Good afternoon, ladies and gentlemen. Welcome to Chunghwa Telecom conference call for the company's fourth quarter 2023 operating results. During the presentation, all lines will be on listen-only mode. When the briefing is finished, directions for submitting your questions will be given in the question and answer session. For your information, this conference call is now being broadcasted live over the Internet. Webcast replay will be available within an hour after the conference is finished. Please visit CHT IR website, www.cht.com.tw/ir under the IR calendar section. Now, I would like to turn it over to Ms. Angela Tsai, the Director of Investor Relations. Thank you. Ms. Tsai, please go ahead.
Thank you. I'm Angela Tsai, Assistant Vice President of Financial Department for Chunghwa Telecom. Welcome to our fourth quarter 2023 results conference call. Joining me on the call today are our Chairman, Harrison Kuo, our President, Ivan Lin, and Vincent Chen, our Chief Financial Officer. During today's call, management will begin by providing the chairman's message, our business overview, a discussion of our segment performance and the financial results, followed by management guidance for 2024. After, we'll move on to the question and answer portion of the call. On slide 2, please read our disclaimers and notes concerning forward-looking statements. Now, without further delay, I will turn the call over to our chairman. Chairman Kuo, please go ahead.
Thank you, Angela, and hello, everyone. Welcome to our fourth quarter results conference call, and I would like to begin with our strong financial performance for 2023. We concluded 2023 with an EPS of TWD 4.76, while both revenue and the EPS exceeded the high end of our full year guidance and hit six-year highs. We are proud to beat the full year guidance and also commit to investors to give all out efforts for this year. During the first quarter of last year, Taiwan's telecom industry entered a new three-player landscape, while Chunghwa Telecom continues to be the largest telecom, followed by the other two players. Our market cap represents 60% of the industry market value. Our revenue share in Taiwan mobile market also exceeded 40%.
In addition, we have the most 5G subscribers in Taiwan, with more than 3 million, not to mention the overall mobile subscriber number. All the stats highlight that our leading position far outweighs our peers. At the same time, we are happy to see the domestic industry evolution and believe that under the current structure, value creation for customers will continue to remain the industry focus, and digital transformation will continue to develop and serve as one of the key strong growth drivers. Keeping our number one position, we reiterate our confidence in widening our leading against the peers due to our solid strength and the growth momentum. In 2023, our mobile postpaid subscriber numbers continues its year-over-year growth throughout the whole year, despite the total number of mobile SIMs in Taiwan decreased in 2023.
We also achieved the highest mobile service revenue in the industry. Our success in attracting subscribers speaks for our network strength, including the most extensive mobile coverage, largest capacity, and fastest speeds, supported by our most numerous mobile base stations already in use. We believe our mobile subscriber gains and revenue growth in 2023 will continue and roll over to 2024. Our competitive advantages also come from our cross-sector business wins, including our growing fixed broadband business, accelerating technology momentum, monetization, and the ongoing investment in content and digital ecosystems. With our continuous efforts and the business development, we maintain optimistic about positive outlook for the next year ahead. Last, I am pleased to share that-...
We are establishing a subsidiary in Germany in the first half of 2024, which will serve as the forerunner for international business expansion in Europe. This marks a meaningful milestone of our international expansion. Now, let me hand the call over to Ivan for the business update of the fourth quarter of 2023.
Thank you, Chairman Kuo. Hello, everyone. Now, please, flip to page 5 for an update on our outperformance in the mobile service. As of November 2023, we maintained our leading position in Taiwan's mobile market with the largest subscribers share of 37.1%. Meanwhile, we were excited to see our revenue share; it reached a remarkable milestone, existing at 40% in the third quarter and hitting 40.2% by the end of last November. Further, widening our lead against our peers. Our existing revenue share over the subscriber share increased to 3.1%. Why is this encouraging?
