Chunghwa Telecom : Meeting Handbook (3MB)

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(This translated document is prepared in accordance with the Chinese version and is for reference only. In the event of any inconsistency between the English version and the Chinese version, the Chinese version shall prevail.)

Chunghwa Telecom Co., Ltd.

2024 Annual General Meeting Handbook

Date: May 31, 2024, Friday

Venue: Chunghwa Telecom Training Institute No. 168, Minzu Road, Banchiao District, New Taipei City, Taiwan, R.O.C.

	Chunghwa Telecom Co., Ltd.
	2024 Annual General Meeting Handbook
	Table of Contents
Agenda	1
Report Items	2
I.	2023 business report	2
II.	2023 audit committee's review report	7
III.	2023 compensation distribution to directors and employees	8
IV.	2023 compensation to directors	9
V.	Amendments to the Ethical Corporate Management Best Practice Principles	13
Matters for Ratification	14
I.	Ratification of 2023 business report and financial statements	14
II.	Ratification of 2023 earnings distribution proposal	36
Matters for Discussion	38
I.	Amendments to the Articles of Incorporation	38
II.	Release of non-competition restrictions on Directors	45
Extemporary Motions	48
Meeting Adjourned	48
The Company's Rules	49
I.	Articles of Incorporation of Chunghwa Telecom Co., Ltd	49
II.	Ordinance of Shareholders Meetings of Chunghwa Telecom Co., Ltd	58

1. Ethical Corporate Management Best Practice Principles of Chunghwa Telecom Co., Ltd. 69

Appendix：Shares held by the directors

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Agenda

Method for holding the meeting: physical

Meeting Date: Friday, May 31, 2024

Meeting Venue: Chunghwa Telecom Training Institute

No. 168, Minzu Road, Banchiao District, New Taipei City 220, Taiwan, R.O.C.

The Chairman Calls the Meeting to Order

Chairman's Address

Report Items

I. 2023 business report

II. 2023 audit committee's review report

1. 2023 compensation distribution to directors and employees IV.2023 compensation to directors
   V. Amendments to the Ethical Corporate Management Best Practice Principles

Matters for Ratification

1. Ratification of 2023 business report and financial statements II. Ratification of 2023 earnings distribution proposal

Matters for Discussion

I. Amendments to the Articles of Incorporation

II. Release of non-competition restrictions on Directors

Extemporary Motions

Meeting Adjourned

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Report Items

1. 2023 business report

Dear Shareholders,

In 2023, the world ushered in recovery and business opportunities following the lifting of Covid-19 pandemic restrictions. The opening of borders drove international roaming revenue growth; relief in supply chain pressures facilitated increased sales of high-end phones, further boosting 5G penetration rates; digital transformation persisted despite pandemic slowdown and even became a crucial driver for sustainable transformation. On the other hand, as global dynamics, and geopolitical risks change rapidly, network resilience and digital adaptability continued to bring both opportunities and challenges for the telecommunications industry.

Taiwan's telecommunication industry completed its consolidation in December 2023, reverting to the new three-player landscape. Under this domestic environment and international context, Chunghwa Telecom, with the hard work of its management team and all employees, delivered impressive operational performance, maintaining and expanding its leading position in the industry. In 2023, our consolidated revenue reached NT$223.2 billion, net income attributable to stockholders of the parent company was NT$36.9 billion, and basic earnings per share was NT$4.76. Notably, our revenue and profit measures not only beat the high end of our financial forecasts but also set a six-year high, living up to shareholders' expectations.

Steady Growth Across the Three Major Business Groups

Innovating and Creating Value for Customers

In 2023, leveraging its advantages in mainstream frequency bands (below 6 GHz) with the widest bandwidths, the highest number of nationwide mobile base stations, and the largest mobile data capacity in the telecom industry, Chunghwa Telcom was once again recognized and awarded by Speedtest® and Opensignal as Taiwan's number one operator with the best 5G network speed and the most extensive mobile coverage, making it Taiwan's premier 5G mobile operator. With outstanding mobile network quality and innovative applications, coupled with a strong reputation for customer service, our overall number of mobile broadband subscribers continued to grow, reaching 13.1 million. Among these, the total number of 5G subscribers exceeded three million, continuing its leading position in Taiwan. The stable 5G penetration rate also continued robust growth in mobile revenue. As of the end of 2023, our mobile subscriber market share and mobile revenue market share were 37.6% and 40%, respectively, and our revenue market share consistently outperforming mobile subscriber market share and significantly surpassing its peers.

