Chee ChingPresident

4904 (TWSE)2018 4Q Investor Update

Sherman LeeCFO

President Chee Ching

Dr. Chee Ching joined Far EasTone in Sep. 2018. Before joining Far EasTone, she has

rich experience in network operation and IT management in AT&T more than 23

year. Her professional background covering Network Operations Planning, Systems

Engineering, and Process Engineering to Delivering E2E System Solutions for AT&T’s

products and services. For her distinguished performance, Chee is awarded

Outstanding 50 Asian Americans in Business in 2018.

Present

President, Far EasTone

Previous

Chief Transformation Officer, Far EasTone

Vice President, Technology Development, AT&T

Assistant VP, Technology Development, AT&T

Director, PMOSS Planning, Engineering, and Development, AT&T

District Manager, GNOC, AT&T

Assistant Professor, Decision & Information Systems, College of Business, Arizona

State UniversityEducation

Ph. D., Management Information System, Purdue University

M.S. Management Information System, University of South Carolina

Bachelor of Science, International Business, National Taiwan University

3

Disclaimer

This presentation contains forward-looking statements. These forward-looking statements are subject to risks, uncertainties and assumptions, some of which are beyond our control. Actual results may differ materially from those expressed or implied by these forward-looking statements. Because of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this presentation might not occur in the way we expect, or at all. You should not place undue reliance on any forward-looking information.

In preparing the information herein, FET have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was provided to FET or which was otherwise reviewed by FET. Neither FET nor its advisors have made any representation or warranty as to the accuracy or completeness of such information and nor do they assume any undertaking to supplement such information as further information becomes available or in light of changing circumstances. None of FET, nor any of their respective affiliates, advisers or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection with this presentation. Neither this presentation nor any of its contents may be reproduced to a third party without the prior written consent of FET.

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Agenda

I. Market Overview & FET 2018 4Q Operational Performance

II. FET 2018 4Q Financial Performance

III. 2019 Guidance

IV. Management Highlight

5

Mobile Market in TaiwanIncreasing Revenue Pressure

5

2015-18 Mobile Rev in Taiwan(1) 2018 Mobile Rev in Taiwan(1)

by Quarter

Source: (1) 2015-2017 mobile revenue data from company’s reported financials, and 2018 data from company’s factsheets

48

55

49

52

1Q18 2Q18 3Q18 4Q18

-9.8%-10.1%-4.6% +1.6%

217

205

227 225224

2014 2015 2016 2017 2018

Total Mobile Rev in Taiwan(1)

Unit: NT$bn

-5.7%-3.3%-0.7%+1.3%

Unit: NT$bn

YoY

6

ICT Orders Grew Substantially Enterprise High Growth Areas

Y2017 Y2018

FET Operational PerformanceThriving New Economy

Cloud Business

+41%YoY

Security Business

+31%YoY

Total Contract Amount+89% YoY

7

Average Customer Satisfactionon Network QualityPostpaid Churn Rate %

2H16 1H17 2H17 1H18 2H18

1.7%1.8%

1.7%1.8% 1.9%

1.6%1.49%

1H16 2H16 1H17 2H17 1H18 2H18 Jan'19

FET Operational PerformanceImproved Churn Rate and Increased Customer Satisfaction

FET customers

Source: company data; customer satisfaction surveys were conducted by a third-party consulting firm.

Other customers

8

Agenda

I. Market Overview & FET 2018 4Q Operational Performance

II. FET 2018 4Q Financial Performance

III. 2019 Guidance

IV. Management Highlight

9

Postpaid ARPU(2) (NT$)Service Revenue(1) (NT$mn)

878

770787

847843866

3Q17 4Q17 1Q18 2Q18 3Q18 4Q18

FET Financial PerformanceService Revenue and ARPU facing challenges

Source: Company DataNote: (1) IFRS 15 (relative fair value) was adopted since 2018/0101, but 2017 was not comparatively adjusted.

(2) Mobile ARPUs are under residual value method across 2017-2018.

17,055

13,63113,55414,64114,341

16,769

3Q17 4Q17 1Q18 2Q18 3Q18 4Q18

10

7,262

5,850

6,8747,151

6,8106,476

31.9% 31.4%33.1%

26.2%

32.7%

26.3%

3Q17 4Q17 1Q18 2Q18 3Q18 4Q18

2,2492,453

2,678 2,618

1,632

2,854

3Q17 4Q17 1Q18 2Q18 3Q18 4Q18

FET Financial PerformanceProfitability

Source: Company DataNote: IFRS 15 (relative fair value) was adopted since 2018/01/01, but 2017 was not comparatively adjusted.

