Chunghwa Telecom Co Ltd

TWSE:2412

Earnings Call Analysis

Modest Revenue Rise Amid Cost Challenges

In the third quarter, the company noted a mild revenue increase from the previous year, bolstered by growing mobile service revenues which helped counteract the reduction in voice revenue and absence of a previous one-time government grant income. However, operational and net income saw declines of 5.9% and 2.9% respectively, impacted by higher electricity and manpower costs. For the first nine months, a total revenue growth of 2.6% was reported, thanks to the robust performance of mobile ICT and broadband services, while net income advanced by 2.1%, and earnings per share increased to 3.69. The company emphasized a sturdy balance sheet with decreased total liabilities, maintaining a positive trajectory in EBITDA and a margin of around 40%. Operating cash flows strengthened by 5.7%, free cash flow grew 14.9% year-over-year, and capital expenditures decreased, indicating strong financial health and potential for sustainable shareholder value.

Leadership in Spectrum Assets and Network Quality

Chunghwa Telecom holds a competitive edge due to its superior spectrum assets and network quality. With the broadest coverage and the most mobile base stations in Taiwan, the company has consolidated its market lead by being number one in sub-gigahertz spectrum ownership. Their 5G capabilities, especially with the completion of a 2-carrier aggregation at 3.5 and 2.1 gigahertz, offer customers speeds up to 2 gigabits per second, surpassing industry standards.

Expanding International Footprint and Technological Collaboration

Not only does Chunghwa Telecom aim to solidify its position within Taiwan, but it has also set its sights on international markets. A key stride in this direction is the strategic collaboration with a partner in Poland, exploring opportunities in Europe, which adds to its global reach and potential.

Growth in Revenue Share and Mobile Service Revenue

Chunghwa Telecom registered more than 14% revenue share in Taiwan's mobile market. The mobile service revenue has risen above 7% year-over-year, continuing a growth trend across the last ten quarters. The emergence of postpaid ARPU, alongside the 5G migration, has resulted in a significant 14% uplift in mobile ARPU.

Increased Revenue and Average Revenue Per User (ARPU)

The company has seen a 2% increase in revenue and a 1% increase in ARPU year-over-year, bolstered by the adoption of high-speed services and packages.

Solid Performance in Consumer Business

The Consumer-Centric Business Group reported a steady total revenue increase of 2.8% year-over-year. This growth is supported by a 6.8% rise in mobile service revenue and 2.7% growth in fixed broadband revenue. Moreover, sales of the latest iPhone series surged by 27% compared to the previous release.

Challenges and Opportunities in Emerging Businesses

Despite a decline in income before tax by 11.8% year-over-year mainly due to a reduction in enterprise fixed voice services, Chunghwa Telecom has seen growth in its Internet Data Center (IDC) and cybersecurity revenues. Investments in the development of 5G private networks and initiatives in offshore wind power denote a commitment to expanding emerging business opportunities.

Diverse Growth and Slight Miss on Revenue Targets

Over the first nine months of the year, total revenues increased by 2.6% year-over-year, with net income growing by 2.1%. However, the third-quarter revenues fell slightly short of expectations. This was counterbalanced by the solid performance of mobile and broadband services, leading to net income and EPS meeting the expectations set by management.

Proactive Approach to Low Orbit Satellite Communication

Chunghwa is actively exploring collaborations with international low orbit satellite operators to enhance network coverage and resilience. They've secured licenses and are in the process of setting up for commercial satellite services, aiming to be a major player in Taiwan's satellite communications.

Maintaining a Competitive Edge

With the largest number of base stations in Taiwan and a robust strategy that has resulted in higher growth rates in mobile service revenue compared to competitors, Chunghwa Telecom is confident in maintaining its leadership even amidst market consolidation and the emergence of stronger competitors.

Earnings Call Transcript 2023-Q3

[Operator]

Good afternoon, ladies and gentlemen. Welcome to Chunghwa Telecom Conference Call for the company's third quarter 2023 operating results. [Operator Instructions] For your 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. And now I would like to turn it over to Ms. Angela Tsai, the Director of Investor Relations. Thank you. Ms. Tsai, please go ahead.

[Angela Tsai, executive]

I'm Angela Tsai, Assistant Vice President of Financial Department of Chunghwa Telecom. Welcome to our third quarter 2023 results conference call. Joining me on the call today are our Chairman, Harrison Kuo; President, Ivan Lin; and Vincent Chen, our Chief Financial Officer.