The overall number of Taiwan's mobile subscribers decreased in 2023, while, during the market consolidation process, we made an inspiring increase in the number of our monthly postpaid mobile subscribers. Meanwhile, the number of our monthly subscribers experienced positive year-over-year (YoY) growth in all months throughout the year. We believe steady customer growth is the driving force promoting our continuous upward momentum in this new industry landscape. In addition, in 2023, driven by the subscriber growth and the upgrade of 5G, Chunghwa Telecom's mobile business revenue increased by 6.4% YoY and mobile 090 postpaid

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ARPU rose by 4.2% YoY, taking the lead in the industry. Notably, the average mobile monthly fee uplift resulting from 4G to 5G migration increased to 44.9%, delivering impressive performance.

In terms of the fixed broadband business, in 2023, Chunghwa Telcom continued its strategy to provide incentives to customers to upgrade to higher speeds, and successfully elevated high- speed products with speeds exceeding 300 Mbps to become the mainstream among our portfolio, as well as brining in a 32.4% increase in the number of customers. On the other hand, we encouraged low-speed customers to upgrade as well to strengthen the overall performance. In December 2023, our fixed broadband ARPU reached NT$783, representing a 1.1% YoY growth. Moving forward, we will continue to optimize customer structure, provide high-speed Gbps services, and encourage customer upgrades, maintaining sustained ARPU growth.

In 2023, all three of our business groups actively seized business opportunities and launched popular services to deliver year-over-year steady revenue growth. For our Customer Business Group, in addition to the continuous growth of mobile and fixed broadband businesses, we continued to invest in content, including acquiring the broadcasting rights of popular events such as the World Baseball Classic, the Summer World University Games in Chengdu, and the Asian Games in Hangzhou, garnering the enthusiasm of audiences in Taiwan for sports events. Additionally, our investments in high-quality TV content were recognized by Taiwan's first-tier awards like the Golden Bell Awards and others. The subscribers of our IPTV/MOD and Hami Video continued to grow and reached new highs, maintaining our position as Taiwan's largest audiovisual platform. In 2023, we even established the "Chunghwa Digital Cultural and Creative Management Consulting Co., Ltd", to enhance cultural and creative businesses, enlarge investments in content creation and explore limitless opportunities for IP applications.

To support our Enterprise Group Business, we continued to leverage AI, big data, cloud, cybersecurity, and other technologies to develop Information, Communications, and Technology (ICT) solutions for different industries. In 2023, our ICT business revenue delivered double-digit growth year-over-year, mainly driven by three major application services: IDC/cloud, cybersecurity, and AIoT, as well as emerging services like 5G private network. We have successfully empowered hundreds of enterprises across various industries during the digital transformation wave, earning significant recognition from our customers. In addition to providing technical expertise for project implementation, we actively developed monthly subscription-based services to create stable and sustained recurring income. In 2023, the recurring revenue from IDC, cloud, and cybersecurity services showed robust growth. Furthermore, to enhance operations and innovation for small and medium-sized enterprises through 5G private networks, we introduced a 'lease-to-own' model, lowering the entry threshold for customers who wanted to enter the 5G vertical domain, which successfully create stable revenue streams and expand our market share in the 5G private network space. Looking ahead, we will continue to leverage our collective strengths, deepen our engagement with key enterprise customers, and expand our digital ecosystem through strategic alliances, to further strengthen our growth momentum.

