Taiwan Telecommunications Report - Q2 2020

Q2 2020
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Taiw
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Includes 10-year forecasts to 2029
Taiwan Telecommunications Report | Q2 2020
Contents
Key View............................................................................................................................................................................................ 4
SWOT .................................................................................................................................................................................................. 5
Telecommunications SWOT..................................................................................................................................................................................................... 5
Industry Forecast........................................................................................................................................................................... 6
Industry Risk/Reward Index ...................................................................................................................................................... 9

Poor Performance, Regulation Weigh On Asia Pacific Telecoms Risk/Reward Index ....................................................................................... 9
Taiwan Risk/Reward Index ......................................................................................................................................................................................................19
Market Overview..........................................................................................................................................................................20
Regulatory Development ..........................................................................................................................................................29
Competitive Landscape.............................................................................................................................................................34
Company Profile...........................................................................................................................................................................38
Chunghwa Telecom...................................................................................................................................................................................................................38
Far EasTone ...................................................................................................................................................................................................................................41
Taiwan Mobile...............................................................................................................................................................................................................................43
Taiwan Demographic Outlook .................................................................................................................................................45
Telecommunications Glossary................................................................................................................................................48
Telecommunications Methodology.......................................................................................................................................49
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Key View
Key View: The conclusion of 5G spectrum auctions in January 2020 will pave the way for commercialisation of services in
mid-2020. Both operators and consumers have demonstrated a strong appetite for new innovative services, and 5G networks will
be a strong plus for telcos to grow their revenues. However, the focus will have to be on developing new over-the-top (OTT) services
and apps over these networks, rather than on subscriber acquisition through competing on prices. Operators will also focus on
applications of 5G in industry and for enterprise use-cases.
5G Uptake To Drive Operator Revenue Growth

Taiwan - Mobile Forecasts
f = Fitch Solutions forecast. Source: Operators, national sources, Fitch Solutions
Latest Updates And Industry Developments
• The mobile market hosted 29.21mn subscribers by the end of 2019. This suggests subscriber losses in 2019 totalled
11,485 connections, and has primarily been driven by SIM deactivations. We have extended our 10-year forecasts through to
2029, though we maintain a broadly similar outlook of the market. We expect there to be approximately 30.93mn mobile
connections by the end of 2029, representing a penetration rate of 128.8%.
• We have introduced 5G forecasts in the Q220 update of the report. Based on available data and disclosures of operator
strategies, we forecast there to be 26.84mn 5G subscriptions by the end of our forecast period, representing over 86% of the
mobile market at that time. Advanced data services and connected devices will drive the market through the next 10 years. 5G
will overtake 4G as the dominant technology by 2023.
• Demand for low-capacity wireline broadband continues to decline, and 4G and fibre connections will facilitate
uptake of high-value triple- and quad-play services. 4G now forms 100% of all mobile subscriptions, though ARPU will
continue declining in the near term before showing a recovery in the medium term as 5G services are launched.
• The regulator NCC has completed its 5G spectrum auction in January 2020. We expect to see a commercialisation of
services in mid-2020, though services, in the short term, will likely remain to major cities and dense population centres.
SWOT
Telecommunications SWOT
SWOT Analysis
Strengths • Despite strong price competition and saturation in the LTE segment, ARPU declines have been relatively
subdued.
• The regulatory framework is advanced and forward looking, and has facilitated competition and built an
attractive business environment for telecoms sector investors.
• Broadband market less dependent on xDSL, as new technologies such as fibre, are becoming increasingly
widespread.
Weaknesses • A high proportion of post-paid customers means saturation, and limited opportunities to migrate users to
higher-value contract packages.
• Regulator-imposed reductions in mobile termination rates, as well as mandated tariff reductions on
operators in 2013-2016, will reduce ARPUs.
• The market for fixed telephone lines is shrinking, albeit at a gradual pace.
Opportunities • Completion of 5G auctions in January 2020 boded well for launch of higher-value 5G services in both the
consumer and enterprise segments.
• LTE has opened the door to higher-value wireless data service growth.
• The proposed new telecoms legislation will make it easier for new operators to enter the market and could
pave way for new MVNOs.
• Continued improvements to the capacity and quality of FTTx networks will help stimulate demand for more
sophisticated IP and multimedia services.
Threats • The mobile market is crowded, with five 4G players.

• 2G services terminated in H217, and 3G in December 2018.
• Regular price cuts mandated by the regulator, the National Communications Commission, are cutting profit
margins, while reductions in mobile termination rates will squeeze revenues.
Industry Forecast
Key View: We hold a bullish view on the Taiwan telecoms market. In the mobile arena, 5G will be a key driver of revenue growth with
service commercialisation expected in mid-2020. However, a key downside risk is the potential for operators to engage in price
competition to garner market share. Operators will focus on new value-added services (VAS) to grow their revenues, rather than
focus on garnering new subscriptions, given the maturity of the mobile market. In the wireline segment, there will be a sustained
migration of legacy copper subscriptions to new fibre technologies, with growth to be underpinned by bundling.
Latest Updates
• Mobile, as part of complex multiplay service packages, enables providers to charge a premium. Multi-user accounts are
offered, diluting ARPUs and increasing volumes of non-voice traffic. Multi-device strategies will underpin the growth of
the mobile market to reach 30.93mn subscribers by the end of our new 10-year forecast period in 2029, up from 29.21mn in
2019.
• 5G services will be launched by mid-2020, joining 4G - the only remaining technology in the mobile market. 2G
services were terminated in H217, while 3G networks were shut off in December 2018. By the end of 2029, we expect 5G to be
the dominant technology with 26.84mn subscriptions, accounting for 86.7% of the market. Remaining connections will be on
4G.
• The regulator, the National Communications Commission (NCC) completed the auction of 5G spectrum and
licenses in January 2019. All operators won mid-band (3.5GHz) spectrum with the exception of Asia Pacific Telecom
(APT), while Taiwan Star Mobile was the only operator to not bid for mmWave (28GHz) wavelength.
• Wireline voice telephony is declining due to mobile and IP substitution effects. The rate of decline is slowed by continued
demand for wireline broadband services, but voice connections will fall to 9.6mn by 2029 from 11.16mn in 2019.
• Wireline broadband forecast to see gradual growth as uptake of fibre and augmented cable connections are offset by
declines in xDSL and other low-bandwidth accesses. The dedicated mobile broadband market is also shrinking as
customers move to voice-and-data plans on smartphones. By 2029, we forecast there to be will be 5.63mn and 3.39mn fixed
broadband and dedicated mobile broadband connections respectively.
Structural Trends
Mobile
Organic subscription growth in Taiwan is low, given the low prevalence or need for multi-SIM ownership. Consumers are increasing
their data use and spending as new services and devices become available. Five mobile operators currently serve the market with
LTE-only services, and these mobile providers have reported strong uptake of data services. As the mobile market is already
saturated, growth will have to come from new, dynamic premium revenue service upselling. Overall mobile subscription growth
should remain slow-paced over the remainder of our 10-year forecast period to 2029.
There is little scope left to acquire a high number of new subscribers, operators are relying on new data-driven revenues, such as m-
commerce, cloud-computing and mobile payment for growth. Operators will have to focus on bundling or providing more data
value-added services to grow their revenues. The merger of Taiwan Star and VIBO in 2014 had created a stronger player to
compete with the top three operators, further boosting the reach of 4G and ensuring improved competition. The merger of Asia
Pacific Telecom (APT) and Ambit Microsystems in 2016 has also had a similar effect on the incumbents.
Mobile ARPU in Taiwan is surprisingly resilient despite ongoing price competition between operators, which we believe is due to
operators offering greater amounts of data at the same price point, reflected in the surging amount of mobile data traffic in the
country. While mobile players have been successful overall in migrating 3G subscriptions over to 4G, the overall ARPU trend is still a
declining one due to the presence of OTT services which are eroding traditional voice and SMS revenues. In 2015, 4G services
helped to reverse the declining ARPU trend, as the presence of more value-added services encouraged demand for higher-speed
4G. The regulator-imposed reductions to mobile termination rates as well as mandated tariff reductions will weigh on operators over
the near-term, but we expect ARPUs to pick-up in the later part of our forecast period. The NCC has also warned, in 2018, that
sustained price competition will slow the pace of 5G adoption.
5G services will drive market growth in the coming years. Limited launch of networks will take place in 2020, but Taiwan's
technologically-savvy populace have proved to be receptive to the launch of new innovations. The ecosystem for 5G devices,
primarily smartphones, has also been developing rapidly, providing choices for users at most price-points.
Mobile Forecasts
Total Mobile Subscribers and ARPU
f = Fitch Solutions forecast. Source: Operators, NCC, Fitch Solutions
Wireline Voice And Broadband
The long-term downtrend for the wireline voice and broadband sector will continue. This is due to the decline in the demand for
residential fixed-lines outpacing the slower growth in business fixed-line demand. Consumers are switching to mobile services, as
well as opting for alternatives, such as VoIP, because of convenience and increasingly affordable services and improving quality. We
expect the business fixed-line segment to hold up in the short-term due to superior quality and reliability from the traditional
service.
The number of 3G dedicated mobile broadband cards fell sharply in 2014/15, as did the number of WiMAX connections, while the
gentle decline in xDSL connections gathered momentum. 4G services are largely focused on smartphone voice and data packages
rather than dedicated mobile broadband, and with the only significant positive growth coming from the FTTx arena, the rate of
broadband growth will be curtailed.
Wireline Forecasts
Total Fixed Voice & Fixed Broadband Subscriptions
TAIWAN TELECOMS MARKET - HISTORICAL DATA & FORECASTS (2018-2023)

Indicator 2018 2019e 2020f 2021f 2022f 2023f
Total mobile phone subscribers ('000) 29,220.0 29,208.5 29,646.6 30,032.0 30,272.3 30,453.9
3G subscriptions ('000) 1,521.8 0.0 0.0 0.0 0.0 0.0
4G subscriptions ('000) 27,698.2 29,208.5 27,128.6 21,526.2 16,390.8 12,505.2
5G subscriptions ('000) 2,518.0 8,505.8 13,881.5 17,948.7
Total fixed voice subscribers ('000) 11,208.8 11,164.0 11,097.0 11,008.2 10,898.2 10,767.4
Fixed broadband subscriptions ('000) 5,759.1 5,894.9 6,305.6 6,226.8 6,134.4 6,031.6
Dedicated mobile broadband subscriptions ('000) 1,023.0 1,566.6 1,519.6 1,496.8 1,481.8 1,470.0
e/f = Fitch Solutions estimate/forecast. Source: Operators, NCC, Fitch Solutions
TAIWAN TELECOMS MARKET - FORECASTS (2024-2029)
Indicator 2024f 2025f 2026f 2027f 2028f 2029f
Total mobile phone subscribers ('000) 30,606.2 30,698.0 30,744.0 30,805.5 30,867.1 30,928.9
3G subscriptions ('000) 0.0 0.0 0.0 0.0 0.0 0.0
4G subscriptions ('000) 10,216.4 8,575.1 7,227.4 6,089.5 4,964.8 4,094.0
5G subscriptions ('000) 20,389.8 22,122.9 23,516.6 24,716.0 25,902.4 26,834.8
Total fixed voice subscribers ('000) 10,616.6 10,446.8 10,258.7 10,053.6 9,832.4 9,596.4
Fixed broadband subscriptions ('000) 5,926.6 5,817.9 5,706.9 5,593.2 5,680.4 5,631.4
Dedicated mobile broadband subscriptions ('000) 1,461.2 1,455.3 1,452.4 1,451.0 1,450.2 1,450.2
Industry Risk/Reward Index

Poor Performance, Regulation Weigh On Asia Pacific Telecoms Risk/
Reward Index
Key View: Asia’s overall score of 49.4 points masks the region’s true growth potential – the presence of many small markets with
little growth potential, such as the Pacific Islands have weighed on the relative outperformance of other large, mature markets, such
as Japan, South Korea, and China. The extension of our 10-year forecasts through to 2029 has also affected the rewards profile of
most countries, given that weaker growth rates are expected toward the end of our forecast period.
Smaller Markets Weigh On Overall Asia Outlook