In addition, our mobile service revenue in the fourth quarter grew 5.8% year-over-year increase and maintained its growth for 33 consecutive months, while our postpaid ARPU reported 4.3% year-over-year increase, continuing its consecutive growth for the eleventh quarter. This increase were mainly due to the 5G migration upsales, international roaming recovery, and the increase of their postpaid subscriber numbers. Thanks to 5G adoption, we see the average amount, see the uplift from customers who migrate from 4G to 5G increased to 49% in the fourth quarter, up from the 44% in the third quarter, maintaining the inspiring up trajectory.
Going forward, we expect the overall 5G penetration in Taiwan will continue to steadily develop in 2024. We believe, like Chunghwa, we believe will benefit the most, given our number one position based on 5G quality and ranked by the well-known international institutes. Let's move on to slide 6, and for update in our fixed broadband business. In the fourth quarter, we are glad to see a positive performance in the fixed broadband sector. Its revenue and ARPU increased by 2.6%, and it 1.1% in the respective. On a year-over-year basis, many attribute to the increased higher speed migration.
Our sign-ups for service of the 300 Mbps or higher continued to be popular among the speed mix since the second quarter of 2023. Its year-over-year growth in the fourth quarter achieved 32%, maintaining a double-digit growth. It's worth noting that our speed profile optimization promoted by the market incentive also worked in upgrading speeds from below the 100 Mbps to transition to higher speed above the 100 Mbps. We see the 12% year-over-year increase in sign-ups for service at 100 Mbps or higher.
As the optimization strategy will go on in 2024, we are confident in seeing the upward trend of the fixed broadband ARPU continuing going forward. Now, let's move on to the performance of our consumer business group. Slide 8 presents the performance of our CBG group. In the fourth quarter, total CBG revenue rose by 4.4% year-over-year. The increase was mainly driven by the notable increase of our outperforming mobile service revenue at 5.3% increase year-over-year. Going to the continued 5G migration and the postpaid subscriber increase, the better-than sales of iPhone 15 series, and the stable growth of the fixed broadband revenue with 3.3% uplift year-over-year, while fixed line revenue decreased.
In addition, I would like to highlight our notable international roaming revenue in 2023, which increased by 270% year-over-year, and has already surged to exist pre-COVID-19 levels. In addition to the busy international activities in 2023, our popular global roaming, the package also contribute to the success. We covered 125 countries to offer customer with the convenience of using one package to enjoy transnational data roaming during one trip. We expect strong demand from customer will contribute, will continue to drive the growth of our roaming business in 2024. CBG income before tax decreased by 0.2% year-over-year, owing to the asset impairment loss accompanied with the phase out of the 3G network.
Excluding the one-time factor, CBG income before tax increased by 3.6% year on year. Slide 9 and further illustrate our consumer business group highlight. In the fourth quarter, and our multiple pay package continued to grow on year basis. The subscriber numbers of the mobile and fixed broadband and Wi-Fi service all together demonstrate in a 14% quarter-over-quarter growth, enter the service consecutive, and the quarter of the double-digit quarter-over-quarter growth. In terms of the individual and home entertainment application, we were happy to report subscriber growth as well. Our video subscriber continued to grow steadily by 3.7% year over year, mainly due to the rich content provided on both MOD and Hami Video, in particular, exclusive and award-winning dramas.
In addition, we observed an increasing demand for the CBG cybersecurity service, as the consumers has become accustomed to accessing the internet across mobile and fixed broadband in the post-pandemic era. In the fourth quarter, our customer cybersecurity sign ups increased by 19% year-over-year, and demonstrate a potential for further growth. Going forward, we will continue to develop consumer application to grow both application and telecom revenues in the sector. Please turn to slide 10 for an overview of our enterprise business group performance.
In the fourth quarter, EBG revenue increased by 2.5%, primarily attributed to substantial and a 13% increase in other revenue, driven by the equipment and sales from subsidiaries and launch of the high-end mobile phones, contributing to a boost in the sales revenue. Additionally, ICT business revenue increased by 2.3% and prepared by a rising in the project revenue, sustained growth in cybersecurity service revenue and a robust expansion in AIoT service revenue. In the further mode, EBG mobile service revenue increased by 3%, fueled by the 5G upselling and the recovery of international roaming revenue. Although fixed-line revenue slightly decreased year-over-year, mainly due to voice decline, data commutation revenue and broadband access revenue continued to grow.
