Good afternoon, everyone, and welcome to Far EasTone 2026 second quarter investor conference call. We have with us today our President Chee and CFO Sharon.

Both will share updates and performance for the quarter. Before we begin, I would like to remind everyone to pay close attention to the safe harbor statement on the first page of the presentation.

Thank you, and now let's proceed with Chee's presentation. Thank you.

Thank you, Gary. Good afternoon, everyone.

I would like to first look at our second quarter financial performance. As you could tell, we actually have achieved a record-breaking performance with all KPIs exceeding our guidance.

Our total revenue came to $28.66 billion, and EBITDA is $10.15 [billion?] .

For the revenue, we are looking at a 13.6% increase YoY. Just to clarify, because for the base last year we have not consolidated with our subsidiary, FETC.

If we restate the base for last year, and that is shown in the central column here. The restated 2025 second quarter, our total revenue was $26.11 [billion?]

if we included ETC's second quarter revenue. Then the YoY—so this is an apple-for-apple kind of comparison—the YoY became 9.8%, okay?

Similarly for every other KPIs, you can kind of look at them yourselves. For the net income, we reached $4.01 [billion?]

. This is actually a record-high net income performance for the second quarter.

Our EPS came to $1.11. Then for our guidance, you can look at from the far right, it says $0.94.

We are certainly exceeded our guidance for now, okay? Then if we combine the two quarters for the first half, it's also, we deliver growth above our guidelines, and then also from the YoY perspective, it is also looking very good.

Our combined revenue came to $56.47 billion, and our EPS came to $2.14. Then for the net income, it's a $7.72 [billion?]

, and if you look at the YoY, it's even in the double digits for operating income, net income, and also EPS. Compared to our first half guidance, the EPS is $1.89, that was the target, and then we now have a $2.14.

It's looking pretty good that we exceeded our guidance, and we expect to continue to do well for the second half. The investors should be happy with that.

Okay. Now, if we look at the trend for the quarterly performance, you can tell in terms of the total revenue, EBITDA, and net income, and then also the EPS, each of the performance here has reached the record high.

For the second quarter revenue, that's all the second quarter in history, the highest. Then for EBITDA, as you can see, actually since starting in the first quarter this year, our EBITDA has kind of a climbed up to the $10 billion level, and then, continue to go up a little bit.

We'd like to stay at this hundred level, and then hopefully we'll get better. Then this is our highest quarterly performance across all quarters for the history, okay?

In terms of the net income, it is $4.01 [billion?] , it's the highest quarter, and then also in terms of the EPS, that's also the highest for the history, okay?

All right. In some financial metrics, our net debt, we have reduced it to NT to the $32.8 billion level, and the net debt to EBITDA improved to 0.83 multiple.

Our year-to-date free cash flow remained really strong at $14.5 billion, and then also our CAPEX for NT for $3.0 billion, it remains in line with our full-year guidance of $9.6 billion, okay? All right.

For the combined, half-year kind of trend, this is also record-breaking all in four all areas for total revenue and operating income, and then also EBITDA and the EPS, okay? All right.

That was also the slide actually I showed to my chairman when he came to the board meeting today, okay. Then in terms of the key drivers for our revenue growth, and then here is a breakdown.

You can see for the red area, that is our combined mobile and essential services, which accounts for 50% of our total revenue, and then showing a 2.4% growth. Then merchandise, percent-wise still 30%, but then the YoY is 11%.

Actually our merchandise in the first in this quarter, actually performs really well. Then but then on the other hand, merchandise margin is a little bit smaller.

If you notice in the previous chart, we actually compare compare the margin. Our margin right rate-wise compared to the same quarter last year, not as good, but then it's just a portfolio kind of changed a little bit, and merchandise has a bigger weight, and they in terms of their growth, it's like stronger, okay?

In terms of ICT plus the fixed business, we grow 32.7% there, then that includes the ETC's ICT revenue. Overall that that is a kind of our our portfolio.

