Chunghwa Telecom Delivers Record Q2 in AI Era

Chunghwa Telecom ((CHT)) has held its Q2 earnings call. Read on for the main highlights of the call.

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Chunghwa Telecom’s latest earnings call painted a broadly upbeat picture, with management highlighting the strongest second‑quarter revenue and EPS in a decade. Executives emphasized broad‑based growth across ICT, international operations, mobile and broadband, alongside expanding margins and solid cash generation, while acknowledging project‑driven volatility, AI investment uncertainty and some seasonal balance‑sheet pressure.

Record Revenue Momentum

Consolidated Q2 revenue climbed 8.2% year over year to TWD 61.36 billion, the company’s highest second‑quarter top line since 2010. First‑half revenue rose 7.8%, giving Chunghwa Telecom substantial momentum as it tracks toward its full‑year financial targets and underlining resilience across core and emerging businesses.

Profitability and Cash Flow Strength

Income from operations increased 5.7% in Q2, while EBITDA rose 4.1% to TWD 23.52 billion, delivering an EBITDA margin of 38.32%. Q2 EPS reached TWD 1.38, the best second‑quarter level in 10 years, and first‑half net income grew 3.9% to TWD 20.75 billion, supported by H1 EBITDA of TWD 46.82 billion and free cash flow of TWD 21.89 billion.

ICT Growth Engine Accelerates

Enterprise ICT revenue surged 32% year over year in Q2, with recurring ICT revenue up 9%, underscoring a shift toward higher‑quality, repeatable business. High‑growth services stood out, including Big Data, which jumped 167%, cybersecurity up 34% and IDC services up 14%, while ICT order intake climbed 30%, with first‑half contract wins already matching the full‑year 2025 total.

Overseas Operations Fuel Top‑Line Upside

International revenue expanded 242% year over year in Q2, driven mainly by large AI supply‑chain projects in the U.S., where revenue grew more than eleven‑fold. Southeast Asia revenue doubled, helping the International Business Group increase revenue by about 79% and boost income before tax by 31%, reflecting growing scale and visibility from overseas projects.

Mobile and 5G Market Leadership

Chunghwa Telecom reinforced its leadership in Taiwan’s mobile market, with revenue share rising to a record 41.2% and subscriber share reaching 39.8%. 5G market share stood at 39.4%, 5G penetration among smartphone users neared 49%, mobile service revenue grew 3.2%, postpaid ARPU increased 2.4% and postpaid churn stayed low at 0.36%.

Fixed Broadband Upsell and Consumer Services

The company continued to move customers to higher‑speed plans, with 42% of fixed broadband subscribers on 300 Mbps‑plus tiers and 1 Gbps‑plus subscriptions up 61% year over year. Fixed broadband revenue rose 3%, ARPU increased by TWD 20 to TWD 824 and multiple‑play sign‑ups grew 14%, while OTT revenue climbed 20% and consumer cybersecurity subscribers exceeded 1 million, rising 11%.

Capital Discipline and Balance‑Sheet Resilience

First‑half CapEx fell 14.3% year over year to TWD 9.85 billion, underscoring a disciplined investment approach even as the company ramps AI‑related infrastructure. The reported debt ratio was 31%, or 23.72% excluding dividend payables, with interest‑bearing debt around 5%, a current ratio of 122.3% and net debt‑to‑EBITDA at zero, signaling low leverage and ample liquidity.

AI Infrastructure and Partnerships

Chunghwa Telecom launched operations at its new AI data center in Lunping, Taoyuan, which can scale up to 36 MW at full build‑out, positioning it for AI and cloud demand. The company also signed a memorandum with the Taiwan Stock Exchange for dedicated colocation in a new Taichung facility and set up an IOWN AI Fund with global partners to build an optical networking ecosystem for the AI era.

Subsidiary Expansion and Project Wins

Subsidiaries are deepening exposure to the AI and photonics value chain, with Chunghwa Telecom Precision Tech starting construction of a new factory to meet growing AI semiconductor testing demand. A leading photonics unit began trading on an emerging exchange, and the group secured major projects spanning AI data centers, Taipower energy storage and multiple smart surveillance deployments.

ESG Progress and Recognition

The company continued to gain recognition for its sustainability efforts, earning CDP A‑List status for supplier engagement and awards for sustainable finance and sustainability bonds, while ranking in the top 5% of TSE‑listed firms for governance. On emissions, it reported a 24.5% reduction in Scope 1 and 2 versus a 2020 baseline and a 10.8% cut in Scope 3 versus 2021.

Managing Project Volatility and Investment Uncertainty

Management acknowledged that a large share of ICT and international growth stems from major projects, particularly U.S. AI supply‑chain work, which could introduce quarter‑to‑quarter lumpiness even with a strong pipeline. They also noted that returns from the Lunping AI data center and IOWN initiatives are long‑term and currently difficult to quantify, limiting near‑term visibility on the economics of these strategic bets.

Working Capital and CapEx Timing Risks

Liabilities increased 27.1% year to date, largely due to seasonal recognition of dividend payables, which temporarily lifted the reported debt ratio to 31% and added some optical balance‑sheet pressure. Working capital was also affected by higher inventory tied to ICT projects, while management flagged that a larger share of 2026 CapEx will fall in the second half, concentrating execution risk later in the year.

Roaming Exposure to Travel Trends

Roaming revenue benefited from robust travel and tourism, with total roaming up 19% and inbound roaming up 42% year over year, helping support overall service revenue growth. Management implicitly cautioned that this revenue stream remains sensitive to macro travel conditions, and a downturn in tourism could reverse some of the recent gains in roaming income.

Forward Guidance and Outlook

Management highlighted that Q2 results exceeded the high end of guidance across revenue, operating income, net income and EPS, and reaffirmed confidence in hitting full‑year targets, supported by 7.8% first‑half revenue growth and 5.2% operating income growth. They pointed to strong cash metrics, disciplined CapEx, robust ICT momentum and solid core telecom metrics, including higher ARPU and low churn, as key drivers of continued performance while noting that more CapEx will be deployed in the second half.

Chunghwa Telecom’s earnings call underscored a company balancing aggressive growth in AI, ICT and international projects with conservative leverage and disciplined capital use. For investors, the story is one of record earnings, strengthening market share and a deepening AI infrastructure footprint, tempered by project‑driven revenue lumpiness, long‑dated AI returns and timing risks around CapEx and travel‑sensitive roaming income.