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Chunghwa Tops on Q4 Earnings and Revs

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Chunghwa Telecom Co. Ltd. declared strong financial results for the fourth quarter of 2013. Quarterly total revenue was approximately $1,988 million, recording a 4.6% year-over-year rise. The fourth-quarter 2013 net income came in at around $316.8 million, up 3.4% year over year.  Net earnings per ADR were 40 cents, remains same year over year.

Quarterly operating income was $375.2 million, up 2.2% year over year. Quarterly operating costs were $1,616.3 million, up 6.1% year over year. Operating margin was 18.9% compared with 19.3% in the year-ago quarter.

The fourth-quarter 2013 EBITDA was $651.3 million, up 0.4% year over year. Quarterly EBITDA margin came in at 32.8% against 34.1% in the prior-year quarter. During the reported quarter, Chunghwa generated around $1,015.4 million of cash from operations, up 22.3% year over year. Capital expenditure was around $443.1 million, down 22.2% year over year.

Segment wise Revenue

The Mobile Communications segment accounted for approximately $956.2 million of the total fourth-quarter 2013 revenue, up 10.5% year over year. The Internet segment accounted for $220 million, down 0.3% year over year. The Domestic Fixed-line Communications segment recorded $653.7 million in revenues, up 0.3% year over year. The International Fixed-line Communications segment generated $131.8 million, down 1.2% year over year. Other Business segment generated the remaining $26.4 million, down 22% year over year.

In the fourth quarter of 2013, Broadband access (including ADSL and FTTx) revenues were around $163.3 million, remains flat year over year. Mobile VAS revenues were nearly $260.6 million, up 39.4% from the year-ago quarter. Handset sales revenues stood at $294.1 million, up 21.9% year over year. Internet VAS revenues were $22.3 million, up 3.3% year over year. 

Subscriber Statistics as of Dec 31, 2013

The total Broadband subscriber base was nearly 4.56 million, out of which the FTTx subscriber base was around 2.96 million, accounting for 64.9% of the total broadband subscriber base. 1.14 million Broadband subscribers signed up for 60Mbps or higher speed connections, up 25.5% year over year.  HiNet subscriber base was 3.78 million, up 0.3% year over year.

Mobile subscriber base stood at 10.66 million, up 3.8% year over year. Mobile Internet subscriber base was 3.94 million, up by a significant 58.8% year over year. Chunghwa currently commands 34.8% of the mobile Internet market share in Taiwan. In the reported quarter, the company added a net of 1.46 million mobile Internet subscribers. The International /Domestic Fixed-line subscriber base stood at 11.57 million.

Fiscal 2014 Financial Guidance

Total revenue in fiscal 2014 is estimated at NT$228.23 billion, up 0.1% year over year. Operating costs and expenses are projected to be NT$ 184.7 billion, up 2.4% year over year. Operating income is likely to be NT$ 43.53 billion, down 8.5% year over year. EBITDA is forecasted to be NT$ 77.1 billion, down 3.4% year over year. EBITDA margin will be 33.8% compared with 35% in fiscal 2013. Earnings per share are projected to be NT$4.62, down 10.1% year over year.

Other Stocks to Consider

Currently, Chunghwa holds a Zacks Rank #2 (Buy). Other better-ranked stocks in the telecom industry include Level 3 Communications Inc. , Oi SA (OIBR) and BT Group plc. (BT - Free Report) . While both Level 3 and Oi carry a Zacks Rank #1 (Strong Buy), BT has a Zacks Rank #2.

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