During today's call, management will begin by providing Chairman's message, our business overview and followed by a discussion of our segment performance and the financial results and then we will move on to the question-and-answer portion of the call.

Slide 2, please read the disclaimers and note concerning forward-looking statements. Now without further delay, I will turn the call over to our Chairman. Chairman Kuo, please go ahead.

[Shui-Yi Kuo, executive]

Thank you, Angela, and hello, everyone. Welcome to our third quarter results conference call. Chunghwa Telecom has been committed to staying ahead in every aspect during the ongoing market consolidation. Before our business overview, I would like to highlight our dominant spectrum assets. One of our solid advantages to sustain our leading position and the growing momentum in post-merger landscape.

Currently, we are the #1 when it comes to the ownership of the mainstream sub-gigahertz spectrum. All of the 290 megahertz sub [indiscernible] spectrum is in use to provide tested mobile speed for our customers, outstanding in the industry. In addition, we have the most mobile-based stations nationwide. We are also the operator with the largest mobile capacity and the widest coverage in Taiwan.

On top of that, our leading -- our leading capabilities have exclusively completed the 2-carrier aggregation of a 3.5 gigahertz and 2.1 gigahertz to provide fast 5G services with theoretical peak speeds of 2 gigabits per second, far beyond the industry standard.

In terms of high band of 28 gigahertz, we are now with 100 megahertz at heme, which is next to the unsold lot that can use for satellite services. We are immediately ready for lowered satellite services. We will monitor the update of spectrum releases and is confident to make another consecutive spectrum at 28 gigahertz.

Contributing to the always broadband connected environment, we commit to customers. To sum up, we are confident to maintain our leadership going forward given our better spectrum assets and the outstanding network quality. Another unique strength of ours and the significant highlights during the quarter was the expansion of our international footprint to Europe.

We are proud to announce our strategic collaboration with [indiscernible] Telecom from Poland. This partnership allows us to join, exploring emerging business opportunities, develop network infrastructure and assists our clients in expanding their presence. This step marks a significant milestone not just aligned with our strategy to replicate Taiwan's success abroad, but also solidifying our overall success and the leadership in Taiwan's telecom industry.

Now I would like to hand the call over to President Lin for the business overview in the third quarter.

[Chau-Young Lin, executive]

Thank you, and Chairman Kuo, and hello, everyone. Now please flip to Page 5 for the update of our performing mobile business. In the third quarter, we successfully achieved a remarkable milestone by acquiring more than 14% of the revenue share in the Taiwan mobile market and widening our leader against our peers.

At the same time, our subscriber share also outperformed in the industry by increasing to reflecting a 7.1% the incremental exit revenue share about our subscriber reach [indiscernible] We are confident in accelerating our leader in consolidation landscape due to our better revenue generation capability and healthier and custom structure.

Let's go back and review the outperform -- how we're performing metrics of our mobile business. In the third quarter, our mobile service revenue delivered above 7% year-over-year. Increased maintaining its growth for [indiscernible] consequent amount owing to the upsell result from the 5G migration. International roaming recovered an increase of the postpaid subscriber numbers. In addition, the postpaid ARPU report 5.1% year-over-year increase.

Continuing is -- consequently and growth for the tenth quarter for customers who migration from our 4G to the 5G, we observed an average 14% uplift in the later months mobile monthly fees, maintaining and spanning of trajectory.

Last, I move on to Slide 6 for an update of our fixed broadband business. In the third quarter, we are great to see the positive performance in the fixed broadband sector. The revenue and ARPU increased by 2% and 1%, respectively, on a year-over-year basis, mainly attributed to the increase of the higher speed service adoption in the third quarter and sign up for our service of the 300 megabit per second or hired, which is currently the mainstream among or speed mix and maintained its high growth rate of the 14% year-over-year.

In addition to stable growth of the high-speed service adoption, we are to set up the speed upgrade of the lower service subscription to optimize our service profile. We launched our attractive incentives during the quarter and a successful encouraged encourage custom with the speed below the 100 megabit per second to transition to the higher speed above the 100 megabit per second. As a result, we achieved and 11% year-over-year increase in size of fee for service 100 megabit per second or higher.

