Good morning. Good afternoon, ladies and gentlemen. Welcome to Taiwan Mobile Conference Call. Our chairperson today is Mr. Jamie Lin. Mr. Lin, please begin your conference, and I'll be standing by for the Q&A. Thank you.
Thank you, operator. Good afternoon, everyone. Welcome to Taiwan Mobile Second Quarter 2022 Earnings Conference Call. Before I start our presentation, let's go over our disclaimer, as always. The information contained in this presentation, including all forward-looking information, is subject to change without notice, whether as a result of new information, future events, or otherwise, and Taiwan Mobile Company Limited, or 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. Now, that's out of the way. Let me start with business overview.
Please turn to page four for highlights of the quarter. In the second quarter, we continue to see solid momentum across three main growth engines, namely 5G, e-commerce, and home broadband. Our mobile service revenue grew year-over-year for the fifth consecutive quarter, with the growth accelerating to over 3%. This via 5G upselling, as well as the continued improvement. E-commerce revenue rose by 14% year-over-year despite a high base, while broadband revenue year-over-year growth reached 11%, thanks to continued demand for faster home broadband. As a result, consolidated revenue increased by 8% year-over-year during the quarter. Looking at the bottom line, both consolidated and telecom EBITDA grew year-over-year for five consecutive quarters.
For the first half of 2022, consolidated EBITDA growth was 5% YoY, comparing to our full year guidance of 1%-3%. Excluding one-off factors, our first half net income would have increased by 9% YoY, aided by deceleration of D&A. Next, let's turn to page five for a closer look at our mobile business. At the second anniversary of 5G service launch, our 5G postpaid penetration is now well above 20%, producing a consistent 25% monthly fee uplift from the renewals during the quarter. Our unique bundles, momobile or MobiDuo in Mandarin, Double Play or Hao Shu Cheng Shuang, and Disney+ continue to be instrumental in delivering ARPU improvements. As more and more users sign up to momobile, their contribution to Momo's e-commerce revenue grows in parallel.
I'm happy to report that this number reached 4.9% in June, up from about 2% only six months ago. On top of that, our data has shown that in addition to offering appealing bundles to Taiwan Mobile customers, momobile also helps Momo broaden its customer base, especially in the younger male demographic, and enhances the stickiness and wallet share of Momo's existing customers. As for Double Play, overall subscribers who were on 999 or higher rate plans further increased to nearly 60% during the quarter, boding well for ARPU. Disney+ also helped increase customer engagement and stickiness. With our unique and appealing portfolio of rate plans and service available to our customers, and as a result of our investments in 48-month contracts during 5G launch, postpaid churn further declined to 0.8% in the second quarter.
On the enterprise side, data and access, cloud and IoT services all delivered solid year-over-year growth in the quarter. Now, before we move on to the next growth engine, I would like to take this opportunity to address a couple of common questions, common investor questions regarding our 5G spectrum and potential synergies from pending merger. Please turn to page six. With regards to our proposed merger with T Star, at the beginning of the year, we have discussed with you its potential synergies, namely 49% from network consolidation, 31% via customer contribution, and 20% through business streamlining. Altogether, this amounts to an average of TWD 6 billion EBITDA increments per annum for the first three years.
Though the deal is currently still being reviewed by the regulators, I would like to take this chance to highlight the benefits of this merger from a different angle, that is spectrum. You see, the moment we acquire the additional 40 MHz of 3.5 GHz spectrum through the merger, with some very simple software settings adjustment, almost akin to flipping a switch. Our combined 11,000+ 3.5 GHz base stations will immediately be able to beam the 60 + 40 MHz of high-speed 3.5 GHz spectrum, hence providing a full capacity of 100 MHz, which is the industry's largest. This is because both companies use the same generation of equipment from the same vendor.
Let me emphasize, no additional CapEx is required, which is a huge advantage over our peer who is targeting to deploy additional 2600 MHz spectrum for 5G use, which usually costs over TWD 10 billion should they decide to fully deploy. In addition, we also recommend investors look at the sub -6 GHz spectrum as a whole. Eventually, most of this 4G spectrum will be refarmed for 5G use. If we compare the total sub -6 GHz spectrum available for 5G use between us and the other merger case, the amounts are basically the same. Even though there are currently limited bandwidth hungry applications in the field, we believe providing capacity and lower latency are more important than having the fastest speed when it comes to optimal user experiences.
In other words, allowing more users to have faster response time and enough bandwidth to use their favorite streaming or gaming apps is more important than allowing one user to see a high speed test result, which is more or less a vanity metric. Recent third-party testing results can also attest to the efficacy of our strategy. Though we did not clinch top speed due to a more rational 3.5 GHz investment, we topped the charts of video and gaming experiences. That said, new radio carrier aggregation technology or NRCA is on the cusp of going mainstream, with iPhone 13 being one of the first major phones to support it. NRCA will allow devices to take advantage of the full 60 + 40 MHz spectrum we all hold, hence producing top speeds comparable to market leaders.
