U.S. Markets open in 4 hrs 10 mins

Chunghwa Telecom (CHT) Q1 Earnings Rise, Revenues Lag

Zacks Equity Research

Chunghwa Telecom Co. Ltd. CHT declared mixed financial results in the first quarter of 2016. Quarterly total revenue was at approximately $178 million, down 6.9% year over year. First-quarter net income came in at around $352 million, up 3.2% year over year.  Net earnings per American Depository Share (ADS) were 45 cents, up 2.3% year over year.

Operating income was $413.4 million, up 17% year over year. Operating costs dropped 3.4% year over year to $1,294.5 million. Operating margin expanded to 24.2% from 20.9% in the year-ago quarter.

First-quarter 2016 EBITDA was $657.6 million, up 7.8% year over year. Quarterly EBITDA margin came in at 38.5%, up from 36% in the prior-year quarter. During the reported quarter, Chunghwa generated around $194.7 million of cash from operations, down 44.9% year over year. Cash and cash equivalents as of Mar 31, 2016 increased 12.2% to $1,036.2 million as compared to that as of Mar 31, 2015.

Segment Revenues

The Mobile Communications segment accounted for approximately $844.8 million of the total first-quarter 2016 revenues, up 0.6% year over year. The Internet segment contributed around $201 million, up 4.7%. The Domestic Fixed-line Communications segment recorded $534 million in revenues, up 1.5%. The International Fixed-line Communications segment generated $104.7 million, down 10.2%. Other Business registered the remaining $24 million, up 5.6%.

In the first quarter of 2016, Mobile VAS (value-added services) revenues grossed approximately $309.3 million, up 7.6% year over year, wherein mobile Internet VAS (largest contributor) revenues were up 8.7% year over year.  Smart device sales revenue decreased 2.1% year-over-year to $236.7 million.

Subscriber Statistics as of Mar 31, 2016

The total broadband subscriber base was nearly 4.5 million, out of which the FTTx subscriber base was around 3.41 million, accounting for 75.8% of the total broadband subscriber base. Over 1.08 million broadband subscribers signed up for 100 Mbps or higher speed connections, up 15.7% year over year. HiNet subscriber base totaled 3.77 million, down 0.5% year over year.

Mobile subscriber base was 11.04 million, down 1.5% year over year. Mobile Internet subscriber base was 6.28 million, up 17.3% year over year. 4G wireless subscribers base stood at 5.21 million. The International /Domestic Fixed-line subscriber base was 11.11 million.


For 2016, Chunghwa expects total revenue to increase 0.7% year-over-year to NT$233.49 billion. Operating costs are expected to increase 2.3% to NT$185.53. Income from operations is expected to be NT$47.75 billion, down 5.2% year over year. Non-operating income is estimated at NT$1.09 billion, reflecting a substantial 32.3% decline from 2015. Income before income tax and net income are expected to be NT$48.84 billion (down 6.1%) and NT$39.98 billion (down 6.6%), respectively.

Earnings per share are expected to be NT$5.15. EBITDA is projected at NT$ 82.24 billion, down 1.9%. Capital expenditure is expected to decline 12.7% year over year to NT$30.63. Chunghwa expects to add a net of 2 million 4G wireless subscribers in 2016.

Zacks Rank & Stocks to Consider

Currently, Chunghwa carries a Zacks Rank #2 (Buy). Other favorably-ranked stocks in the same space are BCE Inc. BCE, Nippon Telegraph and Telephone Corp. NTT and Shenandoah Telecommunications Co. SHEN. While BCE sports a Zacks Rank #1 (Strong Buy), both NTT and Shenandoah carry a Zacks Rank #2 (Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
NIPPON TELE-ADR (NTT): Free Stock Analysis Report
BCE INC (BCE): Free Stock Analysis Report
CHUNGHWA TELECM (CHT): Free Stock Analysis Report
SHENANDOAH TELE (SHEN): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research