Welcome everyone to Far EasTone's 2024 second 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 the 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, IR Officer. Gary, please begin.
Good afternoon, everyone. Thank you to attend Far EasTone second quarter 2024 results conference call. Both President Chee and CFO Sharon join the call with us today. Before we start, please pay attention to our safe harbor statement in the first page of the deck. Let me pass to President Chee. Thank you.
Thank you, Gary. Good afternoon, everyone. So here I'm reporting to you, we have a very good second quarter. So all of our KPIs have exceeded our own guidance, so the board of target, board of directors target. And of course, it is, the merger synergy is certainly is working, and then we are seeing the results. And also organically, FET also did very well. So if we look at the revenue, it came to TWD 24.97 billion, almost TWD 25 billion. And the EBITDA is TWD 8.9 billion, and our net income TWD 3.1 billion, that, that is, a lot higher than our initial forecast. And then the EPS is 0.86. So the net income actually is, our, like, a 9-year record high for the same period.
So with that, and then our first half actually ended with TWD 50.7 billion revenue, against our BOD target that was like a TWD 49.96 billion. Also the EBITDA was TWD 17.83 billion, and the net income comes to TWD 6.03 billion. Our initial forecast was for TWD 5.18 billion for the first half, and so that is definitely something we have done better. This is partly due to some of the synergies that from the merger that we did not, you know, see the full extent when we did the forecast. So we are happily surprised.
Then also some of the organic growth, especially in the smart ICT areas, our margins have been expanding as we are very selective in terms of the project that we want to be engaged in. So that is showing the results as well. So as a result, the first half EPS, it comes to TWD 1.67 versus the TWD 1.44. I know a lot of you were kind of a little disappointed when we released the forecast. But you know, as it turned out, we did better than we initially forecast. So it came to TWD 1.67. Okay, and our full year guidance for the net income is TWD 3.11. So I think we are looking very good to hopefully beat that target. All right.
In some financial highlights, and then here we give some quarterly view and a trending chart. So, the revenue continues to grow, and it is now for the 15 consecutive quarters in a row. So we are seeing the revenue, the year-over-year growth. We certainly wouldn't take this for granted because just a couple years ago, or 2 years, 3 years ago, this trend was definitely a downtrend. So since, if I may remind everyone, since we deployed the 5G in 2020, and then starting in the first quarter of 2021, we start seeing this revenue rebound, right? So the trend is starting going up, and it has been like that very promising and encouraging. On the EBITDA side, that is also doing very well.
In fact, our second quarter EBITDA, that is TWD 8.94 billion. It is a historic record high for Far EasTone. Okay, and then the 13% year-over-year EBITDA growth is attributed not only to the merger synergy but also our better margins from our existing organic business growth. Okay? And then for the net income, the second quarter net income is TWD 3.11 billion. The EPS is 0.86. So this is a 118% achievement of our second quarter guidance. And, again, that was a nine-year record high for the same period, okay? And I believe our year-over-year growth rate is leading the industry at 12.3%. Okay. Now some financial metrics for your reference.
So our net debt has come down to TWD 45.23 billion, and at the end of the last year, it was TWD 55.88 billion. So we continue to pay down our debt, and then our cash flow also looks very healthy, and it is now at TWD 12.07 billion. Our cash-based CapEx is, you know, in line with our guidance for 2024, which is TWD 8.1 billion. And right now we have spent about TWD 3.4 billion. Okay. Now, in terms of our telecom core business, that includes not only the mobile, also the fixed service.
So we see that, when we first merged with APT, because of the dilution and because the user base is bigger, but APT customers rate plans are, you know, kind of lower than the average of Far EasTone. So of course, our pool at that time dropped. But then since then, we continued to improve that, as you can see from the chart. We have now come to 707, and we maintained the lead in the post-merger as well. Okay? And our mobile service revenue is year-over-year 18.3%, rightfully so, because of the merger. And also on the right-hand side, our 5G penetration for postpaid customers has already passed 40%, so it has come to 40.5%.
That is also number one in terms of penetration percentage. The fixed service revenue, we also see a pleasant growth. This is part of what I was saying, you know, for the synergy that we were expecting from the merger. The part on the fixed service was a little bit underestimated when we were doing the forecast for this year. So we definitely see this as expanded customer base for the fixed service, and that gives us some, you know, in our enterprise business, a bigger user base or a client base for them to work on the upsell or cross-sell. So this is definitely an area for us to, you know, continue to improve and do better. So we started with a 32% year-over-year growth. Okay.
