Welcome everyone to Far EasTone's 2023 fourth quarter earnings conference call. All lines have been placed on mute to prevent background noise. After the presentation, there will be a question-and-answer session. Please follow the instructions given at that time if you would like to ask a question. For your information, a webcast replay will be available within an hour after the conference is finished. Please visit www.fareastone.com.tw under the Investor Relations section. Now I would like to introduce Mr. Gary Lai, the IR Officer. Gary, please begin. Good afternoon, everyone. Thank you for attending Far EasTone fourth quarter 2023 results conference call. Both President Chee and CFO Sharon joined the call with us today to discuss 2023 results and 2024 guidance. A reminder before Chee's presentation, kindly pay attention to the first page disclaimer about Safe Harbor Statement. Let me pass to Chee, please. Thank you, Gary. Good afternoon, everyone. It has been a while since we talked last time. So we're going to report to you how we did in the fourth quarter last year and the full-year performance overview. Okay? So as you all know, we have finally successfully completed our merger with APT on December 15th. And the migration or convergence has been going on and then very smooth. So we are looking at the fourth quarter next year. Okay. So the fourth quarter and the full-year financial performance is displayed on the screen for you now. As you can see, we have very solid fourth quarter. The YoY, we came to 8.6%. And the revenue is like TWD 26.47 billion. And then EPS alone is also very good, which is TWD 0.85. And then for the full year, right, we actually have achieved TWD 93.69 billion. That is, of course, 5% over our 2022 performance. EBITDA is also we have a 4.2% increase. We had an internal target, and this is all exceeding that as well. The net income is TWD 11.19 billion. Our EPS, this is a little bit complicated. We show two numbers because we did have the merger effective on the 15th of December. The number of shares that we have actually changed after the 15th. If we use a weighted number of shares as the denominator, and then our EPS will come to TWD 3.42. But then for a lot of analysts, you look at how many shares that we have as a year-end. That would be a bigger denominator for the whole thing. Then our EPS would be TWD 3.10. Okay? That's the difference between the two. Okay. So our total revenue, as you see, we show you the trend here and quarterly. So this total revenue, actually, we have been seeing a positive YoY growth for 13 consecutive quarters. To be exact, it is since the fourth quarter of 2020, the year when we launched 5G. And our EBITDA is also reaching a new record high since 2019, and it came to TWD 8.15 billion for this fourth quarter. And also the 3.3% YoY EBITDA, of course, it is due to our improved gross margin from both core business and our new economy services. Okay? And for the net income, we show 11.4% YoY, and it is also an all-time high for the same period. So the YoY growth rate at 11.4%, as we understand, it continues to lead our industry, okay, for 10 quarters in a row now. Okay? Okay. Some more financial metrics for your information. In terms of our net debt and the net debt to EBITDA, slightly increased post-merger. Overall, it is still very healthy. As you can see, our free cash flow continues to be strong. The CapEx spend in 2023 was TWD 8.15 billion. Our target or our budget was TWD 9 billion. It's about 9% shy of the target. Okay? Next. All right. Last year, actually, was a very good year for us, even though we were all very busy working this extra effort on the merger alone. Still, the team, the FET team, really has delivered a very good, solid scorecard. They actually marked our seven-year high for our history. In terms of the total revenue, EBITDA, net income, and also EPS, my chairman has no complaint about that. And then we did pretty well here. All right. And then we're happy about it. Okay. And then in terms of the mobile core, so 5G, of course, continues to be our growth driver. And then the momentum is good. So as you can see, our mobile service revenue continues to grow year-over-year. And also our pool is also growing. And the postpaid customers, it is also growing. And then, of course, with the addition of APT customers, that gave us a big jump. That's part of the synergy we were looking at because of the bigger customer base. Now, in terms of our 5G penetration, before December 15th, we actually already reached 40%. And that is exceeding our internal target that we set for ourselves. But then with the bigger customer base, the postpaid customer base now, it's diluted a little bit, but we still add more than 37% penetration. And then I believe that is still the highest in the industry. And in terms of our postpaid churn rate, it continues to drop, which is a good thing, although we will continue to improve it. And as well, because with the market now, with only three big companies in it, although I would say the competition is more rational, but then it's definitely still very competitive. But then we will continue to work on the churn rate, and hopefully, it will remain low for us. Okay? And then our new economy this year, if you recall, the target we set for last year, 2023, we wanted to de-risk some of the more kind of areas that may be more risky. Also we wanted to be more selective, and then so we can improve the profitability and then improve the margin. So we did achieve that. And then so overall, still, the new economy business, it is growing steadily as we grow the total revenue. So it is