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 just stand by for the question and answer session. Thank you.
Thank you, operator. Good afternoon, everyone. Welcome to Taiwan Mobile's Q1 2026 results conference call. Before I start our presentation, please refer to our safe harbor notice on this page. Now, let's start with our business overview. Please turn to page 4 for Q1 highlights. In Q1, our Telco+ Tech flywheel accelerated its strong momentum. All core growth engines, namely Telco+, and new Telco+ Tech, delivered robust YoY top-line growth. Consolidated EBITDA and EBIT rose by 8% and 15% YoY respectively, while EPS reached TWD 1.37, topping the industry. On a pro forma basis, excluding one-off items, net income would have grown by 17% YOY. This bottom line performance was underpinned by AI-driven operational efficiencies, optimized subsidies and commissions, growth in AICT projects, as well as robust performance in our BDO business.
Let's take a closer look at our core Telco business on the next page. Turning to our Telco core, that is our mobile and home businesses. Our Sustainable Growth Foundation strategy continues to yield exceptional results in this segment. This is highlighted by a record low post-pay churn rate of 0.15%, a 9 basis points improvement YoY. Alongside a 3% YoY increase in smartphone ARPU to TWD 687. In Q1, 5G penetration within our smartphone post-pay base came in at 44%, up 3 percentage points from a year ago. Migration from 4G to 5G remains a primary revenue driver. The monthly fee uplift upon conversion, we're seeing a robust 50%, much higher than that of our peers as we focus on higher value unique bundles. At the same time, blended contract renewal recorded a 6% monthly fee increase.
These factors propel 5G revenue growth to 9% YoY, which now accounts for 68% of our total mobile service revenues. Moving to our home broadband segment, we reported a solid 5% YoY revenue growth in Q1. Notably, the number of broadband subscribers on speeds of 300 Mbs or higher grew by 25% YoY. During the quarter, we further expanded our broadband service coverage to area to 94% for double play bundles by partnering with more MSOs, strengthening our trajectory for continued market share gains. Driven by strength in broadband and growth in channel distribution business, overall home business revenues achieved double-digit YoY growth this quarter. Next, let's turn to page 6 for our growth engine number 2. Leveraging our Gift-as-a-Service model to provide integrated AICT, AIDC, and cybersecurity solutions, the Telco+ segment remains the strategic cornerstone of our enterprise business.
Growth in this segment has been impressive, with revenue surging 26% YoY in Q1. This performance was bolstered by government AICT projects and the strong momentum of our AI data center business since its launch in Q3 2025. As enterprises accelerate their AI-led transformations, Taiwan Mobile is uniquely positioned as the partner of choice, providing a powerful tailwind for our long-term telecom service revenue growth. Next, let's move on to our new Telco+ tech businesses. Our third engine, new Telco+ tech businesses, delivered a robust 32% revenue surge in Q1, fueled by AI-driven rapid scaling of our digital ventures. In our Direct Carrier Billing business, or [Foreign language] in Mandarin, we achieved solid YoY growth by expanding our service portfolio to drive recurring usage.
By deepening integration across a broader range of digital platforms and utilizing AI to better target users, we are seeing accelerated adoption of carrier-based payments across our subscriber base. Our e-commerce service for brands, or [Foreign language] in Mandarin, recorded exponential growth, with revenue more than doubling YoY. This was driven by the addition of new channels and AI-aided strong organic performance from brands. We will continue to leverage group-wide synergies and data-driven insights to capture market share and optimize marketing efficiency.
Let's take a look at momo. Despite a still challenging operating environment, momo returned to YoY revenue growth in Q1, marking a pivotal turnaround after four quarters of decline. Its e-commerce driven GMV rose by 5% YoY, while the take rate remained stable. The recovery- With that overview of our strategic progresses, I'll now turn the floor over to our CFO, George Chang, for a detailed look at the financials.
Good afternoon. Let's begin with our performance by business segment. In Q1 2026, our telecom business delivered a solid 6% year-over-year revenue growth, accounting for 46% of our consolidated revenue. On top of a steady growth in our core mobile business, significant contributions from SI projects and the new AI DC lifted our Telco+ revenue by 26% YoY. Telecom EBITDA rose by 9% YoY, representing 83% of our consolidated EBITDA. This expansion was fueled by momentum across all three engines, growth engines, successful upselling of mobile plans, and disciplined management of subsidy and marketing expenditures. Moving to momo, the business not only returned to revenue growth but also saw its EBITDA margin contraction moderate in Q1. This improvement reflects enhanced operational efficiency and a more normalized cost structure follows the initial investment phase of its new ventures.