Asia Pacific Telecoms RRI Scores, Q2 2020
Note: Scores out of 100, with higher scores denoting lower risks. Source: Fitch Solutions
Main Regional Features And Latest Updates
• The extension of our 10-year forecasts to cover the 2020-2029 period has led to a slight change in the Industry Rewards profiles
across all markets, given that subscription growth rates will be weaker toward the tail-end of our forecast period. As a result, the
overall score of our Asia Telecoms Risk/Reward Index (RRI) declined by 0.1 point to register 49.4 points - this is below the global
average of 50 points by a slight margin. Weaknesses in the score are primarily caused by markets with little growth potential,
owing to both macroeconomic and political challenges: this includes small markets in the Pacific Islands, together with countries
such as North Korea and Afghanistan.
• South Korea retains its position at the top of our Asian league table, although its overall score has decreased marginally to 82.0
points out of 100; however, it remains the second-most attractive market in the world, behind only the US. Hong Kong, however,
has fallen two places given a poorer rewards profile resulting from sustained political unrest, which will in the short term weigh on
growth in both the enterprise and consumer segments. Japan retains its second position, while Singapore stays in fourth place.
Australia moves upward by two spots owing to an improvement in its overall score by 1.2 points, driven by improvements to both
its Rewards and Risk profiles.
• 5G rollouts will re-invigorate short-term organic growth in several markets, although this dynamic has already been largely
factored in. Major commercial launches are expected in 2020 for Japan, Hong Kong, Singapore and Taiwan. Smaller markets,
such as Cambodia and Vietnam are also planning to launch services later in the year, although the short-term potential of 5G for
these markets remains limited.
Outperformers
South Korea and Japan remain at the top of the league table. In the case of these two countries, the size of the markets has little
overall bearing on their ratings, given that both markets are already highly saturated, and they moving towards advanced services,
rather than subscriber growth, to drive revenues. In this sense, South Korea fares better than its much larger peer for several
reasons: firstly, the launch of 5G services is expected to add a new growth dynamic to the market and support multi-device uptake.
Secondly, South Korea still has a larger youth population relative to Japan: this will help support the adoption of newer technological
services and over-the-top (OTT) services. Thirdly, the presence of major electronics vendors, such as Samsung and LG, which work
closely with operators to introduce new devices, will continue supporting innovation in the telecoms market.
Vietnam has moved up by two spots to rank 14th in this Q220 update, although its overall score of 47.6 points still falls below the
regional average. Operators continue to make strong progress into widening the reach of their 4G networks in order to sell more
higher-margin data packages. Recently-announced plans to decommission 2G networks and auction more 4G wavelengths in the
2600MHz band will also contribute to improved mobile service quality and delivery. In light of continued efforts to liberalise the
telecoms sector to accommodate foreign investment, we have also revised upward our subjective scores for the country’s
competitive landscape; that, coupled with minor changes in the country’s growth forecasts have led to a 1.6-point improvement in
Vietnam’s overall score. Downside risks to the country’s rewards profile will stem from continued government delays in carrying out
its ‘equitisation’ plans, as well as sustained government intervention into the telecoms sector. The government wholly-owns four of
the five mobile operators.
Australia moves up by two places to third in this update as it receives a 1.2 point boost to its overall score. Marginal improvements
were observed in the Country Risk sub-component – our Country Risk team revised upward the country’s Short-Term Political Risk
(STPR) score upward due to greater policy continuity amidst consolidation of Prime Minister Scott Morrison’s position within the
Liberal party. However, the uncertain fate of TPG’s merger with Vodafone Hutchison will remain a key source of concern for the
telecoms sector. Our core view is that a merger will create strong synergies for both players and create a more robust competitor to
Optus and Telstra. We will likely revise our competitive landscape sub-scores downward should the judiciary rule out the merger:
an outcome is expected in the first quarter of 2020.
Underperformers
Myanmar remains in 32nd position on our Asia league table, and its global rank of 157 suggests that there will be limited returns for
operators in the market of 55mn inhabitants. The high incidence of multi-SIM ownership also means that operator revenue per
subscriber is low, given low levels of utilisation: uptake of dual SIM devices is high, as subscribers often take advantage of preferential
intra-network tariffs and calling circles. ARPUs also remain depressed amid sustained price-led competition from operators, as they
jostle for market share. Despite floating plans to reform the regulatory regime in both 2017 and 2018, little progress has since been
made.
Hong Kong slides by two places, with its lower score driven largely by an increasingly uncertain economic outlook; the
intensification of the political crisis and civil unrest saw the territory slip into recession in H219. Our Country Risk team has also
revised downward the market’s economic and political risk sub-scores. Uncertainty has weighed on enterprise digitisation plans:
companies have chosen to hold off on piling money into new digital services. The lower levels of investment will, in turn, translate
into lower revenues for telecoms players. At the same time, depressed wage growth and rising levels of unemployment could lead
to lower spend on communications services, which will not bode well for ARPUs in the longer term.
Political Stability A Driver Of RRI Scores

Change In Country Risk Percentile Scores - Q220 v Q120
Note: Scores out of 100, with higher scores indicating lower risks. Source: Fitch Solutions
ASIA PACIFIC TELECOMS REWARDS AND RISKS SCORES, Q2 2020

Country Industry Country REWARDS Industry Country RISKS RRI Score Regional Global
Rewards Rewards Risks Risks Rank Rank
South Korea 90.6 54.9 78.1 88.1 89.5 88.8 82.0 1 3
Japan 79.1 59.1 72.1 91.8 87.4 89.6 78.5 2 11
Australia 72.9 69.0 71.6 91.8 87.9 89.8 78.2 3 12
Singapore 71.2 65.1 69.1 88.1 91.7 89.9 76.6 4 15
Hong Kong 74.6 62.7 70.5 89.2 84.0 86.6 76.3 5 16
New Zealand 64.7 67.8 65.8 82.8 94.7 88.7 74.1 6 22
Taiwan 67.2 53.1 62.3 91.3 89.4 90.4 72.5 7 28
Malaysia 62.8 62.3 62.6 85.4 80.2 82.8 69.9 8 31
China 68.9 45.6 60.7 83.0 79.2 81.1 68.1 9 36
Macau 66.3 66.4 66.3 37.6 74.8 56.2 62.6 10 50
Indonesia 55.1 45.1 51.6 78.8 67.9 73.3 59.5 11 59
Brunei 49.7 66.8 55.7 27.8 68.6 48.2 53.0 12 77
Thailand 58.0 37.4 50.8 31.8 71.3 51.5 51.0 13 81
Country Industry Country REWARDS Industry Country RISKS RRI Score Regional Global
Rewards Rewards Risks Risks Rank Rank
Vietnam 61.8 31.2 51.1 19.2 68.8 44.0 48.5 14 91
India 42.6 32.8 39.2 55.3 69.3 62.3 47.6 15 94
Philippines 38.9 43.6 40.6 57.0 61.3 59.1 47.3 16 97
Bangladesh 47.2 35.7 43.2 50.9 47.9 49.4 45.4 17 107
Maldives 50.6 41.7 47.5 43.5 37.4 40.4 44.9 18 110
Fiji 47.8 51.1 49.0 28.3 42.0 35.2 43.9 19 116
Nepal 55.3 30.0 46.4 42.8 32.3 37.6 43.2 20 120
Papua New 56.8 35.2 49.2 28.3 29.4 28.9 41.8 21 128
Guinea
Mongolia 44.0 54.3 47.6 16.8 45.1 31.0 41.5 22 131
East Timor 43.4 41.2 42.6 51.8 24.0 37.9 40.9 23 136
Sri Lanka 47.4 29.6 41.2 26.6 51.6 39.1 40.4 24 137
Tonga 45.1 42.9 44.3 10.3 54.3 32.3 40.0 25 140
Micronesia 51.3 35.7 45.8 12.4 43.8 28.1 39.4 26 144
Pakistan 45.3 36.3 42.2 38.1 29.9 34.0 39.2 27 146
Cambodia 45.7 32.3 41.0 31.8 38.8 35.3 38.9 28 147
Tuvalu 33.8 52.8 40.4 12.4 51.8 32.1 37.4 29 152
Vanuatu 36.6 41.4 38.2 12.4 57.2 34.8 37.0 30 155
Bhutan 32.3 38.0 34.3 43.5 37.5 40.5 36.6 31 156
Myanmar 48.4 29.8 41.9 34.0 20.2 27.1 36.5 32 157
Kiribati 39.4 44.7 41.3 12.4 43.0 27.7 36.3 33 159
Laos 44.7 39.4 42.8 7.7 33.4 20.5 34.7 34 166
Solomon 40.3 38.5 39.7 12.4 37.6 25.0 34.4 35 167

Islands
Samoa 33.8 40.0 36.0 7.7 52.2 29.9 33.8 36 168
North Korea 17.0 50.3 28.7 1.3 20.1 10.7 22.1 37 198
Afghanistan 27.7 35.0 30.3 4.8 7.2 6.0 21.4 38 199
Global 50.0 50.0 50.0 50.0 50.0 50.0 50.0 ~ ~

Average
Regional 51.5 45.8 49.5 42.9 55.3 49.1 49.4 ~ ~

Average
Note: Scores out of 100; higher score = lower risk. Source: Fitch Solutions' Telecommunications Risk/Reward Index
ASIA PACIFIC TELECOMS INDUSTRY REWARDS SCORES, Q2 2020

Country Subscriber ARPU (USD) Postpaid Share Competitive Industry REWARDS
Growth Landscape Rewards
South Korea 79.9 93.5 99.0 89.9 90.6 78.1

Japan 34.7 86.9 100.0 94.7 79.1 72.1
Australia 20.1 91.0 85.9 94.7 72.9 71.6
Singapore 33.7 89.9 83.9 77.4 71.2 69.1
Hong Kong 38.7 94.0 75.9 89.9 74.6 70.5
New Zealand 15.1 88.9 77.4 77.4 64.7 65.8
Taiwan 11.1 78.9 88.9 89.9 67.2 62.3
Malaysia 31.7 67.3 66.8 85.2 62.8 62.6
China 59.8 52.8 68.3 94.7 68.9 60.7
Macau 56.8 90.5 70.4 47.5 66.3 66.3
Indonesia 78.4 15.1 32.2 94.7 55.1 51.6
Brunei 47.2 51.8 65.3 34.4 49.7 55.7
Thailand 27.1 53.8 65.8 85.2 58.0 50.8
Vietnam 71.4 34.4 46.7 94.7 61.8 51.1
India 51.3 0.5 41.2 77.4 42.6 39.2
Philippines 48.2 9.5 33.7 64.3 38.9 40.6
Bangladesh 77.4 2.0 24.1 85.2 47.2 43.2
Maldives 23.1 72.4 59.3 47.5 50.6 47.5
Fiji 68.8 82.4 26.1 13.8 47.8 49.0
Nepal 88.9 6.0 36.2 89.9 55.3 46.4
Papua New Guinea 84.4 58.5 36.7 47.5 56.8 49.2
Mongolia 32.7 58.5 57.3 27.4 44.0 47.6
East Timor 43.2 53.3 29.6 47.5 43.4 42.6
Sri Lanka 69.8 7.0 48.2 64.3 47.4 41.2
Tonga 63.8 58.5 44.2 13.8 45.1 44.3
Micronesia 86.9 51.8 39.2 27.4 51.3 45.8
Pakistan 85.9 3.5 6.5 85.2 45.3 42.2
Cambodia 61.8 13.6 30.2 77.4 45.7 41.0
Tuvalu 31.2 58.5 31.7 13.8 33.8 40.4
Vanuatu 28.1 58.5 45.7 13.8 36.6 38.2
Bhutan 19.6 63.3 32.7 13.8 32.3 34.3
Myanmar 83.4 4.5 15.6 89.9 48.4 41.9
Kiribati 26.6 82.4 21.1 27.4 39.4 41.3
Laos 70.9 42.2 18.1 47.5 44.7 42.8
Solomon Islands 44.2 58.5 44.7 13.8 40.3 39.7
Samoa 15.6 58.5 47.2 13.8 33.8 36.0
North Korea 24.1 41.0 3.0 0.0 17.0 28.7
Afghanistan 73.9 5.0 4.5 27.4 27.7 30.3


Global Average 50.0 50.0 50.0 50.0 50.0 50.0
Regional Average 50.3 51.0 47.5 57.4 51.5 49.5
ASIA PACIFIC TELECOMS COUNTRY REWARDS SCORES, Q2 2020

Country Urban/Rural Split Youth Population GDP per capita Country Rewards REWARDS
(24 & under)
South Korea 78.4 1.5 84.9 54.9 78.1
Japan 91.0 0.5 85.9 59.1 72.1
Australia 83.4 30.2 93.5 69.0 71.6
Singapore 98.2 2.0 95.0 65.1 69.1
Hong Kong 98.2 0.0 89.9 62.7 70.5
New Zealand 83.9 32.2 87.4 67.8 65.8
Taiwan 74.4 4.5 80.4 53.1 62.3
Malaysia 72.4 49.7 64.8 62.3 62.6
China 49.7 24.6 62.3 45.6 60.7
Macau 98.2 2.5 98.5 66.4 66.3
Indonesia 42.2 52.3 40.7 45.1 51.6
Brunei 73.9 42.7 83.9 66.8 55.7
Thailand 33.7 24.1 54.3 37.4 50.8
Vietnam 21.1 41.2 31.2 31.2 51.1
India 16.6 56.8 25.1 32.8 39.2
Philippines 31.2 65.8 33.7 43.6 40.6
Bangladesh 22.1 60.8 24.1 35.7 43.2
Maldives 23.6 36.2 65.3 41.7 47.5
Fiji 42.7 61.8 48.7 51.1 49.0
Nepal 5.5 67.8 16.6 30.0 46.4
Papua New Guinea 0.5 75.9 29.1 35.2 49.2
Mongolia 60.8 60.3 41.7 54.3 47.6
East Timor 15.6 80.4 27.6 41.2 42.6
Sri Lanka 4.0 46.7 38.2 29.6 41.2
Tonga 7.0 75.4 46.2 42.9 44.3
Micronesia 6.5 70.4 30.2 35.7 45.8
Pakistan 20.1 73.9 15.1 36.3 42.2
Cambodia 9.0 66.3 21.6 32.3 41.0
Tuvalu 54.3 68.3 35.7 52.8 40.4
Country Urban/Rural Split Youth Population GDP per capita Country Rewards REWARDS
(24 & under)
Vanuatu 10.6 78.4 35.2 41.4 38.2
Bhutan 25.6 54.3 34.2 38.0 34.3
Myanmar 15.1 55.3 19.1 29.8 41.9
Kiribati 40.7 72.9 20.6 44.7 41.3
Laos 18.6 69.8 29.6 39.4 42.8
Solomon Islands 9.5 82.4 23.6 38.5 39.7
Samoa 3.5 76.4 40.2 40.0 36.0
North Korea 50.8 37.2 62.8 50.3 28.7
Afghanistan 11.1 92.5 1.5 35.0 30.3
Global Average 50.0 50.0 50.0 50.0 50.0
Regional Average 39.6 49.8 47.9 45.8 49.5
ASIA PACIFIC TELECOMMUNICATIONS INDUSTRY RISKS, Q2 2020