Now let's move on the performance of our custom-centric business group. Slide 8 presents the performance of our CVG group. In the third quarter, the total CVG revenue increased steadily by 2.8%. Year-over-year, mobile service revenue rose by 6.8%, prepared by stable 5G migration and the increase of the postpaid subscription numbers, in particular, international roaming revenue continuing to recover and brought in contribution. Fixed-line service revenue decreased 0.7% due to the voice decline. And while fixed broadband revenue growth by 2.7% year-over-year, thanks to effective promotion.

In addition, by the end of -- by end of the third quarter, the popular iPhone and 16 series demonstrated a 27% increase in sales volume compared with rise of iPhone 14 series and the CVG and sales revenue in the third quarter increased by the 3 year-over-year.

Despite CVG revenue increased about 3% year-over-year is the income before tax kept because of the higher base of the recognition of the government and subsidiaries in the same period last year as well as the increase of the manpower and electric expensive and purchase the renewable energy.

Further present our consumer business to the high line. In the third quarter, our marketable player package continues to be well received. The subscriber number of the bio 6 broadband and WiFi service altogether demonstrated 16.4% quarter-over-quarter growth.

Home WiFi subscription numbers were increased by the 14% year-over-year, along with the fixed broadband promotion package blowout during the quarter. In addition, our video subscription boost and delivered [ 5% ] year-over-year increased mainly due to broadcasting of the existing Asian games on both MOD and Hami video, which also brought in revenue injection.

As Harrison said, we will continue to invest in but that's product -- building a quality content and team up with the local content production and major international production and company companies with the goal to strengthen our content assets, expand our video platform and prepare Taiwan and content in induction to the global stage. Moreover, we also invest in the [indiscernible] Company technologies for innovative business models and service to further expand the digital ecosystem.

Please turn to Slide 10 for overview of our enterprise business to the performance. In the third quarter, CVG report 11.8% year-over-year decrease of the income tax before, mainly due to fixed voice decline of the enterprise has and clients and higher base result from the recognition of the government subsidies at the same period of last year.

Load factor also resulted in a 4.4% year-over-year decrease of the total revenue of the EVG. In spite of IC revenues and other revenues decreased in the third quarter because the higher basis had base of the recognition of the largest smart energy project mobile service revenue, continuing increase attributable to the 5G upselling and slightly decreased year-over-year mainly due to the roster decline, as I mentioned, about rare data communication revenue and broadband revenue continuing to grow as expected. Despite the above decrease this quarter, we maintain carefully the optimistic outlook on our enterprise, the business performance throughout 2023. Slide 11 presents our enterprise business highlights. In the third quarter, our IDC and cybersecurity business and still demonstrated robust scope. -- where the total imagining enterprise business revenue of our major applications decreased by 6.8% year-over-year due to higher basis let smarter

[Audio Gap] In terms of the details, IDC business, in particular, achieved a 13.7% growth owing to go going project number of the long-end recurring revenue injection. And revenues in the cybersecurity also achieved 7.4% growth due to increase in the demand from our enterprise plan.

Furthermore, despite our cloud service revenue decreased on a year-over-year basis due [indiscernible] project recognition last year. We are great to see that our recurring revenue from the international public cloud service continued to grow strongly by about 20% with increasing and demand on time.

As we continue to invest in developing the 5G private network, we acquired national culture project to speed ARVR technology in emerging performance and expand opportunities in offshore wind power field construction and application. In addition, we continue to expand our IDC with a high quality to cater to increase the demand, which further drive up the recurring revenue contribution to reflect our leading ICT capability.

On Slide 12, I'm going to present our international business performance. In the third quarter, income before tax of IBG decreased by 3.6% year-over-year, owing to the nonoperating expenses such as the [indiscernible] incurrence variation out and -- and the increase of utility expenses, [indiscernible] the impact, IBG continuing to experience positive while year-over-year growth in profit.

Total revenue of the IBG increased by about 13% on the year, mainly driven by the going the emerging business, including IDC and tower service from global clients and record roaming revenue. For the international business highlights, we are delighted to share our footprint expansion in Europe and Thailand in July.

We signed MOU with the [indiscernible] Telecom from Poland. The corporation will be focused on emerging business include 5G and private networks and the smart city solutions. In September, we also signed an MOU with the Overbrook Hospital in Thailand for the corporation of the telemedicine.