In spite of the revenue growth, EBG reported a 6.2% year-over-year decrease of its income before tax, mainly because of the fixed voice decline and the asset impairment loss relating to 3G phase-out. Excluding the one-time impairment, the EBG's income before tax decreased by 4.8% one year. Most importantly, ICT business revenue continued to increase and profit the margin keep improvement. Slide 11 illustrate our enterprise business highlight. In the fourth quarter, our AIoT and cybersecurity business demonstrated robust growth, while the total emerging enterprise business revenue of our major application decreased by 2.7% year-over-year. Due to the higher base of the revenue recognition in the prior year relating to e-learning and fintech projects.
Specifically, cybersecurity business achieved 7.3% growth in the fourth quarter driven by increasing service demands from our enterprise clients, and then climbing upward, and for the eighth consecutive quarter on a year-over-year basis. Furthermore, our AIoT business also experienced a year-over-year increase, owing to the revenue injection from the large project relating to smart energy and intelligent buildings. Furthermore, although our cloud service revenue and IDC revenue decreased on a year base, due to one-time projects recognized last year that created a high revenue base. We are glad to see our recurring revenue of the two, over these two service delivered a stable growth.
On a year-over-year basis, recurring revenue from the international public cloud service rises greatly, and it grows by 20%, where recurring revenue of IDC grows 15% in the fourth quarter. In terms of applications, in the fourth quarter, we achieved a milestone by establishing Taiwan's most extensive 5G network slicing and verification field in Kaohsiung to support innovation development and successfully deliver the multiple innovative and cybersecurity and increased and divided storage and cloud solution, and adapting to the diversity needs of our clients. Slide 12 illustrates our international business performance. In the fourth quarter, total revenue and income before tax of IBG increased about 33% and 39% year-over-year, respectively.
The impressive growth was mainly fueled by the growing demand for emerging business, including IBG and cloud service. From our global clients, during the quarter, we see the ICT project completion and continue to find growing the opportunities. For global expansion, we are glad to announce that we signed an MOU with NTT Corporation in the fourth quarter, aiming to accelerate the realization of the innovative optical and wireless network service. We are optimistic to see the growth momentum roll over into 2024. In addition, as the SJC2 international undersea cable is expected to launch service this year, we looking forward to capitalizing our undersea cable asset, amid growing opportunity from the international OTT service providers. Now, I would like to turn the call to Vincent.
Thank you, President Ivan. Good afternoon, everyone. Now, I will present a financial summary of our fourth quarter results in 2023, and financial guidance for 2024. Let's begin with slide 14, income statement highlights. During the fourth quarter in 2023, total revenue increased by 4% compared to the same quarter last year, primarily attributed by growing ICT business revenue, sales revenue, mobile service revenue, and broadband service revenue. Income from operations and net income decreased by 4.6% and 1.7% year-on-year respectively, mainly due to the impairment loss of telecom equipment caused by the phase-out of 3G network, and the impairment loss of investment property. Excluding the impact of aforementioned one-time impairment losses, income from operations and net income increased by 2.2% and 7.2% year-on-year, respectively.
For the full year results, total revenue increased by 3% year-over-year as a result of solid growth of our mobile, ICT, and broadband services. Income from operations decreased by 1% due to the one-time impairment losses mentioned above. Excluding the one-time effect, income from operations grew by 0.6%. Net income increased by 1.2% on-year. EPS rose from TWD 4.7 to TWD 4.76. It's noteworthy that both of our revenue and EPS reached a 6-year high, and have maintained growth momentum for 4 consecutive years. Now, move on to page 15 for balance sheet highlights. As of December 31, 2023, total assets increased by 0.2% on year, mainly due to the increase in current assets, long-term investments, and other assets, which offset the decrease in intangible assets.
