Thank you. I'm Angela Tsai, Vice President of Finance at Chunghwa Telecom.

Welcome to our fourth quarter 2025 earnings conference call. Joining me on the call today are Chunghwa's President, Rong-Shy Lin, and our Chief Financial Officer, Audrey Shi.

During today's call, management will begin by sharing our recent strategic achievements and providing an overview of our fourth quarter business results. This will be followed by a discussion of our segment performance and financial highlights.

We will then open the floor for questions and answers. Please turn to slide 2 to review our disclaimers and forward-looking statements disclosures.

Now without further delay, I will turn the call over to our president. President Lin, please go ahead.

Thank you, Angela, and hello, everyone. Welcome to our fourth quarter 2025 results conference call.

To begin, I am pleased to report our exceptional financial performance for 2025. Driven by our dedicated efforts, Chunghwa Telecom's revenue, operating income, income before tax, and EPS for 2025 all exceeded the upper end of our guidance, reflecting our strong execution and market-leading position.

On the revenue front, our full-year revenue reached all-time high, demonstrating our continued focus on strengthen our core businesses and active expansion in the ICT sector. Notably, our full-year EPS of NT$4.99 marked an eight-year high, extending our annual growth momentum for the sixth consecutive year.

This milestone underscores our commitment to driving innovation and enhancing long-term shareholders' value. Based on the strong outperformance in 2025, we are entering 2026 with confidence.

For our telecom businesses, we see Taiwan's mobile market remaining stable and favorable to us as the market leader. We are also pleased with our fixed broadband performance and will extend the successful existing strategy for further ARPU enhancement.

In terms of ICT business, our technology capability will continue to remain cutting-edge to support future growth. A particular highlight is our satellite opportunities, as we believe demand of satellite services as the communication backup solution will increase, with our satellites of OneWeb and SES commencing operation in 2025.

The Astranis satellite will join in second half of 2026 to enhance our multi-layer. Furthermore, we will also focus on extending pre-6G related opportunities in AIoT, satellite, and big data services, and expect their combined revenue to surpass the 10 10 billion NT dollars in 2026.

We particularly expect to converge our AI capabilities into our service offering. We expect to assist our customer to integrate the AI into their operational processes, legal compliance, and infrastructure management.

In addition, as the leader in AI-driven connectivity, we are introducing AI edge computing into our AIDC to create the new revenue stream, alongside our continued construction of AIDC in 2026. Ultimately, in the fourth quarter, we were honored with multiple awards, recognizing both our ESG accomplishments and the technical acknowledgment.

We won the Asset ESG Corporate Sustainability Leadership for the fifth time, received the Silver AI Innovation Award at the World Communication Awards for our smart customer service solution, and was recognized as the only Taiwanese telecom company on Newsweek World's Most Trustworthy Companies 2025 list. More importantly, we have secured 4.6 billion kilowatt-hour of renewable energy through a 20-year corporate power purchase agreement, CPPA, to support our 2045 net-zero commitment.

Now let's turn to our fourth quarter 2025 results. Please flip to page 4 for the business overview.

Please turn to page 5 to review our success in Taiwan mobile market. In the fourth quarter, we solidified our leadership position in Taiwan's mobile market for 2025 with record highs across all dimensions.

According to data from our telecom regulator, our mobile revenue market share climbed to unprecedented 41%, while our subscriber market share rose to 39.7%, mainly driven by continued growth in the postpaid subscriber. We are pleased with this strong result.

Our 5G performance was equally impressive. Based on regulator's data, our 5G subscriber market share increased to 39.2%, further solidifying our industry-leading position.

The 5G penetration rate among our smartphone users climbed to 46.4% by the end of 20 2025, while the average monthly fee uplift from 5G migration remained robust at 41%. Given this solid momentum, we were especially encouraged by our strong mobile service revenue growth in the fourth quarter, which achieved a recent record high of 4.7% year-over-year.

Postpaid ARPU also grew 3.6%. We expect this positive trajectory to continue, supported by Taiwan's favorable mobile market landscape.

Let's move on to slide 6 for our fixed broadband business update. In the fourth quarter, our fixed broadband ARPU continued its upward trajectory, reaching a new high of NT$819 per month.

This represents a 3.8% increase in revenue and an 0.5% increase in subscribers year-over-year. This strong result were driven by our high-speed upgrade promotion and the MOD bundle packages, which successfully boosted customer adoption of higher-tier plans.

