Chunghwa Telecom Reports Operating Results for the First Quarter and Forecast of 2006.

TAIPEI, Taiwan, R.O.C. -- Chunghwa Telecom Co., Ltd (TAIEX: 2412, NYSE: CHT) ("Chunghwa" or "the Company"), today reported its operating results for the first quarter and forecast of 2006. All figures were prepared in accordance with US GAAP.

Highlights:

--Total revenue increased 1.1% from 1Q05 to NT$45.0 billion

--Internet and data service revenue increased 10.7% from 1Q05

--Cash flow from operations increased 9.1% from 1Q05 to NT$18.9bn

--The number of ADSL subscribers increased 17.5% from March 31, 2005.

--Net income totaled NT$9.3 billion

--Earnings per share (EPS) were NT$ 0.97, or NT$9.71 per ADS.

Revenues

Total revenues for the first quarter of 2006 were NT$45.0bn, a 1.1% increase YoY. Of the total revenue, 34.1% was from fixed-line services, 39.9% was from wireless services and 24.8% was from Internet and data services. The increase in revenues was mainly driven by continued growth in the mobile and Internet and data businesses.

Revenue from the mobile business grew 3.1% compared with the first quarter of 2005 due to the increase in postpaid subscriber number and value-added service revenue. Revenue from the Internet and data business increased 10.7% year-on-year primarily owing to the continual increase in ADSL subscriber numbers and the effectiveness of the Company's strategy to upgrade ADSL subscribers to higher speed services. Fixed line revenue decreased 7.2% year-on-year. Of this, local revenue decreased 7.0%, mainly due to mobile and broadband substitution, domestic long distance revenue decreased 8.6% due to mobile substitution and market competition, and International long distance revenue decreased 6.7% because of the decrease in average usage fees due to promotions.

Costs and expenses

Total operating costs and expenses for the first quarter of 2006 were NT$32.9bn, a 9.0% increase compared to the same period of 2005. This was mainly due to compensation expenses relating to an early retirement program that was conducted from March 1 to March 31, 2006. 1,929 employees took part in the program and left the Company and the related compensation expense totaled NT$2.3 billion, NT$2.2 billion of which was recognized as operating costs and expenses in March.

Although the compensation expense caused a one-time decline in net income, the headcount reduction is expected to benefit our future operation.

EBITDA and net income

EBITDA for the first quarter of 2006 decreased 9.0% year-on-year to NT$22.4bn, representing a margin of 49.7%. This compares to 55.2% for the same period in 2005.

Net income for the first quarter of 2006 decreased 22.8% year-on-year to NT$9.3bn, representing a net margin of 20.7%. This compares to 27.1% for the same period in 2005.

The decline in net income for the first quarter of 2006 was mainly due to the previously mentioned compensation expense relating to the early retirement program.

Cash Flows

Cash flow from operations remained strong, increasing 9.1% to NT$18.9bn for the first quarter of 2006 compared to NT$17.3bn for the same period in 2005. As of March 31, 2006, our cash and cash equivalents totaled NT$43.8bn.

Businesses Performance Highlights

Internet and Data Services

--Internet and data revenue for the first quarter of 2006 was NT$11.2bn, a 10.7% increase YoY.

--Total Internet subscriptions numbered 4.2mn on March 31, 2006, which increased from 3.9mn from March 31, 2005.

--ADSL subscriber growth continued, with a total of 3.8mn subscribers as of the end of March, an increase of 17.5% compared to the end of March 2005.

Mobile Services

--For the first quarter of 2006, mobile revenues grew by 3.1% YoY to NT$17.9bn.

--At the end of March 2006, the Company had 8.2mn mobile subscribers. The growth in subscriber numbers was somewhat limited due to the reduction of prepaid customers; however, Chunghwa remains the leading mobile operator in Taiwan in both revenue and subscriber market share with 35.5% and 39.9% respectively as of the end of February.

Fixed-line Services

--Fixed-line revenues for the first quarter of 2006 were NT$15.4bn, a decrease of 7.2% YoY.

--As of the end of March 2006, the number of fixed-line subscribers totaled 13.2mn.

Forecast for year 2006 (based on ROC GAAP)

For the full 2006 fiscal year, the Company expects:

--Total revenue to be NT$184.2 billion,

--Operating costs and expenses to be NT$127.2 billion,

--Income before income tax to be NT$55.7 billion,

--Net income to be NT$44.2 billion, and

--Earnings per share to be NT$4.56.

Financial Statements

Financial statements and additional operational data can be found on the Chunghwa Telecom website at www.cht.com.tw/ir/filedownload.

About Chunghwa Telecom

Chunghwa Telecom (TAIEX 2412, NYSE: CHT) is the leading telecom service provider in Taiwan. Chunghwa Telecom provides fixed line, mobile and Internet and data services to residential and business customers in Taiwan.

Note Concerning Forward-looking Statements

Except for statements in respect of historical matters, the statements made in this presentation contain "forward-looking statements" within the meaning of Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual performance, financial condition or results of operations of Chunghwa Telecom to be materially different from what may be implied by such forward-looking statements. Investors are cautioned that actual events and results could differ materially from those statements as a result of a number of factors including, among other things: extensive regulation of telecom industry; the intensely competitive telecom industry; our relationship with our labor union; general economic and political conditions, including those related to the telecom industry; possible disruptions in commercial activities caused by natural and human induced events and disasters, including terrorist activity, armed conflict and highly contagious diseases, such as SARS; and those risks identified in the section entitled "Risk Factors" in Chunghwa Telecom's Form F-1 and F-3 filed with the U.S. Securities and Exchange Commission in connection with our ADR public offering.

The financial statements included in this presentation were audited, and prepared and published in accordance with US GAAP. Investors are cautioned that there are many differences between US GAAP and ROC GAAP. As a result, our results under U.S. GAAP and ROC GAAP may in many events be substantially different.

The forward-looking statements in this press release reflect the current belief of Chunghwa Telecom as of the date of this press release and we undertake no obligation to update these forward-looking statements for events or circumstances that occur subsequent to such date.