Morning, good afternoon, ladies and gentlemen. Welcome to the conference call. Our chairperson today is Mr. Jamie Lin. Mr. Lin, please begin your call, and I'll be standing by for the Q&A. Thank you. Thank you, operator. Good afternoon, everyone. Welcome to today's conference call. We're gonna talk about Taiwan Star merging into Taiwan Mobile, a deal that was approved by both companies' boards on December 30, 2021. Before we begin, please allow me to go over our disclaimer as per usual. The information contained in this presentation, including all forward-looking information, is subject to change without notice, whether as a result of new information for the future events or otherwise. Taiwan Mobile Co., Ltd., hereafter the company, undertakes no obligation to update or revise the information contained in this presentation. No representation or warranty, either expressed or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein, nor is the information intended to be a complete statement of the company, markets or developments referred to in this presentation. All right. Let's start with a summary of the transaction on Page 3. Taiwan Mobile plans to issue circa 282 million new shares to merge Taiwan Star, whose shareholders will own roughly 7.4% stake in Taiwan Mobile after the merger. After the merger is completed, Taiwan Mobile will be the surviving company. The transaction is subject to the approvals from the National Communications Commission and the Fair Trade Commission. Considering a lengthy closure would pose a significant adverse effect to the interest of end users, employees, shareholders, and the industry as a whole, we are hoping that the regulators would give us a green light in a rather timely manner. Next, let's talk about rationale for the transaction. Please turn to Page 4. In summary, we believe the merger will bring Taiwan Mobile and our shareholders significant benefits in the following five areas. Number one, greater scale. Number two, end customer satisfaction. Number three, significant synergies. Number four, earnings growth. And finally, healthy cash flow and financial flexibility. Next, let me provide you with more colors one by one. Page 5. Post-merger, we will have a strengthened position in the mobile industry with a 9.8 million mobile subscriber base and TWD 52 billion in annual mobile service revenues. The position will, in turn, substantially lift our economies of scale and CapEx efficiency. Customer satisfaction will be materially boosted with industry-leading per user 5G spectrum bandwidth our customers can enjoy. There will be less congestion and higher throughput for 5G applications. Integrating the two companies' 60 MHz and 40 MHz blocks on the 3.5 GHz spectrum will provide major impetus for 5G smartphone users and accelerate 5G vertical applications. As you can see from the lower right chart, 5G spectrum available to our mobile users is much higher than the industry average. Next, let's turn to Page 6 to talk about synergies. We expect close to half of the synergies to yield from network consolidation, followed by 30% from customer contribution, and finally, 20% from rationalizing business operations. Network consolidation will result in significant OpEx savings, mainly from rental, electricity, transmission, and maintenance. Once the merger is approved, we plan to shut down Taiwan Mobile's 3G network.T aiwanStar's, I'm sorry, Taiwan Star's 3G network. In addition, we will methodically consolidate Taiwan Star's 4G network and remove redundant 4G base stations. At the same time, we will leverage Taiwan Star's 5G base stations to complement Taiwan Mobile's needs. The move will make our network management more efficient and help contain 5G CapEx. For customer contribution, our mobile service revenue will benefit from the ARPU lift through upselling Taiwan Star's users, mainly from 4G to 5G, and through our Doubleplay, Disney+, and other offerings. The last leg of the synergy will stem from business streamlining, with a big part of it coming from savings produced through refinancing Taiwan Star's debts. Next, let's turn to Page 7 to talk about EBITDA growth and gearing. Taiwan Mobile expects to see EBITDA increments of more than TWD 18 billion post-merger. As a result of cash generation, we expect our net debt to EBITDA to decline to a pre-merger level of 2.2x in the third year after the merger. As we deleverage, it will give us financial flexibility going forward. Now let's look at page eight for post-merger net profit. For the first 11 months of 2021, Taiwan Mobile reported unaudited consolidated net profit of TWD 10.15 billion. With the benefits from the synergies we expect to produce with this merger that we elaborated in previous slides, we expect the deal to add about TWD 2.3 billion in net profit for the company in the third year after the merger. Finally, let's turn to Page 9 to wrap it all up. Here is the future focus we would like for you to take away with. Propel future revenue and earnings growth. Cement Taiwan Mobile's position in the mobile business with EHS-ESG fulfillment. Accelerate Taiwan's 5G service proliferation. Finally, target total returns to its strategy. With that, I would like to now open the floor up for questions. Thank you. Thank you. Ladies and gentlemen, we will now open for questions. If you'd like to register a question, please press Star one on your telephone. Thank you. Our first question comes from Peter Milliken with Deutsche Bank Hong Kong. Please go ahead. Thank you. Yeah. Hi, good