Total liabilities decreased mildly year-over-year, primarily attributable to the decrease in accounts payable. Additionally, debt ratio decreased slightly and net debt over EBITDA remained zero. Altogether, we continue to maintain a strong balance sheet with great financial flexibility to fully support our operations and business expansions, and swiftly adapt to fast-changing macroeconomic climate. Page 16 provides the summary of our cash flows. For 2023, we continued to generate stable and solid cash flows from operations, while our operating cash flows were down by 1.8% relative to the prior year. The decrease was mainly due to income tax payments and settlement of accounts payable. Capital expenditures decreased by 2.5% year-over-year, of which mobile-related CapEx was reduced by 19.3%, whereas non-mobile CapEx increased by 10.6%. The latter was largely attributable to greater IDC investment.
On top of that, free cash flows decreased by 1.4% year-on-year. Collectively, our robust balance sheet, together with solid operating cash flows, enable us to seize business opportunities amidst trends of digital and sustainability transformations, and further create sustainable and long-term value for our shareholders. On slide 17, the table presents financial results against management guidance. In the fourth quarter of 2023, total revenue was about on par with our revenue projection. Profit-related metrics fell short of our expectations, largely attributed to the higher maintenance and material expenses, impairment losses on the phase-out of 3G network, and investment property. For the full year results, our revenue and profit-related measures mostly exceeded the high-end target of our full year guidance, driven by our steady growing core business and improved margin of ICT business. That concludes the overview of our 2023 financial results.
Moving on to slide 18, please see our guidance for 2024. Looking ahead, total revenue for 2024 compared to 2023, is expected to increase by between 2.4% and 3.1%, primarily driven by growth momentum in our core business. Well-received 5G services and speed upgrade promotion packages of fixed broadband are expected to continuously lift subscriber numbers and ARPU. ICT business, business also contributes as we expect growing emerging services to cater to customers' demands for digital transformation. Operating costs and expenses are expected to rise between 4% and 4.6% as a result of the investment in talents and infrastructure that supports future business development in core and emerging businesses. Given these projections, we expect our EPS to be in the range between NT$4.6 and NT$4.8.
As for capital spending, we budget about TWD 34 billion for 2024, as our 5G network is close to its full deployment, and its number one quality has been consistently endorsed by Opensignal and Speedtest for consecutive years. Our mobile-related CapEx is expected to decrease by 14% on year, which continue its downtrend since 2021 for 3 consecutive years. Non-mobile related CapEx, which consists of investment in fixed line network, IDC, and submarine cables, is expected to increase by 24.7% on year to support business expansion in emerging markets, in emerging business. Now, I would like to turn the call over to Chairman Harrison for awards and recognitions.
Thank you, Vincent. On slide 19 is our awards and ESG achievement highlights in the first quarter. In 2023, Chunghwa Telecom was recognized by the Dow Jones Sustainability World Index as number one of the world-class telecommunication sustainability leaders, as well as the Emerging Market Index, reflecting recognition from investors for our ESG practices. We also received a double-A ESG rating from MSCI. In addition, we were reaffirmed the highest double-A credit rating by S&P Global Ratings, continuing to our exclusive leading position among global telcos. Besides, to enhance interest alignment between top management team and the shareholders, we are the only telecom operator in Taiwan to follow the international best practice of implementing the incentive compensation clawback policy.
In addition, as we implemented an internal carbon pricing mechanism of TWD 1,600 per ton in 2023, we are delighted to report that internal carbon fee collected for 2023 was approximately TWD 1 billion, all used to encourage carbon reduction initiatives and technologies. In the first quarter, we also completed carbon credit procurement to further utilize the product carbon neutralization. Meanwhile, we initiated the first environmental footprint census of network equipment in Taiwan to facilitate a low carbon supply chain. This concludes our prepared remarks. Thank you for your attention. At this time, I would like to open our conference call for questions.
Thank you, Chairman Kuo. And 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, and when you are speaking, please be louder or closer to the microphone. If you find that your question has been answered before it is your turn to speak, please press star two to cancel the question. And you are also welcome to send questions via chat box on the webcast page. We will begin with the questions from telephone one and then move to the queries from the webpage. If you would like to ask the question, please press star one on your telephone keypad. Thank you. And our first question is coming from Neale Anderson of HSBC.
