Chunghwa Telecom Earnings Call: Record Results, Bold Spend

Chunghwa Telecom ((CHT)) has held its Q4 earnings call. Read on for the main highlights of the call.

Chunghwa Telecom Earnings Call Flags Record Results Amid Strategic Investment Push

Chunghwa Telecom’s latest earnings call struck an overall upbeat tone, emphasizing record full-year revenue and earnings per share, strong cash and balance sheet metrics, and clear market leadership in mobile and 5G. Management acknowledged some short-term softness in select ICT subsegments and international operations, as well as one-off impairments tied to the 3G shutdown, but framed these as timing-related and non-recurring. The dominant message was one of healthy core profitability, robust recurring ICT growth, and deliberate reinvestment into data centers, satellites and submarine cables to sustain long-term expansion.

All-time High Full Year Revenue

Full year 2025 revenue climbed 2.7% year over year to an all-time high of TWD 236.11 billion, underscoring the resilience of Chunghwa Telecom’s core business. Management credited both traditional telecom services and expanding ICT offerings for the top-line performance, noting that this record marks a continuation of a multi-year growth trend rather than a one-off spike. The combination of stable domestic telecom demand and rising enterprise digitalization needs appears to be driving a steadily higher revenue base.

Strong Profitability and EPS Milestones

Profitability kept pace with revenue, with EPS rising to TWD 4.99 from TWD 4.80 and net income up 4% year on year. Income from operations increased 3.6% and EBITDA rose 2.6% to TWD 88.77 billion, maintaining a solid EBITDA margin of 37.6%. This performance suggests Chunghwa Telecom is successfully balancing growth with cost discipline, extracting operating leverage from its scale and high-margin telecom services even as it steps up investment in newer ICT areas.

Quarterly Revenue and EPS Strength

The fourth quarter reinforced the full-year story, with consolidated revenue inching up 0.5% year on year to TWD 65.65 billion, the highest Q4 in nearly a decade. EPS improved to TWD 1.20 from TWD 1.16, while income before tax grew 2.1% year over year. Q4 EBITDA reached TWD 21.55 billion with a margin of 32.82%, slightly below the full-year level but still healthy given one-off impairments and a tough comparison base. Management presented the quarter as evidence of durable earnings power even amid transitional headwinds.

Market Leadership in Mobile and 5G

Chunghwa Telecom underscored its dominant position in Taiwan’s mobile market, with mobile revenue share rising to 41% and subscriber share to 39.7%. In 5G, subscriber market share hit 39.2% and 5G penetration among smartphone users reached 46.4%. Importantly for investors, 5G migration is translating into higher spending: the average monthly fee uplift from 5G upgrades is 41%. Q4 mobile service revenue grew 4.7% year over year and postpaid ARPU increased 3.6%, signalling that the company is monetizing its 5G investments and leveraging its leadership to enhance unit economics.

Fixed Broadband ARPU and Higher-Tier Adoption

The fixed broadband business is also moving up the value chain. ARPU hit a record TWD 819 per month, backed by 3.8% year-on-year revenue growth and a modest 0.5% increase in subscribers. The real story is mix: subscriptions at 300 Mbps and above rose 13% year over year, while 1 Gbps and above subscriptions doubled in Q4. This shift toward higher bandwidth tiers supports ARPU expansion and reinforces the company’s strategy of prioritizing quality and speed over pure volume growth.

Consumer Services Momentum

Beyond connectivity, Chunghwa Telecom continues to deepen its consumer relationship through bundled services and digital offerings. Multiple-play packages expanded 17% year over year, marking the 16th straight quarter of growth, which enhances customer stickiness and lowers churn risk. Hami video, the company’s video service, saw ARPU jump more than 25% year over year in Q4, while consumer cybersecurity subscriptions grew 11% with double-digit revenue growth. These trends highlight a broader ecosystem approach that goes beyond traditional telecom to capture more wallet share per user.

High-growth ICT and Recurring Revenue

The company’s ICT portfolio remains a key long-term growth driver. Group recurring ICT revenue grew a strong 15% year over year, led by a 19% increase in IDC (data center) revenue and an 88% surge in 5G private network revenue, with big data up 3%. Management emphasized that, despite some quarterly lumpiness, full-year ICT revenue still delivered growth and is increasingly anchored by recurring services. This recurring ICT mix is strategically important, as it provides more stable, higher-visibility revenue compared with project-based work.

Key Contracts and Business Wins

Management highlighted several notable contract wins that reinforce Chunghwa Telecom’s role as a strategic IT and telecom partner. The company secured a flagship government system integration project worth over TWD 3 billion to upgrade the national labor insurance platform, illustrating its strength in large-scale, mission-critical projects. It also won an integrated AI customer service solution contract with a leading financial institution, and saw its satellite services included in a government procurement framework. These wins bolster the pipeline for future ICT revenue and validate its capabilities in AI, cloud, and satellite-enabled solutions.

Strong Cash Position and Improved Leverage

Despite a modest decline in free cash flow, Chunghwa Telecom’s financial position remains robust. Free cash flow was TWD 49.8 billion, down just 1.4% year over year, while the debt ratio improved to 25.25% and net debt-to-EBITDA stood at zero, indicating effectively no net leverage. This balance sheet strength gives the company ample flexibility to fund its elevated investment program and shareholder returns. The firm also issued its first sustainability bonds focused on biodiversity, signaling growing use of sustainable financing instruments.

