Abstract
Chunghwa Telecom will report first-quarter 2026 results on May 7, 2026, Pre-Market; investors are watching revenue resilience, profitability mix, and EPS trends as mobile and broadband momentum offset softer enterprise ICT project timing.
Market Forecast
Based on the company’s prior disclosures and recent quarterly trend, the market expects a steady start to 2026 with revenue broadly flat to slightly higher year over year and margin stability supported by core telecom services; adjusted EPS is anticipated to track roughly in line with last year’s base as cost discipline offsets seasonal revenue mix. The company’s internal outlook points to continued expansion from consumer mobile and fixed broadband, while enterprise ICT revenues may normalize after a strong 2025, with an emphasis on maintaining a healthy gross profit margin profile and stable net profit margin year over year.
Chunghwa Telecom’s main businesses continue to be mobile and fixed-line/broadband services, with near-term highlights centered on increasing 5G penetration and broadband ARPU, and ICT contracts contributing unevenly by quarter due to project timing. The most promising segment is information and communication technology services, anchored by data centers, cloud, cybersecurity, and satellite solutions; this portfolio posted double-digit growth at points in 2025 and remains positioned to contribute incremental revenue in 2026 as international projects and new satellite capacity phase in.
Last Quarter Review
In the fourth quarter of 2025, Chunghwa Telecom delivered revenue of 65.65 billion (company-reported) with a gross profit margin of 33.63%, GAAP net income attributable to stockholders of the parent of 9.29 billion, a net profit margin of 14.17%, and basic EPS of NT$1.20; quarter-on-quarter net profit change was modestly negative.
A notable business highlight was solid consumer momentum: mobile service revenue increased with 5G adoption, and fixed broadband ARPU set another high, while enterprise ICT bookings moderated as earlier projects had been recognized. By business lines, fixed network services remained the largest revenue contributor, followed by mobile services, with ICT services and product sales providing additional support on a seasonal basis.
Current Quarter Outlook
Main business: Mobile and fixed broadband revenue resilience
The key driver for the first quarter of 2026 is stable growth in core telecom services, particularly postpaid mobile and fixed broadband. Management ended 2025 with rising 5G penetration and an uptrend in broadband ARPU, which historically underpin seasonal quarters with better mix even as device-driven sales recede after the holiday cycle. ARPU uplift programs and migration to higher-speed broadband tiers should continue to cushion revenue in the face of maturing subscriber bases.
Profitability in the main business is likely to track stable as scale benefits in network operations and disciplined promotions offset higher manpower costs called out in late 2025. The net profit margin of 14.17% in the fourth quarter provides a recent reference point; absent one-time items like legacy network impairments, margin cadence in Q1 tends to be constructive for a telecom incumbent with high recurring revenue. From a cash angle, lower device subsidy intensity after year-end launch cycles usually provides a slight sequential gross margin tailwind to service mix.
For revenue composition, mobile service should hold its leading weight, supported by steady postpaid ARPU and modest subscriber growth, while fixed broadband revenue growth remains supported by speed upgrades and high-value plans. Churn management and bundling across mobile and broadband are expected to preserve top-line stability and support cross-sell economics in the quarter.
Most promising business: ICT services scaling through data center, cloud, cybersecurity, and satellite
ICT services remain the most promising growth engine, driven by enterprise digital transformation, rising demand for colocation and AI-ready data center capacity, and secular tailwinds in cybersecurity and cloud integration. In 2025, ICT growth was characterized by double-digit expansion during certain quarters, with particular strength in IDC, cloud, and cybersecurity; the company also highlighted overseas momentum, including Southeast Asia project wins and the United States subsidiary’s expansion tied to AI supply chains. This breadth suggests a diversified demand pipeline even if quarterly recognition is lumpy.
Into the first quarter of 2026, project timing is the main swing factor. Q4 commentary indicated that many large ICT projects had already been recognized, implying a softer near-term base for enterprise revenue. However, mid-2026 catalysts are lining up: multi-orbit satellite capability is expanding, and subsea cable investments completed in late 2025 should feed incremental international network services demand. As these initiatives convert to revenue, ICT’s contribution should re-accelerate; until then, Q1 is likely to reflect a normalization phase rather than structural weakness.
Profit impact from ICT depends on mix. Data center and managed security services typically carry healthier margins than hardware-intensive integration. Continued emphasis on higher-value, recurring ICT services should support gross margin accretion over time, even as initial deployment phases dilute near-term margins. Investors should watch backlog disclosures, IDC utilization, and orders for private 5G and satellite-enabled connectivity as leading indicators for mid-2026 revenue inflection.
Stock price swing factors this quarter: Margin cadence, enterprise order timing, and capex signals
The most immediate share-price catalysts are margin trends and the visibility around enterprise ICT bookings. If service revenue mix improves sequentially with lower device contribution, gross profit margin could edge up relative to the fourth quarter’s 33.63%, bolstering confidence in stable EPS. Conversely, unexpected manpower or energy cost pressure could cap margin upside.
Another swing factor is the pace of enterprise order intake versus revenue recognition. Commentary from late 2025 pointed to earlier recognition of major projects, setting a tougher comparison into early 2026. If new awards and international contracts backfill faster than anticipated—even if recognition skews to later quarters—management’s reaffirmation of 2026 guidance ranges would likely be taken positively by the market.
Finally, investors will parse capex disclosures for clues on the monetization timeline of subsea cable and satellite initiatives. Higher capital intensity in 2026 supports strategic positioning, but signals about contracted capacity, IDC pre-leasing, and satellite service commitments will shape expectations for revenue conversion and return on invested capital. Clear articulation of utilization ramps would mitigate concerns about near-term free cash flow while strengthening the medium-term growth narrative.
Analyst Opinions
Recent commentary skews positive, with institutional updates emphasizing stable core service growth and manageable cost trends; the ratio of bullish to bearish views tilts in favor of bullish opinions. Analysts highlighting the company’s fourth-quarter 2025 performance point to the combination of higher mobile ARPU, steady broadband pricing, and a pipeline of ICT opportunities as supportive of a modest year-over-year revenue increase and broadly stable margins in the first quarter of 2026. Several houses underscore the temporary nature of enterprise ICT normalization, expecting midyear re-acceleration as international projects and data center capacity scale.
The constructive camp’s thesis centers on defensiveness plus optionality. They note that quarterly net income attributable to stockholders of the parent improved in the fourth quarter despite softer operating income, and that service-led mix should help maintain net profit margin around the recent 14% reference point in early 2026. They also argue that the satellite and subsea investments, while elevating capital expenditures this year, expand the addressable market in international managed connectivity and enterprise-grade network services, which should unlock higher-value recurring revenue over time.
On balance, the prevailing view expects Chunghwa Telecom to deliver Q1 results that are consistent with full-year guidance trajectories, with revenue up slightly year over year, gross margin steady to slightly higher on mix, and adjusted EPS in line with seasonal patterns. The debate focuses on timing rather than direction: a faster booking pace for ICT and clear utilization disclosures for new infrastructure would strengthen the growth narrative and could serve as positive catalysts for the stock in the coming quarters.Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
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