Okay, for new economy, so we see a steady growth at 10% YOY, and also, as I mentioned, the margin also increased by 22%. And then we have this Microsoft Licensing Solution Provider business that we were able to get the license from Microsoft and, you know, last year, so it has been a year now. The business is on track, and we have seen some very good initial success. And then the revenue grew 155% YOY, and also the contract value is up 300% YOY. Okay? And our two subsidiaries under the enterprise, one is ISecurity, and that is for the security service, and the other is for cloud service. That's Nextlink.
So both of them are doing very well, and they both have a significant EBITDA contribution, and also the YOY growth. Okay? And our Nextlink is ready for listing, and then we have submitted application, and then we are expecting, hopefully, that it will be successfully listed by the end of the year. Okay. On the right-hand side, our, you know, some highlights for our new business. So, as you can see, if you look at the pie, enterprise accounts for 54% of the new economy. So because the smart ICT, quite a bit, we have quite a bit of success with the government contract, and government contract tend to be bigger.
So the contract value is high, and then so the revenue growth, you know, pace faster than the consumer business, because consumer business is more like a cumulative, incremental, and then not like the enterprise. It's more like a big project driven, and then so that could affect that. But then we are happy that both are growing anyway. Okay, so for the ICT, it's kind of the usual, like, the cloud business, the smart ICT are our concentration, so they continue to grow, and it with both revenue and also margin. And then also is the security service. And then on the right-hand side, our friDay digital video service, and for four years in a row, that it is named the top one in terms of the paid subscribers, numbers.
So, we are happy to see that, and then they also continue to grow in both their revenue and also the margin. Okay. And the handset insurance in that area, it is a steady growth. So for the revenue and for the margin, it is a YOY at double digits, like at 12%. Okay. All right. So some highlights for the enterprise business. So we have been focused on four areas for the new smart ICT. As we were saying, that we are, we wanted to converge and then so concentrate on, you know, a few areas so that we can be more selective, and we can also improve our margin, and then that's how we've been doing it, and then we see the results. So I think we are on the right track.
So, the four areas, or the first one is sustainable smart city, and this is especially a lot of projects came from government, you know, the central government or the local government. So we have seen quite a bit of opportunities from these areas. And it's all kind of ESG related. And then so including the charging stations, and then we do the management system because basically it's IoT, right? And then so, in the digital transformation area, now with some, with a lot of companies are now very anxious about the Net Zero, right?
So in order for them to really start doing the net zero kind of effort and keep track of their carbon footprint, they needed to be digitized at first. So this digital transformation and the net zero transformation kind of go hand in hand. So we see quite a bit of opportunities there for both, you know, kind of helping each other. And also, that with this generative AI, and then so there were a lot of the interest generated for Microsoft's Copilot product. And then that also helped us with our MSSP Microsoft LSP business. And then for the cloud migration and then the cloud service, that is also one area that is we see the growth.
And then some of the, like ICT, I should say, IDC-related, the data center-related business, we have a very good pipeline, and we also see some confirmed deals as well. Okay? On the right-hand side is the smart healthcare, and this is one area that is like a surely, a slowly but surely kind of growing area because it is, of course, kind of driven by the legislation, you know, regulation. And then, but we have just, the telemedicine, regulation or, you know, 2.0, that was just, effective on July 1st. So what we have been doing in the past for the rural areas, the underprivileged, medically, areas, but then now those kind of, telemedicine, arrangement can be made to more scenarios, like 10 more scenarios that are supported.
And also, not only the hospitals, the big hospitals, but also the local hospitals and then even the clinics, they are urged by the government to go digital. So, we have seen the opportunity to help them to migrate to cloud. And also, we are actually working on a government-funded project to come up with just a Cloud HIS. I should say there is, like a subsidy provided by the government, and we are the finalist to receive that, and we have already received some of that for us to develop this cloud HIS, because we already have very good platform.
With the cloud HIS, once it's completed, it can be connected with our platform, and this will be reached out to a lot more clinics and the local hospitals. So we see the widespread of use of this platform. That's why I said this is like a it has been slowly but surely growing area. I think it was sooner than later, we should see this area to continue to grow. Also we will see more coverage and then even in the urban areas, and that's when we should see a bigger growth and faster. Okay, the fourth area is our telecom-based SI. Of course, that's kind of our core business extension.
We have won a couple contracts already, and those, like I said, with government, the contract size also usually are on the bigger side. Yeah, so we are happy to see that our focus on these four areas continue to do well and then bring in a better margin for us. Okay? Okay, and on the consumer side, we have the entertainment, the video, friDay Video area, as I mentioned before. And then, so, we also invest in some content, in some movie, and then we see a good results as well. And then for loyalty, our Mobile Circle, the application, we already have, like, six million downloads. It's exceeded six million, and then it's two million monthly active users. So this is a very good digital platform for us to reach to our users.