ESG and Strategic Energy Commitment

ESG is increasingly central to Chunghwa Telecom’s narrative. The company locked in 4.6 billion kWh of renewable energy through a 20-year corporate power purchase agreement, supporting its 2045 net zero ambitions and mitigating long-term electricity price risk. It also garnered multiple ESG and innovation recognitions, including regional awards and inclusion on a global list of trustworthy companies. These achievements could strengthen its brand with customers, regulators, and investors, while also aligning with tightening sustainability expectations.

Quarterly ICT Revenue Weakness and Segment Declines

Not all ICT metrics were flawless. Group ICT revenue fell 6% year over year in Q4, with notable declines in cloud (-16%), AIDC (-27%), and cybersecurity (-16%). Management attributed this weakness mainly to a high comparison base and the timing of project recognition, rather than a structural downturn. Still, the quarter underscores that project-based ICT revenues can be choppy, and investors will watch closely to see if momentum resumes in subsequent periods.

Enterprise Business Group Revenue Pressure

The Enterprise Business Group (EBG) felt the brunt of the ICT volatility, with Q4 revenue down 7.9% year over year and EBG ICT revenue falling around 7%. The declines stemmed from large projects being booked in earlier quarters, which left a softer fourth quarter. Income before tax was further pressured by a one-time impairment related to the 3G network sunset. While management stressed that full-year EBG performance was more stable, the Q4 drop highlights the exposure of enterprise results to project timing and legacy network rationalization costs.

International Revenue Softness

International operations were another weak spot in the quarter. Subsidiaries’ revenue declined 7% year over year, mainly due to softer voice demand and a particularly strong comparison period in the U.S. and Japan. Southeast Asia was a bright spot with 12% growth, partially offsetting declines elsewhere. Overall, the international portfolio remains a relatively small but more volatile contributor compared with the stable domestic core.

One-off Impairments and Operating Profit Drag

Q4 income from operations slipped 2.2% year over year, largely due to non-recurring factors. The main drag came from one-off impairment losses tied to the 3G network sunset and the absence of prior-year gains from investment property disposals, which had boosted the base period. Both the Consumer and Enterprise business groups saw income affected by these impairments. Management characterized these charges as part of the network modernization process, implying limited impact on future earnings.

Rising Operating Cost Outlook vs. Revenue Growth

Looking ahead, Chunghwa Telecom acknowledged that operating costs and expenses are expected to grow faster than revenue in 2026, with a 3.5–3.7% cost increase against 2.5–3.2% revenue growth. The main drivers are higher hiring needs for AI and data center talent, uncertainty around electricity prices, and increased depreciation from expanded infrastructure. This suggests some potential margin pressure in the near term, even as the top line continues to expand. Management’s strategy hinges on these investments enabling new, higher-value services that can offset cost inflation over time.

Near-term CapEx Concentration Shift

Capital allocation is shifting decisively toward non-mobile infrastructure. Total CapEx for 2026 is budgeted at TWD 31.91 billion, with mobile CapEx expected to fall about 6.3%, marking the fifth consecutive annual decline since 2021. In contrast, non-mobile CapEx is projected to rise roughly 24%, targeting data centers, submarine cables, satellite, and AIDC capabilities. This rebalancing reflects the maturing 5G rollout and the company’s view that future growth will increasingly come from digital infrastructure and advanced enterprise solutions rather than traditional radio access expansion.

Slight Softening in Operating Cash Flow

Operational cash generation saw a small step back, with cash flow from operating activities down 2.2% year over year and free cash flow dipping 1.4%. Management linked this to working capital movements, such as lower accounts payable, and the timing of investments, rather than a deterioration in the underlying business. Given the still-strong absolute cash levels and minimal leverage, the company appears well positioned to fund its ambitious CapEx plan without stressing the balance sheet.

Guidance: Steady Growth, Higher Investment and Emerging Revenue Streams

For 2026, management guided total revenue growth of 2.5–3.2% year over year and EPS of TWD 4.82–5.02, signaling expectations for continued steady earnings despite rising costs. Operating expenses are forecast to increase 3.5–3.7%, reflecting investment in talent, energy costs and depreciation from new infrastructure. CapEx is set at TWD 31.91 billion, with mobile-related spending declining about 6.3% while non-mobile CapEx jumps around 24% to fund submarine cables, data centers, satellite and AIDC initiatives. The company expects combined AIoT, satellite and big data revenue to surpass TWD 10 billion in 2026, underpinned by a stable Taiwan mobile market and ongoing 5G and fixed-broadband ARPU gains. Overall, guidance portrays a business trading some near-term margin comfort for long-term strategic positioning in digital infrastructure and data-driven services.

Chunghwa Telecom’s earnings call painted the picture of a mature incumbent successfully extending its growth runway. Record revenue and EPS, expanding ARPUs in both mobile and fixed broadband, and rising recurring ICT income underpin a positive fundamental story, even as quarterly ICT volatility, international softness, and one-off impairments create noise. With a fortress balance sheet and a clear pivot toward data centers, satellite connectivity and submarine cables, the company is betting heavily on next-generation infrastructure. For investors, the key watchpoints will be whether these investments translate into the targeted new-revenue streams and whether management can contain cost inflation enough to preserve its enviable profitability profile.