Go ahead, please.
Good afternoon. I have two questions, please. The first one is on revenue, and specifically on the Enterprise Business Group and the emerging enterprise application revenue. So that fell last year, I think because you had a high base of one-time revenue in, in 2022. Do you face the same situation for this year, or do you think that can return to growth, with a, you know, larger amount of recurring revenue without the one-time factors? So that's the first question. And the second one is on the guidance for the, the cost increase and the investment in, growth business. Are you able to give any more color on...
You know, I assume most of that would be going to the enterprise business group, but I also wonder how much is going to the international business group, given that you're opening up in Germany and I think other markets as well. So could you give any additional comments on that? Thank you.
... Okay, so thanks, Neil, for your questions. For the first question about the enterprise business, the revenue in the enterprise business segment, right? In 2022, we have a high base because we have several big projects. For the 2024, whether we will face such situation again. We think this situation will moderate. We still for the ICT in the enterprise business group, we expect it's gonna grow in a quite a reasonable rate. This is for the answer for your questions. The second one is the guidance for the cost increases, right?
So what we will say is, as I just mentioned in the PowerPoint, for the 2024, we will keep investing in talents and infrastructures, and also we will make investment in contents, because that will attract more subscribers, and that will help our to develop our own platforms and attract more customers and retain more customers. So this is the area where we will put in our resources. So the cost in relation to contents will also go up, and some of the costs will go up is related to revenue. Yeah, for example, like sales revenue, such that our cost of goods sold will also go up.
For the international business, actually, we will expect the international business segment will also go at very well, because we have the footprint in Europe, and we expect there will be more demand from our customers from overseas markets. Thank you.
Understood. Thank you.
Thank you, Neale. Next question is from Sarah Wang, UBS. Go ahead, please.
Thank you. I have two questions. First is on EBG revenue. So I think management just mentioned that the ICT revenue in fourth quarter increased as well as the margin. So just wondering why the income before tax, including the 3G impairment, still declined by mid single digit. And then second question is on the CapEx guidance for 2024. So I noticed that non-mobile CapEx is guided to increase quite meaningfully. So could you elaborate more on where are the like key investment area? Thank you.
Okay. So thanks, Sarah. For the EBITDA, right? So, in fact, for the ICT business, for the revenue and also for the margin actually is improving. But why the overall, the segment, the profit declines? One, as we just mentioned, the 3G, the impairment and also, the voice, the long distance call. Yeah, that also matters. And also there's, we charge internally, we have the internal carbon fees that also affect the bottom line in the enterprise business segment. So that's for your question one. So for your second question, for the CapEx guidance, right? For 2024. So basically, for the non-mobile CapEx, because it increased a lot, that's mainly attributed to IDC.
Because we have several construction ongoing, so that actually accounts for a big chunk of the investments. And also, as I just mentioned, the submarine cables and also for the fixed line network, that's also the regular items we have for the non-mobile CapEx. Thank you.
Got it. Just a quick follow-up on the IDC revenue. So in fourth quarter, the total IDC revenue declined, although the recurring IDC revenue increased. So just wondering, could you give an example of, like, what, what's the non-recurring IDC revenue? Thank you.
Yeah. For the long, for the one time, because some are the set up, set up the revenue for our customers. For example, for some switch office, the cloud switch office. So that, that's one of the examples.
Got it. So theoretically, for the IDC CapEx, that will bring recurring revenue, right?
Yes. Yeah.
Okay. Got it. Thank you.
Okay, next question comes from our internet. Is from Rob Luo. Could you please elaborate more on the business plan for the German office? Does the company plan to team up with European telecom companies for business expansion, or the company plan to expand the exposure to European ICT services, et cetera? Thanks.