And we also see, you know, the traffic led to the that arrived at this application. We were very successful in leading them to our shopping or the other services that we provide. So it serves both as a loyalty program and also kind of like a assist to our other digital services, and then provide additional traffic and a monetization traffic for them, okay? And also, this application, we won the single-A rating in the market. Okay, and then we have worked with Allot, which is an Israeli security company. And then so we provide a Guardian Network feature that would actually screen the unsafe websites that were on the blacklist.
So, this will block a lot of those attempts for our users, and we call this the Guardian Network. It has seen a very good growth in terms of the paid subscribers, and it has grew 46% in the first half. We will see this continue to grow as we have been pushing for a more reliable and safer network, and then as the fraudulent cases now are so prevalent. So it is important that we take some initiatives to protect our users. And so this is at a really, really cheap cost that they need to pay, but it is a very critical service, and also very helpful. Okay. And then the last one is in the fintech area.
So we have invested in MaiCoin. It is Taiwan's largest crypto trading platform and blockchain solution provider. So this is really to expand our footprint in the fintech. And then also, more importantly, we have realized that, you know, a lot of young people now, they don't invest in stock, but they invest in crypto coins. So this, this is gonna help us to have more engagement with our younger generation. And then so our collaboration with MaiCoin, it can be severalfold. So in the short run, so there is some collaboration proposals that we are discussing. So hopefully very soon we will have something that we can issue to our, like a GA program, like to get more young people to join Far EasTone.
So we are looking forward to this collaboration and this investment. Okay. Some major honors and recognitions listed here for your reference only. So, as we are very big on environmental sustainability, for seven years in a row, we were included in the Taiwan ESG Index. And then also our cloud computing center, this TPKC, was certified for ISO 46001 for the water efficiency. In terms of the corporate governance, we continue to get recognized by institutional investors. So we have won several awards there. In Asia, we won the best company to work for in Asia. We also get similar recognition in Taiwan for the Taiwan 104. That is the talent search job bank.
And then also Taiwan Stock Exchange, it is the 10 years in a row that we were ranked at the top five for the corporate governance evaluation in Taiwan. And there were just, like, 8 companies in the entire Taiwan-listed companies that won this top five honors. And then for 10 years in a row, I don't know how many of them, but it's less than that. So it is certainly an honor that's worth mentioning. Okay, so we have a couple service-related awards as well, and I'll just list them for your reference. And in particular, the best customer service in Taiwan is a 13 years in a row, and we are the only one company, a service company in Taiwan, that won this award for 13 years in a row. Okay.
All right. For our second half priorities, for what we have been doing, I think it is working, so we will continue to do what we have done well, and then, and, and only we can do it faster and then also make a bigger impact. So we will continue to grow our telecom service. As I said, it's not only in the mobile, the fixed area as well. We find that as our new golden nugget. Okay. And then, the new economy business, our smart ICT solutions, with expanded enterprise customer base now because of the merger, so we see more opportunities and for more sales there. And then also, we will, we are accelerating our investing in digital services.
So we actually have an internal, kind of, a lean startup program, and then especially with the GenAI being so helpful. And it really, you know, I'm looking forward to a lot more applications that is GenAI or AI-enabled that may come out. So, we not only we will be the mobile provider that will carry these applications, but we, you know, organically, and we wanted to be able to, you know, provide some of those applications or features through our existing, you know, platform and applications. So with that, and then also we have for the consumers that will continue to expand our presence in consumers' essential services. So that means, for example, just like the fintech, right? So there wealth management, and also we have the other areas.
So some of these services, we certainly won't start from scratch, but then it's through some co-create. And then also, in some cases, that will be through strategic investment into the company so that we can provide more a better suite of these essential services through our digital platform to our users. Okay? And then, you know, it is very hard to get the green synergy energy, the, you know, the wind power or the, you know, the solar power. So, in the past, we have, like, by this time, we buy how much and how much. But then now we see it's like the sooner the better, because it's getting harder and harder. So that's what I mean here by accelerate the efforts to secure those green synergy energy. Okay.
And then we will continue to engage globally. And what was not listed here that is oversight is Vodafone. We have a very good alliance with Vodafone as well. So the global engagement, that definitely helps. And our partnership with Microsoft certainly keep us posted on the most advanced technology development. And then that along the LSP program. And then the others are just for information. Hand in hand with China Mobile, we actually attended MWC Shanghai two years in a row. So it has a lot of good applications with 5G or with AI. They are eye-opening, certainly give us many good ideas. So I see this kind of engagement very healthy and very helpful. Okay. All right. Is that the last slide? Okay.