Finally, cable TV revenue achieved double-digit YoY growth, boosted by the expansion of our content agency business. Cable TV EBITDA edged higher year-over-year as a steady decline in Legacy pay TV was more than offset by the robust growth in our broadband services. Let's go to the result summary. While consolidated revenue rose by 3% YoY, our EBITDA and operating income outperformed, rising by 8% and 15% respectively. This margin expansion was mainly driven by increased AI project contributions, counting investment returns, optimized subsidies and commissions, as well as operating efficiencies. On the non-operating front, expenses increased YoY, mainly due to the mark-to-market losses on certain financial assets. This was largely mitigated by higher equity income from our strategic investments.
Finally, looking at the bottom line, excluding the one-off tax benefit recognized in 2025, normalized net income would have increased by 17% YoY in Q1, reflecting the underlying strength of our core operations. Let's move on to balance sheet. We continue to see improvements in our asset efficiency. Within current assets, inventory levels declined due to better turnover management. Meanwhile, accounts receivable and contract assets from 8% YoY, along with the revenue expansion in our mobile and fixed line businesses. In terms of long-term investments, the YoY rise was largely attributable to TWD 3 billion strategic investment in the media sector during the Q1 . We also saw an increase in write off used assets, which reflects the scaling of our AI Data Center operations.
On the liability side, we have successfully reduced our gross debt by TWD 2.6 billion sequentially and TWD 6.5 billion year-over-year, reaching a new post-merger low. This deleveraging is a direct result of a strong cash flow generation unlocked by Taiwan Star merger. Finally, with the ongoing debt reduction and EBITDA growth, our net debt to EBITDA ratio improved to 1.58x , while our ROE climbed to 17%, reflecting focus on sustained capital efficiency. Lastly, let's look at cash flow on the next slide. Our Q1 operating cash flow demonstrate healthy growth QoQ and YoY. This was driven by strengthened earnings and favorable working capital movements, primarily due to the increased advance deposits from the new contracts and higher collections from our project-based services. Investing cash outflow rose QoQ and YoY, mainly reflecting the strategic media investment mentioned earlier.
This also led to lower debt repayments within our financing cash flows for the quarter. Our Q1 2026 pre-IFRS 16 free cash flow reached TWD 7.04 billion, underpinned by disciplined CapEx and robust operating inflows. On an annualized basis, this equates to a strong free cash flow yield of 8.5%, reinforcing our ability to sustain healthy shareholder returns. Let me return the presentation back to Jamie for event updates and key message.
Thank you, George. Beyond our financial performance, Taiwan Mobile continues to earn global and local recognition for our commitment to excellence in ESG. We have been selected for the S&P Global Sustainability Yearbook for the ninth consecutive year, ranking among the global top 5% for the seventh time, solidifying our position as a sustainability leader. On the technology front, our AI-driven transformation earned us the Diamond Award in the ICT sector for Business Weekly's AI Innovation Top 100. We also enhanced our enterprise offerings by attaining the Google Verified Peering Provider or VPP Silver Certification, ensuring high-performance connectivity for our clients. Furthermore, we received a SGS Qualicert international service certification for the 14th straight year, reflecting our consistent service quality.
Last year, our long-term support for the community was recognized as a Sports Activist Award for the ninth year in a row, earning us Gold Class and Long-Term Sponsorship Honors. These accolades underscore our commitment to sustainable growth and social impact. On the next page to wrap up our presentation, here's the key message we would like for all of you to take away with. Key message. Taiwan Mobile is leading the telecom industry with a 4.5% cash dividend yield and a sector high Q1 EPS. Our performance is anchored by stable Telco core foundation, while our Telco+ and new Telco+ Tech segments are delivering double-digit tech structural growth. Together, these engines are upgrading our operating our operational scale and value structure, accelerating our evolution into an AI-driven powerhouse.
With that, let's open the floor for questions. If you are participating online, you are more than welcome to send your questions via the chat box. We will begin by addressing the telephone line inquiries before moving on to the web. Operator, please go ahead.
Thank you, Mr. Lin. Ladies and gentlemen, we will now open for questions. If you'd like to register for a question, please press star one on your telephone keypad. Thank you. Once again, ladies and gentlemen, that is star one for questions.
Operator, if there's no questions from the phone line right now, we will address an online question first.
Yes, please, Mr. Lin.
