Taiwan Mobile 2009 Annual Report Worldreginfo - 1796F75a-1B8b-442A-A876-E99ac87e52b3 Ticker : 3045

Ticker : 3045

Name Rosie Yu

Taiwan Mobile Title Vice President Spokesperson Telephone (02) 6635-1880

Email [email protected]

Name Josephine Juan

Title Director Deputy Spokesperson Telephone (02) 6636-6970

Email [email protected]

IR Contact Email [email protected] 2009 Annual Report

Name Fubon Securities Co., Ltd.

Address 2F, No. 17, Syuchang St., Jhongjheng Dist., Taipei Stock Transfer Agent Telephone (02) 2361-1300

Website www.fbs.com.tw Taiwan Mobile Official Website www.taiwanmobile.com Website Deloitte & Touche Peter Fan, CPA, and S. C. Huang, CPA

Address 12F, No. 156, Minsheng E. Rd., Sec. 3, Taipei Independent Auditor Telephone (02) 2545-9988

Website www.deloitte.com.tw

Listing of Foreign Securities None

Breaking Trough Taiwan Mobile Publication Date : January 31, 2010 Company Website : www.taiwanmobile.com MOPS : newmops.twse.com.tw The cover’s design idea is based on Chang Xu’s winning match of Go (Weichi) during the Go Master title competition. The Taiwanese Go Chess player living in Japan was using the White stones. His victorious play is a fitting representation of Taiwan Mobile’s management strategy of acting cautiously and proactively while positioning a complete telecommunications and media domain to break the competition stalemate and reach a final victory.

Taiwan Mobile 2009 Annual Report WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Ticker : 3045

Name Rosie Yu

Taiwan Mobile Title Vice President Spokesperson Telephone (02) 6635-1880

Email [email protected]

Name Josephine Juan

Title Director Deputy Spokesperson Telephone (02) 6636-6970

Email [email protected]

IR Contact Email [email protected] 2009 Annual Report

Name Fubon Securities Co., Ltd.

Address 2F, No. 17, Syuchang St., Jhongjheng Dist., Taipei Stock Transfer Agent Telephone (02) 2361-1300

Website www.fbs.com.tw Taiwan Mobile Official Website www.taiwanmobile.com Website Deloitte & Touche Peter Fan, CPA, and S. C. Huang, CPA

Address 12F, No. 156, Minsheng E. Rd., Sec. 3, Taipei Independent Auditor Telephone (02) 2545-9988

Website www.deloitte.com.tw

Listing of Foreign Securities None

Taiwan Mobile 2009 Annual Report WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Head Office (02) 6638-6888 13F-1, No. 172-1, Sec. 2, Ji-Lung Rd., Da-An Dist., Taipei Taichung Branch (04) 3600-8888 9F-1, No. 236, Sec. 2, Wucyuan W. Rd., Nantun Dist., Taichung City Company Store Location Kaohsiung Branch (07) 8600-999 6F-1, No. 91, Jhongshan 2nd Rd., Cianjheng Dist., Kaohsiung City

