4904 (TWSE) Q and Full Year Result Investor Update. Disclaimer. Jan Nilsson Vice Chairman and President. February 26, :00pm

Transcription

1 4904 (TWSE) Q and Full Year Result Investor Update Jan Nilsson Vice Chairman and President February 26, :00pm Disclaimer This presentation contains forward-looking statements. These forward-looking statements are subject to risks, uncertainties and assumptions, some of which are beyond our control. Actual results may differ materially from those expressed or implied by these forward-looking statements. Because of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this presentation might not occur in the way we expect, or at all. You should not place undue reliance on any forward-looking information. In preparing the information herein, FET have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was provided to FET or which was otherwise reviewed by FET. Neither FET nor its advisors have made any representation or warranty as to the accuracy or completeness of such information and nor do they assume any undertaking to supplement such information as further information becomes available or in light of changing circumstances. None of FET, nor any of their respective affiliates, advisers or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection with this presentation. Neither this presentation nor any of its contents may be reproduced to a third party without the prior written consent of FET. 2

2 Agenda I. Market Overview II Q4 Performance and Business Update III. Strategic Direction III Q1 Forecast IV. Management Highlight 3 Taiwan Telecom Market Overview (NT$mn) 350, , , , , ,000 50,000 0 Taiwan Telecom Market 102,034 99, ,344 Y2007 Market Mobile Rev 306, , ,339 Y2008 Market Fixed-line Rev Market Status Total Telecom Market Revenue YoY dropped slightly 1.1% with Fixed line revenue (local call + Long Distance + Int l call) 2.4% Mobile revenue (2G+3G) 0.5% But Market mobile subscriber (2G+3G) 5.0% YoY growth Weak economy drives consumers looking for value packages Datacard continues to grow and uphold mobile revenue Source: NCC statistics; mobile revenue adjusted based on big 3 operators factsheets on consolidated basis 4

3 Taiwan Wireless Market Major Operators 2008 Q4 Big 3 Mobile Service Rev Share TWM 30.4% FET 30.9% Source: Operators factsheets CHT 38.7% Mobile Market and Regulatory Mobile Market: Mobile Revenue Market Share of Big 3 Operators has been very stable for last few quarter, while CHT remained flattish FET increased a bit TWM decreased a bit Regulatory 2009 is the last year for 4.88% price cut Radio and Television Act is under revision now while Convergence Act is being push back NCC collects opinions from operators to further discuss wholesale pricing, last mile, IP peering cost and X value Expecting regulatory side still be neutral 5 Agenda I. Market Overview II Q4 Performance and Business Update III. Strategic Direction III Q1 Forecast IV. Management Highlight 6

4 Operational Performance Subscriber ('000) 7,000 6,000 5,000 Total Subscribers ( 000) 6,216 6,226 6,223 6,264 6,245 1,526 1,511 1,475 1, % 2008 Postpaid Subscriber Growth (%) YoY Growth (%) 4% 3% 2.9% 2.6% 4,000 3,000 2,000 1,000 3,013 1,676 2,695 2,020 2,456 2,292 2, ,555 2,779 77% 2% 1% 0% -1% -0.7% 0 4Q'07 1Q'08 2Q'08 3Q'08 4Q'08 3G Postpaid 2G Postpaid Prepaid Source: Company Data -2% CHT FET TWM % 12.0% 8.0% 4.0% 0.0% 12.5% Non-Voice Performance Leading in Non-Voice and Increasing Data Users 2008 Non-Voice % of of Service Revenue #1: FET continues to lead in non-voice market 9.6% 9.6% FET CHT TWM (subs) 150, ,000 3G & HSPA Data Centric Growth 66,333 83, , , ,832 FET 51,311 YoY Non-Voice Growth 50,000 NT$ mn 12.5% 30, % Non-Voice% 8,000 12% 6,000 15% 7,176 8,309 11,952 6,231 8% 4,000 4% 0 2,000 0% 1Q072Q073Q07 4Q07 1Q082Q083Q08 4Q08 Now Non-Voice Rev Non-Voice % of Service Rev Source: NCC Statistics, operators factsheets and company data 8

5 Non-Voice Performance Increasing Non-SMS Mix SMS % of of Non-Voice Rev Non-SMS services getting significant 100% 80% 31.8% 36.2% 60% 50.8% 52.8% 55.0% 40% 20% 68.2% 63.8% 49.2% 47.2% 45.0% 0% Y2004 Y2005 Y2006 Y2007 Y2008 Non-SMS rev % to data rev SMS rev % to data rev Source: Company data 60% 40% 20% 0% Non-Voice Rev Breakdown in in Y % Messaging Related Major growth to specific categories: Web access/datacard ( 300%YoY) Commerce ( 87%YoY) 12% Music Related 10% Web Access 10% 3% 1% WAP Commerce Game Access Note: Messaging related including SMS/ MMS/ Video Calls 9 Consolidated Financial FY2008 Item Unit: NT$ Million, except for EPS 1Q 08 2Q 08 3Q 08 4Q 08 FY2008 Total Revenue 15,858 15,852 15,740 15,069 62,518 Service Revenue 14,331 14,422 14,439 14,127 57,319 EBITDA 6,350 6,691 6,674 6,268 25,983 Service EBITDA Margin % 45.4% 47.1% 47.0% 45.5% 46.2% Pre-tax Income 3,182 3,665 3,447 3,030 13,324 Net Income 2,428 2,789 2,628 2,316 10,161 EPS (1) $0.74 $0.86 $0.81 $0.71 $3.12 Source: 2008 audited financial statement (1) EPS calculated by current outstanding shares of 3,258,501K 10