Country Regulatory Regulator Resources & Industry Risks RISKS
Independence Openess
South Korea 87.9 88.2 88.1 88.8
Japan 95.5 88.2 91.8 89.6
Australia 95.5 88.2 91.8 89.8
Singapore 87.9 88.2 88.1 89.9
Hong Kong 95.5 82.9 89.2 86.6
New Zealand 87.9 77.6 82.8 88.7
Taiwan 87.9 94.7 91.3 90.4
Malaysia 87.9 82.9 85.4 82.8
China 71.4 94.7 83.0 81.1
Macau 18.1 57.0 37.6 56.2
Indonesia 79.9 77.6 78.8 73.3
Brunei 28.4 27.1 27.8 48.2
Thailand 28.4 35.2 31.8 51.5
Vietnam 11.3 27.1 19.2 44.0
India 41.0 69.6 55.3 62.3
Philippines 57.0 57.0 57.0 59.1
Bangladesh 57.0 44.7 50.9 49.4
Maldives 71.4 15.6 43.5 40.4
Fiji 41.0 15.6 28.3 35.2
Nepal 41.0 44.7 42.8 37.6
Country Regulatory Regulator Resources & Industry Risks RISKS

Independence Openess
Papua New Guinea 41.0 15.6 28.3 28.9
Mongolia 18.1 15.6 16.8 31.0
East Timor 87.9 15.6 51.8 37.9
Sri Lanka 18.1 35.2 26.6 39.1
Tonga 18.1 2.5 10.3 32.3
Micronesia 18.1 6.8 12.4 28.1
Pakistan 41.0 35.2 38.1 34.0
Cambodia 28.4 35.2 31.8 35.3
Tuvalu 18.1 6.8 12.4 32.1
Vanuatu 18.1 6.8 12.4 34.8
Bhutan 71.4 15.6 43.5 40.5
Myanmar 41.0 27.1 34.0 27.1
Kiribati 18.1 6.8 12.4 27.7
Laos 8.5 6.8 7.7 20.5
Solomon Islands 18.1 6.8 12.4 25.0
Samoa 8.5 6.8 7.7 29.9
North Korea 0.0 2.5 1.3 10.7
Afghanistan 2.8 6.8 4.8 6.0
Global Average 50.0 50.0 50.0 50.0
Regional Average 46.0 39.8 42.9 49.1
ASIA PACIFIC TELECOMMUNICATIONS COUNTRY RISKS, Q2 2020

Country Long Term Short Term Long Term Short Term Op Risk Index Country Risks RISKS
Economic Economic Political Risk Political Risk
Risk Index Risk Index Index Index
South Korea 98.0 97.0 88.9 74.1 89.4 89.5 88.8
Japan 82.4 77.4 94.0 95.0 87.9 87.4 89.6
Australia 88.9 86.4 92.0 76.9 91.5 87.9 89.8
Singapore 81.9 81.4 87.4 99.5 100.0 91.7 89.9
Hong Kong 89.9 83.9 69.8 61.6 99.5 84.0 86.6
New Zealand 95.0 94.2 92.5 93.5 96.5 94.7 88.7
Taiwan 94.0 99.5 78.4 79.9 92.5 89.4 90.4
Malaysia 85.9 92.2 58.8 72.4 85.9 80.2 82.8
China 93.0 93.5 60.1 87.9 70.4 79.2 81.1
Macau 64.8 78.9 57.8 87.4 79.9 74.8 56.2
Indonesia 80.9 82.9 54.8 63.1 62.8 67.9 73.3
Brunei 51.3 65.8 48.7 97.0 74.4 68.6 48.2
Thailand 82.9 88.7 44.2 66.3 72.9 71.3 51.5
Vietnam 74.9 79.9 45.2 92.0 60.3 68.8 44.0
India 79.4 81.9 75.4 59.3 59.8 69.3 62.3
Philippines 85.4 86.9 56.8 47.0 45.7 61.3 59.1
Bangladesh 70.9 72.9 47.7 41.7 27.1 47.9 49.4
Maldives 24.6 33.2 41.2 44.7 40.2 37.4 40.4
Fiji 66.3 59.8 19.1 22.6 42.2 42.0 35.2
Nepal 50.8 64.8 21.1 11.1 23.1 32.3 37.6
Papua New 51.8 59.0 22.6 19.1 12.1 29.4 28.9

Guinea
Mongolia 16.1 28.1 64.8 49.2 56.3 45.1 31.0
East Timor 20.1 56.8 19.6 25.4 11.1 24.0 37.9
Sri Lanka 58.8 50.3 55.3 35.7 54.8 51.6 39.1
Tonga 72.9 75.9 46.7 41.0 44.7 54.3 32.3
Micronesia 33.2 54.8 33.2 72.4 34.7 43.8 28.1
Pakistan 44.2 31.9 27.6 14.6 30.7 29.9 34.0
Cambodia 39.9 35.2 40.7 50.5 33.2 38.8 35.3
Tuvalu 31.7 58.3 80.9 81.4 29.1 51.8 32.1
Vanuatu 65.3 59.0 81.4 80.9 28.1 57.2 34.8
Bhutan 11.6 24.1 45.7 41.0 51.3 37.5 40.5
Myanmar 30.7 22.6 14.1 30.9 11.6 20.2 27.1
Kiribati 24.1 40.7 76.9 66.3 25.1 43.0 27.7
Laos 17.1 8.0 37.7 84.4 26.6 33.4 20.5
Country Long Term Short Term Long Term Short Term Op Risk Index Country Risks RISKS
Economic Economic Political Risk Political Risk
Risk Index Risk Index Index Index
Solomon Islands 52.8 53.8 29.6 44.0 22.6 37.6 25.0
Samoa 37.7 47.2 86.4 60.3 40.7 52.2 29.9
North Korea 2.0 2.0 32.2 57.3 13.6 20.1 10.7
Afghanistan 14.1 13.6 1.5 6.0 4.0 7.2 6.0
Global Average 50.0 50.0 50.0 50.0 50.0 50.0 50.0
Regional Average 57.0 61.1 53.4 58.8 50.8 55.3 49.1
Taiwan Risk/Reward Index

Key View: Taiwan achieves a relatively high Rewards score relative to its Asian peers, given that the market benefits from high levels
of disposable income, high urbanisation rates, and a strong appetite for advanced mobile and wireline data services.
Rewards
• Taiwan achieves a relatively high Rewards score relative to its Asian peers, given that the market benefits from high levels of
disposable income, high urbanisation rates, and a strong appetite for advanced mobile and wireline data services.
• The upcoming rollout of 5G networks will allow operators to focus more on higher-margin, premium data services, given that 4G
is the only mobile technology available in the market now. Operators will continuously explore new revenue-generating
opportunities in both the consumer and enterprise markets in order to sustain profit growth. Convergence is a clear way forward
but ultimately will prove to be ARPU-dilutive.
Risks
• Taiwan benefits from a stable and forward-looking political and regulatory regime, is business-friendly, and is receptive to foreign
investment. This has allowed its risk rating to remain high relative to most of its peers.
• Excessive licensing (three operators, per type of service, per region) gave rise to considerable duplication of infrastructure and
small allocations of spectrum. Consolidation will ease pricing pressure but will lead to an imbalance of resource distribution.
Taiwan vs. APAC Telecoms Risk/Reward Index

Q2 2020
Note: Score out of 100; higher score = more attractive market. Source: Fitch Solutions
Market Overview
Market Drivers And Trends
Recent Developments
• There were 29.21mn mobile subscribers by the end of 2019, based on the latest data from the National Communications
Commission (NCC). This suggests that the market posted growth of -0.3% q-o-q, and -0.04% y-o-y. Given that 2G and 3G services
were shut down in Q217 and Q418 respectively, virtually all connections were based on LTE technology. Based on our
calculations, the penetration rate was roughly 122.9%.
• In January 2020, the NCC ended the auction process for 5G spectrum, raising TWD136.4bn (USD4.5bn) in the process.
Spectrum licenses across the 3.5GHz band and 28GHz band were allocated, paving the way for commercialisation of 5G services
in mid-2020. Asia Pacific Telecom (APT) was the only player to have not won any mid-band (3.5GHz) spectrum. However, the
NCC has made provisions to mandate winning bidders to share networks with bidders that fail to win any frequencies. We are
positive of the development in potentially increasing competition for the big three operators, and in reducing the financial
burden for the smaller alternative operators in deploying their 5G networks.
• By the end of 2019, there were a total of 5.9mn fixed broadband connections, coupled with 1.57mn dedicated
mobile broadband (dongles, WiFi hubs, etc) connections. Upgrades to wireline (cable TV, xDSL, FTTH) will facilitate
improved delivery of bandwidth-intensive multi-play services, particularly premium TV services as well as connected home
solutions.
With a penetration rate of 122.9% and all subscribers on LTE networks, Taiwan's mobile market is one of the most developed in the
Asia region. Adoption of smartphones is extremely high, and there is a strong appetite for high-speed mobile broadband services, as
well as over-the-top (OTT) services and apps. 2G services were shut down at the end of Q217, while 3G services were turned off in
December 2018. This puts Taiwan ahead of many of its regional peers. The Taiwan telecoms market is usually compared with Japan
and South Korea, which also have a high demand for the latest technologies and services.
Mobile
Subscription Growth
By the end of 2019, there were five mobile operators in Taiwan, although like many other markets, there are three well-established
operators, which collectively hold close to 90% of subscriber market share. Six companies had initially acquired 4G operating
concessions in the spectrum auction of 2013 - the three incumbents: Chunghwa Telecom, Taiwan Mobile, and FarEastTone,
coupled with three smaller players: Foxconn-backed Ambit Microsystems, Asia Pacific Telecom (APT), and Taiwan
Star. Ambit launched its 4G-only network in May 2015 before merging with APT in early-2016, bringing the total number of mobile
operators down to five. There has been long-standing speculation that APT is seeking to acquire Taiwan Star Telecom (itself the
result of the purchase of VIBO Telecom in 2014), although no concrete deal has emerged. We view that there is sufficient
opportunity for consolidation in the market.
Data from the NCC suggests 29.21 'active' mobile subscriptions in Taiwan at the end of 2019, down from 29.31mn a quarter earlier,
and 29.22mn a year earlier. Consolidation has caused a small number of dual-SIM accounts to be lost from the market, while some
customers were lost from the closure of the ageing personal handyphone service (PHS) in 2014, 2G networks in Q217, and 3G
networks in Q418.
We have to supplement official figures from incumbent Chunghwa Telecom and alternative players Taiwan Mobile, FarEasTone and
APT with our own estimates for VIBO Telecom/Taiwan Star Cellular, as the NCC no longer reports subscriber numbers by operator.
Latest market data suggests a penetration rate of 122.9%. This comes after the market posted losses of around 272,000 in the
2017 calendar year, gains of 563,000 in 2018, and losses of 11,500 subscribers in 2019.
Mobile Market Already Highly Advanced

Taiwan - Mobile Market Trends, 2016-2019
Source: Operators, NCC, Fitch Solutions
Inactive SIM Discounting Weighs On Growth