Some of the drivers: In the mobile area, of course, our steady continue 4G to 5G migration, and then for the monthly fee uplift for the fee uplift for those 5G renews, we are looking at 40-point-some percent uplift, it's a very good performance, very good quality migration. Then also we managed the churn very effectively.

Then our essential services, although relatively small compared to the mobile service core base, but then it's showing a good potential and good growth potential. A lot of them are in the double-digit growth, like entertainment for 29% year-over-year, and also our fraud prevention features is showing a 56% increase.

Our mobile financial service that has been around for a while, but then still continues this 8% year-over-year growth, okay, very steady. Then merchandise, we see the upgrades, that definitely is the driver.

I think some of the the price kind of the price the price is increasing. I think that that places some uncertainty, and then gives some pull for the users to wanted to get the new phone, sooner.

We also see some of that purchase going on as well, so that all helped the merchandise growth here, okay? Then merchandise also includes our shopping here.

We actually have done some online offline online merge merger with offline, we see that very effective, the two channels kind of a combined strategy. It was well executed, okay.

For the ICT and the fixed business area, our ICT revenue increased 23%. This 23% doesn't include ETC area, just pure our own core ICT revenue.

Then this is driven by the cloud. We our subsidiary, Nextlink, they have a very good cloud growth, and due to that they have a new acquisition of a Vietnam, cloud service company, it shows a 30%.

Then also that subsidiary also outperforms their own, estimate, their BOD target. In in these four ICT concentration areas that we particularly see smart city performs very well, and then it is YoY they kind of doubled the revenue.

Then for the first half of the year, and then we had some acquisition earlier this year with a subsidiary, we actually seeing the contribution there as well, okay, okay? Then FETC, as a as a new subsidiary to us, they have a very solid business growth for their toll collection, and then also some derivative business, such as parking related.

Then for their international expansion with with the ICT kind of projects based on the toll collection kind of a construction, it is also going very well, and and that contribute to their growth very well, okay? All right.

Some highlights for our mobile business: As I mentioned earlier, we've seen the continued 5G upgrades, and our have we have very strong NP momentum, the the neutrality neutral neutrality portability, right? Neutral Number portability.

Number portability, number portability, right. In terms of our NP performance that we actually looked at every month, we are doing very well there.

You look at our service revenue, it increased 3%, and our ARPU continues to lead the lead our peers. It comes to $733, although still lower than what we had before the merger with APT, but getting close.

Still there's some I think we were like at a $758. We definitely are climbing back, but then there's still some distance there, okay?

In terms of our postpaid 5G penetration, it is now 49.3%. This is the total base of the postpaid.

If we look at only the smartphone users for their for the 5G penetration, then this number would come to 53% or so, yeah, okay? Then we look at the whole base, it is still at 49.3%.

My team still owes me a little bit more there, and but we definitely will break the 50% mark this year, okay? Then the churn rate continues to come down, and then it is reaching the record low, but we will continue to manage it down, okay.

Some highlight for our consumer service: We have launched actually one major application that is called Taste Taiwan. It's a new app.

It's a one-stop kind of dining service app. We already have attracted over 250k 250,000 users by now, and then so this is it is growing as well as we expected.

Then in terms of another app that we didn't launch, but it is a service we put on our mobile Circle, kind of using our digital reach, and partner with Agate, that's a gaming platform, our users that can play to earn. This actually it is what I see as a very typical and a good example of a platform economy.

It's really a platform monetization. This is actually generating revenue every month very, with a good growth, as we speak.

Okay. Then in terms of the entertainment business, for our friDay Video, our subscriptions, paid subscription base has grown 20% YoY this year, and then also revenue-wise, it's a 17%, okay?

Then we continue to to expand our FET's footprint in the entertainment ecosystem and IP, content-related. The users or analysts should see more of a more kind of voice of Far EasTone in this area.