Net Income (NT$mn)EBITDA (NT$mn) and Margin %

11

Consolidated Financial Result4Q18 & FY2018 Result vs. Guidance

ItemUnit: NT$ mn, except for EPS

4Q18(1)

Result(Relative Fair

Value)

YoY%(2) % of Guidance

FY2018Result

(Relative Fair Value)

YoY%(2) % of Guidance

▶Total Revenue 22,289 -1% 89% 86,635 -6% 96%

▶EBITDA 5,850 -5% 84% 26,685 -5% 95%

▶Pre-tax Income 2,084 -11% 65% 11,869 -10% 90%

▶Net Income 1,632 -14% 65% 9,381 -14% 90%

▶EPS $0.50 -14% 65% $2.88 -14% 90%

Source: Company DataNote (1) There was a one-time expense increased YoY mainly arising from employee early retirement made in 4Q18

(2) IFRS 15 (relative fair value) was adopted since 2018/01/01, but 2017 was not comparatively adjusted.

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As of 3Q18 As of 4Q18

Consolidated Financial Result4Q18 Financial Stats

Cash & Cash Equivalents

Available-for-Sale Financial Assets &

Derivatives

Total Borrowing

Net Debt(1)

Shareholders’ Equity

Net Debt to EBITDA (x)

Free Cash Flow – YTD(2)

Cash-based Capex – YTD

EPS(NT$) – YTD

(NT$ mm unless otherwise stated)

(1) Net Debt= Total Borrowing – (Cash and Cash Equivalent +Available-for-Sale Financial Assets & Derivatives )(2) Free Cash Flow = Operating Cash flow- acquisition of fixed-asset & intangible asset

4,248

1,279

29,464

23,937

74,036

0.90x

15,960

7,103

$2.88

7,366

1,281

32,842

24,195

72,363

0.89x

15,498

5,143

$2.38

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Agenda

I. Market Overview & FET 2018 4Q Operational Performance

II. FET 2018 4Q Financial Performance

III. 2019 Guidance

IV. Management Highlight

14

Consolidated Financial Forecast2019 Guidance

Note: (1) 2019 financial guidance is prepared in accordance with IFRS 16, resulting an increase of 3.6bn in EBITDA and depreciation; but 2018 financial result was not comparatively adjusted.

Item(Unit: NT$ Million, except for EPS & margin)

FY2019Guidance(1)

FY2018Result

YoY%

Total Revenue 84,658 86,635 -2.3%

EBITDA 28,852 26,685 +8.1%

Pre-tax Income 10,832 11,869 -8.7%

Net Income 8,467 9,381 -9.8%

EPS $2.60 $2.88 -9.8%

15

NT$bn

8.07.18.8

9.911.8

13.2

0

4

8

12

16

2014 2015 2016 2017 2018 2019E

14.0%12.2%

10.5%9.5%

8.2% 8~9%

Capex toSales %

2019 Capex GuidanceKeep at Low Level

Capex (NT$bn) and Capex to Sales %

planned: 8.5

Source: company dataNote: (1) 2018 planned capex was 8.5bn, but spent 7.1bn.

(1)

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Dividend per share (NT$)

3.753.75 3.753.75 3.75

2014 2015 2016 2017 2018

Source: company dataNote: (1) 2018 dividend distribution is subject to 2019 AGM’s approval

Dividend DistributionGood Track Record of Dividend

Maintain Stable Cash Dividend to Shareholders

(1)

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Agenda

I. Market Overview & FET 2018 4Q Operational Performance

II. FET 2018 4Q Financial Performance

III. 2019 Guidance

IV. Management Highlight

18

From Telecom to Telecom+Big Data, AI, IoT &Cloud Enabled

Digital Services & Enterprise Solutions

Management Highlight2019-2021 Corporate Strategy Theme

19

Grow New Economy business revenues

Deliver sustainable and profitable growths in

Cloud, IoT, Security and ICT business

Form Strategic Partnership with world leading

Tech companies

Protect Core Mobile Business with Big Data

Analytics Drive down costs and improve Ops Efficiency

Enrich our offer with Value Added Services

Provide the BEST customer experience

Continue to develop internal talents in new

technologies

Continue to maintain a stable dividend policy

analytics

data

customer

Management Highlight2019 Priorities

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Q & A

Websites email

Investor Relations IR@fareastone.com.tw

http://corporate.fetnet.nethttp://www.fetnet.net

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