Fufu Shen – Director of Investor Relations Mu Piao Shih – President Bo Yung Chen – Chief Financial Officer.

Gopal Kumar – Nomura Jack Shih – Sinopec Securities Tina Hou – Goldman Sachs Wan Dou – Barclays Peter Milliken – Deutsche Bank Danny Chu – Macquarie.

Good afternoon, ladies and gentlemen. Welcome to the Chunghwa Telecom Conference Call for the company’s First Quarter 2015 Operating Result. During the presentation all lines will be on listen-only mode. When the briefing is finished, directions for submitting your questions will be given in the question-and-answer session.

And 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 Fufu Shen, the Director of Investor Relations.

Miss Shen, please go ahead..

Thank you. This is Fufu Shen. Welcome to our first quarter 2015 earnings results conference call. Joining me on the call today are Mr. Shih, President; and Mr. Chen, CFO. During today’s call management will first discuss business, operational and financial highlights; then, we will move on to the Q&A session.

On slide number 2, please note our Safe Harbor statement. Now, I would like to turn it over to President Shih..

Thank you, Fufu. Hello, everyone. This is Mu Piao Shih. Thank you for joining our first quarter 2015 conference call. We reported robust operational result for the first quarter with total revenues, operating income, pretax income, net income and EPS all increasing year-over-year and outperforming our guidance.

The continuing growth of our mobile VAS revenue, the increase in ICT project revenue, the deceleration of the mobile voice revenue decline all demonstrate that our focus and effort within key business has begun to produce the positive result. With this we are confident that we will be able to meet our guidance for 2015.

In addition, we continue to gain the market share in terms of the mobile subscribers and revenues, reaching 37.5% and 37.1% respectively by the end of February.

As 4G is central business focus this year, we are pleased to report that we maintain our leadership position in the 4G market and have accumulated over 2 million subscribers according to our internal figures. We will continue expanding our 4G customer base, allowing us to achieve favorable economic of scale and EBITDA breakeven.

As such, we announced a short-term promotional plan with favorable pricing incentives that we expect to effectively attract new 4G subscribers. Slide 5 provides an update on our mobile business. During the first quarter mobile VAS revenue grew by 19% year-over-year, mainly driven by the 26.4% increase in mobile internet revenue.

For mobile operations we are focusing on the 4G service promotions and mobile internet subscriber expansion as well as developing enterprise mobile solutions for targeted customers.

We continue to leveraging our high speed 4G network to promote value-added services and new applications as well as migrating our 2G customers to the 3G and 4G network and promoting the usage of mobile data services.

Moreover, we are extremely proud of our customers’ loyalty, especially since competition for 4G subscriber has been particularly fierce. The fact that we continue to have the lowest churn rate demonstrates that our customers recognize our value and are pleased with the quality of our networks and services.

Statistics shows the results for our broadband business. During the first quarter we continue to see a steady migration of subscriber to higher speed fiber services. We witnessed 19% year-over-year growth in subscribers opting for connection speed of 100 megabit per second or higher, reaching 936,000 by the first quarter of 2015.

We will continue leveraging our network capabilities, offering high speed upload services and optimizing broadband network quality to increase the customer satisfaction. As an integrated telecom service provider we will leverage our mobile, broadband and Wi-Fi capabilities to offer seamless internet services.

Last, but not least, we will expedite OTT service offerings and Content Delivery Network, CDN, construction to enhance our competitiveness within the digital convergence product. Moving on to Slide 7, our IPTV revenue and ARPU in the first quarter 2015 increased by 10% and 6.8% year-over-year respectively.

Content distribution, VOD and advertisement revenues all increased significantly. In addition, average package subscription for MOD subscriber continue to increase.

Moreover, the household TV usage rate reached 56.2% in the first quarter of 2015 and the churn rate also decreased year-over-year, showing our success in posting customer stickiness on our platform.

In addition to the fiber convergence spread which encouraged more IPTV subscription, we will continue enriching our local content and VOD programs as well as including OTT services. We will also focus on optimizing the MOD cost structure to enhance capital efficiency. Please see Slide 8 for an update on our ICT and cloud initiatives.

We will continue leveraging our competitive advantages with regard to network infrastructure, IDC, CDN, et cetera, to offer customized and comprehensive ICT solutions to enterprise for customers. Concurrently, we are also developing in-house big data capabilities for further commercialization.

Although relevant revenue from this area was less than the 5% of our total revenue in 2014, it is expected to be over 5% in 2015. Now I would like to hand it over to Mr. Chen to go through our financial result..

Thank you, President Shih. Now I will review our financial result in detail, beginning on Slide 10. Slide 10 contains our income statement’s highlights. For the first quarter of 2015 total revenues increased by 2.6% and operating cost and expenses increased by 3.5% year-over-year. Other income from operations decreased by 0.9%.