Taiwan - Mobile Net Additions ('000), 2015-2019
Market Shares
With a subscriber market share of 37.2% by the end of 2019, Chunghwa Telecom was the clear market leader in the mobile
segment. The incumbent has been highly responsive to changing demands and is usually the first to introduce advanced products,
services and applications for Taiwanese consumers. The company is expected to continue its strategy of solidifying its high-tier
smartphone user base while also introducing more basic smartphones to encourage mobile internet use amongst low- and mid-tier
consumers.
For second position, however, the competition is much tighter; less than one percentage point in market share has separated
Taiwan Mobile and FarEasTone from Q107 up to Q419, when Taiwan Mobile recorded a market share of 25.1% against
FarEasTone's 24.8%. The two companies offer very comparable 4G services and have been aggressively manoeuvring into the
premium services market. Like Chunghwa Telecom, they also have wireline broadband and voice networks, enabling them to offer
very attractive converged service packages. Taiwan Mobile, with its extensive cable TV network, has the edge in terms of reach, but
Far EasTone compensates in terms of pricing.
The draft telecoms act, ratified by the government in November 2017, could potentially pave the way for new MVNOs and increase
competition in a market, which is effectively a triopoly. The new law stipulates a simplified registration process for new operators and
an option for operators to lease out frequencies. However, there has been otherwise little progress in ratifying the law.
Mobile Competition Very Tight

Taiwan - Mobile Market Shares, Q4 2019 (%)
Source: Operators, Fitch Solutions
Usage
Taiwan's mobile operators have benefited from relative stability in ARPU in recent years compared to peers in developed markets.
This trend reflects the success of mobile operators in migrating subscriptions to 3G/4G and post-paid tariffs. Although blended
ARPU levels have been falling, there have been periods of relative stability and even gains of late; but, overall, the long-term trend is
a downward one.
We believe the declining ARPU trend could slow in 2018 as the companies transit into the higher-value 4G and 5G era, but a reversal
in ARPU is unlikely given the entrance of new competitors, which may drive down 4G price plans in the near term. The adoption of
the new T-IFRS 15&16 accounting standards is also leading to a downward revision in figures as operators are now forced to strip
out handset revenues from their ARPU figures.
The strong increase in higher-value 4G subscriptions drove ARPUs upwards in the second quarter of 2015, though a marked
reduction in low-value 2G/3G subscriptions - particularly in the prepaid arena - also contributed to the upwards swing. We did not
believe this increase would be sustained as the arrival of Ambit and the highly saturated nature of the market count against
unfettered expansion. ARPU levels have remained largely stable and no severely steep decline has been witnessed as yet. Taiwan
Mobile and FarEasTone enjoy higher ARPUs than incumbent Chunghwa Telecom, owing to their smaller subscriber bases but
broadly comparable monthly tariffs. Chunghwa Telecom's ARPU is also diluted, to a greater extent than is the cases of its rivals, by
bundling mobile with wireline services.
New Accounting Standards Weigh On ARPU Figures

Taiwan - Monthly Blended Mobile ARPU (TWD), 2015-2019
Note: Mar-18 ARPU drop exaggerated due to switch to IFRS15 accounting standards. Source: Operators, NCC, Fitch Solutions
Networks
5G licenses and spectrum in the 3.5GHz and mmWave (28GHz) bands were allocated in January 2020, paving the way for a
commercialisation in mid-2020. With 2G networks already shut down, we expect the majority of 4G customers to actively use
advanced data services until the market deploys 5G services at scale. 4G services already blanket the entire market, as NCC, in
November 2017, allocated six blocks on the 1800MHz frequency band and 24 blocks of the 2100MHz frequency band for
operators to develop 4G.
The two alternative mobile players are likely to adopt different approaches to 5G. APT has highlighted that it plans to build out
enterprise-focused and industrial Internet offerings, such as 5G multi-access edge computing services; these solutions will likely
require high network capacity, which the high-frequency mmWave spectrum will be better suited to provide. The operator was
outbid in the mid-band and withdrew from the auction, making it the only operator among the five to have not secured mid-band
spectrum. It will likely engage in a network sharing arrangement in order for it to provide mobile services at scale - the NCC has
already mandated that winning bidders share spectrum with applicants which fail to acquire wavelength.
While Taiwan Star has not announced its 5G plans, it has announced a tie-up with cable TV operator China Network Systems
(CNS) to bundle each other’s services for sale to expand their subscriber bases. This suggests that Taiwan Star’s future 5G offering
will be consumer-focused, which the mid-band 3.5GHz band will be suited to provide, as it offers a good mix between capacity and
coverage.
2G services were shuttered at the end of June 2017, and 3G services have been shut-off at end December 2018 after the NCC
announced that it will not renew 3G concessions.
4G The Only Technology Commercially Available

Taiwan - Mobile Connections By Technology ('000), 2015-2019
Wireline Voice And Broadband
Wireline Voice
By the end of 2019, data from the NCC reports there were 10.99mn wireline voice subscribers in Taiwan, down from 11.04mn a
quarter earlier. While subscriptions have been on a constant state of decline, we do note that the rate of decline is decelerating.
Nonetheless, the prevailing fixed-line-to-mobile substitution effect is unlikely to reverse in the long term. There were 13.6mn voice
connections by the end of 2005.
Taiwan has four fixed-line network operators: the incumbent, Chunghwa Telecom, along with Taiwan Fixed Network, New
Century Infocomm Tech (wholly controlled by FarEasTone) and Asia Pacific Telecom. Chunghwa Telecom has a strong grip on the
market, with approximately 92.5% of the market as of Q419.
Approximately 73.5% of Chunghwa's subscriptions in Q419 were taken by residential users. Although the number of business
connections is decreasing, it is doing so at a much slower rate than in the residential market, highlighting the fact that low-cost
alternatives are appealing to budget-conscious consumers.
Few Challengers In The Voice Market

Chungwa Wireline Voice Access ('000), 2015-2019
Source: Chunghwa Telecom, NCC, Fitch Solutions
Wireline Broadband
By the end of Q419, there were 5.9mn fixed broadband Internet subscriptions, based on data provided by the NCC. This was a 0.3%
increase relative to the previous quarter, when there were 5.88mn connections. The NCC reports broadband subscribers
segregated by a variety of technologies: ADSL, FTTx, cable modem, leased line, PWLAN, 3G, 4G and WBA (WiMAX).
The declining popularity of xDSL has been countered by growth of FTTx and cable modem subscriptions. The number of FTTx
subscribers reached 3.71mn in Q419, down slightly from 3.72mn a quarter earlier. Cable broadband connections grew rather
impressively, reaching 1.57mn subscriptions by Q419, up from 1.52mn a quarter earlier. The growth of FTTx and cable has been
driven by new subscription additions, as well as the cannibalisation of the ADSL market. The number of ADSL subscribers fell to
546,747 by end-December 2019, down from 561,162 reported in September 2019.
Unsurprisingly, incumbent Chunghwa Telecom accounts for the majority of Taiwanese fixed broadband subscribers. By Q419,
Chunghwa Telecom reported a total of 4.13mn fixed broadband subscriptions. The migration of Chunghwa Telecom's ADSL
customers to FTTx connections has been a major part of the operator's broadband strategy. As much as 3.62mn of its subscribers
were on FTTx services by the end of December 2019, representing 82.3% of its total fixed broadband subscriber base.
TAIWAN BROADBAND SUBSCRIPTIONS ('000)

Q118 Q218 Q318 Q418 Q119 Q219 Q319 Q419
Total fixed
5,817 5,775 5,757 5,759 5,762 5,797 5,875 5,895
broadband
ADSL 723 688 655 629 605 582 561 547
FTTx 3,633 3,649 3,681 3,675 3,694 3,709 3,721 3,712
Cable
1,354 1,367 1,378 1,418 1,414 1,443 1,524 1,570
modem
PWLAN 107 72 44 37 50 64 69 66
Source: NCC, Fitch Solutions
CHUNGHWA TELECOM WIRELINE BROADBAND SUBSCRIPTIONS BY TYPE ('000)

Q118 Q218 Q318 Q418 Q119 Q219 Q319 Q419
Total
4,485 4,488 4,500 4,483 4,473 4,455 4,434 4,405
broadband
Total ADSL
(including
916 914 893 880 856 828 803 786
other ISP
ADSL subs)
Fibre 3,569 3,574 3,606 3,603 3,617 3,664 3,650 3,624
Source: Chunghwa Telecom, Fitch Solutions
Chunghwa Telecom faces an increasingly competitive broadband market, especially from cable operators. Cable operators have
resorted to low-priced internet access packages to acquire new customers. Cable operators have also upgraded their networks to
higher-speed DOCSIS 3.0 data transfer standards and are pursuing vectoring to boost capacity and prolong the life of their copper
networks. To provide higher bandwidth services for customers, Chunghwa has actively expanded its FTTx network since 2003. Over
the years, Chunghwa Telecom has worked to migrate its many customers from ADSL to FTTx. The number of FTTx subscribers
exceeded ADSL subscriptions for the first time in 2011.
The competition from cable operators is the key threat to Chunghwa. We believe Chunghwa's fixed broadband revenue growth
should shrink once the cable operators digitise their networks, but the impact should be cushioned by a number of proactive
measures Chunghwa intends to undertake. Besides the continued migration of ADSL customers to FTTx - a strategy which boosts
ARPU - the company has further reduced its broadband tariffs for higher speed services.
Pay-TV/Convergence
Taiwan is well served by traditional pay-TV delivery systems; as of December 2019, there were five direct-to-home (DTH) satellite TV
providers competing with 64 discrete regional or national multi-system cable operators (MSOs). NCC data records that there were
4.97mn cable TV subscribers at the end of Q419, up from 4.96mn a quarter earlier. Cable TV penetration was 56.3 subscriptions per
100 TV households as of December 2019.
In Q319 (latest available data), the top four multi-system operators had a subscriber market share of 71.6%. The biggest of these
was Kbro, which had 1.14mn subscribers, followed by CNS, which had 1.13mn subscribers. This is followed by Taiwan Broadband
Communications (TBC, 734,000 subscribers), and Taiwan Mobile (556,000 subscribers).
Chunghwa Telecom's 'multimedia on demand' network provides a number of video-on-demand (VOD) and IPTV services over cable
and broadband platforms. The service served 2.08mn subscribers at the end of December 2019, down from 2.09mn a quarter
earlier. We believe the strong growth was due to a focus on developing new content, and securing exclusive streaming rights to
sporting events. The number of services taken by each subscriber is on the rise, reflecting growing demand for converged services.
PAY-TV GROWTH DECELERATING

Q118 Q218 Q318 Q418 Q119 Q219 Q319 Q419
Households
with Cable- 5,195 5,157 5,117 5,077 5,042 5,015 4,962 4,975
TV ('000)
Penetration
60.0 59.4 58.7 58.1 57.6 57.1 56.2 56.3
rate (%)
Digital set-
top boxes 5,173 5,142 5,113 5,075 5,042 5,014 4,962 4,975
('000)
Source: NCC, Fitch Solutions
TAIWAN MOBILE - PAY-TV METRICS

Q118 Q218 Q318 Q418 Q119 Q219 Q319 Q419
Subscriptions (000)
Cable TV 579 574 570 566 562 559 556 554
DTV 231 236 na na na na na na
Total 810 810 na na na na na na
ARPU (TWD)
Basic TV na na na na na na na na
DTV na na na na na na na na
Blended 747 745 744 743 741 739 740 745
Source: Taiwan Mobile, Fitch Solutions
In January 2016, the Fair Trade Commission approved FarEasTone (FET)'s bid to invest in CNS and to integrate the two businesses'
networks and service portfolios. FET signed a deal with Morgan Stanley Private Equity Asia in July 2015 to purchase an
estimated TWD17.12bn (USD2.3bn) worth of bonds in return for an indirect 60% stake in CNS. This allowed the 2.89% government-
owned mobile operator to circumvent regulations prohibiting political parties, the military, and the government from having stakes
in media companies such as CNS. The deal is necessary to ensure FET's continued relevance in an increasingly convergence-centric
market. CNS operates in six key areas - Kaoshiung City, Keelung, New Taipei City, Tainan City, Taipei City and Taoyuan County - with
dominant subscriber market shares in both Taipei and Kaoshiung.
CNS would have created an additional revenue stream for FET by enabling the operator to develop more complex value-added
services (VAS) and leverage CNS' cable TV content for multi-screen strategies which can compensate for stagnant growth in core
service income. FET has a comprehensive VAS portfolio including an m-commerce platform, an electronic book business, a digital
music platform and a VOD service.In February 2017, FET withdrew its bid for CNS.
Regulatory Development
Key View: The NCC has been proactive in balancing the interest of operators, ensuring that operators receive their due returns on
their investments into infrastructure and spectrum, while simultaneously promoting healthy competition in order to deliver quality,
affordable services to consumers. The NCC is also forward-looking and does not intervene unless necessary.
The National Communications Commission (NCC) was established in February 2006 and is responsible for regulating the
development of Taiwan's information, communications and broadcasting industry. The regulator is tasked with protecting
consumer rights, promoting competition, licensing and assigning radio frequencies, overseeing spectrum auctions, regulating
broadcasting content and developing communications standards.
Industry Risks
In the Q220 update of our proprietary Asia Pacific Telecoms Risk/Reward Index, Taiwan now scores 91.3 out of a potential 100 in the
Industry Risks component. The country fares well as the NCC is an independently-run agency which promotes industry interests, to
the extent that consumer rights are not compromised. The pro-business Taiwanese government seldom intervenes and the NCC's
policy-making process receives little influence from a political agenda. The regulator, in general, is also receptive to industry needs
and consistently adapts policy to meet the demands of businesses.
Regulatory Regime Among The Best In Asia