All right, this question is from Xu . I'm sorry if it should be Xu. All right. From JP Morgan. Question goes, could you explain the difference between EBIT and EBITDA growth? Why is EBIT growing faster than EBITDA also? Xu, thank you for the question. The short answer is we were able to deliver sort of much more efficiency in terms of our depreciation, meaning that toward the sort of bottom half of 5G, some of the investments that we made at the beginning is starting to come to their at the end of their life cycles in terms of depreciation. Going forward, we're expecting that trend to continue. Hope that answers your question.
Thank you.
Operator, we can check if there's more questions from the phone line.
Certainly. Once again, ladies and gentlemen, if you'd like to register for question, please press star one on your telephone keypad. Thank you. Our first question comes from Charlie Bai with HSBC. Please go ahead. Thank you.
Hello, management. Thank you for the opportunity to ask the question. My first question is about your mobile business. I noticed a decent ARPU growth year-on-year in the Q1 , also congratulations on reaching a record low postpaid churn rate. Might know what are drivers behind this kind of ARPU growth and very manageable churn rates?
Thank you, Charlie. Do you want us to answer your questions one by one?
Yeah, maybe one by one. Thank you.
Sounds good. Like we said, during our presentation, we have been focusing on our unique bundles when upgrading users to 5G, and we have been cherishing every opportunity when a customer walks into the store to upsell them to the 5G plan that is both suitable to their needs and also can provide us with the most ARPU lift. That is the reason why we are able to attain on average a 50% ARPU lift when a customer upgrades from 4G to 5G, which is industry high. Also, as we focus on unique bundles, it's very hard for customers to find those type of products from other telecom companies. That's why our churn rate has been on a very healthy trajectory. Hope that answers your question.
Thank you for the detailed answer. My next question is about momo. I noticed there seemed to be a turnaround in your momo business that you achieved year-on-year revenue growth in the first quarter. In term of EBITDA, it seems there is still a small decline year-on-year. When can we expect EBITDA turn turnaround in term of the momo business? What measure have you taken to improve EBITDA margin for momo? These are all my questions. Thank you.
Thank you, Charlie. In terms of Momo's future forward-looking statements because it's also a public company of itself, it's a bit tricky for us to provide guidance. As you can observe from the momentum, usually for a company to turn around, you'll see top line turnaround before bottom line turnaround. As momo continues to implement our mo+ store and also momo Ads strategies, one can only expect similar turnarounds to happen down the road.
Thank you. Thank you very much.
Thank you, Charlie.
Thank you. Once again, ladies and gentlemen, if you'd like to register for a question, please press star one on your telephone keypad. Thank you.
Operator, if there is no questions from phone line right now, we'll address 2 more questions from online.
yes. Mr. Lin , there are no further questions on telephone line. Thank you.
Okay. The next question from online chatbox would be from Rob Lo, MoneyDJ. Question goes: Hi, Jamie, Rob from MoneyDJ. Could you kindly shed some light on the progress of Taiwan Mobile's LEO satellite business plan? I understand that Taiwan Mobile has MOU with AST SpaceMobile. Any more colors on this cooperation? Thanks. All right. Rob, thank you for the question. I think right now, we have, yes, we have signed an MOU with AST. The next step would be to create an regulatory environment for these services to land in the domestic market legally. We're working very hard with regulators on that.
The next question will be from John Lin, TSIT. Question is, how do you think about the possibility to cooperate with satellite operators like Starlink/OneWeb? How long will we see the launch of this type of co-ops? All right. Similar question to Rob, his question. Right now, OneWeb is working through another carrier, but in terms of disaster recovery situations, all of the three telcos are working with OneWeb through that one local Telco that's working with them. Through that one local peer, we're all working with OneWeb. In terms of Starlink, again, it involves regulatory sort of change.
And I'm, as you can read from the news, more than a few peers are all talking to them at the same time. I think that's what we can say so far in terms of your question. Thank you, John. Or operator, we can check if there's more questions from the telephone line.
Certainly. Once again, ladies and gentlemen, if you'd like to register for question, please press star one on your telephone keypad. Thank you. Once again, ladies and gentlemen, that is star one for questions. Excuse me. Mr. Lin, there seems to be no further question at this point in time. Thank you.
All right. We're also not receiving more questions from online. If that's the case, I think we can conclude today's meeting. I wanna thank everybody for your participation, and we look forward to seeing you again at our next edition of the results conference call.
Thank you. Thank you, ladies and gentlemen, for your participation. This concludes our conference call today. Goodbye.