Subscribers choosing speed of 300 megabits per second and above grew by 13% year-over-year, while those opting for 500 megabits per second and above recorded a double-digit growth, and the subscription for 1 gigabits per second and above doubled in the fourth quarter. Slide 7 provides a detailed overview of the highlights from our consumer application services.

In the fourth quarter, our multiple-play packages, which integrated mobile, fixed broadband, and Wi-Fi services, increased by 17% year-over-year, marking the 16th consecutive quarter of expansion and representing the collective growth momentum of our customer business group. In 2025, despite the absence of major global sporting event broadcasting, resulting in overall subscription loss, our Hami Video service demonstrated solid resilience as its ARPU increased by more than 25% year-over-year in the fourth quarter.

Looking ahead, with the launch of Disney+ bundle this January and our ongoing partnership with Netflix, coupled with the exciting pipeline of popular sporting event such as the FIFA World Cup, Asian Games, and etc., we expect to drive further revenue growth throughout 2026. Meanwhile, our consumer cybersecurity subscription recorded an 11% year-over-year growth, with revenue also achieving double-digit gains, contributing to the steady growth for our Consumer Business Group.

The key development in our Enterprise ICT Business. In the fourth quarter, our group's ICT revenue declined by 6% year-over-year due to a higher comparison base in the same period of last year, though our full-year ICT revenue still recorded robust year-over-year growth.

Meanwhile, our recurring ICT revenue grew 15 15% year-over-year, continuing to show strong momentum, supported by increases across all major service lines, particularly contributions of AIoT, IDC, and international public cloud services. Looking at the specific service categories, revenue from IDC, big data, and 5G private network grew by 19%, 3%, and 88% year-over-year, respectively.

IDC performance benefited primarily from project completion in massive data centers. Big data continued to maintain steady momentum with its revenue increased, driven by its recurring revenue growth.

Revenue from 5G private network surged, supported by the project revenue recognition from both public and private sector customer. However, revenue from cloud and AIDC business declined by 16% and 27% year-over-year, respectively, due to a high base last year.

Our cybersecurity service revenue also decreased by 16% year-over-year, as the majority of our cybersecurity revenue for 2025 had already been recognized in early quarters. Notably, despite the quarterly fluctuation, both cloud service and cybersecurity business still delivered full-year revenue growth.

We are also proud to share that we secure an AI customer service solution to build the first integrated AI customer service assistant for a leading bank in Taiwan. Furthermore, we secured a flagship government system integration project to upgrade the labor insurance platform to next-generation infrastructure, with a contract value exceeding NT$3 billion.

In addition, to further leverage our sea, land, and sky network deployment and expand our satellite business scale, we successfully incorporated our satellite services as part of the government's joint procurement contract framework, paving the way for more long-term service contracts from government agencies. Lastly, our deployment of remote surveillance platform for correctional institution nationwide brought us five additional new projects in the fourth quarter, with a total contract value nearing NT$150 million.

We expect to further replicate and scale this success in the coming year. Slide 9 illustrates the performance of our international subsidiaries.

In the fourth quarter, our international subsidiaries revenue decreased 7% year-over-year, mainly due to slowing demand for voice services, as well as higher comparison base in the United States and Japan ICT market last year. However, we were glad to see an 12% year-over-year revenue increase in Southeast Asia market, as we completed multiple plant construction projects in Singapore and Thailand.

Looking ahead, this momentum is expected to continue through 2026. Notably, our Malaysia subsidiary commenced operations in December 2025, aiming to provide more timely, high-efficient ICT integration services for Taiwanese and multinational enterprise in the growing Southeast Asia market.

Look ahead of 2026, we maintain a relatively optimistic outlook for our global market development, as we have secured several AI supply chain project in the United States in our pipeline, including key project in Texas and California, which expected to significantly boost our US market performance in 2026. Now let's move on to page 10 for the financial performance of our three business groups.

In the fourth quarter, our CBG delivered a robust 6% year-over-year revenue growth, supported by steady increase in both mobile and fixed broadband services, plus higher sales driven by the iPhone demand. However, its income before tax slightly decreased, mainly dragged by the final phase of 3G telecom equipment impairment, which has fully recognized in the fourth quarter, and a higher comparison base from government subsidies recorded in the same period last year.

Our EBG revenue decreased by 7.9% year-over-year, mainly because revenue of major ICT projects has already been recognized in previous quarters, resulting in a 7% year-over-year drop in the EBG ICT revenue. Income before tax was also impacted by the one-time impairment mentioned earlier.