Industry Risk Scores, East Asia (Q2 2020)
Note: Scores out of 100, with higher scores indicating lower risks. Source: Fitch Solutions
Main Development: 5G Spectrum Auction
In January 2020, the NCC called an end to its 5G spectrum auction following the withdrawal of Asia Pacific Telecom (APT) from
bidding. Bids tabled for the 270MHz of 3.5GHz mid-band spectrum on offer totalled TWD136.4bn (USD4.5bn), making it the most
expensive auction in Asia so far, ahead of South Korea, and third most expensive globally, behind Italy and Germany. 3.5GHz
wavelength prices in Taiwan reached USD0.7/MHz/pop. Operators also bid for 1,600MHz of high-frequency spectrum for a total
consideration of TWD1.65bn (USD55mn). Following the auction, operators are expected to reconvene in February 2020 to disclose
their desired positions on the 3.5GHz band, which was split into 10MHz blocks. The operators now aim to commercialise services by
mid-2020, pending the approval of their 5G business proposals by the NCC.
Our expectation that APT would be priced out of the expensive mid-band spectrum has played out: despite a fresh funding round of
TWD10bn (USD330mn) from parent Hon Hai Precision (better known as Foxconn) in November 2019, APT was unable to
outmuscle its bigger, well-capitalised rivals. As a result, it could become a marginalised player in the segment, and will have to rely on
network sharing agreements with one of the other operators for it to provide comprehensive 5G consumer services. It appears that
it could choose to partner with Taiwan Mobile - the market’s third largest mobile operator - given that the duo are already working
together on a rural roaming agreement, targeting 86 remote townships throughout the island. We maintain that APT will likely find
stronger growth opportunities through providing enterprise 5G services in the manufacturing sector and others, rather than
focusing on its fledgling consumer business.
Capex pressures will be elevated following the auction, where prices for the mid-band spectrum closed 461.5% higher than the
reserve prices set by the regulator. Chunghwa Telecom, for one, has already stated that it expects spending on 5G - which it
forecasts to be as much as TWD9-10bn (USD300-333mn) annually - to significantly overtake the TWD60bn it spent to deploy its 4G
networks. We also expect the other operators to commit higher levels of expenditure to deploy 5G connectivity, given that 5G
equipment is pricier than their 4G equivalents, and the higher frequency on which 5G networks operate will require higher base
station density. Industry groups - such as the Taiwan Telecommunications Industry Development Association (TTIDA) - have already
called on the NCC to waive frequency usage charges, given that operators are already overpaying for spectrum. Reportedly, the
Taiwanese Cabinet will hold an interdepartmental meeting to discuss the distribution of auction proceeds, including investments
into improving existing telecoms infrastructure and into developing new, innovative services.
The government continues to show a keenness in developing 5G networks for enterprise applications. In December 2019, the NCC
announced plans to release up to 100MHz of spectrum in the 4.9GHz band - another candidate band for 5G services - for operators
to trial potential 5G applications. The band has already been allocated in Mainland China to mobile market leader China Mobile.
The NCC aims to issue 4.9GHz licences in 2021 or 2022. At the same time, the Ministry of Economic Affairs (MEA) has outlined
intentions to set aside spectrum in the 3.7-3.8GHz range for vertical application providers to develop new products; however, the
proposal was criticised by operators and the NCC. Opponents have argued that the proposal could allow industry players to obtain
spectrum without undergoing the same bidding and auction process as operators.
Overall, despite the elevated spectrum prices, operators are unlikely to adopt a more conservative approach to their 5G
deployments, given that they are banking on new network launches to drive their stagnating revenues. We remain positive of the
prospects of consumer 5G services for operators in Taiwan - the mobile market is highly advanced, and consumers have
demonstrated a strong willingness to adopt the latest mobile services - as evidenced by the uptake of 4G services.
COMPETITION CAUSES 3.5GHZ PRICES TO SKYROCKET

Operator 3.5GHz band (MHz) Price 28GHz band Price
(MHz)
Chunghwa Telecom 90 TWD45.67bn (USD1.51bn) 600 TWD618mn

(USD20.39mn)
FarEasTone 80 TWD40.6bn (USD1.34bn) 400 TWD412mn

(USD13.59mn)
Taiwan Mobile 60 TWD30.45bn (USD1.0bn) 200 TWD206mn

(USD6.8mn)
Taiwan Star 40 TWD19.7bn (USD650mn) na na
Asia Pacific Telecom na na 400 TWD412mn

(USD13.59mn)
TOTAL 270/270 TWD136.4bn (USD4.5bn) 1600/2500 TWD1.65bn

(USD54.4bn)
na = not available. Source: NCC, Fitch Solutions
Additional Developments
5G Network Sharing Rules
• In September 2019, the NCC has introduced provisions to mandate winning bidders in the upcoming 5G spectrum auction to
share networks with bidders which fail to win any frequencies. Under the new guidelines, 5G concession winners will have to
make provisions to share their 5G network, infrastructure, and spectrum resources. We are positive of the development in
potentially increasing competition for the big three operators, and in reducing the financial burden for the smaller alternative
operators when bidding for 5G spectrum.
• The new rules are likely in response to industry backlash on the NCC’s proposed cap of 100MHz of 3.5GHz (mid-band) spectrum
per winning bidder. We had earlier highlighted that the imposition of the cap would most likely have created a scenario where
the three bigger operators financially outmuscled the smaller, alternative mobile players, as only 270MHz of the 3.5GHz
spectrum is available for purchase.
3G Shut Off
• The NCC announced in early 2018 that it will not renew 3G concessions at the end of December 2018. Operators have mostly
completed the migration of their 3G subscribers to 4G. The NCC reported that there were as many as 1.522mn 3G connections
at the end of December 2018, though we believe that most of these are inactive prepaid connections. There have been no
significant impact on operator revenues after the decommissioning of 3G networks. Taiwan is the first country in the world to be
4G-only.
New Spectrum Auction
• After announcing in Q117 that it will release 150MHz of the 4G-capable spectrum, the NCC completed the auction of 12 lots of
2,100MHz frequencies and one lot of 1,800MHz bandwidth in October 2017. Chunghwa secured one 2x5MHz blocks in the
1,800MHz band and four 2x5MHz blocks in the 2,100MHz band for a total of TWD10.9bn (USD372.9mn). Taiwan Mobile paid
TWD8.60bn (USD294.2mn) for four 2x5MHz blocks in the 2,100MHz band, with FarEasTone paying TWD6.51bn (USD222.7mn)
for three 2x5MHz blocks in the same band. Taiwan Star managed one 2xMHz block in the 2,100MHz band for TWD2.22bn
(USD75.9mn).
• The NCC plans to follow up the sale by offering additional spectrum in the 1,700MHz, 1,800MHz, 1,900MHz and 2,100MHz
bands. 3G service concessions are set to expire in December 2018, with the 1,900MHz and 2,100MHz bands being utilised for
the service.
Taiwan Mobile-FET Spectrum Dispute
• In July 2015, Far EasTone (FET) filed a request with the Taipei District Court for provisional measures prohibiting rival Taiwan
Mobile (TWM) from using a portion of its C1 frequency band to operate 4G mobile services, until TWM returns a portion of the C4
frequency band. FET offered a security deposit of TWD1.048bn (USD33.5mn) for the court to bring the requested measures into
effect. The court granted the request but allowed TWM to offer an anti-security deposit of TWD927mn to continue use of the
spectrum.
• The lawsuit originated from a contract signed by FET and TWM in 2014. FET won licences for C3 and C4 frequency bands and
TWM won the C1 band in Taiwan's 4G tender held in October 2013. C4 is now used by TWM for the provision of 2G services, while
C1 is used by FET for 2G services. The 2G licences were set to expire at the end of June 2017.
• To use the two bands earlier than the expiry date, FET and TWM agreed that FET would release the band units on the same day
before the end of June 2016. In March 2015, FET returned the C3 band to the NCC to designate the band unit for 4G operations
by FET. FET had to return the C1 unit along with the C3 unit. TWM subsequently applied to use the C1 unit and obtained NCC
approval.
• However, FET claims that TWM should have released the C4 band unit 'on the same day' - as required in the agreement - as when
FET released the C1 band unit. Because TWM did not do so, FET filed a lawsuit. However, TWM argued that FET was required by
regulations to return the C1 unit and it did not do so voluntarily. Therefore, returning the spectrum had nothing to do with the
agreement and TWM considered it was not obliged to return the C4 spectrum for now.
Second 4G Auction
• The NCC launched the second auction of 4G spectrum in November 2015. The regulator offered six blocks of spectrum in the
2.5-2.6GHz range in a process that concluded in early December. The auction raised a total of TWD27.9bn (approximately
USD847.9mn); the final bid exceeded the total floor price that the government had set for the frequency block by 93.9%.
• Apart from Taiwan Mobile, which withdrew from the auction at an early stage, the country's remaining four telecoms operators
won various spectrum blocks. Chunghwa Telecom won blocks D2 and D4 for TWD9.955bn, while FET acquired blocks D3 and D6
for TWD9.13bn, and Taiwan Star secured the D1 block for TWD6.615bn. APT won block D5 for TWD2.225bn.
FET Acquisition Of CNS Approved
• At the end of January 2016, the NCC approved FET's proposed acquisition of a stake in cable TV operator China Network
Systems (CNS). The regulator has imposed conditions on CNS and FET, requiring CNS to complete digitalisation of its content
by the end of Q217 by terminating the analogue content of the three channels it carries.
• CNS will also have to invest TWD4bn (approximately USD119mn) over the next five years in digitalisation, and an additional
TWD800mn over the same period to expand its optical receiver facilities. CNS is also required to invest TWD600mn and
TWD500mn respectively, in upgrading its broadband communication services and in assisting residential customers covered by
the cable TV network to develop public community TV channels.
• In February 2017, FET withdrew its bid for CNS.
New Cable TV Subscription Plans
• In March 2016, the NCC proposed two new cable TV subscription plans with the intention of increasing consumer choice. Cable
TV subscribers currently pay a flat subscription fee for access to more than 100 channels. However, together with the digitisation
of cable TV in 2017, a tiered pricing scheme will also be introduced to subscribers.
• The Commission also proposed removing a monthly subscription fee cap of TWD500-600 which was included in the three-tiered
plans it proposed in 2013, on the basis that competition from Multimedia on Demand and OTT services, as well as the opening
up of an a-la-carte option to subscribers, will abolish the need for a fee cap.
TAIWAN - REGULATORY BODIES AND THEIR RESPONSIBILITIES

Regulatory Body Responsibilities
Directorate General of • Devising an integrated telecommunications development plan.