Taiwan Mobile Customer Service 0809-000-852

Northern Taiwan Central Taiwan Southern Taiwan Taipei Daan Service Center Taipei Nanchang Service Center Jhunan Boai Service Center Chiayi Linsen Service Center No. 172-3, 172-4, Sec. 2, Jilong Rd., Daan Dist., Taipei No.107, Sec. 1, Nanchang Rd., Zhongzheng Dist., Taipei No. 142, Boai St., Jhunan Township, Miaoli County No. 185, Linsen W. Rd., West Dist., Chiayi City Taipei Vieshow Service Center Banciao Minzu Service Center Miaoli Jhongjheng Service Center Chiayi Cueiyang Service Center No. 20, Songshou Rd., Xinyi Dist., Taipei No. 33, Minzu Rd., Banciao City, Taipei County No. 501, Jhongjheng Rd., Miaoli City, Miaoli County No. 636, Cueiyang Rd., Chiayi City Taipei Dinghao Service Center Banciao Sinjhan Service Center Fongyuan Jhongjheng Service Center Chiayi Puzih Service Center 1F, No. 71, Sec. 4, Zhongxiao E. Rd., Daan Dist., Taipei No.112, Sec. 1, Wunhua Rd., Banciao City, Taipei County No. 448, Jhongjheng Rd., Fongyuan City, Taichung County 1F, Nos. 28, 30, Wunhua S. Rd., Puzih City, Chiayi County Taipei Bade Service Center Banciao Jiangzihcuei Service Center Taichung Wunsin Service Center Tainan Sinying Service Center No. 34, Sec. 3, Bade Rd., Songshan Dist., Taipei No. 320, Sec. 2, Wunhua Rd., Banciao City, Taipei County 1F/2F, No. 151, Sec. 4, Wunsin Rd, Beitun Dist., Taichung 1F, No. 261, Minjhih Rd., Sinying City, Tainan County Taipei Zhongxiao Service Center Banciao Guanqian E. Service Center City Tainan Simen Service Center Nos. 659, 661, Sec. 5, Zhongxiao E. Rd., Xinyi Dist., No. 9, Guanqian E. Rd., Banciao City, Taipei County Taichung Zihyou Service Center No. 357, Sec. 2, Simen Rd., West Central Dist., Tainan City Taipei Banciao Siwei Service Center 1F, No. 43, Sec. 2, Zihyou Rd., Central Dist., Taichung City Tainan Minsheng Service Center Taipei Minsheng E. Service Center No. 233, Siwei Rd., Banciao City, Taipei County Taichung Liming Service Center 1F, No. 279, Sec. 2, Minsheng Road, West Central Dist., 1F, No.71, Sec. 4, Minsheng E. Rd., Songshan Dist., Yonghe Fuhe Service Center No. 436, Sec. 2, Liming Rd., Nantun Dist., Taichung City Tainan City Taipei No.137, Fuhe Rd., Yonghe City, Taipei County Taiping Shusiao Service Center Tainan Yongkang Service Center Neihu Guangdian Service Center Yonghe Jhongjheng II Service Center No.69, Shusiao Rd., Taiping City, Taichung County No.663, Jhonghua Rd., Yongkang City, Tainan County No. 498, Ruiguang Rd., Neihu Dist., Taipei No.320, Jhongjheng Rd., Yonghe City, Taipei Taichung Donghai Service Center Tainan Minzu Service Center Taipei Kunyang Service Center Jhonghe Jhonghe Service Center No. 20, Dongyuan Lane, Taichunggang Rd., Longjing No. 55-1, Sec. 2, Minzu Rd., West Central Dist., Tainan No.378, Sec. 6, Zhongxiao E. Rd., Nangang Dist., Taipei 1-2F, No. 304, Jhonghe Rd., Jhonghe City, Taipei County Township, Taichung County Tainan Haidian II Service Center Taipei Raohe Service Center Jhonghe Nanshihjiao Service Center Fongjia Fusing Service Center No. 163, Sec. 1, Haidian Rd., Annan District, Tainan City No.697, Sec. 4, Bade Rd., Songshan Dist., Taipei No. 2, Lane 64, Sec. 1, Singnan Rd., Jhonghe City, Taipei No. 338, Fusing Rd., Situn Dist., Taichung City Tainan Kunshan Service Center Taipei Guangfu S. Service Center County Taichung Shalu Service Center No. 824, Dawan Rd., Yongkang City, Tainan County No.415-3, Guangfu S. Rd., Xinyi Dist., Taipei Jhonghe Liancheng Service Center No. 124, Shatian Rd., Shalu Township, Taichung County Yongkang Jhongshan S. II Service Center Nanjing Sanmin Service Center No.267-1, Liancheng Rd., Jhonghe City, Taipei County Taichung Chongde Service Center No. 28-1, Jhongshan S. Rd., Yongkang City, Tainan County No.84, Sec. 5, Nanjing E. Rd., Songshan Dist., Taipei Jhonghe Jhongshan Service Center No.3, Sec. 2, Chongde Rd., Beitun Dist., Taichung City Tainan Yongkang Service Center Taipei Donghu Service Center No. 44, Sec. 2, Jhongshan Rd., Jhonghe City, Taipei Taichung Yongfu Service Center No.138-1, Zhonghua Rd., Yongkang City, Tainan County County No.129, Donghu Rd., Neihu Dist., Taipei 1F, No.155-1, Yongfu Rd., Situn Dist., Taichung City Tainan Gongyuan Service Center Taipei Yongji Service Center Banciao Fujhong Service Center Taichung Syueshih Service Center No. 591-44, Gongyuan Rd., North Dist., Tainan City No. 56, Fujhong Rd., Banciao City, Taipei County No.84, Lane 30, Yongji Rd., Xinyi Dist., Taipei No. 157, Syueshih Rd., North Dist., Taichung City Tainan Jhonghua E. Service Center Taipei Zhanqian Service Center Sanchong Tomson Service Center Taichung Jhonggang Service Center No. 48, Sec. 3, Jhonghua E. Rd., East Dist., Tainan 1F-2, No. 2, Lane 609, Jhongsin Rd., Sec. 5, Sanchong 1F, No.38, Sec. 1, Zhongxiao W. Rd., Zhongzheng Dist., No. 7, Sec. 2, Taichung Port Rd., Situn Dist., Taichung City Tainan Rende Service Center City, Taipei County Taipei Taichung Meicun S. Service Center No. 497, Jhongshan Rd., Rende Township, Tainan County Taipei Ximending Service Center Sanchong Tiantai Service Center 1F., No.62, Meicun S. Rd., South Dist., Taichung City Kaohsiung Lingya Service Center 1F, No. 102, Sec. 2, Chongsin Rd., Sanchong City, Taipei 1F, No.12, Emei St., Wanhua Dist., Taipei Changhua Jhongjheng Service Center No. 149, Guangjhou 1st St., Lingya Dist., Kaohsiung City County Taipei Nanjing W. Service Center No. 1, Sec. 1, Jhongjheng Rd., Changhua City, Changhua Kaohsiung Mingcheng Service Center No. 42, Nanjing W. Rd., Datong Dist., Taipei Taipei Sinjhuang Service Center County No. 288, Heti Rd., Sanmin Dist., Kaohsiung City 1F, No.299, Jhongjheng Rd, Sinjhuang City, Taipei County Taipei Nanjing E. Service Center Changhua Heping Service Center Kaohsiung Sanduo Service Center No.204, Sec. 2, Nanjing E. Rd., Zhongshan Dist., Taipei Sinjhuang Singfu II Service Center No 9, Heping Rd., Changhua City, Changhua County 1F, No. 262, Sanduo 3rd Rd., Lingya Dist., Kaohsiung City No.690, Singfu Rd., Sinjhuang City, Taipei County Taipei Nongan Service Center Changhua Sihu Service Center Kaohsiung Juemin Service Center No. 19, Nongan Street, Zhongshan Dist., Taipei Sinjhuang Fuguo II Service Center 1F, No.370, Sihuan Rd., Sihu Township, Changhua County No. 197, Juemin Rd., Sanmin Dist., Kaohsiung City No.41, Fuguo Rd., Sinjhuang City, Taipei County Taipei Tianmu Service Center Changhua Yuanlin Service Center Kaohsiung Jyudan Service Center 1F, No. 11, Tianmu W, Rd., Shilin Dist., Taipei Taipei Tucheng Service Center No. 4, Jhongshan S. Rd., Yuanlin Township, Changhua 1F, No. 179, Sinjhuangzai Rd., Zuoying Dist., Kaohsiung City 1F, No.261, Yumin Rd., Tucheng City, Taipei County County Taipei Wenlin Service Center Kaohsiung Wufu Service Center No. 678, Wenlin Rd., Shilin Dist., Taipei Taoyuan Bade Service Center Caotun Jhongjheng Service Center No. 27, Wufu 3rd Rd., Cianjin District, Kaohsiung City No.807, Sec. 1, Jieshou Rd., Bade City, Taoyuan County Danshuei Jhongjheng Service Center No. 859, Jhongjheng Rd., Caotun Township, Nantou County Gangshan Liouciao E. Service Center 1F, No. 124, Jhongjheng Rd., Danshuei Township, Taipei Taoyuan Chenggong Service Center 1F, No. 32-5, Liouciao E. Rd., Gangshan Township, Kaoh- No. 86, Sec. 2, Chenggong Rd., Taoyuan City, Taoyuan County Nantou Fusing Service Center siung County County 1F, No. 207, Fusing Rd., Nantou City, Nantou County Taipei Changchun Service Center Kaohsiung Zihyou Service Center No. 374, Changchun Rd., Zhongshan Dist., Taipei Taoyuan Damiao Service Center Yunlin Huwei Service Center 1-2F, No. 123, Zihyou 1st Rd., Sanmin District, Kaohsiung City No.142, Jhongjheng Rd., Taoyuan City, Taoyuan County Taipei Hengyang Service Center 1F, No.488-3, Sec. 1, Linsen Rd., Huwei Township, Yunlin County Kaohsiung Nanzih Service Center No. 55B, Hengyang Rd., Zhongzheng Dist., Taipei Taoyuan Baoshan Service Center No. 250, Nanzihsin Rd., Nanzih District, Kaohsiung City No.165, Baoshan St., Taoyuan City, Taoyuan County Taipei Jiuquan Service Center Douliou Jhenbei Service Center Nos. 10, 12, Jhenbei Rd., Douliou City, Yunlin County Tainan Jinhua II Service Center No.100, Jiuquan St., Datong Dist., Taipei Taoyuan Longtan Service Center No.152, Sec. 2, Jinhua Rd., South Dist., Tainan City No.121, Zhongzheng Rd., Longtan Township, Taoyuan Taipei Minquan W. Service Center Taichung Dali Service Center County Kaohsiung Huarong Service Center No.141, Minquan W. Rd., Datong Dist., Taipei No. 361-1, Sec. 2, Jhongsing Rd., Dali City, Taichung County Nos. 339, 341, Huarong Rd., Gushan Dist., Kaohsiung City Taipei Fuxing N. Service Center Taipei Sansia Service Center No. 39, Wunhua Rd., Sansia Township, Taipei County Kaohsiung Linsen Service Center No. 333, Fuxing N. Rd., Songshan Dist., Taipei Dali Tucheng Service Center 1F, No.486, Tucheng Rd., Dali City, Taichung County No. 243-1, Linsen 1st Rd., Sinsing Dist., Kaohsiung City Taipei Gongguan Service Center Jhongli Huanbei Service Center No. 542, Huanbei Rd., Jhongli City, Taoyuan County Kaohsiung Sansin Service Center No. 289, Sec. 3, Roosevelt Rd., Daan Dist., Taipei Taichung Situn Service Center No. 28-1, Sec. 2, Situn Rd., Situn Dist., Taichung City 1F., No. 279, Sanduo 1st Rd., Lingya Dist., Kaohsiung City Sindian Cijhang Service Center Jhongli Sinsheng Service Center No. 132, Sinsheng Rd., Jhongli City, Taoyuan County Kaohsiung Rongzong Service Center No.165, Sec. 2, Beisin Rd., Sindian City, Taipei County No.1, Rongzong Rd., Zuoying District, Kaohsiung City Taipei Muzha Service Center Yangmei Dacheng Service Center No. 32, Dacheng Rd., Yangmei Township, Taoyuan County Kaohsiung Fongshan Service Center No. 80, Sec. 3, Muzha Rd., Wenshan District, Taipei No. 148-1~3, Jhongshan Rd., Fongshan City, Kaohsiung Taipei Yongkang Service Center Jhubei Guangming Service Center County No. 95, Guangming 6th Rd., Jhubei City, Hsinchu County 1F, No.174, Sec. 2, Xinyi Rd., Daan Dist., Taipei Fongshan Wujia Service Center Taipei Sijhih Service Center Hsinchu Jhongjheng Service Center No.563~1, Wujia 2nd Rd., Fongshan City, Kaohsiung Nos. 9, 11, Jhongjheng Rd., Hsinchu City No. 206, Jhongsing Rd., Sijhih City, Taipei County Jilong Yiyi Service Center Hsinchu Jhuke Service Center Pingtung Fusing Service Center No. 633, Guangfu Rd., East Dist., Sec. 1, Hsinchu City No. 38, Yiyi Rd., Jhongjheng Dist., Jilong City 1F, No. 586-3, Zihyou Road, Pingtung City, Pingtung Luodong Singdong Service Center Hsinchu Minsheng Service Center County No. 254, Minsheng Rd., East Dist., Hsinchu City No. 150, Singdong Rd., Luodong Township, Yilan County Pingtung Minzu Service Center Yilan Jhongshan II Service Center Hsinchu Nanda Service Center No. 174, Minzu Rd., Pingtung City, Pingtung County No. 364, Nanda Rd., East Dist., Hsinchu City No.37, Sec. 3, Jhongshan Rd., Yilan City, Yilan County Pingtung Donggang Service Center Hualien Jhongjheng Service Center Jhongli Jhancian II Service Center 1F, No. 73, Jhongshan Rd., Donggang Township, Pingtung No. 18, Jhongjheng Rd., Jhongli City, Taoyuan County No. 155, Sanmin St., Hualien City, Hualien County County Sindian Jhongjheng II Service Center Taoyuan Airport Terminal I Service Center Taitung Jhonghua Service Center No. 15, Hangjhan S. Rd., Puxin Village, Dayuan Township, No. 516-1, Jhongjheng Rd., Sindian City, Taipei County No. 518, Sec. 1, Jhonghua Rd., Taitung City, Taitung Taoyuan County (3F, Departure Hall) County Taipei Muxin Service Center No. 163, Sec. 3, Muxin Rd., Wenshan Dist., Taipei Taoyuan Airport Terminal II Service Center Kaohsiung Rueilong Service Center No. 9, Hangjhan S. Rd., Dayuan Township, Taoyuan County No. 564, Rueilong Rd., Cianjhen District, Kaohsiung City Taipei Heping E. Service Center (3F, Departure Hall) No. 232, Sec. 1, Heping E. Rd., Daan Dist., Taipei Fongshan Cingnian II Service Center No. 474, Sec. 2, Cingnian Rd., Fongshan City, Kaohsiung County Kaohsiung Dachang Service Center No. 516, Dachang 2nd Rd., Sanmin Dist., Kaohsiung City Kaohsiung Wumiao Service Center No. 118-8, Wumiao Rd., Lingya Dist., Kaohsiung City WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Contents