6 Consolidated Financial 2008 Q4 Financial Stats (NT$ mm unless otherwise stated) Cash & Cash Equivalents Total Borrowing Net Debt Shareholders Equity Debt/Capitalization Ratio Gross (%) Net (%) Free Cashflows YTD Cash-based Capex YTD Pre-tax EPS - YTD EPS(NT$) YTD As of 2008 Q4 7,236 1,955 72, % 15,940 7,470 $4.09 $3.12 As of 2008 Q3 6,375 5,869 69, % 11,311 5,108 $3.05 $2.41 ROA ROE 11.0% 13.3% Source: FET Consolidated financials; above EPS calculated by current outstanding shares of 3,258,501K 11.3% 13.9% 11 Recent Activities 2008 Q4 & 2009 Q1 Services Digital Photo Frame device & services Super Saving 070 VoIP rate plan Data-pack rate plans 950 & 350 Shopping Voucher Promotions Network and Platform FET & KGT Network Consolidation Seamless Network (3.5G w/ WiFi) WiMAX as a data-plus network IMS Platform Devices 3.5G handsets Sharp WX-T923 & T930 Fujitsu F905i HTC Touch Pro Samsung F488 Innovative devices Mio Moov380 Digital Photo Frame Continue to introduce more game consoles like NDSL, Wii etc. 12

7 Agenda I. Market Overview II Q4 Performance and Business Update III. Strategic Direction III Q1 Forecast IV. Management Highlight 13 Focus: Strategy in Saturated Telecom Industry Reliability, Quality, Quality and Value Value for for Money Money Strategy: Leadership in Cost Efficiency and Time to Market Continuous Investment for Service Quality and Cost Efficiency Brand Equity and Value Enhancement Consolidation of FEG Telecom Sector 14

8 Strategic Direction for Business Units Consumer Mobility BU Home BU Grow Home Broadband, Introduce Home Solutions Defend Voice, Grow Data Access, Grow Device Revenue Enterprise BU Generic Growth, Information Communication Technology (ICT) Grow Generic, Complimentary M&A Content & Media BU 15 Agenda I. Market Overview II Q4 Performance and Business Update III. Strategic Direction III Q1 Forecast IV. Management Highlight 16

9 2009 Q1 Consolidated Financial Forecast 2009 Q1 Forecast vs Q4 & 2008 Q1 Item Unit: NT$ Million, except for EPS 2009 Q1 Forecast 2008 Q4 Actual QoQ% 2008 Q1 Actual YoY% Total Revenue 15,504 15, % 15, % Service Revenue 14,214 14, % 14, % EBITDA 6,373 6, % 6, % Service EBITDA Margin % 45.9% 45.5% 45.4% Pre-tax Income 3,234 3, % 3, % Net Income 2,466 2, % 2, % EPS (1) $0.76 $ % $ % Source: FET Consolidated financials; EPS calculated by current outstanding shares of 3,258,501K 17 Agenda I. Market Overview II Q4 Performance and Business Update III. Strategic Direction III Q1 Forecast IV. Management Highlight 18

10 Management Highlight Attractive Valuation and Strong FCF Yield EV // EBITDA Free Cash Flow Yield % 8 (x) FET has attractive valuation (%) among Asia peers FET is also strong in 20% generating free cash flow % Asia % 15% Asia 12% 13% Avg 10% = 6-7% Avg 4 9% 3.3 = 3.9-9% 8% 9% 9% 9% 10% 10% 8% 4.2x 8% 6% 5% % 0 0% FET TWM CHT China Mobile DoCoMo 2009E SmarTone M1 2010E SingTel StarHub Source: Bloomberg & Credit Suisse estimates as of 17 Feb 2009 FET TWM CHT China Mobile DoCoMo 2009E M1 SingTel 2010E StarHub 19 Management Highlight Key Message Expanding New Revenue Sources Continue to Drive Cost Efficiency Continue to Work on Consolidation towards Future Synergy Expecting Non-Operations Improve Significantly Attractive Valuation and Strong Free Cash Flow among Asian Telcos 20

11 Q & A For Further Information: Websites Investor Relations IR@fareastone.com.tw 21