Telecommunications/National • Supervising telecommunications enterprises.
Communications Commission • Promoting the development of an information society so as to enhance public welfare.
• Setting of tariffs.
• Overseeing interconnection agreements.
• Imposition of fines and penalties where appropriate. Inspection of telecommunications facilities.
• Approval of telecommunications equipment.
• Planning, coordination and modification of frequency allocation.
• (From 2006) Regulation of the broadcasting sector.
Ministry of Transportation and • Development of telecommunications policy, overseeing the functioning of the DGT.
Communications
Source: MOTC, NCC, Fitch Solutions
Competitive Landscape
TAIWAN MOBILE MARKET OVERVIEW
Q118 Q218 Q318 Q418 Q119 Q219 Q319 Q419
Mobile Subscribers ('000)
Total 28,638 28,945 29,043 29,220 29,190 29,250 29,306 29,208
Prepaid 22,524 22,765 22,842 22,982 22,958 23,005 23,049 22,972
Post paid 6,114 6,180 6,201 6,238 6,232 6,245 6,257 6,236
3G 5,094 3,769 2,622 1,522 - - - -
4G 23,544 25,176 26,421 27,698 29,190 29,250 29,306 29,208
Mobile Usage
Monthly
Blended 566 566 521 509 496 489 485 481
ARPU (TWD)
Wireline/Broadband Accesses ('000)
Total Wireline
11,388 11,332 11,273 11,209 11,155 11,112 11,043 10,989
Voice
Total
7,083 6,961 6,861 6,782 7,264 7,337 7,506 7,462
Broadband
o/w Fixed
5,820 5,775 5,757 5,759 5,762 5,797 5,875 5,895
Broadband
Financials (TWDmn)
Fixed Service
18,277 18,657 19,232 17,818 17,467 17,847 17,437 16,884
Revenue
Mobile
Service 45,320 45,978 42,603 42,160 69,564 40,655 40,594 40,122
Revenue
Note: o/w = of which. Source: NCC, operators, Fitch Solutions
CHUNGHWA TELECOM
Q118 Q218 Q318 Q418 Q119 Q219 Q319 Q419
Total 10,395 10,518 10,554 10,594 10,578 10,597 10,640 10,649
Mobile Usage
Monthly
Blended 513 567 475 474 464 462 463 456
ARPU (TWD)
Monthly
Blended
1.6 1.6 1.4 1.5 1.5 1.6 1.5 1.5
Churn Rate
(%)
Total Wireline
Voice 10,626 10,559 10,494 10,494 10,362 10,302 10,230 10,163
Accesses
Total Fixed
Broadband 4,485 4,488 4,500 4,483 4,473 4,455 4,434 4,405
Accesses
Financials (TWDmn)
Total
Operating 53,632 53,658 52,705 55,463 51,331 50,108 50,848 55,233
Revenue
Fixed
Operating 15,803 16,435 16,497 17,986 15,798 15,921 15,627 18,361
Revenue
Mobile
Service 26,485 25,679 23,446 25,060 24,481 14,664 14,729 14,588
Revenue
EBITDA 18,909 20,022 18,377 18,185 19,162 19,106 18,814 18,795
Net Profit 8,728 9,861 8,504 8,424 8,353 8,569 8,091 7,798
Capex 4,400 1,690 2,180 9,210 4,490 5,820 13,640 7,810
Data for 'Mobile Usage' and 'Financials' from Mar-18 onward are on IFRS15 standard. Source: Chunghwa Telecom, NCC, Fitch Solutions
TAIWAN MOBILE
Q118 Q218 Q318 Q418 Q119 Q219 Q319 Q419
Total 7,168 7,229 7,194 7,266 7,274 7,254 7,223 7,178
Prepaid 1,441 1,564 1,569 1,649 1,650 1,601 1,536 1,491
Post paid 5,726 5,665 5,626 5,617 5,624 5,653 5,687 5,687
Mobile Usage
Monthly
Blended 691 697 640 624 603 592 586 574
ARPU (TWD)
Monthly
Blended
2.9 2.9 2.6 2.3 2.4 2.7 2.6 3.2
Churn Rate
(%)
Total Fixed
Broadband 217 222 225 228 232 234 237 252
Accesses
Cable TV
579 574 570 566 562 559 556 554
Accesses
Financials (TWDmn)
Total
Operating 30,306 28,540 28,320 31,566 29,873 29,615 30,826 34,108
Revenue
Mobile
Service 13,810 14,011 12,906 12,731 12,344 12,377 12,047 11,814
Revenue
Pay-TV
951 937 927 912 898 885 877 876
Revenue
Broadband
348 349 350 351 354 356 360 365
Revenue
EBITDA 8,174 8,341 7,590 7,619 8,410 8,426 8,300 8,252
Net Profit 3,481 3,797 3,273 3,091 3,071 3,206 3,253 2,951
Capex 2,760 1,690 2,180 1,870 2,020 1,380 2,120 -
Data for 'Mobile Usage' and 'Financials' from Mar-18 onward are on IFRS15 standard. Source: Taiwan Mobile, NCC, Fitch Solutions
FAREASTONE
Q118 Q218 Q318 Q418 Q119 Q219 Q319 Q419
Total 7,125 7,141 7,164 7,172 7,183 7,178 7,157 7,093
Prepaid 1,818 1,847 1,905 1,898 1,884 1,852 1,816 1,743
Post paid 5,307 5,294 5,259 5,274 5,300 5,326 5,341 5,350
Mobile Usage
Monthly
Blended 669 633 620 607 589 585 579 579
ARPU (USD)
Monthly
Blended
2.2 2.2 2.0 2.2 2.2 2.3 2.3 2.3
Churn Rate
(%)
Financials (TWDmn)
Total
Operating 21,667 21,621 21,059 22,289 20,819 20,425 21,407 21,214
Revenue
Mobile
Service 14,341 14,641 13,554 13,631 13,217 13,807 13,556 13,440
Revenue
EBITDA 6,810 7,151 6,874 5,850 7,471 7,399 7,191 7,092
Net Profit 2,453 2,678 2,618 1,632 2,232 2,174 2,195 2,134
Capex 1,715 1,686 1,742 1,870 1,385 1,812 1,729 1,292
Data for 'Mobile Usage' and 'Financials' from Mar-18 onward are on IFRS15 standard. Source: FarEasTone, NCC, Fitch Solutions
Company Profile
Chunghwa Telecom
SWOT Analysis
Strengths • Leading wireline voice, mobile and broadband operator.
• Revenue driven by increases in internet and data sectors.
• Mobile churn rates are lower than rivals', despite the introduction of MNP.
• The first mover in terms of 4G deployment, and looks likely to be the first-mover in 5G deployment.
Weaknesses • Wireline telephony segment is declining.

• Government mandated a reduction in mobile termination rates from TWD2.15 to TWD1.15 over 2013-2016
will affect Chunghwa the most.
• Yearly reduction in xDSL circuit-lease rates by 5.18% over 2013-2016.
Opportunities • Further government divestment could lead to a key strategic investor gaining a stake in the operator and
possibly network expansion.
• Investment in cloud computing, IoT, big data and AI will cement its place as Taiwan's leading enterprise
provider, increase service offerings and boost revenue.
• High capacity broadband infrastructure investments offer the potential for revenue growth in the medium
term.
Threats • National Communications Commission implementation of free IP peering regulations weighs on revenue
derived from wireline infrastructure.
• Regulator-mandated price cuts affecting profitability.
• Increasing competition from other mobile operators as they launch VAS and apps to meet customer
demand.
Company Overview
Chunghwa Telecom is Taiwan's leading telecoms service provider, offering fixed-line, mobile, internet and data services to residential
and business customers. The operator's full scope of services includes local fixed-line services, long-distance calls, international
telephony, GSM, data communications, internet services, broadband, IPTV, satellite communications, intelligent network and mobile
data.
Chunghwa Telecom was established in 1996 as a result of the government's separation of its regulatory role and its telecoms
business. The operator was part-privatised in 2000 and, by the end of 2004, the government's share had fallen to 65.6%. In August
2005, Chunghwa sold shares in the form of American depositary receipts (ADRs) on the NYSE, realising USD2.56bn. The sale
reduced the government's holding in Chunghwa to 48.6%. This was followed by further sales of ADRs in late September 2006,
raising USD959mn. The sales reduced the government's stake to 36%.
Strategy
In 2018, Chunghwa Telecom released a three-year strategic transformation plan. It focused on differentiating itself with its
competitors through improvements on the quality and coverage of its 4G network in order to retain and attract new subscribers.
The company is also focusing on home-centric digital services through migrating subscribers from legacy copper and ADSL
connections onto new fibre based technologies to enable upselling toward more premium and data-heavy services. Its
convergence strategy is underpinned by its Multimedia On Demand IPTV service. The company aims to introduce more innovative
applications, such as smart speakers into its converged offering.
Targeting 5G commercialisation in 2020, Chunghwa is investing heavily into expanding its network capacity. It has highlighted that it
will spend as much as TWD9-10bn (USD300-333mn) annually for 5G deployments, with the total spending expected to significantly
overtake the TWD60bn it spend to deploy its 4G networks. Being a major enterprise player in Taiwan, it is also focusing on smart city,
big data and cyber security applications to serve its business and government clients.
Developments
2020
In January 2020, Chunghwa secured 90MHz of spectrum in the 3.5GHz band for TWD45.7bn (USD1.5bn), and 600MHz in the
28GHz band for TWD618mn (USD20.4mn). In February, it paid an additional fee to the NCC to secure frequencies on optimal parts
of the 3.5GHz band, after failing to reach an agreement with other operators on their location on the spectrum.
2018
Chunghwa will reportedly be forced to vacate its spectrum in the 3.4GHz and 3.6GHz bands, which it currently utilises for earth-
satellite communication, with the National Communications Commission planning to allocate bandwidth in the high-frequency
bands for 5G services soon.
2017
In Q317, the company announced plans to bolster its 4G base stations by up to 40% this year and to re-purpose the 1,800MHz
airwaves previously used for 2G services for expanded 4G connectivity in the country. Furthermore, the mobile carrier stated that it
plans to boost nationwide LTE speeds to up to 500Mbps using four band carrier aggregation technology over the coming months.
In 2017, the company terminated its 2G network and shed around 60,000 subscribers that had not yet moved to 3G/4G plans. The
company has pledged to offer a six-month grace period where the existing phone number will be held and upgraded to a 3G/4G
plan, while during this period the 2G handset will be able to make emergency outbound calls. The company won one block of the
1,800 MHz and four blocks of the 2,100MHz frequency band for a combined total of USD362.26mn. In Q117, the company signed a
memorandum of understanding with Ericsson to jointly develop and field-test 5G technology in the country. The two firms have
stated that they will actively work to develop 5G capabilities and further to develop a network evolution strategy from LTE-Advanced
to 5G.
2015
Chunghwa's position as the largest operator and fixed-line incumbent puts it in a strong position to capitalise on the 4G growth
potential. Mobile data revenue increased by 13.8% y-o-y in 2015. This was largely a result of the company's continued strategy to
solidify high-tier smartphone users, introduce mid-to-low tier smartphones to expand the mobile internet subscriber base,
accelerate the migration of 2G customers to 3G networks and speed up the 4G deployment process to enjoy first mover advantage.
The company's strategic targeting of the fast-growing, low-to-mid tier smartphone market has paid off. Its smartphone contract
packages had successfully expanded its mobile internet user base to almost 6mn in 2015. Aggressive promotion of its data plans
should facilitate customer adoption of data services.
Evidence suggests Chunghwa has some of the strongest data monetising ability in the market. Compared to rivals FarEasTone and
Taiwan Mobile, Chunghwa has the fastest growing data revenue and commands a significant share of data revenue as a percentage
of its mobile service income.
Financial Data
Revenues:
• 2019: TWD207.5bn
• 2018: TWD215.5bn
• 2017: TWD227.6bn
• 2016: TWD230.0bn
Net Income/Loss:
• Net Income (2019): TWD32.8bn

Far EasTone
SWOT Analysis
Strengths • Merger of mobile and fixed-line operations following the acquisition of New Century InfoComm in H210.
• NFC foray provides opportunity to increase Far EasTone's mobile VAS revenue.
• Received 10MHz of 700MHz and 10MHz of 1,800MHz spectrum for LTE deployment.
Weaknesses • Still ranked well behind market leader Chunghwa Telecom.

• Falling ARPU across blended, prepaid and post-paid as a result of reclassification of inactive users.
Opportunities • 4G mobile ecosystem provides new revenue sources.

• Launch of cloud computing services and a focus on growing its enterprise capabilities will boost profits and
reduce its reliance on mobile services.
Threats • Possibility remains of further price wars, possibly in contract segment.

• Increasingly saturated market will reduce the opportunity to win new customers.
• New entrants looking to seize 4G opportunities could displace some market share of the incumbent
operators.
Company Overview
FarEasTone was awarded a GSM licence in 1997, and launched its GSM900 and 1800 networks. As Taiwan's third-largest operator,
Far EasTone closed the gap between itself and the country's leading operators, Chunghwa and Taiwan Mobile, through its 2004
merger with fourth-ranked operator KG Telecom. In August 2005, the company listed on the Taiwan Stock Exchange.
Strategy
Anticipating a decline in mobile revenues amid intense price competition, FarEasTone in 2017 announced that it is now looking at
new initiatives to grow its enterprise and digital businesses. Among others, it is focusing on the growth of its IoT business, and has
completed its rollout of a nationwide NB-IoT network in May 2018. It has also earmarked big data, AI, and cloud solutions to grow its
enterprise revenue.
It is also investing into 5G, and FET has stated that it has already started preparations for commercialisation of its new network. The
operator is also actively building a 4G mobile service ecosystem. The 4G ecosystem will integrate potential markets such as e-
commerce, mobile payment and mobile media with the high-speed network as infrastructure backbone.
Developments
2020
In January 2020, FarEasTone secured 80MHz of spectrum in the 3.5GHz band for TWD40.6bn (USD1.3bn), and 400MHz in the
28GHz band for TWD412mn (USD13.6mn). In February, it paid an additional fee to the NCC to secure frequencies on optimal parts
of the 3.5GHz band, after failing to reach an agreement with other operators on their location on the spectrum.
2017
In H217, the carrier scrapped its 2G services in the country and approximately 8,000 of its subscribers were affected. The telecoms
carriers will provide a six-month grace period where they will hold the phone number and upgrade it to a new 3G/4G plan for the
existing subscriber.
2016
In November, the company announced it would renew its partnership with Ericsson to develop and cooperate further in the IoT field
and work together towards developing 5G technologies in the country. The firms look to broaden cooperation in the fields of
transportation, media and utilities as part of the IoT initiative. The same agreement also allows Ericsson to deploy combined LTE FDD
TDD services over FET's 2.6GHz airwaves.
In January, FET received regulatory approval for its proposed acquisition of cable TV operator China Network Systems (CNS). The
regulator imposed a number of obligations on FET as part of the deal, however. CNS will also have to invest TWD4bn over the next
five years in network digitalisation, and an additional TWD800mn over the same period to expand its optical receiver facilities. CNS is
also required to invest TWD600mn and TWD500mn respectively, in upgrading its broadband communication services and in
assisting residential customers covered by the cable TV operator's network to develop public community TV channels. At the end of
2015, CNS served 1.29mn households across Taiwan, representing a 26% share of the local cable TV market.
2015
In May, Far EasTone selected Ericsson to be its sole LTE supplier. The collaboration will support Far EasTone's 4G and 5G network
strategy. The contract covers LTE network expansion and optimisation projects, including Ericsson Radio Access Network, Evolved
Packet Core, voice over LTE (VoLTE), Wi-Fi calling and professional services. End-users will enjoy superior LTE network
performance and will be able to use HD VoLTE and Wi-Fi calling.
Financial Data
Revenues:
• 2019: TWD83.87bn
• 2018: TWD86.64bn
• 2017: TWD92.07bn
• 2016: TWD94.35bn
Net Income/Loss:

Taiwan Mobile
SWOT Analysis
Strengths • 4G deployment well advanced.
• Highest ARPU in the market.
• 20MHz of contiguous 700MHz (15MHz from the 2013 auction, 5MHz from Ambit) and 5MHz at 1,800MHz,
most spectrum available for LTE usage.
Weaknesses • Slow to gain market share in wireline broadband.