still about 20% of our total revenue it accounts for. Now, in terms of the margin, it did rise 8.7% YoY. And then because we optimize on the projects that we engage, and then also our consumer digital services, like, okay? Like mobile financial services and our video business, they always have a higher margin, and then they are growing as well. So that all contributed to the margin rise, okay, to about 8.7% YoY. On the right-hand side, it shows that out of the total new economy revenue, the enterprise facing actually accounts for more than 50%. It has been the case for at least a couple or two, three years now. So that means we actually see more rapid growth on the enterprise side. Consumer side is steady, but then it is also growing. And we show some of the highlights. For example, one thing, as we work on improving the profitability on our ICT project, and one very important key factor is to use our homegrown solutions. So as that percent and we are tracking how many solutions of our homegrown solution were used in our ICT project. And we see a 75% increase YoY. And also one of our subsidiary companies, that's Nextlink, which is a cloud service provider. And it is successfully listed on the emerging stock market early this year. Okay? And then our security service, that's ISSDU, it continues to grow. And last year, we have seen an 8% YoY growth. And also our green energy company that is Prime Eco Power, although size-wise, it's relatively small still. But then the year before, they already posted positive net income. And then this past year, we actually see a 54% YoY in terms of the revenue and also the profit, and then has posted significant increase there. Okay? And our friDay Shopping posted 14% outperform the market. And then the friDay Video, we have more paying subscribers. It will show a 7% YoY there. Okay? And then handset insurance, although it's showing 5%, and this is a market where you deal with already saturated mobile markets. So we are pleased with this 5% increase anyway still. Okay? All right. And some highlights for your information. On the business side, we have four major areas for our ICT business. So in Smart City, where it is also a lot of ESG-related solutions that will be used. So this is one of our concentrated areas. So in this area, we will be deploying our homegrown EMS energy management system as solutions. So we have more cases in this area. Also, we have this traffic intersection, the UPS, so that in the case of a power outage, the traffic light will still work, and it can sustain four hours. And that is also our own innovative solution. And it is also help with recycling of the batteries that are from these electric motorcycles. Okay? And then in the telecom-based areas, so we have because telecom is our core business. So telecom-based SI is still one of our major growth areas. And then so we have a couple big successes and then in the public sector. And then on the right-hand side is the Smart Healthcare, which is, of course, based on our homegrown 5G-enabled telemedicine platform. And in terms of the reach now, we have covered 14 counties and 48 rural health centers. And this year, it will come to a conclusion with 15 counties and then 53 rural health centers covered. And also based on that platform, we have enhanced additional facilities, and then we came up with this 5G ambulance solution that was deployed in Taipei City and also a couple other cities and counties. We are also donating the solution to some of the counties that with more kind of a rural area that could use this kind of technology to just help them with more rural residents. And then on their way to the hospital, more things can be done to help them. And here comes the ambulance, as you can hear in the background. Okay. All right. Digital transformation, this is one growing area where we see a lot of companies of all kinds of sizes that are looking for digital transformation. Part of that is driven by the ESG-related requirement. Part of that is for how to accommodate the competition, right, worldwide. So this generative AI has become kind of like a trend. We have many partners or clients that would ask about this area. We have become the licensed solution provider for Microsoft. So that scope includes their Copilot product. So we see this as another growing opportunity for us. This one, last year, we only just launched that in probably April last year, but we have seen some very good success. We will expect this to continue to grow. So for the digital transformation, this area, we provide professional services by our own team with the technical expertise to implement, including the data migration or the IT migration to cloud or the AI-enabled applications or data services or big data analytics kind of services. And this is what we provide to our customers in this digital transformation area. Okay? And then more on the consumer side, so our friDay Video ranked number three by Nielsen Research in Taiwan's OTT view share. So it even beat Disney+ and all other local OTTs. So our OTT platform usage is also ranked number one, okay, from another survey provided by the local Taiwan Creative Content Agency. Now, FET's customer loyalty application, that is Mobile Circle, we maintain the top satisfaction rating in the market. And then also it leads in the download, which we have now more than 5 million. Okay? And then friDay Shopping, as I mentioned earlier, it is 14% YoY. Also, we have actually re-architected the system and then using the AI and also generative AI, which definitely is helping with the productivity. While our revenue has grown a lot compared to a