We expect our service offering in overseas market into the U.S., Japan, Southeast Asia and Europe continue to [indiscernible]. Now I will like to turn the call to Vincent for our financial highlights.

[Vincent Y.S. Chen, executive]

Thank you, President Ivan. Good afternoon, everyone. I will now provide a financial summary of our third quarter results. Let's begin with Slide 14, income statement highlights. During the third quarter, total revenues increased mildly compared to same quarter last year.

The main reason is growing mobile service revenues offset decreased voice revenue and the recognition of a onetime government grant income from the same period last year. Income from operations and net income decreased by 5.9% and 2.9% on year, respectively, mainly due to an increase in electricity expenses and manpower costs.

Overall, for the first 9 months of the year, total revenues increased by 2.6% year-over-year, primarily fueled by strong growth of our mobile ICT and broadband services, which offset declining voice revenue and the contribution of a one-time government grant income.

Net income grew by 2.1% on year, mainly due to our growing ICT business. EPS Rose by 2.1% on year to 3.69. The growth of EBITDA remained in positive trajectory and EBITDA margin remained at about 40%.

Now move on to Page 15 for balance sheet highlights. As of September 30, 2023, total assets compared to the end of 2022, decreased by 2.1%, mainly due to the decrease in current assets, PPE and intangible assets, which offset the increase in other financial assets.

Total liabilities decreased by 2.7%, primarily attributable to the decrease in accounts payable. Additionally, debt ratio decreased slightly and net debt over EBITDA remains 0. Taken together, these debt [indiscernible] ratios demonstrated the robustness of our balance sheet.

Page 16 provides a summary of our cash flows. Our cash flows from operating activities remained robust, which increased by 5.7% on year. Capital expenditures decreased by 6.6% compared to the same period last year, of which mobile-related CapEx was reduced by 28.4% whereas nonmobile CapEx increased by 12.9%.

The latter was primarily attributable to greater IDC investments. On top of that, Free cash flow was up by 14.9% on year. Collectively, our strong operating cash flows, along with the robust balance sheet enable us to be future-ready, and create sustainable and long-term value for our shareholders.

On Slide 17, the table presents financial results against management guidance. During the third quarter, revenues slightly fell short of our expectation due to declining ICT business revenues, while net income and EPS meet our expectations, mainly driven by strong performance of mobile and broadband services.

For the first 9 months of 2023, our revenue and profit measures with our forecast as a result of outperforming core and emerging businesses. That concludes the overview of our Q3 financial results. Let me turn the call over to Chairman Harrison.

[Shui-Yi Kuo, executive]

Thank you, Vincent. On Slide 18 is our awards and ESG recognitions received in the third quarter. In October, the asset -- a widely recognized business news and the research organization announced that we won the Jet Award, the highest level of the asset ESG Corporate Award for the third consecutive year. We are the only company in Taiwan to stand out from the growth industry and the cross-country selections for our extraordinary ESG efforts. Moreover, we are glad to share that our efforts in ESG and rightly recognized and received by investors as we are the only telco includes as 1 of the top 10 construction by Financial Time [indiscernible] Taiwan ESG index.

Meanwhile, we were honored as the most outstanding company in Taiwan within the communication services sector by Asia Money, reflecting our high-quality telecom equation services, excellent governance and great ESG initiatives acknowledged by global investors. This concludes our prepared remarks. Thank you for your attention. At this time, I would like to open our conference call for questions.

[Operator]

[Operator Instructions] And our first question will be Neale Anderson of HSBC.

[Neale Anderson, analyst]

I have a question relating to the government subsidy in the third quarter of last year. Is it possible to give the amounts that were booked? It looks like they were booked in both the Consumer business group and the enterprise business group. I'm just trying to work out the pressure on profit from that because you also mentioned some other cost increases, electricity, et cetera.

[Chau-Young Lin, executive]

Okay. So regarding the government grant income, so that's because of the satellite subsidy. So the amount is about $0.4 billion. So for this quarter -- actually, last year same quarter because we record this amount. So that will affect our income on the bottom line for this quarter because of the higher base.

[Neale Anderson, analyst]

And that's split between the consumer and the enterprise business group. Is that correct? Are you able to give any detail on the split?

[Chau-Young Lin, executive]

Yes, because the customer is mainly for the enterprise customer. So it affects heavily on the EPG performance. And this is a onetime effect.

