This article first appeared on GuruFocus .
Release Date: August 05, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Chunghwa Telecom Co Ltd ( NYSE:CHT ) delivered robust Q2 2026 results with revenue, operating income, net income, and EPS all exceeding the high end of guidance, with total revenue reaching its highest Q2 level since 2010.
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The company's ICT business showed strong momentum, with revenue increasing 32% year-over-year and order intake growing 30%, with H1 contract value already matching the full-year 2025 total.
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International business group performed exceptionally well, with revenue up 9% and income before tax up 31% year-over-year, driven by large-scale AI supply chain projects in the US and Southeast Asia.
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Mobile service revenue grew 3.2% year-over-year, with post-paid ARPU increasing 2.4% and 5G market share maintaining the number one position at 39.4%, reflecting strong customer loyalty and premium revenue base.
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The company is strategically positioned for AI growth with the launch of a new AI data center in Taoyuan (up to 36MW capacity) and a leading IDC market share of 78% in Taiwan, alongside the establishment of the ION AI Fund to build the optical ecosystem.
Negative Points
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The company does not disclose the total capital investment required for its AIDC build-out or projected IRRs, leaving investors without clear visibility on the return profile of these significant projects.
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The ION network and AI Fund are still in early stages, with management acknowledging that it will take time to generate real revenue from these initiatives, creating uncertainty about near-term financial impact.
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ICT revenue shows volatility from quarter to quarter due to the project-based nature of the business, which could lead to unpredictable earnings fluctuations.
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Total liabilities rose 27.1% compared to year-end 2025, driven by seasonal dividend payable recognition, although the adjusted debt ratio improved when excluding this factor.
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Working capital was negatively impacted by higher inventory spending for ongoing ICT projects, which could pressure cash flow if project timelines are delayed or costs overrun.
Q & A Highlights
Q: Can you provide more color on the long-term guidance and visibility for the international segment, particularly breaking down demand by region (U.S., Southeast Asia) and project type? A: (CFO Audrey Hsu) We continue to see growing interest from international customers, particularly in AI infrastructure, international connectivity, and data center services in the U.S. and Southeast Asia. While our primary market remains Taiwan, we believe the AI expansion across Taiwan, the U.S., and Southeast Asia aligns with AI development growth. (VP of Finance Angela Tai) In the U.S. market, we see significant opportunities related to the AI supply chain, with potential opportunities estimated at several billion NT dollars over the next two to three years.
Q: What is the required investment to build out the 36 megawatts of AI data center capacity, and what are your projected IRRs? A: (CFO Audrey Hsu) We do not disclose the expected IRR for individual projects. However, on a group basis, our IDC market share in Taiwan reached 78% as of the second quarter, maintaining our position as the market leader. Each investment is subject to disciplined capital allocation and investment evaluation, and we only proceed with projects that meet our financial and strategic return requirements. (VP of Finance Angela Tai) The AIDC is built in phases, so our investments are injected by phases, and we do not disclose the total capital invested for the AIDC.
Q: Can you help us understand the investments you're making in ION (Integrated Optical Network) and how this impacts your business outlook going forward? A: (VP of Finance Angela Tai) The ION ecosystem is quite important in the AI era. We plan to connect our distributed AIDCs at home and abroad through the ION network. However, this is still in the early stage, and it will take time to gain real revenue from the ION network. (CFO Audrey Hsu) All photonics is becoming a key driver for the next generation of data centers. ION is important for building our competitive advantage, given our nearly 80% market share in Taiwan's IDC market. We view ION as both a technology and business initiative that provides an important foundation for future AI-related services and next-generation network capabilities.
Q: Can you help us understand the drivers of the volatility in enterprise ICT revenues from one quarter to another? A: (VP of Finance Angela Tai) The volatility pattern for ICT revenue this year is similar to the previous year. We are quite confident in beating our ICT revenue targets for this year.
Q: What drove the spectacular growth in the international sector, and how sustainable is this growth given that some of it could be project-based? A: (CFO Audrey Hsu) The growth is driven by the global trend of AI development, with growing interest from international customers in AI infrastructure, international connectivity, and data center services. We see this AI expansion across Taiwan, the U.S., and Southeast Asia as aligned with continued AI development growth. (VP of Finance Angela Tai) In the U.S., we see opportunities related to the AI supply chain, with potential opportunities estimated at several billion NT dollars over the next two to three years.
Q: What is the total investment required to build out the 36 megawatts of AI data center capacity? A: (VP of Finance Angela Tai) The AIDC is built in phases, and when fully built out, it could provide a maximum of 36 megawatts. Our investments are injected by phases, and we do not disclose the total capital invested for the AIDC.
Q: What is the revenue opportunity from ION, and how much capital are you deploying there? A: (VP of Finance Angela Tai) The ION ecosystem is still in the early stage of development. We are investing in building up this network, but it will take time to gain real revenue from the ION network. (CFO Audrey Hsu) ION is important for the next generation of data centers and helps build our competitive advantage. Given our leading position in Taiwan's IDC market and our customers' positions across the Asia Pacific, we view ION as both a technology and business initiative that provides an important foundation for future AI-related services.
Q: Can you provide more details on the AI data center projects and the expected returns? A: (CFO Audrey Hsu) We don't usually disclose the expected IRR for individual projects. However, our IDC market share in Taiwan reached 78% as of the second quarter, maintaining our position as the market leader. Each investment is subject to disciplined capital allocation and investment evaluation, and we only proceed with projects that meet our financial and strategic return requirements.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
