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Good afternoon, ladies and gentlemen. Welcome to Chunghwa Telecom Conference Call for the Company's Third Quarter 2021 Operating Results. [Operator Instructions] For 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'd like to turn it over to Ms. Angela Tsai, the Director of Investor Relations. Ms. Tsai, please go ahead.
Thank you. This is Angela Tsai, Director of Investor Relations for Chunghwa Telecom. Welcome to our third quarter 2021 results conference call. Joining me on the call today are Harrison Kuo, our President; and Vincent Chen, our Chief Financial Officer.
During today's call, management will begin by providing an overview of our business from this quarter, followed by a discussion of operational and financial highlights. After, we will move on to the question-and-answer Session. On Slide 2, please note our safe harbor statements.
Now I will turn the call over to President Kuo. President Kuo, please go ahead.
Thank you, Angela, and hello, everyone. Welcome to our third quarter 2021 earnings call. In the third quarter of 2021, we are pleased to report robust performance.
In the mobile business, 5G subscriber members continued to grow during the quarter and the launch of iPhone 13 series later in the third quarter, a further drop of both 5G setup and high price plan adoption. About 90% of iPhone 13 series users choose plans of NT$999 or above, and approximately 3/4 of the overall 5G users adopted plans of NT$999 or above.
In addition, customers who renewed contracts to adopt 5G services contributed an average of 29% uplift in monthly fees to sustain the upwardly trending ARPU. Going forward, we will continue to orderly steer 5G migration by offering diversified price plans to accommodate different demands and accelerate 5G deployment to provide a 5G network. And at this time, we have more than 10,000 5G base stations. And we remain confident in our ability to achieve our guidance of building 12,000 5G base stations by the end of this year.
In the third quarter, both broadband and mobile businesses demonstrated our promising performance. HiNet subscriber net adds continued to increase on a year-over-year basis due to work-from-home benefits. Broadband revenue increased and ARPU uplift continued as subscriber migration to our broadband services of 300 megabits per second or higher increased by 48% year-over-year.
Olympic games are forecasted on MOD platform and Hami video during the third quarter, subsequently reaching our record high viewing rates and bringing in a surge of advertisement revenue despite the relatively small revenue base. Going forward, we will continue our strategy to acquire popular content to retain customers and respond to market competition, as we strive to maintain our leading status of the largest video platform in Taiwan.
For ICT business, we are delighted to see the average ICT project margin grew year-over-year as we continue our efforts to enhance ICT margin. We expect the overall business performance will continue to develop on track.
Now allow me to walk you through each of our business lines. Turn to Slide 5; you may find updates on our mobile business. In the fourth quarter, we continue to maintain our leading position in the mobile market as revenue market share remained at 38.8% and the subscriber market share increased to 36.1%, excluding IoT SIMS. During the quarter, our mobile customer net adds and postpaid net adds both ranked highest among the big 3 majors. As postpaid subscriber number increased year-over-year and the 5G migration enhanced high price plan adoption, our mobile service revenue continued to increase year-over-year, which also led to the year-over-year increase of our postpaid ARPU.
Please turn to Slide 6 for an update on our broadband business in the third quarter. Our HiNet subscriber net adds continued to increase year-over-year in the third quarter, reflecting the growing fixed broadband demand in the market. We were also pleased to see that our broadband ARPU increased by 3% year-over-year, which reflects our success in migrating subscribers to adopt higher speed services. The number of subscribers that sign up for connection speed of 300 megabits per second or higher increased by 48% year-over-year.
While VPN circuit revenue contributions from enterprise customers increased as well. In addition, benefits stemming from stay-at-home opportunities in the new normal continued to grow in the third quarter. Our responding packages that bundled broadband with Netflix, gaming and online learning continue to be well received and brought in revenues. Going forward, we will continue our efforts to maintain the upward trend of broadband revenue and ARPU.
Slide 7 illustrates our MOD business performance. In the third quarter of 2021, MOD revenue increased by 5% year-over-year due to our proper pricing strategy and the success of broadcasting the Tokyo Olympic Games. The SVOD ALL PASS package that rolled out in the first quarter rapidly accumulated subscription number and successfully strengthened VOD revenue company growth for 2 quarters in a row.
Channel revenues continue to increase year-over-year as 90% of subscribers choose the highest-priced package among the tiered pricing schemes. In addition, advertisement revenue increased as MOD and the Hami video successfully leveraged the highest ever viewing traffic for the Olympic Games, in lieu of advertisement orders. As a result, the MOD ARPU achieved a 5% increase year-over-year in the third quarter. Moving forward, we will continue to enhance the content offerings by acquiring popular sports events and by carrying well-known OTTs, and we aim to maintain our leading position as the largest video platform in Taiwan.
Please turn to Slide 8 for an update on our ICT business. As mentioned earlier, on a year-over-year basis, ICT project margin in the third quarter continued to increase as the ICT gross profit increased as well, which is positive to our overall bottom line. In addition, ICT revenue increased 11% year-over-year, mainly due to the revenue recognition from the projects in financial industry.