[Neale Anderson, analyst]

Right. Okay. If I could follow up though. So in the press release and also in your presentation, you mentioned in the Enterprise business group, there was a decrease of fixed voice after the pandemic. So could you give a little bit more detail on that? What's happening there? Are people moving to IP-based services or businesses, I should say, moving to IP-based services and that's resulting in lower revenue.

[Chau-Young Lin, executive]

So basically, during the pandemic period, so the people stay home, so they use more voice call to connect their relatives or their customers in a post-pandemic period. So people return to work, and they are out of their home. And so they use more on the wireless or the broadband. Yes. So in the -- during the pandemic period, so at that time, the voice revenue actually is still declining, but the rate actually is lower. It's about like 4%, 5%. But now in the post pandemic, actually, the declining rate is greater. So that affects our revenue and also our income. Yes.

[Neale Anderson, analyst]

Got it. Perhaps just finally on the deal with the Polish operation, I think -- is that to support Taiwanese businesses in Europe? Could you give a little bit more detail about how large or the geographic scope for that business. Is it Poland, specifically? Or is that the European partner and you're aiming to services business more broadly?

[Chau-Young Lin, executive]

Okay. So we are still in talk with our counterpart, our partners, and we may collaborate in various areas. Yes, it's not only in the ICT or maybe extend to other areas. And we don't rule out the possibility to expand in the collaborations to our regional partners in Europe. We will keep you positive once we have more details and when the deal is more confirmed.

[Operator]

[Operator Instructions] If there's no further questions at the moment, then now I hand the call over to the management team to take the questions from the webcast page line.

[Angela Tsai, executive]

Okay. Now we've received a question from the webcast. It's about the joint class developments of their low lower orbit satellite services. And is there any cooperation playing with a specific operator?

[Chau-Young Lin, executive]

Thank you for the website questions. The development of low orbit satellite primarily complements ground communication network, aiming to expand the overall communication network coverage and enhance network resilience. We adopt an open approach and actively exploring cooperation opportunities with multiple international low orbit satellite operators, and we're waiting to participate in domestic proof-of-concept projects. However, due to nondisclosure agreement, specific details of the collaboration on cannot be disclosed at this moment. We have obtained licenses for geo synchronized orbit satellite this year, one for medium earth orbit and one for low earth orbit. In addition to ongoing negotiations with satellite system operators, we are actively preparing for applying commercial frequency license, network setup and et cetera. In accordance with regulation, our goal is to introduce commercial services for low earned orbit centerized in Taiwan as soon as possible. For one way, we have NDA, there is not much to share for now. We will do announcements as the agreement is finalized.

[Operator]

[Operator Instructions] And on the call, we have the next question is from Rajesh Panjwani, JPMorgan.

[Unknown Analyst]

I think you answered -- the last question, I think you answered it, but I couldn't properly get the figure. So can you -- the government subsidies project because of which the revenues were lower this quarter versus last quarter. Can you just repeat how much was the amount impact on both revenues and operating profit because of that?

[Chau-Young Lin, executive]

Yes, the amount is $0.4 billion. It's about $0.4 billion.

[Unknown Analyst]

Okay. And this is a revenue impact?

[Chau-Young Lin, executive]

Yes. it's a subsidy yes. So basically, the revenue is on the profit.

[Unknown Analyst]

Okay. Got it. Got it. And the second question is, in general, like there is further consolidation going on in the industry. But do you expect that your competitors will become relatively stronger going forward as they add to more base stations, more spectrum? Are you concerned about that going forward?

[Chau-Young Lin, executive]