• Mobile revenue in gradual decline as a result of strong domestic competition.
Opportunities • 4G beginning to reverse falling ARPU trend.

• High ARPUs; increased selection of high and mid-range smartphones to boost data revenue.
• Planned investment of TWD5bn in cloud computing should grow business overall.
Threats • New entrants looking to seize 4G opportunities will displace some market share of the incumbent operators.
• Market share with Far EasTone converging, with both operators regularly trading second and third spots.
Company Overview
Taiwan Mobile is a mobile operator in Taiwan. It is a member of the Bridge Alliance, a group of Asian telecoms operators offering a
range of services. The company was founded in 1995 and has become one of the drivers of Taiwan's mobile growth.
In 2012, the Tsai family, which owns a stake in Taiwan Mobile, acquired an 80% stake in cable TV operator Kbro for TWD36bn from
the Carlyle Group. The move enabled Taiwan Mobile to launch an internet TV service, through Kbro, in Q211.
Strategy
Taiwan Mobile continued focusing on the development of its 4G network, and is investing into improving its service quality and
delivery. The company won two 15MHz blocks in the 700MHz and the 1,800MHz bands, with the lowest unit spectrum cost among
the big three incumbent operators. With several new entrants entering the Taiwanese 4G mobile market as mobile virtual network
operators, Taiwan Mobile is developing a wide variety of voice/data and VAS rate plans to target different customer segment groups.
The aim is to acquire new customers and reduce churn by delivering superior user experience.
It is also focused on the development of its Momo e-commerce business, which it gained majority control of in 2011 for TWD8.4bn
(USD290mn).
Developments
2020
In January 2020, Taiwan Mobile secured 60MHz of spectrum in the 3.5GHz band for TWD30.5bn (USD1.0bn), and 200MHz in the
28GHz band for TWD206mn (USD6.8mn).
2017
The company dismantled its 2G network over the course of 2017 and an approximate 20,000 subscribers that had not migrated to
3G/4G were impacted by the termination. Following suit with other companies, there will be a six month grace period where the
phone number of the 2G subscriber will be held for a potential migration to a new 3G/4G enabled plan.
2016
Taiwan Mobile plans to invest TWD11.1bn in 2016, including TWD6bn for mobile, TWD2.2bn for wireline, TWD1.3bn for cable TV and
TWD1.6bn for other operations.
Besides actively trying to expand its 3G/4G customer base, Taiwan Mobile also aims to grow its mobile VAS revenue. The operator
has launched the mobile app for 'myfone' online shopping, with features including an innovative in-app video commentary made by
a host of each product, as well as payments being integrated into the customers' phone bills.
Financial Data
Revenues:
• 2019: TWD124.4bn
• 2018: TWD118.7bn
• 2017: TWD117.2bn
• 2016: TWD116.6bn
Net Income/Loss:
• 2019 (Net Income): TWD12.5bn

Taiwan Demographic Outlook

Demographic analysis is a key pillar of our macroeconomic and industry forecasting model. Not only is the total population of a
territory a key variable in consumer demand, but an understanding of the demographic profile is essential to understanding issues
ranging from future population trends to productivity growth and government spending requirements.
The accompanying charts detail the population pyramid for 2017, the change in the structure of the population between 2017 and
2050 and the total population between 1990 and 2050. The tables show indicators from all of these charts, in addition to key
metrics such as population ratios, the urban/rural split and life expectancy.
Population
(1990-2050)
f = Fitch Solutions forecast. Source: World Bank, UN, Fitch Solutions
Taiwan Population Pyramid

2017 (LHS) & 2017 Versus 2050 (RHS)
Source: World Bank, UN, Fitch Solutions
POPULATION HEADLINE INDICATORS (TAIWAN 1990-2025)

Indicator 1990 2000 2005 2010 2015 2020f 2025f
Population, total, '000 20,311.7 21,840.2 22,602.9 23,102.4 23,485.8 23,817.9 24,045.2
Population, % y-o-y 0.59 0.63 0.37 0.31 0.25 0.15
Population, total, male, '000 10,501.2 11,140.9 11,480.6 11,631.4 11,746.8 11,849.4 11,912.0
Population, total, female, '000 9,810.5 10,699.4 11,122.3 11,471.0 11,738.9 11,968.5 12,133.2
Population ratio, male/female 1.07 1.04 1.03 1.01 1.00 0.99 0.98
KEY POPULATION RATIOS (TAIWAN 1990-2025)
Indicator 1990 2000 2005 2010 2015 2020f 2025f
Active population, total, '000 13,510.2 15,308.1 16,094.5 16,919.0 17,373.1 17,009.8 16,211.1
Active population, % of total population 66.5 70.1 71.2 73.2 74.0 71.4 67.4
Dependent population, total, '000 6,801.5 6,532.1 6,508.4 6,183.4 6,112.7 6,808.1 7,834.1
Dependent ratio, % of total working age 50.3 42.7 40.4 36.5 35.2 40.0 48.3
Youth population, total, '000 5,561.2 4,680.9 4,333.0 3,715.6 3,233.4 3,096.7 3,200.9
Youth population, % of total working age 41.2 30.6 26.9 22.0 18.6 18.2 19.7
Pensionable population, '000 1,240.3 1,851.2 2,175.4 2,467.9 2,879.2 3,711.4 4,633.2
Pensionable population, % of total working age 9.2 12.1 13.5 14.6 16.6 21.8 28.6
URBAN/RURAL POPULATION & LIFE EXPECTANCY (TAIWAN 1990-2025)
Indicator 1990 2000 2005 2010 2015 2020f 2025f
Urban population, '000 13,461.2 15,258.9 16,340.1 17,254.5 18,054.9 18,761.8 19,331.2
Urban population, % of total 66.3 69.9 72.3 74.7 76.9 78.8 80.4
Rural population, '000 6,850.5 6,581.3 6,262.8 5,847.9 5,430.8 5,056.1 4,714.1
Rural population, % of total 33.7 30.1 27.7 25.3 23.1 21.2 19.6
Life expectancy at birth, male, years 71.6 73.3 74.8 75.8 77.0 78.0 79.1
Life expectancy at birth, female, years 76.7 79.1 80.8 82.0 82.7 83.4 84.1
Life expectancy at birth, average, years 73.9 76.0 77.6 78.7 79.7 80.7 81.6
POPULATION BY AGE GROUP (TAIWAN 1990-2025)
Indicator 1990 2000 2005 2010 2015 2020f 2025f
Population, 0-4 yrs, total, '000 1,621.9 1,495.8 1,219.8 975.0 1,024.5 1,072.1 1,074.3
Population, 5-9 yrs, total, '000 1,924.6 1,599.6 1,504.5 1,222.9 981.8 1,040.0 1,084.4
Population, 10-14 yrs, total, '000 2,014.7 1,585.5 1,608.7 1,517.8 1,227.2 984.6 1,042.2
Population, 15-19 yrs, total, '000 1,786.5 1,879.1 1,595.6 1,611.7 1,519.4 1,228.7 985.9
Population, 20-24 yrs, total, '000 1,917.2 1,957.8 1,880.9 1,593.9 1,610.0 1,517.9 1,227.7
Population, 45-49 yrs, total, '000 879.5 1,582.3 1,788.4 1,900.5 1,849.3 1,749.7 1,985.0
Indicator 1990 2000 2005 2010 2015 2020f 2025f
Population, 50-54 yrs, total, '000 850.8 1,030.9 1,556.0 1,763.4 1,870.8 1,822.5 1,726.5
Population, 55-59 yrs, total, '000 762.3 796.7 1,001.4 1,533.8 1,729.4 1,835.9 1,790.8
Population, 60-64 yrs, total, '000 725.3 758.8 780.7 967.5 1,484.9 1,676.8 1,783.9
Population, 65-69 yrs, total, '000 533.4 648.1 707.3 734.2 917.4 1,411.1 1,599.7
Population, 70-74 yrs, total, '000 338.7 568.0 585.7 645.2 673.2 845.3 1,307.0
Population, 75-79 yrs, total, '000 219.8 356.5 470.9 497.1 558.2 588.2 745.1
Population, 100+ yrs, total, '000 0.1 0.4 0.7 1.2 2.3 3.7 6.5
POPULATION BY AGE GROUP % (TAIWAN 1990-2025)
Indicator 1990 2000 2005 2010 2015 2020f 2025f
Population, 0-4 yrs, % total 7.99 6.85 5.40 4.22 4.36 4.50 4.47
Population, 100+ yrs, % total 0.00 0.00 0.00 0.01 0.01 0.02 0.03
Telecommunications Glossary
Definition Definition Definition
3G Third generation ILD International long-distance na not available
4G Fourth generation IoT Internet of Things NFC Near Field Communication
5G Fifth generation IPO Initial public offering NFV Network Functions Virtualisation
ADSL Asymmetric Digital Subscriber Line IPTV Internet protocol television NGAN/NGNNext generation access network
Integrated Systems Digital Operating income before depreciation

AI Artificial intelligence ISDN OIBDA
Network and amortisation
ARPU Average revenue per user ISP Internet service provider OTT Over-the-top
ASP Average selling price IT Information technology POP Point of presence
International
bn billion ITU PSTN Public switched telephone network
Telecommunication Union
CDMA Code Division Multiple Access JV joint venture R&D Research and development
DMB Digital Multimedia Broadcasting kbps kilobits per second RGU Revenue generating unit
Data Over Cable Service Interface

DOCSIS KHz kilohertz SaaS Software-as-a-Service
Specification
DSL Digital Subscriber Line km kilometre SIM Subscriber Identity Module
DTH Direct to Home (Satellite TV) LAN Local Area Network SMS Short Message Service
DVB-H Digital Video Broadcasting - Handheld LEC Local exchange carrier Tbps Terabits per second
Low Power Wide Area

e/f estimate/forecast LPWAN trn trillion
Network
Earnings before income tax, depreciation Unbundled local loop/Local loop

EBITDA LTE Long Term Evolution ULL/LLU
and amortisation unbundling
European Bank for Reconstruction and Universal Mobile Telecomunications

EBRD M2M Machine-to-machine UMTS
Development System
EC European Commission Mbps Megabits per second VDSL Very high-speed Digital Subscriber Line
EMEA Europe, Middle East and Africa mn million VoD Video-on-Demand
FDI Foreign direct investment MEA Middle East and Africa VoIP Voice-over-Internet Protocol
Fibre-to-the-x (x = home, building or

FTTx MENA Middle East and North Africa W-CDMA Wideband CDMA
cabinet)
Worldwide Interoperability for

Gbps Gigabits per second MHz Megahertz WiMAX
Microwave Access
GPON Gigabit passive optical network MMS Mobile Multimedia Service WLL Wireless local loop
GDP Gross domestic product MNP Mobile number portability WTO World Trade Organization
GSM Global system for mobile communications MoU Minutes of Use
Memorandum of
HSDPA High-speed data packet access MoU
understanding
Mobile virtual nework

Hz Hertz MVNE
enabler
IDD International direct dialling MVNO Mobile virtual network

Definition Definition Definition
operator
Telecommunications Methodology
Industry Forecast Methodology
Fitch Solutions’ industry forecasts are generated using the best practice techniques of time-series modelling and causal/
econometric modelling. The precise form of model we use varies from industry to industry, in each case being determined, as per
standard practice, by the prevailing features of the industry data being examined.
Common to our analysis of every industry is the use of vector auto regressions. Vector auto regressions allow us to forecast a
variable using more than the variable's own history as explanatory information. For example, when forecasting oil prices, we can
include information about oil consumption, supply and capacity.
When forecasting for some of our industry sub-component variables, however, using a variable's own history is often the most
desirable method of analysis. Such single-variable analysis is called univariate modelling. We use the most common and versatile
form of univariate models: the autoregressive moving average model (ARMA).
In some cases, ARMA techniques are inappropriate because there is insufficient historic data or data quality is poor. In such cases,
we use either traditional decomposition methods or smoothing methods as a basis for analysis and forecasting.
Fitch Solutions mainly uses OLS estimators and in order to avoid relying on subjective views and encourage the use of objective
views, we use a 'general-to-specific' method. We mainly use a linear model, but simple non-linear models, such as the log-linear
model, are used when necessary. During periods of 'industry shock', for example poor weather conditions impeding agricultural
output, dummy variables are used to determine the level of impact.
Effective forecasting depends on appropriately selected regression models. Fitch Solutions selects the best model according to
various different criteria and tests, including but not exclusive to:
• R2 tests explanatory power; adjusted R2 takes degree of freedom into account;