However, due to the increasing foreign currency exchange gains and the investment income, our net income increased by 2%. In addition, our EBITDA margin decreased from 36.81% to 36.01% in the first quarter as compared to the same period in 2014. Please refer to Slide 11 for an update on our business segment’s revenues.

In general, all our segments performed better y-o-y in the first quarter of 2015. The increase in total revenues was driven by the growth in mobile value-added services revenue and ICT project revenue, which offset the decrease in fixed and mobile voice revenue.

We are pleased that our mobile VAS revenue continues to grow rapidly and the decline rate of our mobile voice revenue was lower year-over-year. Moving on to Slide 12.

Our first quarter 2015 operating cost and expenses increased by 3.5% year-over-year, mainly due to the higher cost of handsets sold, increasing cost from ICT projects and higher 4G license amortization.

On Slide 13, in the first quarter of 2015 cash inflow from operating activities increased by NT$2.17 billion or 22.6% compared to the same period of 2014. As of March 31, 2015, we had NT$30.8 billion of cash and cash equivalents. The decrease in EBITDA margin was primarily due to handset subsidies for 4G promotion in the first quarter of 2015.

Slide 14 shows our 2015 first quarter operating result as compared to our guidance. We reported robust operating result in the first quarter of 2015, with total revenue, operating income, pretax income, net income and EPS all increasing year-over-year and outperforming our guidance.

The better-than-expected revenues and operating income were mainly due to increased ICT project revenue. In addition, investment income under equity methods and foreign currency exchange gains were also higher than expected. As a result, net income and EPS also exceeded our guidance.

Looking at our performance thus far in 2015, we believe our business operations and developments are on track. And we are confident that we will reach our full year guidance.

Lastly, on Slide 15, though we will continue to construct our 4G network aggressively, we are still posting a low CapEx of NT$30.7 billion for 2015, when compared with that of year 2014.

We will continue monetizing our existing installed equipment and building infrastructure for new services such as the 300 mega broadband based on the potential demand and effectiveness of the service.

Furthermore, the mobile network will be constructed according to the existing equipment utilization status and business growth potential to enhance capital efficiency. Thank you for your attention and we would like to open up for your questions..

Thank you. [Operator Instructions] The first question is from Gopal Kumar, Nomura. Please ask your question..

Hey, thanks for the opportunity, just few questions. Given the recent price cuts on 4G unlimited price plans, is there any risk to your revenue growth guidance for this year? I’m talking about the service revenue growth where you were earlier expecting 5%. Are you still expecting similar growth? That's question number one.

And question number two is, if I look at the domestic fixed segment on a quarter-on-quarter basis, the revenue seems to have come down by around NT$2 billion. Am I missing something here? Thanks so much..

Gopal Kumar, could you please repeat your question number two?.

Yes. If I look at the domestic fixed segment revenues fixed segment revenues, the revenue in 1Q 2015 was around NT$17.5 billion versus around NT$19.6 billion in 4Q 2014.

Can you help me understand why there is a decline in revenues here, or am I missing something?.

Okay. Let me just answer your first question. I think recently we just launched one new price plan program. And I think that from time to time occasionally we will just launch a different program to meet the different customer demand. The most recent one is not a new one because our competitors already launched that program for a few months.

I think we are just a follower and we just try to defend the market share and to meet the customer needs. And this is a short- term program and we don’t think this will have a significant impact on our financial statement. So I think our guidance will remain intact. Nice to answer your first question..

Yes..

For your question number two, I think the domestic fixed, that segment because I didn’t highlight everything because right now we have pretty good growth rate on our ICT business. So including ICT overall, domestic fixed declining rate is a little bit slower, say, about – so we still see about 2.3% kind of growth, okay.

So that probably should be explained to you, to your question..

Okay, thank you. If I can just squeeze in one more question.

Given that you have crossed 2 million subscribers on 4G now, what is the target for the full year?.

Yes, we set, our goal is to have 40% of the market share. So according to the aggressive prediction, by the end of this year the subscriber will 10 million totally. So we expect we have goal, it’s roughly 4 million by the end of this year..

Sorry, 4 million is it?.

Yes..

Okay, thank you..

[Operator Instructions] The next question comes from Jack Shih, Sinopec Securities. Please ask your question..

Thank you. And my first question is could you tell us what is your strategy about the 4G in 2015? I mean you have new – will have a new plan and do you have any other new rate plan in the following year? And this is the first question. And the second question is, we see the ICT revenue they are somewhat still.

Could you inform us what’s your ICT strategy in 2015 and what is the growth in 2015? Thank you..

Yes..

Hello?.

I think the 4G competition is very fierce. We launched some promotional packages. The goal is to acquire more subscribers, to reach economy of scale. So we continue to have very strong promotion in this year. So the goal is very clear that we want to have the subscriber near 4 million by end of this year.

So our new plan is depending on the market competition..

I think our ICT business is still in an early stage because the ICT is copy of just the communication business. It also includes the big data and security and IOT and cloud computing. So I think the current revenue mix is a single-digit percentage versus the total revenue. So however, I think the growth rate in this year will be faster.