year or two years ago, but then we actually were able to use less number of employees. So this AI technology definitely benefits friDay Shopping in terms of increasing the productivity for us. And then FET has this Guardian Network that we use a lot. So it is getting a very good acceptance rate by the users that trialed it. And also on top of it, FET network team has been very proactive in using AI, big data analytics, and machine learning to prevent or to detect and prevent fraudulent calls or attacks or those suspicious website links. So overall, we wanted to let our customers know that this is a reliable and safe network, so they should feel safe to navigate through our network. So this is one thing that we continue to build as a very important image, that our network is not only fast, but then also it is safe. Okay? And in terms of the investing for the future, we continue to host this startup accelerator. This year will be the third time, and so for us, for the third year, we're doing that. And so far, we already have worked with 37 startups. And then we work with them and find them the monetization opportunities, and we took them to our clients and then for some real project implementation using their solutions and all that. Also, for some of them that we think there were more synergies, and then strategically aligned with our product direction, we also invested in them. Okay? All right. And then also, even if not from us, we also help them attract more than TWD 320 million investment from other interested parties. Okay? And then we have received some major honors and ESG recognitions. I wouldn't read through the list, but then just as you can see, some of them are definitely well-known, renowned. And like the first one, DJSI, we actually were ranked number one on the world index. And also for emerging markets, that is number two in the world for the telecom industry, okay, which we really took pride in it. And there are some other recognitions that we don't work for the recognitions, but then we are happy that our work did get good recognition. Okay? All right. Then in terms of 2024 priorities, of course, we wanted to accelerate our network migration. We have already completed the RAN network consolidation before the end of January. And then now we are going through the dismantling of the sites from the former sites from APT. So as soon as we dismantle them, actually, as soon as we turn them off, which we already did, we already start saving on the utility. And then once we complete the once we complete the dismantling of those and get those equipment or spare parts and all that out of the site, and then we can clean up the site and return it. And then that's when we can terminate the lease, and we'll be saving on the lease. So that's more OpEx savings. So this is something we are accelerating because the sooner we complete it, and then the sooner the part of the synergy, the savings that we can realize or start realizing. And also, our BU has been accelerating our user migration, APT user migration. And since December 15th, and we actually have seen very good numbers, we are pleased with that. So we have migrated or some of them renewed. And then also, we see some upsell, cross-sell opportunities. And then just from the simple migration, we see good uplift contribution from the users. So I am very pleased with the speed right now, and then we expect this to continue. Also, for the mobile growth momentum in 2024, we'll keep it up. And then with more 5G penetration, we'll continue to grow. We actually set our target at 45% by the end of the year, which is aggressive, but I have to give my marketing head a lot of credit for committing to it. And this is already the bigger base, and just keep that in mind. And then we will expand our new economy business growth with more smart ICT solutions deployment. Also, our cooperation with Microsoft on the LSP thing, licensed solution provider, I do expect to see even more aggressive growth this year as well. Okay? And then we want to continue to grow FET's presence in consumer markets. So that is beyond just the mobile rate plans and also the device. But then we have other services as well. So we will have invested more in the entertainment-related work. And also for Smart Health, we will have some friendly launch on the 2C kind of service as well. That is part of the plan for this year. Okay. So for 2024 consolidated financial forecast, so our total revenue target will be at TWD 104.92 billion, although I did tell my team, "Why don't you just round it up to 105? That's easier for everybody to remember." But they want to be exact. So it's TWD 104.92 billion. And then for EBITDA, it's TWD 35.66 billion. And then our net income will be TWD 11.20 billion. I think it's worth mentioning, though, for the EBITDA that we are targeting at TWD 35.66 billion. And last year, we actually finished with TWD 32.08 billion. So that is about TWD 3 billion increment as we have announced two years ago about our merger. That was what we think that we should be able to do with the merger. So according to this forecast that you could see, we are managing to meet our commitment back then. And our EPS, of course, this is already calculated based on the new number of shares, the bigger one. And then that will be TWD 3.11. So in terms of the increment, it's not as impressive. But then this is the first year that we are doing the merger. And then as I mentioned, some of the work is still ongoing. So it wouldn't be a full-year kind of a benefit yet for the dismantling of the radio stations. So those will take some time. So this year, we only