Yes, we recognize ICC's conditional approval of the mergers among our peers as the resulting change is expecting to be positive to the overall mobile market development in Taiwan. We welcome the regulator's decision to require our peers to dispose the access bandwidth acquired with the merger, which upholds fair market competition and in line with the original policies and the rules made during the course of the spectrum auction. Our goal and the position not only to ship ourselves as the enablers to perform and expand digital ecosystem but also to expand overall value for customers, shareholders in the ecosystem and us. For example, to upgrade, migrate our customers services to higher speed bandwidth services. And as mentioned -- as I mentioned earlier, we have the most the most base stations nationwide in Taiwan. So we have confidence to have to lead in the Taiwan telecom industry Yes. So if I may add. So let me provide some financial numbers to show we are quite confident that we will still remain our lead in the post-merger market if we look at the mobile markets, right? So for the mobile service revenue, our annual growth is around 6% to 7% in the past 9 months. But if you look at our peers, so their revenue -- their growth rate is about 3% to 5%. So we are -- so it kind of shows our strategy is quite correct. So that we can remain to acquire clients and also we can grow our mobile service revenues. And for our broadband services, so if you look at -- after we draw out this speed upgrade promotion. So our broadband service revenue also maintain a very healthy growth trajectory. So for the year -- so our propane service revenue, the growth rate is about 2% to 3%. And actually, our subscriber has been increasing. And if you look at our ICT business, so for example, our emerging application services. So if you look at the IDC cybersecurity and also have been doing very well also for the 5G network, the AIoT and for the -- and other emerging application, they have been done very well. And most importantly, if we look at the ICT profit margin, actually, it has been steady goes up. So we think these are the good sign.

And looking forward, because we see the market has turned positive and the macro condition is getting better and better. And we also know that digital demand has been growing dramatically. So we believe our ICT business has a good potential to grow, yes. This is what we see. And because we have a very good network and we provide very good quality to customers in a consistent manner. So we are quite confident that our customers will stay with us and actually from the change, we are the lowest among our peers and it's as low as 0.4%. We are quite comfortable about this number, and we believe we can further improve it. And we also have a research lab with a team of 1,000 staff engineers. They actually provide excellent research support. So that's why we can -- as I just mentioned before, that's why we can support our expansion in our ICT business because we can focus on high value-added application services. So that's the supplementary information provided from me.

[Unknown Analyst]

That is very helpful. Can I ask one more question on your overseas -- doing this in Poland. Now will this focus primarily be on ICT and enterprise services? Or would you also look at investing in the networks? And would you be open to taking stakes and telcos outside Taiwan?

[Chau-Young Lin, executive]

Okay. So basically, for now, we -- as we just mentioned, we collaborate with our Polish partner in various aspects. So ICT enterprise are the main business collaboration we are talking about now, and we may collaborate in other dimensions. But for details, we will reveal as soon as it is getting clear.

[Angela Tsai, executive]

Okay. Now we have 3 questions from the webcast. The first is will EBG revenue decline again -- year-over-year decline again in the fourth quarter.

[Chau-Young Lin, executive]

So for the EVG revenue basically is affected by the decline of the voice revenue. Because in the post pandemic period, the people they have and the customer behavior has changed back to normal. So they use their voice services. And the other key reason is the onetime government grant income. So as I mentioned because last year, during the same period, we recorded $0.4 billion in revenue, also profit. So that heavily affects our revenue and our bottom line. And on top of that, also the electricity expense because at the early this year because there is electricity, there's a great race in electricity. So that also affect our income. So these are pretty reasons that mainly affect the revenues and the income in the EPG segment. But as I just mentioned before, for -- in terms of the business outlook and turn of the taking we have. So basically, we are still very confident that EPG performance will perform in line with our expectations. Thank you.

[Angela Tsai, executive]

And the second question is what is the 5G penetration rate?

[Chau-Young Lin, executive]

So currently, for the 5G subscribers, so now it's over 3 million subscribers. And actually, the growth rate has been quite steady.

[Angela Tsai, executive]

The next question is, is there a 5G penetration target for this year?

[Chau-Young Lin, executive]

So actually for the 5G penetration, as I just mentioned, actually, the growth rate is quite steady and we are quite comfortable with the number. And in terms of the 5G, the migration, the uplift is over 40%. So we think the growth pattern is good, is healthy, and that's what we are care about and in line with our expectation.

[Operator]

[Operator Instructions]

[Angela Tsai, executive]

Now we have another question from the webcast. The question is that what percentage of EBG revenue is from voice?

[Chau-Young Lin, executive]

So for the voice revenue, it accounts for about 20% of the revenues in the EPG performance of your fixed voice, fixed line. For the fixed line revenue for the voice, it accounts for 20% in EBG.

[Operator]

[Operator Instructions] If there are no further questions at this point, I now turn it back -- turn the call over back to the Chairman Kuo. Thank you.

[Shui-Yi Kuo, executive]

Thank you for your participation. Goodbye.

[Operator]

Thank you, Chairman Kuo. Ladies and gentlemen, we 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. Thank you, and goodbye.