We have some like an indie music music festival, and that is partnered with Spotify. As I was told, that is like the first in how many years that Spotify did that with with any of the local, companies here, okay.

Then for the new mobile products, we launched 5G FWA and then plus the home entertainment kind of package in April. We are also seeing a very good response from the market, and it is exceeding our target by 23% for the for this quarter, okay?

Then we launch another product that is a mobile product, and that is different than our typical, X99 kind of pricing. This is this is with a segment focus.

This is a young segment. We call it youthful youthful companions, and then it is targeted at Gen Z.

So 33% of our new subscribers came from this younger segment, okay. Then fraud prevention, I think I mentioned it earlier, the paid subscriptions grew 44%, okay?

Then this is with we continue to work with the vendor for the AI-enhanced capability, they continue to improve that, and also that helped the adoption as well. Then just for a reference, this is no money, but we blocked over 200 million attempted visits at those unsafe websites, what we consider as a blacklisted, for the for the subscribers of the service in second quarter alone.

It is definitely doing its service, okay. All right.

In the ICT area, our ICT revenue grew 23% in the first half, and then in terms of the contract value, we actually grew 103%. It's like a double double what we had last year for the for the first half.

Then in particular, a smart smart campus, smart in the smart city area, that we see a very strong growth there for 46%, and some big projects that we have won from several cities, and that definitely helps. Then also for the smart health, the smart healthcare, although the base is relatively small, but this is definitely one area it is growing slowly but surely.

Then our telemedicine contracts has grown 76% YoY, and then also the smart hospital solutions is growing 114% YoY. Then we also have some big wins, and that that so even though smart health base is small, but it is definitely growing very with a very solid some wins, okay.

In terms of digital transformation, that mainly is driven by the demand for AI, and then which then drive the demand for cloud. We have seen that trend since like 2 years ago, and then it just continues and then and then even stronger.

For the first year in our digital transformation service area, that already we are seeing 50% YoY revenue growth. Then also the contract value that we have accumulated in the first half already surpassed the full year 2025 total.

A few big wins, in terms in in terms of central government, we have one particular central government ministry cloud migration project, and then also two with the leading global Taiwan-based electronics and cloud infrastructure companies. Those are kind of big wins for us as well.

For telecom-based SI, we have several multiple large-scale telecom SI, we have secured them across, transportation and smart infrastructure areas. Then major wins including Taiwan Railways and also a leading technology company that is a BOT BOT project, and then the smart building-related.

Also there is a government agency training center that's also smart building-related that we have got the contract. Some major honors and recognitions for your information only.

We have earned the BSI Data Center Mark of Trust, and then as I was as we were informed, this is the first IDC operator worldwide that is recognized for excellence in IT service management. We took pride in that.

Also we are Taiwan's Best Customer Service Golden Award, we won it for the 15 consecutive time, and that's the only one only company in Taiwan to achieve this distinction. Then we have some environmental sustainability that is recognized, and also some corporate governance and then leadership-related awards for your information there.

I just won't go over them one by one, okay? Finally, for our second half priorities, we will continue to accelerate the growth in the consumer essential services.

As I say, that's where I see our potential growth is, and then also ensure the timely delivery of the smart ICT projects. What the numbers may not show, even though we're already seeing a ICT with a 23% YoY revenue increase, but then we we do have some project that didn't complete as per our original schedule.

Those revenue will be realized in the in the next quarter or so. Some of the revenue, otherwise if they, completed as as originally estimated, our ICT revenue would be even higher, okay.

Ensure timely delivery of these smart ICT projects will be our priority as well. Then we have the we have several the the pipeline actually is long, those AI project delivery, and as I mentioned, that was really driven by the enterprise interest and demand, and which also drives the demand for cloud.

Together our delivery capacity and capability will continue to build up this team, just in in response to this high demand, okay. Then we have started our 5G standalone deployment, we'll continue to advance that per our schedule.