Therefore, non-continuous 3.5 GHz spectrum will be a relatively small issue. This merger will level the playing field for us while giving us some advantage in key niches. Now let's go to the next page for updates on our e-commerce business. As you may recall, Momo had an extraordinary second quarter last year as Taiwan entered level three alert in May. Despite this high base, Momo managed to grow our e-commerce revenue by 14% YoY in the quarter. While this may seem like a deceleration from the previous period, it is actually a stark outperformance compared to our peers. It is also worth mentioning that during the quarter, momobile customers e-commerce spending on Momo grew by TWD 850 million versus a year ago.
To put that in perspective, if you divide that by the total TWD 2.99 billion e-commerce revenue Momo added during the same period, it would work out to around 28%. The extra stickiness momobile creates partly explains Momo's resilience versus the overall market. On the other hand, Momo's EBITDA fell YoY during the period, again, due to a high base and as marketing costs and expenses normalized compared to a year ago. Looking beyond the near term headwinds, we are carrying on with Momo's logistics investments to strengthen our leadership position and to build a solid foundation for longer term growth. Two more satellite warehouses were added in the quarter, while our total warehouse space reached 408,000 square meters, a 25% YoY increase.
About 20% of our deliveries now are done by our first party fleet. As we mentioned before, Momo's southern and central distribution centers are on track to go live in 2023 and 2025 respectively. Through this investment, Momo will further expand the coverage area of our rapid delivery services and be better poised for future growth. Now let's take a look at our broadband business on the next page. In the second quarter, we continued to outperform our MSO peers in the YoY trends of basic TV subscriptions and broadband service penetration. Steady demand for faster home broadband, as well as the success of our Double Play bundles, led to sequential increases in broadband subs and RPO.
The ratio of broadband subscribers, including those of Double Play packages, who signed up for speeds of 500 Mbps or higher, rose by 43% YoY. As a result, broadband revenue grew by 11% YoY, helping the overall CATV business EBITDA grow YoY in the quarter. Now let me turn the presentation over to Rosie for a financial overview.
Hi. Good afternoon. Let's start with performance by business. In the second quarter of 2022, consolidated revenue rose by 8% year-on-year, as our three growth engines all deliver year-on-year growth. Mobile service revenue grew year-on-year for five quarters in a row, thanks to ARPU improvement amid rising 5G adoption and rational 4G pricing. In terms of profitability, telecom was the main driver, with its EBITDA rising year-on-year for five consecutive quarters, underpinned by service revenue increase, 5G government subsidies, and savings in channel commissions. Coupled with stabilizing rise in telecom D&A, telecom EBIT grew quarter-on-quarter and year-on-year for two quarters in a row. Momo's EBITDA fell year-on-year due to a high base as the marketing costs and expenses normalized compared to a year ago. Steady broadband revenue momentum helped cable TV EBITDA to post a 2% year-on-year uptick in the quarter.
Now let's go to results summary. In the first half of 2022, improving telecom performance and decent e-commerce momentum contributed to a 10% growth in consolidated revenue. Our three main businesses all posted year-on-year EBITDA growth in the first half of this year. Coupled with diminishing D&A increases, consolidated operating income growth reached 8% year-on-year. The gap between the year-on-year increases of operating income and net income stemmed from a high base in non-operating income and tax benefits. Excluding one-off factors, first half 2022 net income would have increased by about 9% year-on-year, bolstered by telecom growth. Let's move on to balance sheet analysis.
On the asset side, receivables increased quarter-on-quarter and year-on-year in the second quarter owing to improving mobile business, Momo's revenue expansion and exercising our shareholders' appraisal rights to request APT to buy back its shares in the wake of its announcement of the merger with Far EasTone. Long-term investment climbed year-on-year due to our ventures into e-commerce, marketplace, media, fintech, and cloud services. Although 5G investment had already peaked, PP&E grew year-on-year as Momo acquired land for its central distribution center in the quarter. As for liabilities, other current liabilities went up quarter-on-quarter following AGM's approval of dividend payments. While other non-current liabilities increased year-on-year as we received 5G government subsidies in the second half of 2021. TWD 38.6 billion of excess reserves remain available for future dividend top-ups.
Our net debt to EBITDA declined to 1.5 x in the second quarter, benefiting from decent free cash flow generation, which is a record low since the fourth quarter of 2019. Lastly, let's look at cash flow analysis on the next slide. While our cash earnings increased quarter-on-quarter and year-on-year, operating cash flow in the second quarter faced a high base as Momo's inventory days significantly shortened amid the level three alert a year ago. Investing cash outflows rose year-on-year, driven by higher CapEx for Momo's distribution centers and increase in investment. On the financing front, we managed to reduce our reliance on short-term borrowing. With 5G investment cycle behind us, in the first half of this year, telecom CapEx declined 39% year-on-year and resulted in a 5% year-on-year decrease in total cash CapEx.