... Thank you for your question. For 2024, we will continue to expand international outreach by mainly following Taiwanese clients' global footprint, footprint, and replicate our successful use cases in 5G private networks and smart cities to overseas market. In addition, Europe will be a new focus in 2024, as we have seen growing ICT demands from clients' global expansion in Europe. Therefore, we plan to set up a subsidiary in Frankfurt to provide business support, and we don't rule out the possibility to increase offices in different locations in Europe. Thank you.
Now, if you would like to ask a question, please press star one on your telephone keypad. Thank you. And you can also send questions via chat box on the webcast page. Thank you. And on the telephone, we have another question, which is from Rajesh Panjwani, JP Morgan. Go ahead, please.
Thank you very much. A couple of questions. First, on, you mentioned that the increase in the non-mobile CapEx in 2024 is mainly due to IDC CapEx. Can you just give us some idea about what proportion of the total CapEx is going in IDC in 2024 versus 2023? Second, do you expect the non-mobile CapEx to remain at an elevated level after 2024, or do you expect it to decline after that? Lastly, can you give us some more idea about your international business expansion? What exactly are the kind of projects you are targeting in international markets? Thanks.
Okay, so for the first question, for the non-mobile, right? So actually, the IDC investment increased by about 10% and more, so that's the increase in the non-mobile CapEx. And for the international projection and targets, so actually, we don't disclose figures, but we do have some orders in hand. That's why we deploy our staff and resources overseas. Thank you.
Hi, just to follow up on this. So I'm not asking for numbers. I'm like, what are the kind of projects you are likely to do in the international markets going forward? Can you give us some idea of that? And also, you said the IDC investment is increased by 10%, but your non-mobile CapEx is going up by 25%, which means that investment in non-IDC areas is probably even higher. So can you give us some breakup of that, and also whether the CapEx is likely to remain at an elevated level beyond 2024 also?
Yeah. For the CapEx, right? So actually, the undersea cable also increased a lot, so these are the two big ones. For the regular, like a fixed price, actually, it just increased at a steady rate. Okay. So for the international projects, right? So basically, we help our customers to deploy their in not only the city, but also ICT business in Europe and in U.S. and Japan, yeah, in these overseas areas. So currently, we cater to many Taiwanese clients and, but also we are expecting there will be more foreign customers, clients, yeah, to use our ICT services. So these are the main areas for the IBG. Thank you.
Got it. Thanks. Can you also comment on whether the CapEx is likely to remain at elevated level beyond 2024? Or once your subsea cables is commissioned, the CapEx will fall in 2025.
Because for 2025 and outwards, we haven't finalized the numbers, so we cannot give any indication or any prediction for the moment. Thank you.
Okay. Thank you.
Thank you. We are now in question and answer session. If you would like to ask the question, you can either press star one on your telephone keypad or submit your question through the webcast page. Thank you.
Okay, now we have another question from our chat box. Could you please give us the outlook on the ICT business outlook for 2024?
We will continually,
We will continue and cultivate our three major billion-dollar services: cloud, IDC, cybersecurity, and IoT services in emerging sectors. We also work on 5G applications and AI solutions to capture the increasing demand. Looking forward to 2024, we maintain a cautiously optimistic outlook for our ICT business, and we are positive about achieving our full-year guidance, as we continue to see healthy order intake and project completion. We will continue to leverage our ICT capabilities to further enhance our ICT margin. Given the order intake in our pipeline, we expect the ICT revenue to deliver positive year-on-year growth in 2024. Thanks for your question.
As a reminder, please press star one on your keypad if you would like to ask the question. You can also send your questions via the chat box on the webcast page. Thank you. We're now in question and answer session. If you would like to ask the question, please press star one on your keypad, or you can send your question via the chat box on the webpage. Thank you. If there are no further questions at this point, I will turn it back over to Chairman Kuo. Chairman Kuo, please proceed.
Thank you for your participation. Happy New Year! Goodbye.
Thank you, Chairman Kuo. Ladies and gentlemen, we thank you for your participation in Chunghwa Telecom conference. There will be a webcast replay within an hour. Please visit www.cht.com.tw/ir under the IR calendar section. You may now disconnect. Thank you and goodbye.