afternoon. You know, well done on helping move the industry towards consolidation. One question I have is about the lifetime unlimited customers on Taiwan Star. Can you tell us how many of its users are on lifetime deals and if there's any price associated with that? The other one is just can we get the financials of T Star, right? What were their revenues or EBITDA was in 2020, for example? Thank you, Peter. Thanks for the kind words. In terms of lifetime unlimited customers, unfortunately, I cannot disclose their numbers here, but I can say that they're mainly 4G customers, so we will be looking to upsell them to 5G and/or our Mobile Double Play Disney+ and all the other offerings. We're pretty confident that we will be able to increase their ARPU while making sure they are happier with the product they're getting. In terms of T Star financials, I think you can find it in the appendix. Okay. All right. Great. Thank you. Thank you, Peter. Thank you. Our next question comes from Leo Anderson with UBS Hong Kong. Please go ahead. Thank you. Thank you. Good afternoon, and also congratulations. Great to see five going to four. Two questions. The first is on the approvals from the FTC and NCC. Would it be fair to say that as Taiwan Star's relatively small market share, that it doesn't present any obvious obstacles to merger approval? It'd be great to get your comments on that, on how this fits relative to the guidelines for industry consolidation. The second one is on the network side. In terms of the vendors, the equipment providers, are they similar between Taiwan Mobile and Taiwan Star or quite different? Thank you. Thank you for the question. In terms of approval by NCC and FTC, like I said in the presentation, we think that if the approval process takes longer, the longer the approval process would take, the more negative impact to end user, employee, shareholder and industry interests it would pose. We're essentially begging the regulators to give us a more expedited sort of answer. In terms of vendors, both companies are 100% Nokia in terms of our base station. That would make synergy much easier to extract. Thank you. Great. Thank you. Just to follow up, you mentioned to Peter the financials are in the appendix. I don't see them in the Sorry. We will provide it right afterwards. Great. All right. It's a public company, actually, so. You're talking on speaker. Oh, sorry. Because the Taiwan Stock Exchange Corporation does not provide you with English translation of- Yeah. The financials. We'll do it right away. That's great. Thank you very much, Ruby. Thank you. You're welcome. Thank you. Our next question comes from Sarah Wong with UBS Hong Kong. Please go ahead. Thank you. Thank you, and congratulations on the deal. I have two questions. First is that, if I'm calculating everything correctly, it seems the consideration of this deal implies around 9x-10x EBITDA for T Star. Just wondering, could you please provide any, like, further color on the, like, reasoning behind? Second question is that, given in the presentation, it seems both the free cash flow or EBITDA and earnings will increase after the merger. Just wondering if there's any potential upside in dividend or any change in the dividend policy. Thank you. Hi. Well, on the EBITDA multiples, we don't disclose the exact numbers to you. We can say that with synergy it's less than the multiples you just calculated. On the dividend policy, as you can see that, given the healthy free cash flow, we don't find it difficult to maintain a stable dividend policy going forward. I don't think it's gonna change or it will be a problem for us. Also it's being factored in in our calculations of synergy. I think it will be finally decided by the board anyway. Based on our calculations, it's not a difficult situation for us. Thank you. Just one follow-up on the incremental EBITDA. Seems Taiwan Star, they have roughly like TWD 3 billion EBITDA in 2020. Then in the slides, it seems the incremental EBITDA after the deal would reach TWD 7 billion in year 3. May I take the difference between like TWD 3 billion and TWD 7 billion as most of comes from the like synergy we just mentioned? Yeah. Okay. Thank you. Our next question comes from Cass Summer with Fidelity Singapore. Please go ahead. Thank you. Hello, management. Happy New Year and thanks for hosting the call. Can you hear me okay? Yes. You might wanna speak a little louder. Thank you. Okay. Yeah. Just a quick question on the regulation side, right? What will be the key hurdle for this merger to get approved? If my understanding is correct, in Taiwan, there is a regulation in terms of the spectrum market share, which is one-third, right? Do you think this is going to be the case? If I guess, Taiwan Mobile slash Taiwan Star will violate. I mean, we'll have more than 1/3 of the spectrum in the sub-1 GHz band, right? If my calculation is not mistaken. If in such a case, would you be okay to return part of your spectrum back to the regulator so that this merger can go through? Thank you. Thank you for the question. In terms of sub-1 GHz market share sort of limitation, the sort of text of the law describes that in a merger or a buyout situation, the regulator can use their judgment to allow parties to hold spectrum sort of above that limitation. There's a chance that if we can make the case that the combined customer base needs certain capacity to have a good sort of telecom service quality, then there's a chance that we might be able to make that