see some partial synergy to be realized. But then still, we managed to kind of have the increased EBITDA versus the increased depreciation that we are still able to keep it very balanced. And then still, we'll be able to do just a little bit better than last year's TWD 3.10. Okay? But this is a bigger base of the number of shares now. Okay? And then in terms of the CapEx, so our cash CapEx guidance for 2024 will be at TWD 8.1 billion, and then out of which there is TWD 0.8 billion that is carryover from 2023. Okay? All right. Okay. So for our dividends, we are going to keep it at TWD 3.25. And then as you know, we are going to pay to the larger number of shares at a time in summer, right? So compared with that, just for apples-to-apples, so we are looking at TWD 3.25 versus TWD 3.10 EPS. So this is still a generous payout, more than 100%. We like to thank our shareholders and investors for their continuous support. And then I think, as you all can see, we have been doing very well. With the merger now, and then it gives us a bigger scale and a bigger size. And then we believe we'll continue to grow. And then with the synergy, and then we will grow at a scale. And give us a year or so, I think, and more of the synergy will be realized. So that should be it, right? Do I have any? Okay. So with that, I concluded my presentation, and we welcome your questions. Thank you, President Chee. Ladies and gentlemen, we will now begin our question-and-answer session. If you have a question for any of today's speakers, please press star one on your telephone keypad, and you will enter the queue. After you are announced, please ask your question. If you find that your question has been answered before it is your turn to speak, please press star two to cancel the question. Now, please press star one on your keypad if you would like to ask the question. Thank you. And our first question will be coming from Neale Anderson of HSBC. Go ahead, please, Neale. Thank you. Good afternoon. I have a couple of questions really relating to the merger. So the first question is, it's two years since you outlined your initial plans for that. It's obviously taken a long time to complete. So I just wanted to ask you whether your view or expectations have changed in the interim. So it looks from your guidance like not much, but I think originally, you guided for net income to be positive or accretive in year one. And it just about is, but it's pretty flat. So I wondered if there'd been any change. That's the first question. The second one was about synergy timing. You mentioned you completed the RAN switch-off, and you're dismantling the site. So do you expect any spike in costs? Because I think you have to pay a penalty to exit some of the leases. Does that imply some quarterly volatility? Then once we get you mentioned the full-year benefits will probably come in 2025. That was when you will have completed the network integration, and you're still working on other sort of revenue synergies. Is that the right way to look at it? Thank you. Yes. Okay. Sure. So to your first question, as you can see, right, when we and my CFO is always more conservative. So at the time when we announced, we were probably TWD 3 billion, right? TWD 3 billion kind of an EBITDA increment. And then so we still can do it. So I would say if the merger case wasn't prolonged so much that we probably would end up doing better and then sooner, right? And then for the second question, in terms of synergy, yes. So the network consolidation is a big part of it, especially the RAN part. So we are looking at and then as you mentioned, there will be some penalty. But then because the year, it's really it's an annual contract. So actually, it's manageable. So as we are dismantling, right, the contract's still going. So very few, I would expect, that we will actually run into a penalty situation. It's really just a matter of when I can really clean out of the site and then let the landlord have it. So penalty isn't really a factor, if at all. Okay? So then the year after, it will be a full-year savings, especially with the utility price continues to go up. So that's a good thing. We definitely can have the full-year benefit. And then so in terms of the total network migration, as you may know, right, RAN is not the only thing. I still have the core network that I need to continue to consolidate. And that is really not so much about the technology itself that takes time. It's also part of my business strategy because according to what we committed to the Fair Trade Committee, the APT users do have until the end of next year, 2025. Their old contract can still be valid. So I need to time when I want to complete the migration or when they will stay on so I can calculate what may be to the best interest of us financially. But then still, we will only do it and then so once we can migrate once we can retire the APT's core network, that will give us more savings too. But then at the same time, when I do that, I need to add capacity to my current core. But then for the ongoing MA and then license and all that, we definitely would have savings the year after. Okay? So then is there a third question? I forgot now. Did I answer all your questions, Neale, or if there's anything that is still not? It did. Thank you. Yeah, that's very helpful. Thanks very much. Okay. Sure. Thank you. Next question, Andy Huan, Morgan Stanley. Go ahead, please. Thanks, management. Just one quick question on your CapEx guidance of TWD 8.1 billion. Could you give us a little bit color on how much of that goes to merger network consolidation-related CapEx and