• Testing the directional movement and magnitude of coefficients;
• Hypothesis testing to ensure coefficients are significant (normally t-test and/or P-value);
• All results are assessed to alleviate issues related to auto-correlation and multicollinearity.
We use the selected best model to perform forecasting.
It must be remembered that human intervention plays a necessary and desirable role in all our industry forecasting. Experience,
expertise and knowledge of industry data and trends ensure that analysts spot structural breaks, anomalous data, turning points
and seasonal features where a purely mechanical forecasting process would not.
Sector-Specific Methodology
Our Telecommunications industry forecasts are generated using a number of principal criteria, and differ from the regression and/
or time-series modelling used in other industries.
• Average Market Growth
Indicator takes into consideration the historical growth patterns of the fixed-line, internet, broadband and mobile markets, providing
a basis from which to forecast. Using historical data is often the most desirable method of analysis. In most cases, subscriber data
are derived from individual operators and/or national regulators.
• Subjective Indicators
Indicators look at a number of factors, such as the following:
• Neighbouring/similar states. These types of markets often share similar telecoms markets. For example, Japan and South Korea
are both highly developed technophile markets where growth prospects are high in 4G ecosystems. Meanwhile, China and India
both offer high growth in successfully emerging markets.
• Tracking growth. High growth may be more likely to be repeated in the near future, and is unlikely to turn into a significant
decline in the short term, although there may be exceptions to this rule.
• Market maturity. Where markets have reached saturation, they are not likely to expand as fast as those that are less developed.
• Competition from alternative technologies, such as VoIP versus fixed-line, fibre versus mobile broadband.
• Operator behaviour. Operators' corporate strategies and investment behaviour may dictate changes in the telecommunications
market. This is similarly the case for regulatory developments, which have been accounted for in our integration of the
Telecommunications Risk/Reward Index.
Sources
Sources used in telecoms reports include national ministries and media/telecoms regulatory bodies, officially released company
results and figures, national and international industry organisations, such as the CTIA, and the International Telecommunication
Union (ITU) and international and national news agencies.
Risk/Reward Index Methodology
Fitch Solutions’ Risk/Reward Index (RRI) provide a comparative regional ranking system evaluating the ease of doing business
and the industry-specific opportunities and limitations for potential investors in a given market.
The RRI system divides into two distinct areas:
Rewards: Evaluation of sector's size and growth potential in each state, and also broader industry/state characteristics that may
inhibit its development. This is further broken down into two sub categories:
• Industry Rewards. This is an industry specific category taking into account current industry size and growth forecasts, the
openness of market to new entrants and foreign investors, to provide an overall score for potential returns for investors.
• Country Rewards. This is a country specific category, and the score factors in favourable political and economic conditions for
the industry.
Risks: Evaluation of industry-specific dangers and those emanating from the state's political/economic profile that call into
question the likelihood of anticipated returns being realised over the assessed time period. This is further broken down into two sub
categories:
• Industry Risks. This is an industry specific category whose score covers potential operational risks to investors, regulatory issues
inhibiting the industry, and the relative maturity of a market.
• Country Risks. This is a country specific category in which political and economic instability, unfavourable legislation and a poor
overall business environment are evaluated to provide an overall score.
We take a weighted average, combining industry and country risks, or industry and country rewards. These two results in turn
provide an overall Risk/Reward Index, which is used to create our regional ranking system for the risks and rewards of involvement
in a specific industry in a particular country.
For each category and sub-category, each state is scored out of 100 (100 being the best), with the overall Risk/Reward Index a
weighted average of the total score. Importantly, as most of the countries and territories evaluated are considered by Fitch
Solutions to be 'emerging markets', our score is revised on a quarterly basis. This ensures that the score draws on the latest
information and data across our broad range of sources, and the expertise of our analysts.
Indicators
The following indicators have been used. Overall, the index uses three subjectively measured indicators, and around 20 separate
indicators/datasets.
RISK/REWARD INDEX INDICATORS

Rationale
Rewards
Industry Rewards
- ARPU Denotes depth of telecoms market. High-value markets score better than low-value ones.
- No. of
Denotes breadth of telecoms market. Large markets score higher than smaller ones.
subscribers
- Subscriber Denotes sector dynamism. Scores based on annual average growth over our five-year forecast period and also take
growth, % y-o-y into account the penetration rate.
- No. of operators Subjective evaluation against Fitch Solutions-defined criteria. Evaluates market openness and competitiveness.
Country Rewards
A highly urbanised state facilitates network rollout and implies higher wealth. Pre-dominantly rural states score lower,
- Urban/rural split
with overall score also affected by country size.
- Age range Proportion of population under 24 years old. States with young populations tend to be more attractive markets.
- GDP per capita,

A proxy for wealth. High-income states receive better scores than low-income states.
USD
Risks
Industry Risks
- Regulatory
Subjective evaluation against Fitch Solutions-defined criteria. Evaluates predictability of operating environment.
independence
Country Risks
- Short-term Score from Fitch Solutions’ Country Risk Index(CRI). Denotes state's vulnerability to externally induced economic
external risk shock, which tend to be the principal triggers of economic crises.
- Policy continuity From CRI. Evaluates the risk of a sharp change in the broad direction of government policy.
From CRI. Denotes strength of legal institutions in each state - security of investment can be a key risk in some
- Legal framework
emerging markets.
From CRI. Denotes risk of additional illegal costs/possibility of opacity in tendering/business operations affecting
- Corruption
companies' ability to compete.
Source: Fitch Solutions
Weighting
Given the number of indicators/datasets used, it would be inappropriate to give all sub-components equal weight. Consequently,
the following weighting has been adopted:
WEIGHTING OF INDICATORS
Component Weighting, %
Rewards 70, of which
- Industry Rewards 65
- Country Rewards 35
Risks 30, of which
- Industry Risks 40
- Country Risks 60
Source: Fitch Solutions
Fit
Fitch
ch Solutions, 30 North C
Colonnade
olonnade,, Canary W
Wharf
harf,, L
London.
ondon. E14 5GN, UK
Tel: +44 (0)20 7248 0468
Fax: +44 (0)20 7248 0467
Web: www.fitchsolutions.com
IS SN: 1748-4863
ISSN:
Copy Deadline: February 2020

opy
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2020
20 Fit
Fitch
ch Solutions Gr
Group
oup Limit
Limited.
ed. All rights rreserv
eserved.
ed.
All information, analysis, forecasts and data provided by Fitch Solutions Group Limited is for the exclusive use of subscribing persons or organisations (including those
using the service on a trial basis). All such content is copyrighted in the name of Fitch Solutions Group Limited and as such no part of this content may be reproduced,
repackaged, copied or redistributed without the express consent of Fitch Solutions Group Limited.
All content, including forecasts, analysis and opinion, has been based on information and sources believed to be accurate and reliable at the time of publishing. Fitch
Solutions Group Limited makes no representation of warranty of any kind as to the accuracy or completeness of any information provided, and accepts no liability
whatsoever for any loss or damage resulting from opinion, errors, inaccuracies or omissions affecting any part of the content.
This report from Fitch Solutions Country Risk & Industry Research is a product of Fitch Solutions Group Ltd, UK Company registration number 08789939 (‘FSG’). FSG is an
affiliate of Fitch Ratings Inc. (‘Fitch Ratings’). FSG is solely responsible for the content of this report, without any input from Fitch Ratings. Copyright © 2020 Fitch
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Q2 2020

Industry Risk/Reward Index ...................................................................................................................................................... 9

Regulatory Development ..........................................................................................................................................................29

Taiwan Demographic Outlook .................................................................................................................................................45

5G Uptake To Drive Operator Revenue Growth

f = Fitch Solutions forecast. Source: Operators, national sources, Fitch Solutions

Latest Updates And Industry Developments

Threats • The mobile market is crowded, with five 4G players.

f = Fitch Solutions forecast. Source: Operators, NCC, Fitch Solutions

Wireline Voice And Broadband

f = Fitch Solutions forecast. Source: Operators, NCC, Fitch Solutions

TAIWAN TELECOMS MARKET - HISTORICAL DATA & FORECASTS (2018-2023)

3G subscriptions ('000) 1,521.8 0.0 0.0 0.0 0.0 0.0

4G subscriptions ('000) 27,698.2 29,208.5 27,128.6 21,526.2 16,390.8 12,505.2

5G subscriptions ('000) 2,518.0 8,505.8 13,881.5 17,948.7

3G subscriptions ('000) 0.0 0.0 0.0 0.0 0.0 0.0

4G subscriptions ('000) 10,216.4 8,575.1 7,227.4 6,089.5 4,964.8 4,094.0

5G subscriptions ('000) 20,389.8 22,122.9 23,516.6 24,716.0 25,902.4 26,834.8

Industry Risk/Reward Index

Smaller Markets Weigh On Overall Asia Outlook

Main Regional Features And Latest Updates

Political Stability A Driver Of RRI Scores

ASIA PACIFIC TELECOMS REWARDS AND RISKS SCORES, Q2 2020

South Korea 90.6 54.9 78.1 88.1 89.5 88.8 82.0 1 3

Japan 79.1 59.1 72.1 91.8 87.4 89.6 78.5 2 11

Australia 72.9 69.0 71.6 91.8 87.9 89.8 78.2 3 12

Singapore 71.2 65.1 69.1 88.1 91.7 89.9 76.6 4 15

Hong Kong 74.6 62.7 70.5 89.2 84.0 86.6 76.3 5 16

New Zealand 64.7 67.8 65.8 82.8 94.7 88.7 74.1 6 22

Taiwan 67.2 53.1 62.3 91.3 89.4 90.4 72.5 7 28

Malaysia 62.8 62.3 62.6 85.4 80.2 82.8 69.9 8 31

China 68.9 45.6 60.7 83.0 79.2 81.1 68.1 9 36

Macau 66.3 66.4 66.3 37.6 74.8 56.2 62.6 10 50

Indonesia 55.1 45.1 51.6 78.8 67.9 73.3 59.5 11 59

Brunei 49.7 66.8 55.7 27.8 68.6 48.2 53.0 12 77

Thailand 58.0 37.4 50.8 31.8 71.3 51.5 51.0 13 81

Vietnam 61.8 31.2 51.1 19.2 68.8 44.0 48.5 14 91

India 42.6 32.8 39.2 55.3 69.3 62.3 47.6 15 94

Philippines 38.9 43.6 40.6 57.0 61.3 59.1 47.3 16 97

Bangladesh 47.2 35.7 43.2 50.9 47.9 49.4 45.4 17 107

Maldives 50.6 41.7 47.5 43.5 37.4 40.4 44.9 18 110

Fiji 47.8 51.1 49.0 28.3 42.0 35.2 43.9 19 116

Nepal 55.3 30.0 46.4 42.8 32.3 37.6 43.2 20 120

Mongolia 44.0 54.3 47.6 16.8 45.1 31.0 41.5 22 131

Tonga 45.1 42.9 44.3 10.3 54.3 32.3 40.0 25 140

Micronesia 51.3 35.7 45.8 12.4 43.8 28.1 39.4 26 144

Pakistan 45.3 36.3 42.2 38.1 29.9 34.0 39.2 27 146

Cambodia 45.7 32.3 41.0 31.8 38.8 35.3 38.9 28 147

Tuvalu 33.8 52.8 40.4 12.4 51.8 32.1 37.4 29 152

Vanuatu 36.6 41.4 38.2 12.4 57.2 34.8 37.0 30 155

Bhutan 32.3 38.0 34.3 43.5 37.5 40.5 36.6 31 156

Myanmar 48.4 29.8 41.9 34.0 20.2 27.1 36.5 32 157

Kiribati 39.4 44.7 41.3 12.4 43.0 27.7 36.3 33 159

Laos 44.7 39.4 42.8 7.7 33.4 20.5 34.7 34 166

Solomon 40.3 38.5 39.7 12.4 37.6 25.0 34.4 35 167

Samoa 33.8 40.0 36.0 7.7 52.2 29.9 33.8 36 168

Afghanistan 27.7 35.0 30.3 4.8 7.2 6.0 21.4 38 199

Global 50.0 50.0 50.0 50.0 50.0 50.0 50.0 ~ ~

Regional 51.5 45.8 49.5 42.9 55.3 49.1 49.4 ~ ~

ASIA PACIFIC TELECOMS INDUSTRY REWARDS SCORES, Q2 2020

South Korea 79.9 93.5 99.0 89.9 90.6 78.1

Country Subscriber ARPU (USD) Postpaid Share Competitive Industry REWARDS

Japan 34.7 86.9 100.0 94.7 79.1 72.1

Australia 20.1 91.0 85.9 94.7 72.9 71.6