Also LEO satellite service readiness, we already have the kickoff meeting with Amazon in July, and then we have formed several workstreams, so the work continues, okay. All right, and then with that, I concluded my presentation and ready for your questions.

Thank you.

Hi. Good evening, management.

Thank you for the presentation and the opportunity. I have one question on the advanced 5G standalone deployment, what is the benefit that you're seeing of standalone versus non-standalone 5G, and how much capital are you looking to deploy, and if there's any numbers you can share on IRR of these investments, that would be very helpful.

Thank you.

If I'm not mistaken, I believe you asked the same question last time. [laughter] Okay.

For 5G SA, we look at it as a technology evolution and also a must-do on the way to be ready for 6G. Then also on the other hand, with the 5G deployment, 5G SA will unleash some of these unique capabilities for enterprise applications.

We are kind of fell short if we don't complete that part. We have looked at several different scenarios in both the consumer and enterprise areas.

While my NT team is working hard on the deployments and all that, and my business team are also working with the NT team to familiarize themselves with these features that are going to be available when, and then so they can design their product or service accordingly. We definitely see the monetization opportunities there.

Also on top of it, right, and then part of these capital investment will also help us to further improve the penetration into the home, because the 5G alone, with the 5G SA and also what we are doing with the 700 spectrum area, all these are kind of investment together in terms of our NT deployment that is going on right now. In terms of the network quality, network performance, and then also the potential, the future monetization opportunities for both consumer and enterprise, so that's why we're doing it.

In terms of, I think you asked about the scale probably, I think we are looking at more than 50% of the coverage that we should be able to complete that by the end of the year in terms of having 5G SA deployed. Part of that we need to work with Apple, right?

When we say we want to enable the 5G SA, Apple needs to kind of certify, and then you need to show, demonstrate that it's not you're just in doing a POC and those kind of things. I think more than 50% of the coverage is what we are looking at for this year, if I remember it correctly.

Thank you.

Sure.

Hi, thank you, management. Thank you.

I have about four to five five questions. Apologies in advance.

Should I ask them all together or should I ask them one by one?

Either way. It depends.

Let's hear your first question,

and then

we'll see.

Sure. Maybe let me just take it one by one.

My first few questions are about the ICT segment. Firstly, could you just give us a sense of the 103% year-on-year increase in contract value growth?

What are the projects or specifics of these project values?

Okay. You are asking about the ICT revenue growth and then specifically what kind of project they are and the contract value, is that?

Specifically for the new contracts that were signed in first half and second quarter.

What? Contract value, yeah?

Should we release that? [laughter] Yeah, we actually look at for the first half, I think more than $8 billion, more than $8 billion that we have accumulated.

We got more in July. Then, yeah, for cut-off at the end of June, it's more than $8 billion, okay?

Then so for ICT, we have four major concentration areas. The first one is telecom-based SI, and then the second one is smart city, the third one is smart health, and the fourth one is digital transformation service.

Then so I think in the smart city and digital transformation service in particular, we got quite a few contracts from the government, and then those numbers are all big ones.

Great. Thank you.

My second question is about the AI project delivery that you mentioned towards the end of your presentation. Could you let us know how much of our ICT revenue right now comes from AI-related projects, and for the AI-related projects, are we seeing any margin difference from the rest of the ICT projects?

I don't think we have a KPI or we have specifically do that calculation there. Then I think I can answer so in terms of AI-related, right?

I know a lot of companies talk about AI-related. This statement could have a lot of difference, right?

Then so what I'm talking about here, I can tell you very specifically, as we are the licensed solution provider for Microsoft, and then so on one hand we sell Microsoft service, the M365, for example, and also Azure. Then those have been there, but then they got even more popular because the GenAI, the OpenAI association with Microsoft, and Microsoft recently has even opened up their AI-related capabilities and then in terms of the sourcing.

We see all that. Then when we do this digital transformation, it's not just about selling the license.