As a leader in Taiwan's telecom industry, Chunghwa Telecom has boundless markets globally. In 2023, Chunghwa Telecom celebrated the 20th anniversary of its listing of American Depositary Receipts on the New York Stock Exchange, as well as the 15th anniversary of our subsidiary in Japan, demonstrating our commitment to international markets and years of

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globalization efforts. In 2023, we achieved remarkable milestones in international expansion. In addition to bringing international customers to Taiwan and promoting Internet Data Center (IDC) and cloud business services, we followed the footsteps of other Taiwanese enterprises, extending Taiwan's influence globally and are actively developing business partnerships in international markets with local strategic allies. We successfully obtained a specific construction license for telecommunications and communication work in Japan, facilitating the expansion of our information and communications services in Japan. Meanwhile, we also signed a collaboration Memorandum of Understanding (MoU) with hospitals and local governments in Thailand, focusing on developing telemedicine and smart city application; as well as an MoU in partnership with Poland's EXATEL, aiming to explore emerging business opportunities in Europe. In addition to our longstanding presence in the United States, Japan, and Southeast Asia, we are poised to extend our reach to Europe in 2024. By establishing subsidiaries and replicating successful overseas experiences, we are committed to advancing our European business endeavors.

Advancing Technological Excellence, Strengthening Network Resilience and Venturing into Emerging Sectors

We continuously pursue excellence in technology, aligning ourselves with international telecom industry leaders. In 2023, the 3rd Generation Partnership Project (3GPP), an organization leading the global development of mobile communication technology, hosted a conference in Taiwan and Chunghwa Telecom was invited to speak on the development of 6G, underscoring Taiwan's contribution to international mobile standards. To advance innovative telecommunications technology centered around all-optical networks, we signed an MoU with Japan's NTT Corporation to jointly develop IOWN (Innovative Optical and Wireless Network) innovative applications. In response to the increasing global demand for network resilience and the widespread commercial use of low-earth orbit satellites, Chunghwa Telecom leveraged on its satellite technology to secure an exclusive agency contract for OneWeb's Taiwan low- earth orbit satellite in 2023. This not only enhances Taiwan's overall network resilience but also leads Taiwan into a new era of low-earth orbit satellite applications.

Robust Financial Health, Actively Rewarding Shareholders and Investing for the Future

As our core business continued to exhibit stable growth and ICT gross margin continued to grow, coupled with an increase in sales revenue following the ease of supply chain pressures, our EPS grew by 1.3% in 2023. With effective planning and resource allocation, we continued to maintain a robust financial position and strong cash flow. International credit rating agency Standard & Poor's continues to assign us a foreign long-term rating of "AA," making us the best and only telecommunications company globally to receive this rating. Adhering to our intention of returning earnings to shareholders, in 2023, we maintained a cash dividend payout ratio approximately 100%. In the future, we will continue to uphold a stable dividend policy, actively responding to shareholder expectations.

A robust financial position serves as the cornerstone for our continued investment in the future. In 2023, our capital expenditures were NT$30.7 billion, primarily allocated to precision construction of 5G and core access networks, establishing Internet Data Centers (IDCs), and expanding international submarine cables in response to the digital transformation demands and opportunities driven by services like Over-the-top (OTT). We also continue to phase out

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high-energy-consuming equipment, accelerating our efforts to achieve carbon reduction targets.

Sustainable Development, Staying Ahead of the Curve

Our vision is to become an internationally recognized benchmark enterprise grounded in sustainable development. In 2023, we received validation of greenhouse gas reduction near-term targets from the SBTi, and further submitted long-termnet-zero commitment. Simultaneously, we were approved to join RE100 with a pledge to achieve 100% renewable energy usage by 2040. To meet this objective, we have elevated our renewable energy procurement target to 69 million kWh annually. To promptly access the entire company's power data, we're driving the development of an "Environmental and Energy Central Monitoring Center," overseeing all the 4G and 5G base stations and switch rooms. To comprehensively understand the group's carbon emissions, the greenhouse gas inventory and verification now extend to include Scope 1 and Scope 2 emissions of the group's subsidiaries. To effectively monetize carbon emissions, we have implemented an internal carbon pricing and carbon fee fund system, incentivizing technological carbon reduction and energy-saving innovations. In addition, we participated in the initial batch of carbon trading on the Taiwan Carbon Solution Exchange after its establishment, and will tap on the carbon trading market in accordance with the Company's roadmap towards carbon neutrality of its products. We recognize the corporate responsibility to preserve and promote biodiversity and are committed to achieving net positive impact and net zero deforestation by 2030. Additionally, we are expanding our tree planting and afforestation initiatives.