Letter to Shareholders 04

Chapter 1 Company Highlights 07

Vision 07 Core Competency 07 Company Profile 08 Milestones 08 Awards and Recognitions 10 2 Chapter 2 Organization 12

Contents Organization Chart 12 Board of Directors 14 Employee Bonus and Compensation to Directors and Supervisors 18 Management Team 25 Human Resources 38

Chapter 3 Corporate Governance 39

Corporate Governance Principles 39 Corporate Governance Implementation 40 Achievements and Recognitions 44 Certified Public Accountants (CPA) Information 44 Internal Control System 45

Chapter 4 Financial Information 48

Capital and Shares 48 Changes in Shareholding of Directors, Supervisors, Managers and Major Shareholders 50 Corporate Bond Issuance 56 Other Significant Issues 57 WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Chapter 5 Operating Strategy 59

Macro Environment 59 Overall Operating Results 59 Consumer Business Group 60 Home Business Group 65 Enterprise Business Group 69

Chapter 6 Risk Management Analysis 73

Industry Risk 73 Financial Risk 76 Operating Risk 76 Risk Management 79

Chapter 7 Our Values 81

Premium Service 81 Excellent Brand Image 81 Green Company 82 Corporate Social Responsibility 83 Innovative Research and Development 93

Chapter 8 Financial Report 96

Financial Status 96 Financial and Operating Results Analysis 100 3 Affiliates 107

Audit Committee Report 110 Contents 2009 Financial Statements 111 2009 Consolidated Financial Statements 151 WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Letter to Shareholders

Dear Shareholders,

In spite of the global financial crisis and weak domestic private consumption, Taiwan Mobile (“TWM” or “the Company”) delivered satisfactory results last year, surpassing its peers in various key performance indexes. Outperforming industry peers 4 In 2009, the Company posted consolidated revenue of NT$68.47bn, edging down 1% from a year ago. Its Letter to Shareholders consolidated EBITDA of NT$29.29bn and net income of NT$13.89bn, which translates into earnings per share of NT$4.66, met 101% and 100% of the Company’s respective annual targets.

Despite an intensely competitive environment, the Company managed to outperform its peers because of double-digit growth rates in its cable and mobile broadband businesses.

1. Cable broadband With CATV penetrating most households in Taiwan, the Company was able to offer premium quality cable broadband services at a lower price and increase its ratio of high-speed service subscribers, resulting in a 31% and 44% YoY increase in cable broadband subscriber numbers and service revenue, respectively. TWM launched digital TV services in 2009, which are expected to further enhance revenue growth.

2. Mobile broadband With the popularity of data cards, netbooks and smartphones, TWM attracted an increasing number of users to subscribe to data rate plans in addition to voice services to enjoy more convenient and higher- speed mobile internet services, thereby boosting its mobile internet service revenue up 65% from a year ago.

As the broadband technology evolution continues to boost transmission speeds and expand multimedia WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 content, gradually replacing telecom’s traditional focus on voice-oriented businesses, TWM has accelerated its implementation of an all IP-based network infrastructure to facilitate voice, data and multimedia transmission. This will keep us from duplicating capex investment as well as enhance the independence of IP peering. A role model for corporate governance and customer satisfaction

1. Enterprise sustainability Aside from focusing on its core business and protecting shareholders’ interests, the Company has won wide recognition domestically and internationally for its commitment to corporate governance and corporate social responsibility. In 2009, TWM was awarded the “Corporate Governance Asia Recognition Award” by Corporate Governance Asia for the third year in a row; received an A+, the highest ranking, and ranked among the top 10 listed companies in “Transpar- ency and Information Disclosure” by the Securities and Futures Institute for the fourth consecutive year; and was granted the “Environmental Protection Award” from the Environmental Protection Administration of the Executive Yuan, the first awardee in the service industry. TWM was recognized as a role model for companies in Taiwan for its 5 compliance with the strict rules on corporate governance and enterprise sustainability development. Letter to Shareholders

2. Customer satisfaction The Company is committed to creating the best customer experience by continually introducing innovative products and services, for which it has won numerous recognitions. TWM received the “Gold Trusted Brand” from Reader’s Di- gest for the sixth year in a row and the “Top Service Awards” from Next Magazine for five times. The Company also ranked sixth in the “Info tech 100 Taiwan” by Business Next Magazine, placing it ahead of its telecom peers, and won the highest recognition in the “Enterprise Internet Service Satisfaction Survey 2009” conducted by the Institute for Information Industry. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Looking to lead digital con- Cable Broadband vergence Unit: NT$mn Global telecoms companies are now moving toward the development of TIME – 700 60% 600 telecommunications, internet, media and 50% 500 40% entertainment. With the completion of 400 30% its merger of Taiwan Fixed Network and Unit:300 NT$mn 200 20% TFN Media (TFNM) in 2007, TWM was 700 60% 100 10% 600 able to expand its pure mobile business 0 0%50% into the fixed-line and cable markets. In 500 2007 2008 2009 40% 400 2009, the Company continued its expan- 30% 300 Revenue Annual growth rate sion with the announcement to acquire 200 20% Kbro’s cable business (pending regula- 100 10% tory approval), leapfrogging the competition to become0 the largest multiple system operator in Taiwan. Through the acquisition,0% 2007 2008 2009 the Company obtained access not only to the “last mile,” but also content distribution agency rights from TFNM and Kbro. This should aid TWM in its goal to become the leading company in the TIME digital convergence era. 6 Revenue Annual growth rate Challenges ahead Letter to Shareholders Although the global economy is gradually emerging from the financial crisis, the National Communications Commission’s announcement of the second round of the mandatoryUnit: tariff NT$ mncuts will inevitably weigh on the telecom industry’s operations and revenue. In the face of these challenges, TWM 4,000 80% will continue to focus on businesses with Mobile Broadband promising growth potential and offer 3,000 60% richer multimedia content through its 2,000 40% Unit: NT$mn consolidated mobile, fixed-line and cable 1,000 20% service platform. TWM aims to provide a 4,000 80% comprehensive digital life to users and to 3,0000 06%0% 2007 2008 2009 create maximum value for its sharehold- 2,000 40% ers. Revenue Annual growth rate 1,000 20%

0 0% 2007 2008 2009

Revenue Annual growth rate

Richard Tsai Harvey Chang Chairman President WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Chap. 1 Company Highlights

Vision

The Company’s core vision is to provide the best communication experience for its customers. Its aim is to become a leader in digital convergence, offering integrated information, telecommunication and media services to enhance the Company’s value and maximize shareholders’ interests. Core Competency

The Company has established an expanded platform covering mobile, fixed-line, cable TV and broadband services. Through integration, the Company is able to provide “Quadruple Play” services that meet the demands of the consumer, household and corporate markets for excellent service and information security. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Company Profile the most admired and trusted enterprises in Taiwan. Taiwan Mobile Co., Ltd. was incorporated in the Republic of China (“ROC”) on February 25, 1997, and awarded a The Company will continue its brand equity of providing Type I telecom license in the same year. TWM was the first premium services and enhancing corporate governance private telecommunications company to go public and the to strengthen its competitiveness in the marketplace and first wireless operator to launch 3G services using Wide- achieve its goal of becoming the most reliable telecom and band Code Division Multiple Access (WCDMA) technology. media operator in Taiwan, and create a paradigm for telecom and media services in the new era. TWM’s shares began trading on the ROC’s Over-the- Counter Securities Exchange in 2000. In 2002, the Com- Milestones pany’s shares were listed on the Taiwan Stock Exchange

(Ticker: 3045) and included in the Taiwan 50 Index and September 2009 Announced its acquisition of Carlyle Group’s cable Morgan Stanley Composite Index. TV business in Taiwan (pending regulatory approval) to make TWM the leader in the digital convergence era. To expand its operational scale, the Company acquired a August 2009 Introduced TWM’s first Android phone – the Sam- southern regional operator, TransAsia Telecommunications sung Galaxy i7500 – and at the same time, launched 8 Inc. (TAT), in July 2001 and a central regional operator, a brand new “match” portal to lead customers into Mobitai Communications Co., Ltd. (Mobitai), in August the mobile internet era.

