Chunghwa Telecom Co. Ltd.
(CHT) declared solid financial results for the first quarter that saw a 16% year-over-year rise in net income. Quarterly GAAP net income was $351 million or 36 cents per ADR compared to a net income of $302 million or 31 cents per ADR in the year-ago quarter. The company posted strong results primarily due to higher revenue and operating margin.
 
Total revenue was $1,553 million, up 7.4% year over year. Despite facing increased competition and an extremely challenging economic environment, Chunghwa was able to raise its subscriber base for both high-speed broadband/FTTx and mobile businesses.
 
Gross margin was 44% compared to 42.7% in the year-ago quarter. EBITDA increased 12% year-over-year to $466 million and that of the EBITDA margin was 30% compared to 28.8% in the year-ago quarter. Net profit margin was 22.6% compared to 20.9% in the year-ago quarter.
 
During the first quarter 2010, Chunghwa generated $491 million cash from operation compared to $472 million in the year-ago quarter. Free cash flow (cash flow from operations less capital expenditures) was $361 million compared to $334 million in the prior-year quarter.
 
At the end of the first quarter of 2010, Chunghwa had $2.49 billion of cash & marketable securities and $116 million of outstanding debt on its balance sheet compared to $2.03 billion of cash & cash equivalents and $20 million of outstanding debt at the end of the prior-year quarter.
 
Segment wise Revenue

 
Mobile Communications segment accounted for $695.3 million of total first quarter 2010 revenue, up 2.1% year over year. Internet segment accounted for $184.8 million, up 2% year over year. Domestic Fixed-line Communications segment generated $538.7 million, down 2.8% year over year. International Fixed-line Communications segment accounted for $125.3 million, up 9.3% year over year. Non-telecom Business segment generated the rest $9 million, up 35.5% year over year.
 
Broadband access (including ADSL and FTTX) revenue was around $160 million in the reported quarter, up 1.1% year over year. Mobile-VAS revenue was $78.3 million, up 23.9% year over year.
 
Subscriber Statistics as of Mar 31, 2010
 
Total Broadband subscriber base was 4.3 million. Out of this, FTTx subscriber base was 1.74 million, accounted for 40.4% of total broadband subscriber base. Total number of ADSL and FTTx customers with a service speed greater than 8 Mbps reached 2.1 million, representing 48.8% of total broadband subscribers compared to 39% at the end the prior-year quarter. HiNet subscriber base was 4.07 million, a net addition of 6,545 sequentially.
 
Mobile subscriber base was 9.4million, up 4.2% year over year. Out of this 3G wireless subscriber base was 4.9 million, accounted for 52.7% of total mobile subscriber base. International/Domestic Fixed-line subscriber base was 12.4 million.Zacks Investment Research