TAIPEI -- Chunghwa Telecom Co., Ltd (TAIEX: 2412, NYSE: CHT) ("Chunghwa" or "the Company"), today reported its operating results for the first half and second quarter of 2006. All figures were prepared in accordance with US GAAP. Highlights

Revenues

Total revenues for the first half of 2006 rose by 0.8% from the same period last year to NT$91.4 billion, of which 34.2% was from fixed-line services, 39.6% from wireless services and 24.7% from Internet and data services. The increase in revenues was mainly driven by continued growth in the mobile and Internet and data businesses.

Revenue from the mobile business grew 1.7% year-on-year and was primarily driven by an increase of postpaid subscriber numbers and value-added service revenue. Revenue from the Internet and data business increased 10.4% year-on-year, led by a continual increase in ADSL subscriber numbers and the effectiveness of the Company's strategy to upgrade ADSL subscribers to higher speed services. Fixed line revenue decreased 6.2% year-on-year. Of this, local revenue decreased 6.9%, mainly due to mobile and broadband substitution. Domestic long distance revenue decreased 8.5% due to mobile substitution and market competition, and International long distance revenue decreased 2.5%, which was mainly a result of a decline in average usage fees due to various promotional campaigns.

Total revenues for the second quarter of 2006 was NT$46.4 billion, a 3% increase quarter-on-quarter. Of this, 34.4% was from fixed-line services, 39.4% from wireless services and 24.5% from Internet and data services.

Costs and expenses

Total operating costs and expenses increased 6.1% year-on-year to NT$65.6 billion in the first half of 2006. This was mainly caused by NT$2.3 billion of compensation expenses related to the early retirement program, NT$1.55 billion of employee bonuses and NT$1.21 billion of performance-based bonuses.

Total operating costs and expenses for the second quarter of 2006 were NT$32.8 billion, a slightly decrease of 0.3% quarter-on-quarter.

Although the compensation expense caused a one-time decline in net income, the headcount reduction is expected to benefit our future operation.

EBITDA and net income

EBITDA for the first half of 2006 decreased 6.2% year-on-year to NT$46.1 billion and the EBITDA margin decreased 37ppt year-on-year to 50.5%. Net income for the first half of 2006 decreased 20.4% year-on-year to NT$19.8 billion, representing a net margin of 21.6% compared to 27.4% in the same period last year.

The decline in net income for the first half of 2006 was mainly due to the previously mentioned compensation expense relating to the early retirement program.

Cash Flows

Cash flow from operations maintained its strong growth, increasing 22.8% to NT$46.0 billion for the first half of 2006, compared to NT$37.5 billion for the same period in 2005. As of June 30, 2006, the Company's cash and cash equivalents totaled NT$63.2 billion.

Businesses Performance Highlights

Internet and Data Services

Mobile Services

Fixed-line Services

Chunghwa Telecom Co. Ltd. (NYSE: CHT)