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Chunghwa Telecom (CHT) Q1 Earnings Fall Y/Y, Revenues Grow

Zacks Equity Research

Chunghwa Telecom Co. Ltd. CHT announced mixed financial results in the first quarter of 2017. Quarterly total revenue was approximately $1,754 million, up 2.1% year over year. First-quarter net income came in at around $309 million, down 12.7% year over year.  Net earnings per American Depository Share (ADS) were 40 cents, down 11.1% from the year-ago quarter.

Operating income was $371.3 million, down 16.3% year over year. Operating costs decreased 0.4% year over year to $1,384.3 million. Operating margin declined 21.1% from 24.2% in the year-ago quarter.

The first quarter of 2017 EBITDA was $631.4 million, down 10.5% year over year. Quarterly EBITDA margin came in at 36%, down from 38.5% in the prior-year quarter. During the reported quarter, Chunghwa generated around $342.9 million of cash from operations, up a substantial 64.1% year over year. Cash and cash equivalents as of Mar 31, 2017 increased 10% year over year to $1,224.2 million.

Chunghwa is the largest telecom operator in Taiwan. Management expects to enter the mainland China telecom market in the future, where it will face intense competition from China Mobile Ltd. CHL, China Unicom (Hong Kong) Ltd. CHU and China Telecom Corp. Ltd. CHA. Chunghwa Telecom currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Segment-wise Revenues

The Mobile Communications segment accounted for approximately $858.5 million of the total revenue in first-quarter 2017, down 5.3% year over year. The Internet segment contributed around $222.2 million, increasing 3.8%. The Domestic Fixed-line Communications segment recorded $540.3 million in revenues, down 5.4%. The International Fixed-line Communications segment generated $101.4 million, down 12.5%. Other Business registered the remaining $33.5 million, down 18.7%.

In the first quarter of 2017, Mobile VAS (value added services) revenues grossed approximately $341.3 million, up 2.8% year over year, wherein mobile Internet VAS (largest contributor) revenues increased 3.4% year over year.  Smart device sales revenues slumped 7.6% to $234.7 million.

Subscriber Statistics as of Mar 31, 2017

The total broadband subscriber base was over 4.471 million. Of the total, FTTx subscriber base was around 3.51 million, accounting for 78.5% of the total broadband subscriber base. Broadband subscribers signing up for 100 Mbps or higher speed connections were over 1.19 million, up 10.1% year over year.  HiNet subscriber base totaled 3.76 million, down 0.3% year over year. Mobile subscriber base was 10.76 million, down 2.5% year over year. Mobile Internet subscriber base was 7 million, up 11.5% year over year. 4G wireless subscribers base is pegged at 7.12 million. The International /Domestic Fixed-line subscriber base was 10.88 million.

Chunghwa Telecom Co., Ltd. Price, Consensus and EPS Surprise


Chunghwa Telecom Co., Ltd. Price, Consensus and EPS Surprise | Chunghwa Telecom Co., Ltd. Quote


For 2017, Chunghwa expects total revenue to increase 0.5% year over year to NT$231.16 billion. Operating costs are expected to increase 2.8% to NT$186.46. Income from operations is expected to be NT$44.66 billion, down 7.1% year over year. Non-operating income is estimated at NT$1.03 billion, reflecting a substantial 19.8% decline from 2016. Income before income tax and net income are expected to be NT$45.69 billion (down 7.4%) and NT$36.89 billion (down 7.8%), respectively. Earnings per share are expected to be NT$4.75. EBITDA is projected at NT$ 77.91 billion, down 3.3%. Capital expenditure is expected to rise a substantial 29% year over year to NT$30.28.

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Chunghwa Telecom Co., Ltd. (CHT): Free Stock Analysis Report
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