More importantly is to make the customer see the value of getting these licensed capabilities. Then so how we help them adopt AI, and then also how we help them with AI tooling or AI capabilities now they have their fingers on, and then to create some applications for them in terms of helping them either with a productivity improvement or a error detection.

That is the service, the AI adoption and the AI transformation service we provide on top of the license selling. The total revenue here, because with the license, of course, that is kind of like the base, but all that other service that is what's provided by my engineers.

This is also, if you have heard the term FDE, the forward delivery engineering. This is the professional understand the tooling and working with the clients and then help them using the AI tool to solve their problems.

This is what my team does on top of selling the licenses, because license themselves don't sell. It's the capabilities that they can create, the value they can create for the client, that will sell.

My team sells that. That margin will be relatively high because the cost of goods sold is low.

It's my human capital and talent, okay?

Sure, thank you. That's very helpful.

My last question regarding ICT is—

I actually can give you another piece of information if I didn't mention it earlier. Just this area, the revenue growth for the first half is 50%.

We definitely see the momentum that is going really strong in this AI-driven cloud demand and the AI transformation service. We see ourselves as our client's AI transformation partners.

Got it. Thank you very much for that.

My last question regarding the ICT segment is, could you give us a sense of just the margins of our overall ICT segment? As the ICT contribution percentage to group revenues steadily increases, what's our view on the group EBITDA margin going forward?

You're talking about smart city, right? You're asking smart city?

No, overall? Overall ICT.

Oh, okay.

If it's overall ICT, it is about 20%. 20, I think it's more than 20, but then between 20% and 25%.

It depends on the portfolio. Every quarter it changes a little bit.

As our ICT revenue contribution as a percentage of group revenues steadily increases, what do we think about the overall group margin going forward?

You can look at it, the overall is in 33, 35? Yeah, 35.8%.

Our EBITDA margin is 30 35.8% for the first half. I actually showed it on the chart.

If you look at it later, you can see that.

Okay. My last question is on CAPEX.

We have plans to build up 5G standalone and also LEO satellite services, and I think at the start of the year we also guided for actually higher CAPEX for 2026, but I think for first half right now we're spending at the same amount as last year. Could I check what's the reason behind that, and will the bulk of CAPEX come in second half?

Oh,

well, some of these are when the POs are placed, and also for us to really pay them, we have to complete the testing and all that. The realization will be showing in the second half.

You will see more of that. Actually, we had our board meeting today.

We just passed another additional $1 billion, right, almost. We have an additional CAPEX request that were approved this morning by our board.

Actually the CAPEX number will be a little bit higher.

Thank you very much. I'll jump back in the queue.

Hi, I'll just follow up with one question. President Chee, could you give us an update of our conversations with Amazon on the LEO satellite service, and could you also give us just a sense of how the partnership model would be like and what is the revenue potential for LEO service in Taiwan, please?

Some of the information you asked is really NDA, in terms of a contract agreement. I won't be able to disclose that, but what I can tell you is in addition to having the kickoff meeting, as I have stated this before in public, yeah, to be able to commercial launch the service, there are several gates that we have to pass with our central government ministries: MODA, NCC, and the CIB.

Then we already have passed three of them, three out of the six. That is progressing well.

A couple of them needed the support or approval from NCC, and we were able to acquire or secure the approval from the NCC before the commission expires. None of the commissioners are available now since the new candidates haven't been approved by our Congress.

We are making good progress there, and then we already completed three out of the six gates. That is progressing well.

In terms of the revenue and all that, all I can say is if this is not something that we see reasonable profit or we don't see big enough revenue opportunities there, that we won't just dive in necessarily. Those have to be reasonable, that goes without saying.

Any more details, that's really within the contract, and then I cannot disclose it.

Sure, no problem. Thank you.

Sure.

Thank you, everybody, to attend our second quarter 2026 result conference call.

They can always follow up with you if they have more questions afterwards.

Yes, please. Thank you.

Thank you all.

See you next quarter. Bye-bye.