Encouragingly, EBG mobile and fixed broadband services, as well as its satellite services, still deliver solid growth momentum this quarter. As for our IBG, revenue grew by 2.5%, and the income before tax increased by 1.8% year-over-year, driven by rising demand for the international IDC services and a stronger roaming revenue.

Furthermore, we are pleased to report that our submarine cables, SJC2 and the first phase of Apricot, were completed this quarter, and further boosted IBG's fixed-line services revenue by 2.2% year-over-year. Now I would like to hand the call over to Audrey for financial updates.

Thank you, President. Good afternoon, everyone, and thank you for joining us today.

I'm pleased to walk you through of our financial performance for the fourth quarter and full year of 2025 and share our financial guidance for 2026. Now please turn to slide 12 for our income statement highlights.

Let's start with our fourth-quarter results, shown in the first three columns on the slide. Revenue and operations: we reported consolidated revenue of NT$65.65 billion.

This represent a steady 0.5% year-over-year increase and makes our highest fourth-quarter revenue in nearly a decade. This growth was fueled by strong mobile device sales alongside the sustained momentum of our core telecom service.

Income from operations decreased by 2.2%. This was primarily due to one-off impairment losses from the 3G network sunset this quarter, coupled with a high comparative base from last year's investment property valuation gains.

Income before tax increased by 2.1% year-over-year. This growth was driven by investment disposal gains reflected in our non-operating income.

As a result of this performance, EPS increased from NT$1.16 to NT$1.20. This reflects our consistent profitability and marks the highest fourth-quarter EPS in 10 years.

Finally, EBITDA for the quarter remained stable at NT$21.55 billion. The EBITDA margin stood at 32.82%.

Now let's expand our view to the full year of 2025, shown in the last three columns. The annual view reflects a strong growth trajectory.

For the full year, total revenue reached NT$236.11 billion, a solid increase of 2.7% compared to 2024. The growth was broad-based and driven by three pillars.

First, we saw strong momentum in our sales revenue. This was fueled by higher mobile handset volumes and a robust performance of our subsidiary, Chunghwa Precision Test, in the semiconductor testing sector.

Second, our ICT portfolio continued to deliver with significant contributions from high-growth areas, such as IDC, cloud, and cybersecurity. Third, we maintained steady growth across our foundational mobile service and fixed broadband business.

This top-line strength translated directly into profitability. Income from operations grew by 3.6%, and net income rose by 4% year-over-year.

Consequently, full-year EPS reached NT$4.99, up from NT$4.80 last year. EBITDA also grew 2.6% year-over-year to a strong NT$88.77 billion.

Our EBITDA margin remained stable at 37.6%, broadly consistent with the prior year. In summary, these results reflect high-quality earnings growth.

This profit expansion was driven by sustained positive momentum in our core telecom business, complemented by the continued scaling of our IDC, cloud service, and other ICT business operations. Now let's turn to slide 13, balance sheet highlights.

Total assets increased by 0.4% year-over-year. The growth reflects strategic allocation into long-term investments and prepayments for satellite infrastructure reported in other assets.

The increase was partially offset by a net decrease in property, plant, and equipment as depreciation charge exceeded new capital additions, along with a net decrease in intangible assets due to the 4G and 5G spectrum amortization. On the liability side, total obligations decreased by 0.7%.

We repaid older loans, while successfully issuing our first-ever sustainability bonds focused on biodiversity. The strategy not only strengthen our capital structure, and reinforced our ESG-driven financing.

Our financial health is best illustrated by our key ratios. Our debt ratio improved further to 25.25%.

Our current ratio remained healthy, well above 100%. Most notably, our net debt to EBITDA ratio stood at zero.

Moving to slide 14 for our cash flow summary, we will review our performance for the full year 2025. Cash flow from operating activities decreased slightly by 2.2%.

The variation was primarily driven by working capital dynamics, specifically a decrease in accounts payable between '25 and '24. On the investment front, capex declined by 3.7% to NT$27.7 billion.

First, regarding mobile capex, spending decreased by NT$1.4 billion. The reduction aligns with our roadmap to lower mobile capital intensity now that we have passed the peak of the 5G deployment cycle.

Second, regarding non-mobile capex, spending increased by 2%. The increase was mainly driven by strategic investment in submarine cables.

Consequently, free cash flow stood at NT$49.8 billion, a marginal decrease of 1.4% year-over-year. Despite this slight variation, we continue to maintain a strong cash position.

Our stable cash inflows remain fully capable of supporting both our business growth initiatives and our commitment to shareholder returns. Now let's turn to slide 15 to review our performance highlights against guidance.