We prioritize digital equity. In 2023, we collaborated with the Chunghwa Telecom Foundation to launch the "Smart Classroom Program," focusing on educating the elderly on mobile phone fraud prevention to enhance their ability to protect themselves from scams. We have also offered online courses for seniors to enhance their digital literacy and learning capabilities. We are committed to building a happy workplace, offering flexible working hours tailored to the nature of each business unit's work. To reassure employees about their ability to balance work and childcare duties, we have widened the criteria for reduced working hours to accommodate childcare needs. We have launched the women empowerment initiative, organizing seminars featuring female CEOs and parenting experts to promote gender equality awareness. Additionally, we have introduced leadership development courses tailored for potential managers, with over 30% female participants.

To enhance the supervision and decision-making on sustainable development within the Company's highest governance unit, in 2023, we elevated the Sustainability Committee to the level of a functional committee of the board of directors. It was merged with the original "Board Strategy Committee" and renamed the "Board Sustainable Development and Strategy Committee." Additionally, the Chairman assumed the role of our Chief Sustainability Officer to oversee the Company's sustainable development efforts. We understand that fostering ESG initiatives is primarily about mindset. To cultivate a corporate culture that integrates these values into our daily operations, in 2023, we increased the variable proportion of executive compensation linked to ESG outcomes to 15%. In 2024, we will further raise this to 25%, demonstrating our commitment to sustainable governance from the top down. To strengthen compliance with intellectual property laws, we became the first telecommunications company in Taiwan to be certified under the Taiwan Intellectual Property Management System (TIPS).

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We further lead our industry by implementing a compensation claw back mechanism, reinforcing the alignment between senior executives and shareholder interests to achieve international best practices in corporate governance.

Our significant progress in sustainable development has garnered international recognition, as evidenced by our consecutive inclusion in the Dow Jones Sustainability Index (DJSI) World Index, where we have been ranked as the top global telecommunications company. Our MSCI rating has been upgraded from A to AA. Moreover, we are honored to once again receive the prestigious Jade Award, the highest accolade in The Asset ESG Corporate Awards. This marks our third consecutive win, making us the only company to achieve this distinction in Taiwan.

Future Outlook

In light of the global trends towards ESG sustainability and industrial transformation, and in alignment with macro policies in Taiwan, we have conducted a thorough analysis that integrates the external industry environment with our internal core strengths. Looking forward to 2024, our company will leverage our four abundant assets: "customers and partners, technology platforms, infrastructure, and talent" to fulfill our mission of creating value for stakeholders. We will uphold four core values: "Integrity, Trust, Innovation, Accountability," to advance towards the Company's three major visions: "becoming an international benchmark enterprise built upon sustainable development, becoming a leading brand of digital co- creation ecosystems, and becoming a first-rate technology group with trillions in market value."

Chairman and Chief Executive Officer: Shui-Yi Kuo

President: Chau-Young Lin

Vice President, Accounting Department: Shu-Ling Chen

February 23, 2024

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1. 2023 audit committee's review report

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1. 2023 compensation distribution to directors and employees

1. The 2023 compensation distribution to directors and employees was approved by the 10th meeting of the 10th Board of Directors on February 23, 2024.
2. The 2023 compensation distribution to directors and employees：

Item		NT$
Net income		36,916,707,800
Profit	(A)	46,819,656,640
Ratio of Directors' compensation to profit	(B)	0.085%
Directors' compensation	(C)=(A)*(B)	39,796,708
Ratio of Employees' compensation to profit	(D)	3.2518%
Employees' compensation	(E)=(A)*(D)	1,522,481,595

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