So that the overall growth rate is still – I mean, compared with the total revenue pool will be still below 10% but the growth rate will be faster compared with the overall growth rate..

Thank you. Another follow-up question. What is your opinion about the 2600 megahertz spectrum in this year? And what's your opinion? And what is our strategy for this spectrum bidding? Thank you..

The 2.2 gigahertz spectrum now is under plan by the NCC. We are preparing to attend the spectrum auction. 2.6 gigahertz is very good spectrum for LTE in the urban area. So for Chunghwa Telecom we need to have this spectrum for the capacity purpose. So we are very aggressive to join the auction according to the schedule set by the NCC..

Thank you..

The next question is from Tina Hou, Goldman Sachs. Go ahead please..

Hey, thanks answering for the call. My question would be on the unlimited data side. When do you think it will be an appropriate time to take away the unlimited plans in the market? And then also in regard of the current situation there is also mainly unlimited data in Taiwan.

So do you see this putting some sort of pressure on your network? And then going forward mainly to add more capacity and what will be the impact to your CapEx maybe for the next year?.

I think [indiscernible] should be ended by sometime, we think by the end of this year. It may be difficult to take away, but we think the tier pricing is the right way to go. So it’s really dependent on the market competition, but every operator is just waiting for the first mover.

I think maybe next year is a good time to remove the unlimited data plan..

Regarding your question two and question three, I think that currently our network capacity is still sufficient to meet our customer needs. And so far, so our CapEx plan we just have heard, our original plan would be no change.

Sorry, Ms.

Hou, do you have any other question for our speakers today?.

No. I'm good. I'm good. Thank you..

Thank you. [Operator Instructions] And next one is from Wan Dou, Barclays. Go ahead please..

Hey, management, just a follow-up question on 4G. Could you please give us some updates in terms of the 4G ARPU as well as which plan is currently the most popular among your subscribers? Thank you..

I think that currently our 4G ARPU is still slightly increased, and our majority of our customers still – I mean, their price therefore above the 1,100, yes, 1,100..

Sorry, a follow up, do you see lots of traction after you launched the promotion? I think people now – most – the net [indiscernible] will be on your lower-rate plans?.

I think we launched the program in a very short period. So far it’s not so clear, but we can see – there are many price segments. So I think there are some positive effects we can see lower – even lower segment, then move to the 988. And also we saw very little impact from, I mean, the higher pricing to the lower pricing so far..

Okay, thank you very much..

And our next question comes from Peter Milliken from Deutsche Bank. Please ask your question..

Yes, good afternoon and thank you for call. I have two questions, one of them is if you were to win the 2.6 gigahertz spectrum, when would we be looking at a commercial launch of capacity on that frequency? And then the other question is, you have been very effective at lowering your CapEx.

Are you interested in putting the same sort of focus on the OpEx going forward? Thank you..

If the 2.6 gigahertz spectrum is available next year, we think we will take around one year to construct the equivalent. And in the first phase we will focus on the big city, very heavy traffic base station to upload traffic. So the launch maybe next year..

I think we have been focusing on our OpEx for quite a long time. That’s the reason you see the cost expenses, the major increase part is in 4G amortization expenses and also in the handset sold cost. I think that our operating expenses will just keep a little bit declining trend in future..

Okay, that's great. Thank you very much..

And the next one is from Danny Chu, Macquarie. Please ask your question..

Hey, management, thank you for your presentation. Actually this is just a follow-up to a question early on. You mentioned that with regards to the potential withdrawal of the year all-you-can-eat 4G data subscription plan depends on the market.

But may I just ask directly, will Chunghwa be the first operator to withdraw that, let's say, sometime this year, or when we move into 2016 when you mention that 2016 is a good year to withdraw the all-you-can-eat data plans, will Chunghwa be the market leader to withdraw that? Or even when we get into 2016 Chunghwa will still wait for the competitors to withdraw the all-you-can-eat data plans before Chunghwa will follow? Thank you..

Yes, it’s very possible for Chunghwa to be the first operator to enter the all-you-can-eat. But it really depend on the timing, because if we launch the 4G at the end of last May, so two-year contract is to be ended by next May. So I think it’s a possible timing maybe next year to consider how we can end the all-you-can-eat start from next year.

But it’s only possible, it will really depend on the market competition..

Thank you. And I guess just a very quick follow-up is, what if Chunghwa achieved the 4 million 4G customers earlier than expected, say sometime in September? Will achieving that KPI be I mean directly leading to Chunghwa will withdraw the all-you-can-eat data plans earlier than what you just mentioned? Thank you..

I think the 4 million subscriber number is a very meaningful number. Yes, everything could be possible..

Yes..

Okay, thank you..

[Operator Instructions] If there are no further questions I would turn it back over to President Shih..

Okay. Thank you for attending today’s conference call. Thank you very much..

President Shih. 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..