argument. Like I said, everything would be up to the regulators. We will be looking to discuss proactively with them, and hopefully we can make a good case for all of the stakeholders. In terms of other hurdles, it's pretty standard. All the things you can expect from NCC and FTC. Okay. Thank you. That's very helpful. My last question is, I'd like to take a bit of a deeper dive into the synergies, right? If I take a look at the first half results of Taiwan Star, they are still making huge loss at the net profit level, right? About TWD 2 billion in the first six months of this year, right? I understand there should be a lot of synergies from a telecom merger, but if you could just help me understand why you are not expecting any negative contribution even from year one, despite the fact Taiwan Star is still making, you know, on a run rate basis, probably about TWD 4 billion level of net loss, right? What makes you believe there will be no negative contribution, even from year one, through this merger? Thank you. Thanks for your question. Like we said, work is immediately executable, and also, the company will benefit immediately from it. Right at the merger we'll immediately get to work and combine the networks. In the month that we're able to consolidate base stations, immediately from the next month we'll enjoy the benefits. We are pretty confident that the first year we're able to extract enough synergies to make the impact to bottom line rather limited. In the synergy you are not expecting a positive impact on ARPU, right? Basically you are only expecting cost synergy. We're expecting 30% of the synergy coming from ARPU. ARPU. Okay. Sorry, I will- Yeah. Okay. This is constant consumer contribution, which accounts for 31%. Yeah, that's 31%. Yeah. Yeah. ARPU, okay. Like I said also, in terms of debt refinancing, it's also immediately. It can also be immediately executed, and we will immediately benefit from it as well. Yeah. To elaborate a bit, we also have tax benefits from loss carryforward. Okay. From Taiwan Star. I understand that. Thank you. Sorry, just quickly on the last question. In year one you are expecting, I don't know, maybe around TWD 4 billion-TWD 5 billion in incremental EBITDA on Page 7, right? This is what you're saying, right? Because, you know, in the first six months, Taiwan Star EBITDA is probably only around, like TWD 1.5 billion, right? No, about TWD 700 million-TWD 800 million. If I annualize that, it's gonna be about TWD 1.5 billion for the whole year of 2021. Thanks to the synergies you are expecting, the incremental EBITDA to be, yes, somewhere between like TWD 4 billion-TWD 5 billion from year one. Is that correct understanding? We can't share the exact numbers with. Yes. Yes. Yes. Yeah. As you can see from the chart, I think there will be. Mm-hmm. Substantial EBITDA increments. Okay. Thank you. That's all. Very helpful. Terry, I wanna point out that Taiwan Star's first half 2021 EBITDA is to the tune of TWD 1.4 billion. TWD 1.4 billion. Okay. For half a year. Okay. That's perfect. Okay. Thank you so much. We have a follow-up question from Mr. Peter Milliken with Deutsche Bank. Please go ahead. Yeah. Hi. On the subject of the network consolidation, you mentioned that you can quite quickly close down some of the redundant network. I'm assuming there would still be site leases that you would be locked into though for a period of time. You know, would they typically be one-year leases or longer than that? Well, yes, the leases are usually longer than that, but the penalty is usually much shorter than that. Meaning that you can get out of the leases through paying an X month worth of rentals and get out of it. Right. It's already been factored in our calculation of synergies too. I see. Okay. If you're closing down the some of these base stations, is there then a depreciation write-off that we need to assume over and above the sort of net profit neutrality that you're forecasting? Well, in year one, we will ask the CPA to do the so-called purchase price allocation to gauge the exact impact. Since we can realize some loss carryforward tax benefits, we expect the impact on the net profits will still be positive. Okay. Got it. Thank you. Next, the third question from Ms. Sarah Wong with UBS. Please go ahead. Thank you. Thank you. Just one question on the spectrum. For the 3.5 GHz spectrum, it seems Taiwan Mobile is not adjacent to Taiwan Star. Just wondering, going forward, will that be any incremental CapEx in terms of base station deployment? That will be a negative. Our equipments are fully capable of sort of transmitting both of our 3.5 gigahertz spectrum holdings. Same with the Taiwan Star 3.5 gigahertz equipments that we will obtain after the merger. Got it. That means for the existing base station, it can support spectrum from both Taiwan Mobile and Taiwan Star. Yes. In two-three years, we're expecting the industry to make intra-band carrier aggregation standards. Meaning that we will be able to allow one single user or one single end device to use both lots of blocks of spectrum at the same time. Got it. Thank you. Thank you. Thank you. First name is Celine. There seems to be no further question at this point in time. Thank you. That's great. Thank you guys for joining today's conference call. We wish you a healthy and happy 2022, and we look forward to seeing you again at our next installment. Thank you and Happy New Year. Happy New Year. Thank you. Thank you for your participation. This concludes the conference. Goodbye.