Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Taiwan Mobile Co Ltd (TPE:3045, Financial) reported a strong 26% year-over-year growth in mobile service revenue, driven by the integration of Taiwan Star postpaid users and organic growth.
- Consolidated EBITDA increased by 19% year-over-year, primarily due to the mobile business and merger synergies.
- The company achieved a 53% year-over-year growth in telecom EBIT on a pro forma basis, reflecting successful cost savings from base station consolidation.
- First half 2024 consolidated EBITDA grew by 20%, surpassing the initial guidance of 11% to 13%, setting a new record for the company.
- Taiwan Mobile Co Ltd (TPE:3045) was recognized in the Institutional Investor's 2024 Asia Executive Team ranking, achieving first place in several categories, including Best CEO and Best CFO.
Negative Points
- momo's revenue growth decelerated to 2% year-over-year, with a slight decline in EBITDA margin due to a lower take rate in a slower demand environment.
- Overall CATV revenue declined year-over-year, primarily due to the discontinued content distribution deal with Disney.
- Despite the growth in net profit by 8% year-over-year, the first half 2024 EPS remained flattish due to dilution from new shares issued to T Star shareholders.
- Gross debt increased year-over-year to $86.2 billion, attributed to borrowing inherited from T Star.
- Operating cash flow fell slightly year-over-year in the second quarter of 2024 due to changes in working capital.
Q & A Highlights
Q: Could you provide more details on the breakdown of the 20% year-on-year EBITDA growth, which is ahead of the guidance of 11% to 13%? How does this affect your outlook for the next 18 months, especially regarding the T Star integration?
A: The majority of the growth comes from being three months ahead in integrating T Star's base stations, leading to savings in network, electricity, and rental costs. Additionally, T Star subscribers have responded well to our unique bundles, allowing for cost-effective upselling. We expect these savings to continue and benefit us fully next year. The positive response from T Star users to our bundles is also expected to persist.
Q: How are the merger synergies with T Star impacting your financial performance?
A: We are approximately three months ahead of our most optimistic projection for base station consolidation, resulting in significant savings in network costs and site rental expenses. This has contributed to a 53% year-on-year growth in telecom EBIT on a pro forma basis, from TWD4 billion in the first half of 2023 to TWD6.23 billion in the first half of 2024.
Q: What are the key drivers behind the strong performance in your mobile service revenue?
A: Mobile service revenue grew by 26% year-on-year, driven by the addition and upselling of 2 million Taiwan Star postpaid users and continued organic growth from our existing customer base. The smartphone postpaid ARPU of existing Taiwan Mobile users also grew by more than 6% year-on-year, supported by unique bundles and 5G upselling.
Q: Can you elaborate on the performance of your broadband business in the second quarter of 2024?
A: Our broadband business grew by 4% year-on-year, driven by steady demand for faster connectivity and our bundled services, which include cable TV, broadband, mobile, and OTT services like myVideo and Disney+. Broadband subscribers on speeds of 300 megabits or higher increased by 46% year-on-year during the quarter.
Q: How is the e-commerce segment, particularly momo, performing amid the current market conditions?
A: In the second quarter of 2024, momo's revenue grew by 2% year-on-year, with increases in active users and total orders. However, the EBITDA margin fell slightly due to a lower take rate in a slower demand environment. We plan to scale up 3P advertising and live commerce businesses in the coming quarters to drive growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