2004, lifting its combined market share to around 30% in July 2009 Launched “new TV” digital TV service. Chap. 1 Company Highlights terms of telecom service revenue. In September 2008, TAT March 2009 Launched TWM’s own brand netbook W101. and Mobitai were merged into the Company, marking the first telecom industry consolidation in Taiwan. January 2009 Founded Taipei New Horizons Co., Ltd. (TNH) with Fubon Land Development Co., Ltd., to develop a cultural park in the old Songshan Tobacco Plant site The Company further acquired Taiwan Fixed Network Co. for headquarter use under a 50-year BOT contract Ltd. and Taiwan Telecommunication Network Services Co., with Taipei City Government. Ltd. in 2007, making it the second-largest internet service September 2008 Launched “New Line 299” rate plan, which offers provider (ISP) in Taiwan and allowing it to offer "Quadruple mobile-to-fixed line rates that are lower than fixed- to-fixed line calls. Play" services – covering mobile, fixed-line, cable TV and broadband. In 2008, the Company launched three brands September 2008 Merged TransAsia Telecommunications.

– “Taiwan Mobile”, “TWM Broadband” and “TWM Solution” August 2008 Taiwan Fixed Network Co., Ltd. (TFN), a TWM subsid- – to promote its Quadruple Play services for the consumer, iary, merged Taiwan Telecommunication Network Services Co., Ltd. (TTN). household and enterprise markets. June 2008 Richard Tsai and Daniel Tsai were elected Chairman and Vice Chairman, respectively, at the first meeting The Company launched “new TV” digital TV services in of the Fifth Board of Directors. July 2009. Two months later, TWM announced the acquisition of Carlyle Group’s cable TV and content agency businesses in Taiwan (pending regulatory appr), making the Company the biggest multiple system operator (MSO) in the domestic market and the leader in the digital convergence era.

The Company has, for more than 10 years, won extensive recognition at home and abroad for its outstanding performance in information security management, customer service, corporate governance and corporate social responsibility. It has been recognized as one of

▲ Richard Tsai (on the right hand side), the chairman of TWM, announced the acquisition of Carlyle Group’s cable TV assets in Taiwan. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 April 2008 Acquired Hurray! Times Communications Co. from August 2002 Moved from the OTC exchange to the Taiwan Stock Hurray! Holdings in China to facilitate development Exchange’s mainboard. of mobile content. May 2002 C. S. Chen was appointed President at the second February 2008 Introduced three new brands – Taiwan Mobile, TWM meeting of the Third Board of Directors. Broadband and TWM Solution – to provide consumers, households and enterprises with integrated May 2002 Set up Taiwan Telecom Group to centralize admin- telecommunication services, including wireless istration of Taiwan Cellular Corp., TFN and other communication, cable TV and fixed-line services. affiliates. The group was headed by Chairman Jack T. Sun, Vice Chairman Richard Tsai, CEO Joseph Lee, December 2007 Acquired full ownership of Taiwan Fixed Network. COO S. T, Chang and CSO Ray-Ying Fan.

December 2007 To simplify its investment structure, TWM subsid- April 2002 Jack T. Sun and Joseph Lee were re-elected Chair- iary TransAsia Telecommunication merged Mobitai man and Vice Chairman, respectively, at the first Communications Co., Ltd. meeting of the Third Board of Directors.

December 2007 Company’s capital dropped to NT$38bn after a February 2002 Granted 3G license. capital reduction of NT$12bn. July 2001 Teamed up with an affiliate to acquire 95.62% of September 2007 Acquired the Videoland Hunters basketball team TransAsia Telecommunications, boosting its sub- and renamed it Taiwan Mobile Cloud Leopards. scriber base to 6.42 million.

August 2007 Acquired 45% stake in TTN, one of the top three November 2000 Ray-Ying Fan was appointed President at the eighth internet service providers in Taiwan, to expand its meeting of the Second Board of Directors. footprint in the corporate market. September 2000 Became the first private telecom operator to start April 2007 Acquired 84% stake in TFN, combining telecom- trading on Taiwan’s Over-the-Counter market. munications and media businesses to enhance its competitiveness. June 1999 Jack T. Sun and Joseph Lee were re-elected Chair- man and Vice Chairman, respectively, at the first January 2007 Launched 3.5G (HSDPA) service. meeting of the Second Board of Directors.

December 2006 Became the first in Taiwan to provide BlackBerry January 1998 Started commercial services. Launched mobile service, the world’s No.1 mobile email solution. numbers with the “0935” prefix.

August 2006 Richard Tsai and Daniel Tsai were elected Chairman December 1997 Became the first nationwide private operator to ob- and Vice Chairman, respectively, at the tenth meet- tain a GSM 1800 network operating license. ing of the Fourth Board of Directors. February 1997 Taiwan Cellular Corp. incorporated. June 2006 Acquired full ownership of TransAsia Telecommuni- cations by purchasing the remaining minority stake. January 1997 Jack T. Sun and Joseph Lee were elected Chairman and Vice Chairman, respectively, while Lai-Ting Zou January 2006 Launched a revolutionary rate plan – My Zone – was appointed President at the first meeting of the which allows customers to select one of five zones First Board of Directors. as their home zone and enjoy discounted rates when making calls to off-net people within this des- May 1996 Preparation for the Company’s incorporation. ignated zone.

January 2006 Acquired full ownership of Mobitai by purchasing the remaining minority stake.

May 2005 Became the first in Taiwan to launch 3G services, heralding the start of a new era in mobile communications.

November 2004 Joined Bridge Mobile Alliance, the largest mobile alliance in Asia.

August 2004 Acquired 67% stake in Mobitai, increasing its subscriber base to 8.2 million.

July 2003 Harvey Chang was appointed President at the 15th meeting of the Third Board of Directors.

July 2003 Daniel Tsai and Richard Tsai were elected Chair- man and Vice Chairman, respectively, at the second meeting of the Third Board of Managing Directors.

June 2003 Taiwan Telecom Group’s operating model was dis- ▲ TWM expanded its footprints in the media entertainment continued. business and announced the launch of digital TV service, “newTV”, leading subscribers into a new digital lifestyle. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Awards and Recognitions

December 2009 Granted AA1000 and GRIG3 certifications for its Corporate Social Responsibility Report (2007~2008), making it the first telecom company whose CSR report was granted dual credit.

December 2009 Awarded the Gold Prize in the “The Athletics Pro- April 2009 Received the “Trusted Brand Gold Award” by Read- moters’ Awards” by the Sports Affairs Council of the er’s Digest for the sixth consecutive year. Executive Yuan. March 2009 Awarded for “Excellence in Corporate Social Re- December 2009 Rosie Yu, Vice President, received the “National Man- sponsibility” by CommonWealth magazine for the ager Excellence Award in Finance” at the Chinese third year in a row. Professional Management Association’s 27th annual February 2009 Won seven commendations from the National Com- awards. She was the sole awardee in the telecom munications Commission of the Executive Yuan – industry. the most among its peers – for its work on bridging November 2009 Won the “R.O.C. Enterprises Environmental Pro- the digital gap in remote areas. tection Award” by the Environmental Protection December 2008 James Chang, Vice President, received the “National Administration of the Executive Yuan. TWM was the Manager Excellence Award in Information Technol- first enterprise in the service sector to be granted ogy” from the 26th Chinese Professional Manage- this national award. 10 ment Association Awards. He was the sole awardee November 2009 Harvey Chang, President and CEO, was recognized in the telecom industry. as the “Benchmark Entrepreneur of the Year” by November 2008 Harvey Chang, President and CEO, was recognized

Chap. 1 Company Highlights Ernst & Young, Taiwan’s “Entrepreneur of the Year for his outstanding contributions in corporate gov- 2009 Taiwan Awards.” ernance by the CFA Association of Taiwan. October 2009 Awarded two prizes in Next Magazine’s “2009 Top November 2008 TWM’s myfone e-store won an “e-21 Golden Website Service Awards,” placing 2nd in mobile/fixed-line Award” in the large enterprise sector from the Min- communications and 3rd in 3C store channels. For istry of Economic Affairs of the Executive Yuan. the second year in a row, TWM was the only double winner in the telecom industry. November 2008 Awarded two prizes by Next Magazine in its “2008 Top Service Awards,” placing 2nd in mobile/fixed- September 2009 TWM Solution received the highest rating in an online communications and 3rd in 3C store channels. line satisfaction survey on corporations conducted TWM was the only double winner and the first tele- by Foreseeing Innovative New Digiservices (FIND) communications company to win in the 3C store of the Institute for Information Industry. channels category. July 2009 Received an “A+” ranking and ranked as one of the November 2008 TWM and TWM Foundation won the 9th WenXin top 10 listed companies in “Transparency and Infor- Gold Award by the Council of Cultural Affairs of the mation Disclosure” from the Securities and Futures Executive Yuan. Institute for the fourth year in a row. July 2008 Received an “A+” ranking and ranked as one of the June 2009 Ranked 6th in the “Info Tech 100 Taiwan” by Business top 10 listed companies in “Transparency and Infor- Next Magazine, putting it ahead of its telecom rivals. mation Disclosure” from the Securities and Futures June 2009 Received the “Corporate Governance Asia Recogni- Institute for the third year in a row. tion Award” in the Asia-Pacific region by Corporate June 2008 Won the highest customer satisfaction rating Governance Asia for the third year in a row. among peers in a survey released by the Consum- ers’ Foundation in 2008.