how much is others? Thank you. Okay. Let me see if I have the detailed breakdown. If not, we may provide it later. But then so out of the TWD 8.1 billion, of course, network-related always is the biggest part, right? And then just like the BAU, every year, I need to pay the vendor for the optimization, for the technical support. Those are all part of the CapEx. But then really, the new I can tell you the plans. So merger-related, as far as we so when I finish the RAN consolidation, anything merger-specific, that is really already done. But later on, when I started some fixed network, that is more capacity-related. But then I do have planned, right, now because I have a bigger base, right? And then we still have a 2,600. And then how I would maximize the use of it and then also the 700 spectrum that I have. So I do have a plan to deploy additional 2,000 stations, for example, for the 700 and then maybe a couple thousand or 1,000 for the 2,600. So that part is the new kind of new CapEx for that. But then a big part of this is still ongoing. If I don't do anything, I still need to pay Ericsson and then also Nokia for the transport, some of this. That's that. And then we also include some hundreds of millions of dollars for Prime Eco Power, right? And then to invest in the green energy, there's some CapEx spending we budgeted for it. And also there are projects. Some of the projects now, it's like a government, they would ask us to put in the CapEx, but then they will pay us over 10 years or whatever through their OpEx. So there is a model like that. So, if we bid for those projects and we win it, and then that CapEx will then be needed. So there is some room for this kind of that is not necessarily going to be realized for sure. But to be exact, the breakdown, maybe Gary can provide you later. But then really, merger-specific, I think it's very limited, very small, if any. Okay. Great. Thank you. Sure. Thank you. We are now in question-and-answer session. If you would like to ask the question, please press star one on your telephone keypad. Thank you. And next question, Sarah Wang, UBS. Go ahead, please. Hi. Thank you. Just one quick question on the merger synergy timeline. So it's actually on the network consolidation. So just wondering, what's the rough timeline for, for example, first, dismantling the overlapping base stations from APT, and then second, upgrade our core network, as you just mentioned? Thank you. Okay. So for the dismantling, we are expecting to have it finished by the end of June. Okay? So that's kind of a half-year left for the synergy savings. And in terms of the core network, so it will most likely be next year because, as I mentioned, it needs to be aligned with my BU migration strategy. So I think we are going to do it sometime next year. Got it. Then a quick follow-up because 2024 net profit guidance is relatively flat YoY, but EBITDA was quite strong, more than 10% growth. Is the discrepancy mainly due to higher depreciation? So my question is, if we could finish dismantling the base station from APT by June, then shall we see a depreciation savings into the second half? The budget here already takes into account our plan that we will have the dismantling all finished by June. This budget is done according to that plan. But then if my network can put it up, my network team can put it up, anything that they do sooner than that will be extra saving for me. Otherwise, it's June. That is the schedule, and that is what we booked into this budget version. Okay. Thank you. In other words, I already take into account the fact that the dismantling won't be finished until June. So the depreciation we calculated is based on that version. So unless the team can put up the schedule by a month or by two months, then the depreciation and all that will change a little bit. Otherwise, it is the same, the savings. Got it. Yeah. Got it. Thank you. Thank you. Yeah. And then maybe I'll just add a note here is because while we merged with APT, of course, we got more assets, and therefore, there is more depreciation. But some of that and then depends on the different duration. So what we are looking at this year, maybe I would say probably is the highest. And then this will go lower as we go. So this will only get better. And also for any synergy and also more subscriptions and that we will be able to uplift, and those there will be accumulating. So I'm not so. Don't be too concerned about this depreciation that we added because of the merger because it will go over time. It will soften up. Yeah. Okay. Thank you. As a reminder, please press star one on your keypad if you would like to ask the question. Thank you. Ladies and gentlemen, we are now in question-and-answer session. If you would like to ask the question, please press star one on your telephone keypad. Thank you. Okay. So maybe if they have some more questions, they can always follow up with Gary. Okay. Yep. All right. Maybe then President Chee Ching, should we wrap up the call? Yeah. Sure. Last call. Is there any question for me still? Otherwise, you are more than welcome to contact Gary and Amy afterwards. If needed, we can arrange other calls for you. Thank you. Then I think there are currently no other questions at the point. Thank you, President Chee. And ladies and gentlemen, yes. And we also thank you for your participation in Far EasTone's conference. There will be a webcast replay within an hour. Please visit www.fareastone.com.tw under the investor relations section. You may now all disconnect. Thank you, and goodbye. Thank you all. Thank you. Thank you. See you next quarter. Thank you.