Free cash flow calculated on a pre IFRS 16 basis was TWD 6.22 billion in the first half, translating into an annualized free cash flow yield of 4.1%. Let me turn the presentation back to Jamie for event updates and key message.
Thank you, Rosie. On page 15, we summarized awards and recognitions we received during the quarter for your reference. On behalf of the management team, I especially like to take this opportunity to thank the analyst community for your support during this year's institutional investor awards process. Your recognition has given us a lot of positive energy to keep at it and do even better going forward. Thank you. We really appreciate it. Finally, please turn to the next page. As we wrap up our presentation, here's the key message we would like for you to take away with. Key message. As our growth engines including 5G, Momo and momobile, as well as home broadband and Double Play continue to generate thrust, we have delivered steady growth and healthy returns to our shareholders.
Post T Star merger, we expect to leverage our advantages in spectrum holdings, equipment synergy, as well as system design and optimization to deliver first-rate, if not superior, performance in number one, overall sub-6G, 4G, 5G experience. Number two, 5G massive MIMO deployment. Number three, 5G peak speed. Before we go into Q&A, there's one more thing today. As many of you should have read in the news, Rosie is retiring at the end of this month. After a long stellar career as our CFO and countless and enormous contributions to our organization, I don't even know where to begin. I truly appreciate having her as my partner over the past 3.5 years during our turnaround.
Since this will be the last time she joins us here, if you want to take the chance and bid her farewell, please feel free to do so. All right. With that, let me open the floor up for questions.
Thank you. Ladies and gentlemen, we are now opening for questions. If you would like to register for questions, please press star one. Thank you. First question we have Neale Anderson with HSBC. Thank you.
Thank you. Good afternoon. First of all, Rosie, wish you all the very best for a great retirement. Thank you for your help over the years. I have two que-
Thank you for your support, Neale.
Thank you. I have two questions, please. The first one relates to the 5G migration to 25%. Can you give us your views on how sustainable you think that's going to be in the second half of the year, perhaps going into next year? Do you think you can maintain it at those levels? The second one relates to the 5G government subsidies. Could you just remind us the status of those? How long they will be in place for, and what sort of impact they've been having? Thank you.
Let me answer the second question first on 5G government subsidies. We have received TWD 2 billion last year and received TWD 0.7 billion this year. From the book, you will only be seeing part of it because we will need to amortize these subsidies in line with its depreciation or amortization schedules. Okay? The depreciation schedules, put it this way. If we buy some equipment and depreciate the equipment based on a seven-year period or five-year period, then the government subsidies will be amortized in the same pattern.
Thank you.
On the 5G migration.
I'll take that. In terms of government subsidy, we know that phase one was approved by the Legislative Yuan, but phase two, based on our knowledge, is still yet to be green-lighted by LY. That'll be up to the sort of government to decide. In terms of 5G migration, 25% lift, it's been pretty consistent over the past five quarters. We don't expect it to be dramatically shifting in the foreseeable future.
Got it. Thank you very much.
Thank you, Neale.
Thank you. Once again, ladies and gentlemen, please press star one for questions. Thank you. Once again, please press star one for questions. Thank you. Ladies and gentlemen, please press star one for questions. Thank you. Next question we have Alvin with J.P. Morgan. Thank you.
Hi. Good afternoon, management. Thanks a lot for the opportunity. We understand that in the slide, that after the merger with T Star, definitely Taiwan Mobile will have more 5G spectrum on the 3.5 GHz. But I just have a concern that, because Taiwan Mobile and T Star spectrum blocks are not adjacent to each other, so will this be a concern when driving the spectrum synergy about the merger that you look forward or forecast in the future? Thank you.
Thank you, Alvin. Like I said during the presentation, starting from iPhone 13, more and more major smartphones will support new radio carrier aggregation, so NRCA, meaning that they can use the 60 + 40 MHz of 3.5 GHz spectrum simultaneous, meaning that the adjacency of the spectrum will be no issue for them. As time goes by, more and more phones will be supporting NRCA. We do foresee it being a minor problem. It's not no problem at all. Hope that answers your question.
Yes. Okay, thank you.
Thank you.
Thank you. Once again, please press star one for questions. Thank you. Ladies and gentlemen, please press star one for questions. Thank you. Excuse me, Mr. Lin, there seems no further questions at this point in time.
All right. If not, thank you, operator. Thank you, everyone. We'll see you at our next installment.
Thank you. Bye.
Bye.
Thank you for joining the conference. You may now disconnect. Goodbye.