Cloud revenues remained flat year-over-year while cybersecurity revenue decreased by 16% year-over-year due to project revenue delays. However, we are delighted to see recurring revenue of cybersecurity increase year-over-year, reflecting the subscription base cybersecurity service continue to be well received. Going forward, we will continue to enhance our overall ICT technology capabilities to cater to more emerging digital opportunities and be more selective as we aim to further increase project profit margin.
Now I would like to turn the call over to our CFO, Vincent Chen, who will review our financial results. Mr. Chen, please go ahead.
Thank you, President Kuo. Good afternoon, everyone. I will now discuss our third quarter financial results. Please turn to Slide 10, which provides highlights from our income statement.
For the third quarter of 2021 on a year-over-year basis, total revenues decreased by 2.5% and operating costs and expenses decreased by 5.5%. Income from operations increased by 6.7%, and our net income increased by 12.8%. In addition, our EBITDA margin increased to 41.4% from 38.5% in the same period of 2020.
Slide 11 provides a breakdown of revenue by business segment. In the third quarter of 2021, total revenue decreased by 2.5% year-over-year, mainly due to the decrease in ICT project revenue and the voice revenue as a result of VoIP substitution, which offset the increase of handset sales revenue, mobile service revenue and broadband revenue.
Moving on to Slide 12. Our operating costs and expenses in the third quarter decreased by NT$2.28 billion, 5.5% year-over-year, mainly due to lower ICT project cost and lower concession fees.
Slide 13 shows that cash flows from operating activities for the third quarter of 2021 increased by NT$0.85 billion or 4.2% compared to the prior year period. This was mainly due to an increase in pretax income. Free cash flow decreased by 15.6% on a year-over-year basis due to higher capital outlay that will enhance our future revenue streams. As of September 30, 2021, the balance of cash and cash equivalent was NT$23.59 billion, an increase of NT$5.89 billion or 33.2% compared to September 30, 2020. The increase was primarily attributable to the issuance of corporate bonds.
On Page 14, you may find the table that compares our financial results with forecasts. As you can see, in the third quarter of 2021, all performance measures beat our guidance. Revenue met guidance attributed to higher mobile services, broadband access and data communications revenue.
Please turn to Slide 15. For 2021, we budget NT$43.1 billion in CapEx, including spending on business focuses in 2021, such as accelerating the construction of 5G network, IDC and submarine cables. As of September 30, 2021, cash outlays of IDC and submarine cable went below our expectations due to the delay of construction. While our 5G CapEx spending was on track and in line with our schedule of 5G base station deployment, we maintain our forecast that 2021 is our 5G investment peak.
Now I would like to turn the call over to President Kuo for our awards and recognitions.
Thank you, Vincent. Finally, Slide 16 illustrates our awards and recognitions from the third quarter, highlighting our distinction in telecom operation, mobile data service and the data center service as well as the recognition of corporate branding and ESG practices.
As a trustworthy leading brand in Taiwan, we especially attach importance to sustainability, and we will make full efforts to carry out sustainable development of the overall business.
Thank you for your attention. And now I would like to open the floor for questions.
[Operator Instructions] Our first question is coming from Neale Anderson from HSBC.
I was wondering if you could give us a little bit more color on competition in the 5G market and how you expect that to play out in the fourth quarter? What are the recent trends in terms of spending migration and how you think that market is developing? I'd be interested in your views on both the consumer and the enterprise side.
Well, I think, currently, the overall 5G competition in Taiwan market is pretty rational. And you see, post the ARPU in this market, we present our third quarter number momentum, the blended ARPU or post the ARPU. But Chunghwa, I think we are kind of among our peers -- among the major peers. I think we are the best. But momentum like this, I think the overall market in terms of the pricing of the package, you don't see any extreme package. All the package is kind of orderly launched. So I would say that the 5G market is pretty rational. And so in the foreseeable future, in the fourth quarter, we would like to see this as well.
Any evidence of sort of new service demand or 5G-specific service demand amongst business customers?
For the enterprise side, I think the vertical industry, I think we will continue to launch, to partner with our enterprise customers to see what they need, and we will explore the -- any possibility in those report.
[Operator Instructions] The next question is coming from [ Ken Fidelity ].
Hello. Can you hear me okay?
Sure. Yes.
Okay. Yes. So just a quick question. So [indiscernible] if you can comment on that. But I guess if I'm not mistaken, I have seen a new flow that some of the politicians in the Taiwan Assembly is now demanding a cheaper IoT-type plan just to help the people like from an economic perspective because some of the people may be suffering from COVID-19. Is there anything you can comment on this, I mean, in terms of potential regulatory tariff pressure on 5G services?
I think we do have some kind of a cheaper plan all the time like in the digital channel and for some special for the people all the time. Not really from the regulatory pressure, not really, just to answer your question.
[Operator Instructions] If there are no further questions, I will turn it back over to President Kuo. Please proceed. Thank you.
Thank you for your participation. Bye-bye.
Thank you, President Kuo. 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. Goodbye.