April 2008 Received the “Trusted Brand Gold Award” by Read- er’s Digest for the fifth year in a row.

March 2008 Ranked among Taiwan’s Top 10 in The Wall Street Journal’s “Asia’s 200 Most Admired Companies.” TWM was the sole telecom awardee.

March 2008 Awarded for “Excellence in Corporate Social Respon- sibility” by CommonWealth magazine for the second year in a row.

August 2007 Received the “Happy Worker – Best Employer Award” in Taiwan and Asia by Cheers magazine in its 2nd annual survey. TWM was the sole telecom awardee.

July 2007 Received an “A+” ranking and ranked as one of the top 10 listed companies in “Transparency & Infor- mation Disclosure” from the Securities and Futures Institute for the second year in a row. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 May 2007 Won the “Corporate Social Responsibility Award – October 2005 Awarded “2005 Most Admired Company in Taiwan” Service Sector Category” at Global Views Monthly’s by CommonWealth magazine and ranked No.1 in third annual awards. Taiwan’s telecommunications services sector.

April 2007 Received the “Trusted Brand Gold Award” by Read- October 2005 Awarded “2005 Excellent Service Award” by Global er’s Digest for the fourth year in a row. Views Monthly and ranked No.1 in Taiwan’s telecommunications services sector. April 2007 Received the “2007 Information Security Contribu- tion Award” by iSecuTech magazine and the Execu- May 2005 Awarded the “Corporate Social Responsibility tive Yuan’s Research, Development and Evaluation Award” by Global Views Monthly and ranked No.1 in Commission for its outstanding contributions in the Taiwan’s service sector. field of information security. TWM was the sole tele- April 2005 Awarded the “Gold Trusted Brand Award” by Read- com awardee. er’s Digest for the second year in a row. March 2007 Awarded for “Excellence in Corporate Social Respon- October 2004 Awarded the “Best Customer Service – Mobile Tele- sibility” and ranked No.1 in corporate governance com Operator in Taiwan” by Next Magazine. sector by CommonWealth magazine. September 2004 Ranked No. 1 by Euromoney for “Best Corporate March 2007 Received “CG6002 certification” from the Corporate Governance in Taiwan.” Governance Association for the second year in a row. July 2004 Ranked No. 1 by Institutional Investor for “Most Im- proved Corporate Governance.” November 2006 Harvey Chang, President and CEO, received the “Best Social Responsibility Award – Corporate Category” June 2004 Ranked No. 1 by the Directorate-General of Tele- and the “Outstanding Management Award” during communications among telecom companies in the Fourth Taiwan Business Awards, marking the managing and protecting personal information and first time that a company received multiple awards privacy. at the annual event. April 2004 Received the “Trusted Brand Gold Award” by Read- September 2006 Ranked No. 1 by Euromoney for “Best Corporate er’s Digest. Governance in Taiwan” – the second time TWM received such recognition. December 2003 Ranked No. 1 and No. 2 by Asiamoney for “Most Im- proved Corporate Governance” and “Most Improved July 2006 TWM and TWM Foundation won the 8th WenXin Investor Relations,” respectively. Gold and Silver awards from the Council of Cultural Affairs of the Executive Yuan in recognition of the January 2002 Ranked as the most desirable brand among tele- Company’s contribution to local cultural affairs. com operators in Taiwan by Breakthrough Marketing magazine. June 2006 Received an “A+” ranking and ranked as one of the top 10 listed companies in “Transparency and Infor- December 2001 Ranked as one of the top 10 companies in Taiwan mation Disclosure” from the Securities and Futures by Far Eastern Economic Review magazine. 11 Institute. October 2001 Voted by mobile subscribers as the “Best Mobile May 2006 Won distinctions for “Best Managed Company,” “Best Service Provider” in Taiwan in a poll conducted by Chap. 1 Company Highlights Corporate Governance” and “Best Commitment to the Institute for Information Industry. Strong Dividends” by Finance Asia’s “Taiwan’s Best September 2001 Ranked the 7th largest mobile operator in Asia Pa- Managed Companies Poll.” cific by Asia Pacific Mobile Analyst. April 2006 Received the ”Gold Trusted Brand Award” by Read- January 2001 Selected by Asiamoney magazine’s poll as the “Best er’s Digest for the third year in a row. New Taiwan Listed Company.” February 2006 Received the first CG6001 certification from the Cor- March 2000 Network engineering management accredited with porate Governance Association. ISO 9002 certification. January 2006 TWM and its subsidiary, Taiwan Teleservices & Tech- December 1999 Rated “excellent” by the Directorate-General of Tele- nologies, obtained the first worldwide ISO 27001 communications for service quality, based on three Information Security Management System certi- criteria – downtime, blocking rate and coverage in fication. Also received certifications from the UK, tunnel. Sweden and Norway, demonstrating the Company’s commitment to providing information security. July 1999 Customer service system granted ISO 9002 certification. November 2005 Led Taiwan’s delegation in participating in the first World Cyber Game Mobile Tournament and won one gold and one silver medal. Also placed first and second in the first Asia Mobile Tournament held by SingTel. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Chap. 2 Organization

Auditing of the Company and its subsidiaries Organization Internal Audit Office Monitoring and examination of the effectiveness and efficiency of the Company’s Chart internal control system Legal counsel Legal Office Company litigation Legal document review

Regulatory & Carrier Rela- Regulatory matters, government relations and inter-carrier relations tions Division

Maintenance and management of corporate image Public Affairs Division Media communication, news agenda setting and crisis management Planning and execution of corporate social responsibility strategies

Procurement policy and system planning Procurement & Logistics Handling of procurement-related activities Division Suppliers evaluation and management Contract negotiation and signing

Office machinery and equipment management Administrative Division General and administrative affairs coordination Base station administration and related expense payments

Human Resources Division Staffing, compensation, training and employee relations coordination

Occupational safety and health management Shareholders’ Occupational Safety & Site area safety management Meeting Health Office Environmental protection management Corporate Workplace health promotion Support Front-end customer management solutions Customer Management Channel services, commission, and performance solutions Board of Solutions Division Order management system solutions Directors Enterprise management information systems

Billing Solutions Division Billing system operation and development

Enterprise Management Data warehouse, customer relations management and network management solu- President Solutions Division tions Program Planning & Infra- Systems and network infrastructure construction and operation management structure Division Security and internet data center (IDC) construction and operation

Enterprise IT architecture Enterprise Architecture & Audit Committee TWM’s customer care application systems Service Solutions Division Enterprise resource planning (ERP) and human resource solutions

Call Center Solutions Divi- Call center infrastructure and operation management solutions Corporate sion Governance Committee Corporate external website and e-commerce systems Application Systems Divi- Service-oriented architecture and enterprise service bus system (SOA/ESB) sion Fixed network application systems and IT infrastructure Integrated intranet working portal

Enterprise Business Infor- Enterprise business sales and billing systems operation and development mation Systems Division

Treasury management Finance Division Monitoring of investments and subsidiaries’ business activities Finance-related project evaluation, planning and execution

Timely disclosure of the Company’s operating and financial status, management Investor Relations Division strategy, future business plans and developments to investors Communication between the Company and investors

Billing Management Divi- Billing, receivables collection and settlement Finance sion Credit check and risk management Group Accounting-related affairs Accounting Division Tax planning and execution

Corporate share registrar management Company seal custodian Secretarial Division Transmit/receive corporate documents Corporate registration affairs

BU operating performance analysis, financial forecasting and annual budget Operation Analysis Division review WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Planning and design for core, radio, IP and transmission network system of mobile and fixed network Systems Design Division Development of new technologies and verification testing of network elements

Mobile telecom and fixed network business infrastructure budget, control and management Supervision of outsourced engineering and construction projects Management of cables and conduits in government agencies Network Engineering Division Fixed network service management, project evaluation and coordination Inter-communication between different divisions within Technology Group and assistance on SD (System Design Team) for developing next generation technologies

Mobile network technical support Techno- Network Assurance & Technical Fixed network technical support logy Group Support Division IP based network technical support Network quality assurance

24-hour supervision of mobile and fixed system network operation and maintenance Network Management Division Technical support for network operations and customer issues Management of network quality and critical events

Network Operations and 2G/3G network construction, expansion, operation, maintenance and optimization, including core, Maintenance - North I, North II, transmission and radio networks Central and Southern Regions Fixed network construction, expansion, operation, maintenance and optimization

Customer service and call center management Customer Service Division Telemarketing sales and retention

Channel strategy planning and performance management Channel Strategy and Sales planning and store management Management Office Training and point-of-sale system administration

Open Channel Sales Division Open channel development and business execution

Franchise Division Supervision of franchisees’ product promotion, distribution and customer service

Direct Store Division Product sales and customer service at company stores

Cross-function business process improvement and management Customer service quality measurement and monitoring; hosting service quality committee Quality Management Division Information security policy making and procedure maintenance; hosting information security management system committee

