(CHT) Chunghwa Telecom Co. Ltd. Misses Earnings – Beats Revenues

Chunghwa Telecom Co. Ltd. (CHT) declared mixed financial results for the first quarter of 2013. Quarterly total revenue was approximately $1,914 million, showing a 2.1% rise year over year. The first-quarter 2013 net income was approximately $309 million, down 4.7% year over year.  Net earnings per ADR were 40 cents, down 4.1% year over year.

Quarterly operating income was $380 million, down 2% year over year. Operating margin was 19.8% compared with 20.7% in the year-ago quarter. The first-quarter 2013 EBITDA was $651 million, down 1.4% year over year. Quarterly EBITDA margin came in at 34% compared with 35.2% in the prior-year quarter. During the reported quarter, Chunghwa generated around $289 million of cash from operations, down 34.5% year over year. Capital expenditure during the same quarter was around $255 million, up 12.6% year over year.

At the end of fiscal 2012, Chunghwa had approximately $15,202 million of cash & cash equivalents and a little over $1,748 million of outstanding debt on its balance sheet compared with $14,853 million of cash & cash equivalents and $38.3 million of outstanding debt at the end of 2012.

Segment wise Revenue

The Mobile Communications segment accounted for approximately $943 million of the total first-quarter 2013 revenues, up 9.1% year over year. The Internet segment accounted for $204 million, down 2.7% year over year. The Domestic Fixed-line Communications segment generated $610 million in revenues, down 5.9% year over year. International Fixed-line Communications segment generated $129 million, up 4.8% year over year. Other Business segment generated the remaining $28 million, down 6.3% year over year.

In the first quarter of 2013, Broadband access (including ADSL and FTTx) revenues were around $163.3 million, up 2% year over year. Mobile VAS revenues were nearly $219.4 million, up 42.2% year over year. Handset sales revenues were $308.6 million, up 17.1% year over year.

Subscriber Statistics as of Mar 31, 2013

The total Broadband subscriber base was more than 4.559 million, out of which FTTx subscriber base was around 2.79 million, accounting for 61.2% of the total broadband subscriber base. More than 964,000 Broadband subscribers signed up for 50Mbps connections.  HiNet subscriber base was 3.78 million, up 1.4% year over year. Mobile subscriber base was 10.35 million, up 2.6% year over year. Mobile Internet subscriber base was 2.87 million, up by a significant 59.6% year over year. In the reported quarter, the company added a net 388,000 mobile Internet subscribers. International /Domestic Fixed-line subscriber base was 11.74 million.

2013 Outlook

The total revenue is estimated around $7,449.5 million, down 1.1% year over year. Operating costs and expenses will be approximately $5,906.7 million, up 0.9% year over year. Income from operations is estimated to be approximately $1,542.8 million, down 8.1% year over year. Net income will be around $1,285.6 million, down 6.2% year over year. EBITDA will be approximately $2,675.1 million, down 4.1% year over year. EBITDA margin will be 35.9% compared with 37% in fiscal 2012.

Other Stocks to Consider

Chunghwa currently has a Zacks Rank #4 (Sell). Other stocks in this industry that are worth considering include Shenandoah Telecommunications Co. (SHEN), Verizon Communications Inc. (VZ) and Vimpelcom Ltd. (VIP). While Shenandoah currently has a Zacks Rank #1 (Strong Buy), both Verizon and Vimpelcom carry a Zacks Rank #2 (Buy).

CHUNGHWA TELECM (CHT): Free Stock Analysis Report

SHENANDOAH TELE (SHEN): Free Stock Analysis Report

VIMPELCOM LTD (VIP): Free Stock Analysis Report

VERIZON COMM (VZ): Free Stock Analysis Report

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