With that, I finish my report, and we welcome your questions.
Yes. Thank you, President Chee. Ladies and gentlemen, we will now begin the 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. First one is Neale Anderson, HSBC. Go ahead, please, Neil.
Hi, Neale.
Hi there. Good afternoon. Thanks for the detailed update. I have two questions, please. The first relates to the unexpected or unplanned synergies that you mentioned. I think you said that most of those were on the fixed line side, but could you clarify that or give any more details on those? And the second one also relates to the merger. So as I understand it, the network integration was much easier for you because you're sharing the same vendor. So a lot of that network integration could happen quite quickly. So my question is, is that now pretty much complete? How far do you think you're through that? How many more, or how much more benefit can you realize on the network integration side? Thank you.
Okay, sure. So the first question about, you know, the part that we didn't... Well, so I should say, we didn't expect as much. So that includes really, I would say, in two areas. So for fixed services, so the revenue and also the fixed service margin was pretty good. So, we have, in the second quarter, even the first quarter, we start seeing some of the fixed part of the revenue. Because, you know, it, when we were doing the budget, that was also the time we were doing the merging, so it was very chaotic. And then a lot of things, numbers as you go through. So, there were some of these that we did not see in our initial assessment of this through the budget.
So then, you know, of course, they come out. And then the other part is actually we see the cross sell. So, quite a few, APT customers, when they migrate to, our service plan, and they will actually take on our, digital services or added the services. And the take-on rate, the percent, is even higher than our own FET customers. So that was a pleasant surprise. Yeah. So I think several things like that, that combined, it's not just one, like in the fixed service, but then overall, that, that's, that's, that's that. And then, and then as I said, it's, we have also organically grew, done very well for our, FET's organic business. So, and then also with the expanded margin. So it all contributed to the better, net income results. Okay?
For your second question-
Network.
Oh, network. Yes. So, we have, for the mobile com, mobile, mobile stations and all that, we actually finished that early in January, but there is a lot of follow-up, right? So when we were able to switch and, you know, we can turn them off, and at the time we turn those off, and then we start saving the electricity. And then you have to go through the cleanup and all that, so you can return the site to the landlord, and then you can terminate the lease. And then, you know, of course, the, you have to negotiate with them. Sometimes the landlord didn't want you to go, so there's some of that. And then also there are like 6,000 of them, so it does take some time.
But then for that, we are almost complete, as well. So we start seeing the—once the lease is returned and then the expenses on that also terminated. But then because we—it was kind of scattered, right? So throughout January or end of January and then throughout four months. So the savings we have realized in the first half is still a lot less than what we will see in the second half. So just an example, you probably want to ask the numbers. So roughly like, if I said TWD 200 million in the first half, and then it's another TWD 700 million, that will be expected just for the network part in the second half. Okay? And then, but then that's just the mobile.
So remember, you know, APT does have the fixed assets, so there, there will be some consolidation there as well, and some of the systems. So for that, we still continue to do. But then in, as far as the mobile network is concerned, for the RAN, okay, the Radio Access Network, that is completed. And then the next, once we are almost done with the, you know, user migration, and also, as you may recall, the Fair Trade Committee asked us to wait until the end of next year for the, you know. So at that time, then, if for those that have the contract that already expired, they will just need to move on to our service agreement.
And then, so that, that is- that will be a kind of like a cut-off date for us to-- And then that will be a good day for us to really migrate the core from APT to, to, to retire it. So that is what we are working on now. So the, in terms of network migration, we have like a phases. The RAN migration that I just mentioned, but also gave us the most, quite a bit of, consolidation synergy that was in the RAN, and we, we are done with that. 99%. 99%. Okay.
. Thanks very much. That's very clear.
All right, thank you.
Thank you. As a reminder, please press star one on your keypad if you would like to ask the question. 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. If you would like to ask the question, please press star one on your keypad. Thank you. Ladies and gentlemen, we are now in question and answer session. Please press star one on your keypad if you would like to ask the question. Thank you. Okay, then there are currently no questions. I'll pass the call back to Mr. Gary Lai. Gary, please proceed.
Thank you again for everyone to attend our second quarter result conference call. See you next quarter. Thank you.
Thank you. And you can always follow up with Gary and then Amy for more questions if you think of them later. Thank you.
Thank you. Bye-bye.
Ladies and gentlemen, we 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 disconnect. Thank you and goodbye.