Management of brand identity, strategic development, integrated marketing communication, and implementation of Brand Management & Customer ad campaigns Communication Division Execution of store signage/interior design and cost control Company websites integration and operation, e-marketing implementation, including on-line sales and services

Consumer Front-end sales/service operation process planning and implementation Business Operations Manage- Business Back-end resource management and channel performance award management ment Division Group Sales channel logistics and service fulfillment

Design and implementation of retention strategy Loyalty & VAS Marketing Divi- Development and implementation of plans to raise customer loyalty, stimulate usage rate, and lower churn rate sion Launch of value-added services marketing campaigns Customer behavior analysis and market surveys 13 Strategy development and execution to attract new customers Customer Acquisition & Terminal Strategy implementation to promote and develop customized and promotional handsets, smartphones, netbooks, Marketing Division data cards and accessories

Rate plan design and marketing Chap. 2 Organization

Management of revenue and profit for prepaid cards and calling cards Prepaid Business Division Development and implementation of product offerings, distribution, marketing communication and sales for prepaid cards and calling cards

Overall VAS business management and product quality assurance Value-added Services (VAS) Business strategy setting, product planning, development and management Business Division Platform integration and device customization

Technical consultation and solution analysis for VAS products and CPE technologies Product Technology Division Solution design, system development and delivery for VAS products and marketing promotion VAS platform operation, administration and maintenance

Household integrated and innovative digital convergence services, including video (CATV/DTV), broadband internet access (cable modem/FTTx), and Home wireless voice Business Implementation of integrated technology solutions for development of new products and VAS to increase video and broadband internet access pen- Group etration rate and overall revenue Expansion of two-way optical network to broaden coverage and ensure better internet access quality and stable cable signal

Strategy development and business analysis Enterprise Channel development, sales and customer loyalty management Business Enterprise ICT integration and bundled products, marketing campaign, operation and execution Group Enterprise customer services and billing matters Inter-carrier relations and international business (including international roaming) plan and implementation WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Board of Directors

The board of directors, acting on behalf of the Company’s shareholders, is charged with the task of supervising the management team. The board, elected and approved during the AGM on June 13, 2008, includes four independent directors, which more than fulfill current regulations requiring public companies to have at least two independent directors. The Audit Com- mittee, composed entirely of independent directors, replaced the position of supervisors. Information regarding the Com- pany’s Fifth Board of Directors is detailed below:

Chairman Richard Tsai Vice Chairman Daniel Tsai Director Harvey Chang Representative of Fu-Chi Venture Representative of Fu-Chi Venture Representative of TCC Investment 14 Corp. Corp Co., Ltd. (Note 1) Date elected 2008.06.13 Date elected 2008.06.13 Date elected 2009.09.19 Term expires 2011.06.12 Term expires 2011.06.12 Term expires 2011.06.12 Chap. 2 Organization Shareholding when elected : Shareholding when elected : Shareholding when elected : Shares 4,849,515 Shares 4,849,515 Shares 222,774,179 % 0.128 % 0.128 % 5.861

Current shareholding : Current shareholding : Current shareholding : Shares 6,387,515 Shares 6,387,515 Shares 222,774,179 *91,466,154 *96,644,434 *1,526,780 % 0.168 % 0.168 % 5.861 *2.406 *2.543 *0.040

Spouse/minor’s shareholdings : Spouse/minor’s shareholdings : Spouse/minor’s shareholdings : Shares 5,651,663 Shares 8,646,863 Shares - % 0.149% % 0.227% % -

Education and experience : Education and experience : Education and experience : · MBA, Stern School, New York University · LL.B., National Taiwan University · MBA, Wharton School, University of Pennsylvania · Chairman, Fubon Securities Co., Ltd. · LL.M., Georgetown University · Senior Vice President, Trust and Foreign departments · Chairman, Fubon Insurance of Chiao Tung Bank Current position(s) in other companies : · Chairman, Fubon Land Development Co., Ltd. · Founding President of Grand Cathay Securities Corp. · Vice Chairman, Fubon Financial Holding Co., Ltd. · President, China Development Corp. · Chairman, Fubon Life Assurance Co., Ltd. Current position(s) in other companies : · Chairman, China Securities Investment Trust Corp. · Vice Chairman, Taipei Fubon Commercial Bank Co., · Chairman, Fubon Financial Holding Co., Ltd. · Vice Chairman, KG Telecommunications Co., Ltd. Ltd. · Chairman, Taipei Fubon Commercial Bank Co., Ltd. · Senior Vice President and Chief Financial Officer, · Chairman, Taiwan Fixed Network Co., Ltd. · Vice Chairman, Taiwan Fixed Network Co., Ltd. Taiwan Semiconductor Manufacturing Co., Ltd.

Officer, director, or supervisor is a spouse or Officer, director, or supervisor is a spouse or Current position(s) in other companies : consanguineous within two degrees : consanguineous within two degrees : · President, Taiwan Mobile Co., Ltd. Title Vice Chairman Title Chairman · Director and President, Taiwan Fixed Network Co., Name Daniel Tsai Name Richard Tsai Ltd. Relationship Brother Relationship Brother · Chairman, Taiwan Teleservices & Technologies Co., Ltd. · Director and President, Taiwan Cellular Co., Ltd. · Director and President, TCC Investment Co., Ltd. · Director, Taiwan Super Basketball Co., Ltd. · Director, TFN Media Co., Ltd. · Director, Union Cable TV Co., Ltd. · Director, Yeong Jia Leh Cable TV Co., Ltd. · Director, Phoenix Cable TV Co., Ltd. · Director, Globalview Cable TV Co., Ltd. · Director, Taipei New Horizons Co., Ltd. · Director and President, Wealth Media Technology Co., Ltd. · Chairman, TWM Communications (Beijing) Co., Ltd. · Chairman, IC Broadcasting Co., Ltd. · Chairman, Taiwan Fund Inc. · Director, CX Technology Corp. · Independent Director, Lite-on Technology Corp.

Officer, director, or supervisor is a spouse or consanguineous within two degrees : Title - Name - Relationship - WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Independent Director Vivien Hsu Director Victor Kung Director Jack J.T. Huang Representative of TCC Investment Representative of Fu-Chi Venture Co., Ltd. (Note 1) Corp.

Date elected 2009.09.19 Date elected 2008.06.13 Date elected 2008.06.13 Term expires 2011.06.12 Term expires 2011.06.12 Term expires 2011.06.12

Shareholding when elected : Shareholding when elected : Shareholding when elected : Shares 222,774,179 Shares 4,849,515 Shares - % 5.861 % 0.128 % -

Current shareholding : Current shareholding : Current shareholding : Shares 222,774,179 Shares 6,387,515 Shares - *None *None - % 5.861 % 0.168 % - *None *None -

Spouse/minor’s shareholdings : Spouse/minor’s shareholdings : Spouse/minor’s shareholdings : Shares - Shares - Shares - % - % - % -

Education and experience : Education and experience : Education and experience : · MBA, University of New South Wales, Australia · MA in Economics and MBA in Finance, New York · LL.B., National Taiwan University · MBA, National Chengchi University University · LL.M., Northwestern University · Executive Vice President and Chief Financial Officer, · Executive Vice President, Walden International · S.J.D., Harvard University KG Telecommunications Co., Ltd. Investment Group · President and CEO, Lambda Net Co. · Executive Director, Citicorp Capital Asia Ltd. Current position(s) in other companies : · President and CEO, KGEx.com Co. · Director of Direct Investments, AIG Investment Corp. · Partner-in-charge, Jones Day Taipei · President and CEO, KG Satellite Communication Co., · Director, Yulon Motor Co., Ltd. Ltd. Current position(s) in other companies : · Independent Director, WPG Holdings Ltd. 15 · Chief Financial Officer, Cathay Financial Holding Co. · Director and President, Fubon Financial Holding Co., · Independent Director, Systex Corp. · Senior Vice President and Chief of Staff, Taiwan Ltd. · Independent Director, Chinatrust Financial Holding Mobile Co., Ltd. · Director, Fubon Insurance Co., Ltd. Co., Ltd. · Chairman, Taiwan Tele-Shop Co., Ltd. · Director, Taipei Fubon Commercial Bank Co., Ltd. Chap. 2 Organization · Senior Consultant and Acting President, Taiwan · Director, Fubon Asset Management Co., Ltd. Officer, director, or supervisor is a spouse or Fixed Network Co., Ltd. · Director, Fubon Bank (HK) Limited consanguineous within two degrees : · Chairman, WinTV Broadcasting Co., Ltd. · Director, Fubon Life Insurance Co., Ltd. Title - · Supervisor, Fubon Asset Management Consulting Name - Current position(s) in other companies : Co., Ltd. Relationship - · SVP & CFO, Taiwan Mobile Co., Ltd. · Supervisor, Fubon Financial Holding Venture Capital · Director and President, Taipei New Horizons Co., Ltd. Co., Ltd. · Director, Taiwan Fixed Network Co., Ltd. · Supervisor, Fubon Multimedia Technology Co., Ltd. · Director, Taiwan Cellular Co., Ltd. · Supervisor, WinTV Broadcasting Co., Ltd. · Director, Union Cable TV Co., Ltd. · Director, Yeong Jia Leh Cable TV Co., Ltd. Officer, director, or supervisor is a spouse or · Director, Phoenix Cable TV Co., Ltd. consanguineous within two degrees : · Director, Globalview Cable TV Co., Ltd. Title - · Director, Wealth Media Technology Co., Ltd. Name - · Supervisor, TFN Media Ltd. Relationship - · Supervisor, TCC Investment Co., Ltd. · Supervisor, WinTV Broadcasting Co., Ltd.

