to respond to the electricity cost increase as well. For the energy intensive services like IDC, we have factored the electricity fee issue into our service contracts, including transferring the mark-up of the electricity fees to our clients. Thus, for us, the electricity fee increase is generally manageable. In the long run, we will still continue to invest in the initiatives of carbon emission reduction, aiming to control the overall energy cost as well as to respond to ESG cost. Thank you.

[Operator instructions] Ladies and gentlemen, we thank you for your questions. If there are no further questions at this point, I'll turn it back over to Chairman, Kuo Guo, for closing comment. Thank you.

Thank you for your participation. Goodbye.

Thank you. Chairman, 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. Thank you and good bye.