In the fourth quarter of 2025, revenue exceeded the target, showing stronger-than-expected demand. Key performance measures, such as net income and EPS, were all in line with our forecasts.

For the full year 2025, the cumulative results validate our strategy. We are very proud to report that all key metrics—revenue, income from operations, net income, EPS, and EBITDA—either met or exceeded our full-year guidance.

Again, this broad-based success was powered by our telecom business, driven by successful 5G migration and mobile service revenue growth, alongside our ICT business, which capitalized on expanding demand for IDC and cloud, big data overseas markets. Now moving on to slide 16.

16: please see our guidance for 2026. Looking ahead, total revenue for 2026 is expected to increase between 2.4% to 3.0% year-over-year, primarily driven by growth momentum in our core business, where 5G service and speed upgrade promotion packages for fixed broadband are expected to continuously enhance our subscriber numbers and ARPU.

ICT business is also expected to contribute to revenue growth as we continue to see digital transformation opportunities in the market. Operating costs and expenses are expected to increase between 3.5% to 3.7% due to continued investment in talents and infrastructure that support future business development in both core and emerging business.

Given these projections, we expect our EPS to be in the range of NT$4.82 and NT$5.02. As for capital budgeting, we have budgeted NT$31.91 billion for 2026.

Looking ahead, our long-term roadmap balances disciplined efficiency with strategic expansion into resilient and sustainable infrastructure. Our mobile-related capex is expected to decrease by 6.3% year-over-year.

This marks the fifth consecutive year of this decline since our peak in 2021. This demonstrate our ability to maintain our mobile leadership through capital efficiency as we move past the heavy 5G construction phase.

Non-mobile related capex is expected to increase by 24.1% year-over-year. This investment is strictly aligned with our sea, land, sky strategy to capture emerging business opportunities while fortifying our network.

Key investment include expanding submarine cables to boost connectivity alongside building our IDC data center. We also strengthen infrastructure resilience by upgrading power, cooling, and cybersecurity systems.

We are turning digital resilience into a unique competitive advantage. This concludes our financial results highlights.

Thank you for your attention. At this time, we would like to open the conference call for questions.

Thank you very much. A quick question on the capex, if you can give some more detail about the big increase in the non-mobile capex, which is almost 24% for 2026.

Also, can you provide some more details about, you're looking at almost 3.5% to 4% increase in the operating costs, which is higher than the revenue growth as well? A bit more color on that as well.

Thanks.

Thank you. Thank you very much, Rajesh.

The first question is about capex, about more detail on mobile capex, about 24% increase in 2026. There are couple of categories, as I just mentioned.

This include the fixed-line maintenance, which consists of quite the big proportion of the fixed-line maintenance. The second is about the satellite and also the cables.

The third one is about IDC. I should say that mainly that from the IDC and also the satellite portion.

This is for the first part. The second part about the increase about 3.5% operating cost, I think that they are two main portions.

Couple of the reason is that one is the human resource, the talents. I think that, as that we have a lot of the sectors in IDC.

We need a lot of the AI-related talents. Investment in the human resource is one important area.

The second is that electricity. I think that we are not so sure about the electricity policy in Taiwan, we are a bit cautious.

Also, this is also a second big area that takes our cost. The third one is about depreciation, although that we try to trim down a lot of the capex in recent years, as I mentioned that discipline management is a key philosophy in our capex policy, but in the early stage that we still have some capex.

As you see in our cash flow statement, you will see depreciation and also the amortization. These two portions is much higher than the net increase of our capex of the PPE.

Is that clear or do you want me to clarify any others?

If you can share, of the total increase in non-mobile capex, how much is from IDC?

We didn't separately disclose the exact number of the capex budget for each non-mobile items. I can share with you that, I think that capex for IDC and cloud, it's remain the second largest part of the non-mobile capex

for 2026, okay? Then I want add one more point for the mobile capex.

As we know that capex investments, we had just passed the peak, right? For 2026, actually, we will invest in SA, standalone, related applications like the network slicing for your reference.

The total mobile capex for 2026 actually still less than that of the 2025.

I got it. This is helpful.

It would really be helpful if, going forward, you can provide greater breakup of non-mobile capex because it's almost more than 3/4 of your capex is now non-mobile capex. It would be really helpful to get more details about that in the future.

Thank you.

Thank you for your opinion.

Okay. Thank you very much for your participation, yeah.

Happy New Year.

Yep,