Officer, director, or supervisor is a spouse or consanguineous within two degrees : Title - Name - Relationship - WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Note1: Former institutional director, TFN Investment Co., Ltd., was merged into TCC Investment Co., Ltd. on September 19, 2009. Independent Independent Independent Director Tsung-Ming Chung Director Wen-Li Yeh Director J. Carl Hsu

Date elected 2008.06.13 Date elected 2008.06.13 Date elected 2008.06.13 Term expires 2011.06.12 Term expires 2011.06.12 Term expires 2011.06.12

16 Shareholding when elected : Shareholding when elected : Shareholding when elected : Shares - Shares - Shares - % - % - % -

Chap. 2 Organization Current shareholding : Current shareholding : Current shareholding : Shares - Shares - Shares - - - - % - % - % - - - -

Spouse/minor’s shareholdings : Spouse/minor’s shareholdings : Spouse/minor’s shareholdings : Shares - Shares - Shares - % - % - % -

Education and experience : Education and experience : Education and experience : · BBA, National Taiwan University · Department of Architecture, Chung-Yuan Christian · BSEE, National Taiwan University · MBA, National Chengchi University University · Ph.D. and MS in Computer Science, UCLA · CPA, ROC · MA and Ph.D. candidate, University of Paris · Senior executive, AT&T, Bell Labs and Lucent · CPA, Connecticut, USA · EMBA Studies, University of California, Berkeley Technologies Communications Software Group · Partner, T.N. Soong & Co. · Planner, Council for Economic Planning & · Professor, National Tsing Hua University in Taiwan, · Instructor, Department of Accounting, National Development under the Executive Yuan Peking University and others Chengchi University · Managing Director, United Pacific International, Inc. · President, United Communications Current position(s) in other companies : Current position(s) in other companies : · Managing Director and Vice Chairman, United · Professor, Peking University and other universities · Chairman and CEO, Dynapack Technology Corp. Advertising Co. · Board member of Rogers Corp., USA · Independent Director, Chroma Ate, Inc. · Chairman, Carat-United Media Services (Taiwan) · Director, Far Eastern International Commercial Bank Ltd. Officer, director, or supervisor is a spouse or · Director, Unity Opto Technology Co., Ltd. · Chairman, Aegis Media Taiwan consanguineous within two degrees : Title - Officer, director, or supervisor is a spouse or Current position(s) in other companies : Name - consanguineous within two degrees : · Chairman of Greater China, Aegis Media Relationship - Title - Name -Officer, director, or supervisor is a spouse or Relationship - consanguineous within two degrees : Title - Name - Relationship -

* Personal shareholding WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 1. Major shareholders of TWM’s institutional investors As of January 31, 2010

Institutional investor Major shareholders

Fu-Chi Venture Corp. Richard Tsai (50.20%), Mei-Hui Ueng Tsai (49.75%), Cheng Ru Tsai (0.05%)

TCC Investment Co., Ltd. Taiwan Cellular Co., Ltd. (100%)

2. Major shareholders of companies mentioned on the right hand side of the table above As of January 31, 2010

Company Major shareholders

Taiwan Cellular Co., Ltd. Taiwan Mobile Co., Ltd. (100%)

3. Independence criteria of directors and supervisors As of January 31, 2010

Over five years of experience in No. of public com- business, finance, panies in which he Name legal and/or other Independence criteria (Notes) or she also serves areas related to as an indepen- the Company’s dent director business

1 2 3 4 5 6 7 8 9 10

Richard Tsai V V V V Daniel Tsai V V V V Harvey Chang V V V V V 1 17 Vivien Hsu V V V V V V

Victor Kung V V V V V V V V Chap. 2 Organization Jack J.T. Huang V V V V V V V V V V V 3 Tsung-Ming Chung V V V V V V V V V V V 1 Wen-Li Yeh V V V V V V V V V V V J. Carl Hsu V V V V V V V V V V V

“V” denotes meeting the conditions specified above Criterion 1: Not an employee of the Company or its affiliated companies Criterion 2: Not a director or supervisor of the Company’s affiliated companies Criterion 3: Neither a shareholder that directly or indirectly owns more than 1% of the Company’s outstanding shares, nor one of the Company’s top 10 individual shareholders Criterion 4: Not a spouse or a relative within second degree by affinity, or within five degrees by consanguinity to any person specified in criteria 1 to 3 Criterion 5: Neither a director, supervisor, or employee of an entity that directly and/or indirectly holds more than 5% of the Company’s shares, nor one of the Company’s top five shareholders Criterion 6: Not a director, supervisor, manager, or shareholder owning more than 5% of the outstanding shares of certain companies that have financial or business relationship with the Company Criterion 7: Not an owner, partner, director, supervisor, manager, or spouse of any of the aforementioned, of any sole proprietorship, partnership, company, or institution that provided financial, commercial, legal consultation, and other services to the Company or its affiliates within the past year Criterion 8: Not a spouse or relative within second degree by affinity to other directors Criterion 9: Not in contravention of Article 30 of the Company Law Criterion 10: Not an institutional shareholder or its representative pursuant to Article 27 of the Company Law WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 An employee cash bonus of NT$414,697,375 and com- Employee Bonus and Compensation to pensation to directors of NT$41,469,738, as approved in Directors and Supervisors the 2009 board of directors’ and shareholders’ meetings, were duly paid in 2009. 1. Earnings distribution plan according to the Company’s Articles of Incorporation 3. 2009 employee bonus and compensation to According to the Company’s Articles of Incorporation, an- directors and supervisors proposal adopted nual net income after deducting previous years’ losses, by the board of directors appropriating 10% thereof for legal reserves, and setting 1. The board of directors proposed to distribute an em- aside special reserves, shall be distributed in the following ployee cash bonus of NT$374,825,512 and compensa- order: tion to directors of NT$37,482,551. 1. Dividends and bonuses to preferred stockholders; 2. Maximum of 0.3% as compensation to directors; 2. Proposed employee stock bonus as a percentage of 3. 1% to 3% as bonuses to employees; retained earnings distributed: None. 4. Remainder thereafter to be set aside for stock/cash dividends to shareholders as determined in the annual 3. Pro forma earnings per share after employee bonus and 18 shareholders’ meeting. compensation to directors: NT$4.66. (Equals to EPS, as employee bonuses and directors’ compensation Chap. 2 Organization The board of directors is empowered to decide the alloca- were expensed since January 1, 2008) tion of stock bonuses to employees. Recipients are to include qualified employees of subsidiaries. Compensation 4. Pro forma earnings per share after employee stock to specific directors is calculated based on their respective bonus: NT$4.66. (Equals to EPS, as the Company involvement in the Company’s operations and contribution distributed employee bonus in the form of cash) to the Company.

The above-mentioned proposals are subject to BOD and 2. Earnings distributed as employee bonus and 2010 AGM approval. compensation to directors and supervisors in the previous year

4. Compensation to directors and supervisors over the past two years Unit: NT$

Compensation As a % Compensation As a % Type Year Net profit to directors of net profit to supervisors of net profit

2008 153,186,899 1.00% 1,471,522* 0.01% 15,371,385,543 On a stand-alone basis 2009 150,669,456 1.08% NA NA 13,888,862,693

2008 157,837,315 1.03% 1,471,522* 0.01% 15,382,248,644 On a consolidated basis 2009 152,591,867 1.10% NA NA 13,890,516,183

*Compensation paid from January to June 2008 before supervisors were replaced by the Audit Committee. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 5. Compensation to managers over the past two years Unit: NT$

Compensation to Type Year As a % of net profit Net profit managers

2008 269,733,515 1.75% 15,371,385,543 On a stand-alone basis 2009 267,370,076 1.93% 13,888,862,693

2008 279,305,499 1.82% 15,382,248,644 On a consolidated basis 2009 279,175,395 2.01% 13,890,516,183

6. Compensation to directors, supervisors and managers

Guiding principles for compensation to directors and supervisors:

1. Remuneration policies, standards and package 2. Procedure for setting remuneration

(1) The Board is authorized to decide the remuneration (1) In accordance with the Company’s Articles of Incor- for the Chairman and Vice Chairman, but this should poration, compensation to directors and supervisors not be higher than the remuneration payable to the shall not exceed 0.3% of the Company’s annual net CEO of the Company. income after deducting previous years’ losses, appropriating 10% thereof for legal reserves, and set- (2) Directors and supervisors are paid according to the ting aside special reserves. resolution of earnings distribution approved at the annual general shareholders’ meeting. The remu- (2) Transportation allowances are subject to discus- neration or other equivalent allowance for directors sion and assessment by the Corporate Governance 19 and supervisors are based on their involvement in Committee, and then forwarded to the Board for ap-

the Company’s operations and contribution to the proval. Chap. 2 Organization Company, the “Rules for Setting Director’s Remu- neration” and industry norm. 3. Performance factor

(3) Transportation allowances are paid quarterly based Compensation to each director or supervisor is assessed on attendance in board meetings and for services based on his/her contribution to the operation of the Com- rendered as members of the Corporate Governance pany and the Board. The Corporate Governance Commit- Committee and Audit Committee tee and the Board review the compensation mechanism periodically, taking the Company’s future operating risks into consideration. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 1. Compensation to directors

Unit: NT$

Independent Independent Independent Independent Title Chairman Vice Chairman Director Director Director Director Director Director Director Director Director

Harvey Chang, Vivien Hsu, Benny Chen, Howard Lin, Richard Tsai, Daniel Tsai, Victor Kung, Representative Representative Representative Representative Representa- Representa- Representa- Jack J.T. Tsung-Ming Name of TCC Invest- of TCC Invest- Wen-Li Yeh J. Carl Hsu of Taiwan Fixed of Taiwan Fixed Total tive of Fu-Chi tive of Fu-Chi tive of Fu-Chi Huang Chung ment Co., Ltd. ment Co., Ltd. Network Co., Network Co., Venture Corp. Venture Corp. Venture Corp. (Note 1) (Note 1) Ltd. (Note 2) Ltd. (Note2)

Cash compensa- Stand-alone ------tion (A) Consolidated ------1,032,000 - 1,032,000

Retirement pay Stand-alone ------(B) Consolidated ------Director’s compensation Earnings paid as Stand-alone 5,407,970 4,055,977 2,703,984 4,055,977 2,703,984 4,055,977 4,055,977 4,055,977 4,055,977 1,841,372 1,841,372 37,482,551 20 compensation to directors (C) Consolidated 5,407,970 4,055,977 2,703,984 4,055,977 2,703,984 4,055,977 4,055,977 4,055,977 4,055,977 1,841,372 1,841,372 37,482,551

Stand-alone 210,000 120,000 140,000 340,000 120,000 340,000 380,000 320,000 320,000 120,000 120,000 2,330,000 Chap. 2 Organization Professional fee (D) Consolidated 369,000 261,000 398,000 340,000 120,000 340,000 380,000 320,000 320,000 120,000 120,000 3,092,000

Stand-alone 0.04% 0.03% 0.02% 0.02% 0.03% 0.03% 0.03% 0.03% 0.03% 0.03% 0.01% 0.29% A+B+C+D as % of net profit Consolidated 0.04% 0.03% 0.02% 0.02% 0.03% 0.03% 0.03% 0.03% 0.03% 0.03% 0.01% 0.30%

Performance- Stand-alone 84,638,726 based salary (E) Consolidated 84,767,128

Retirement pay Stand-alone 216,000 of employees (F) Consolidated 216,000

Cash bonus 26,002,188 Total employee Stand-alone compensation Earnings paid as Stock bonus ------bonus to employees (G) Cash bonus 26,002,188 Consolidated Stock bonus ------

Employee stock Stand-alone ------option granted (H) Consolidated ------

A+B+C+D+E+F+G+H as % of net Stand-alone 1.08% profit Consolidated 1.10%

Compensation from investees other than subsidiaries None

Other allowances 2,242,476 WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 1. Compensation to directors

Unit: NT$

Independent Independent Independent Independent Title Chairman Vice Chairman Director Director Director Director Director Director Director Director Director

Cash compensa- Stand-alone ------tion (A) Consolidated ------1,032,000 - 1,032,000

Retirement pay Stand-alone ------(B) Consolidated ------Director’s compensation Earnings paid as Stand-alone 5,407,970 4,055,977 2,703,984 4,055,977 2,703,984 4,055,977 4,055,977 4,055,977 4,055,977 1,841,372 1,841,372 37,482,551 compensation to directors (C) Consolidated 5,407,970 4,055,977 2,703,984 4,055,977 2,703,984 4,055,977 4,055,977 4,055,977 4,055,977 1,841,372 1,841,372 37,482,551

Professional fee Stand-alone 210,000 120,000 140,000 340,000 120,000 340,000 380,000 320,000 320,000 120,000 120,000 2,330,000 (D) Consolidated 369,000 261,000 398,000 340,000 120,000 340,000 380,000 320,000 320,000 120,000 120,000 3,092,000

Stand-alone 0.04% 0.03% 0.02% 0.02% 0.03% 0.03% 0.03% 0.03% 0.03% 0.03% 0.01% 0.29% A+B+C+D as % of net profit Consolidated 0.04% 0.03% 0.02% 0.02% 0.03% 0.03% 0.03% 0.03% 0.03% 0.03% 0.01% 0.30%

Performance- Stand-alone 84,638,726 based salary (E) Consolidated 84,767,128

Retirement pay Stand-alone 216,000 of employees (F) Consolidated 216,000

Cash bonus 26,002,188 Total employee Stand-alone compensation Earnings paid as Stock bonus ------bonus to employees (G) Cash bonus 26,002,188 21 Consolidated Stock bonus ------Chap. 2 Organization Employee stock Stand-alone ------option granted (H) Consolidated ------

A+B+C+D+E+F+G+H as % of net Stand-alone 1.08% profit Consolidated 1.10%

Compensation from investees other than subsidiaries None

Other allowances 2,242,476

Note 1: Former institutional director, TFN Investment Co., Ltd., was merged into TCC Investment Co., Ltd. on September 19, 2009. 2: The representative of Taiwan Fixed Network Co., Ltd. was discharged as director on September 18, 2009 following the transfer of more than half of TFN’s shares in the Company. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 2. Range of compensation to directors Since no net loss was reported for two consecutive years and none of the directors’ holding fell below requirements for three consecutive months in the most recent year, the Company will distribute compensation to directors as follows:

Name of directors Director’s compensation + Range of compensation Director’s compensation to directors Total employee compensation On a stand-alone On a consolidated On a stand-alone On a consolidated basis basis basis basis

Richard Tsai, Daniel Tsai, Richard Tsai, Daniel Tsai, Harvey Chang, Vivien Harvey Chang, Vivien Victor Kung, Benny Victor Kung, Benny NT$0~NT$1,999,999 Hsu, Victor Kung, Benny Hsu, Victor Kung, Benny Chen, Howard Lin Chen, Howard Lin Chen, Howard Lin Chen, Howard Lin

Jack J.T. Huang, Tsung- Jack J.T. Huang, Tsung- Jack J.T. Huang, Tsung- Jack J.T. Huang, Tsung- Ming Chung, Wen-Li Ming Chung, Wen-Li Ming Chung, Wen-Li Ming Chung, Wen-Li NT$2,000,000~NT$4,999,999 22 Yeh, J. Carl Hsu, Taiwan Yeh, J. Carl Hsu, Taiwan Yeh, J. Carl Hsu, Taiwan Yeh, J. Carl Hsu, Taiwan Fixed Network Co., Ltd. Fixed Network Co., Ltd. Fixed Network Co., Ltd. Fixed Network Co., Ltd. Chap. 2 Organization NT$5,000,000~NT$9,999,999 TCC Investment Co., Ltd. TCC Investment Co., Ltd. TCC Investment Co., Ltd. TCC Investment Co., Ltd.

NT$10,000,000~NT$14,999,999 Fu-Chi Venture Corp. Fu-Chi Venture Corp. Fu-Chi Venture Corp. Fu-Chi Venture Corp.

Richard Tsai, Daniel Tsai, Richard Tsai, Daniel Tsai, NT$15,000,000~NT$29,999,999 - - Vivien Hsu Vivien Hsu

NT$30,000,000~NT$49,999,999 - - - -

NT$50,000,000~NT$99,999,999 - - Harvey Chang Harvey Chang

NT$100,000,000 and above - - - -

3. Compensation to supervisors: Not applicable

4. Compensation to managers

Guiding principles for compensation to the president and (2) Performance bonuses are determined based on the vice presidents are as follows: president’s or the vice presidents’ contribution to the Company and the results of an annual performance (1) Compensation to the president and vice presidents appraisal. comprises a fixed monthly salary and performance (3) The Human Resources Department is tasked with bonus. preparing the annual compensation to the president and vice presidents and submitting a report to the independent directors of the Corporate Governance Committee. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Unit: NT$

President and Chief Executive Officer, Harvey Chang; Chief Operating Officer of the Consumer Business Group, Cliff Lai; Chief Operating Officer of the Enter- prise Business Group, George C. Chou; Chief Technology Officer and Chief Resigned Operating Officer of Home Business Group, James Jeng; Chief Financial Offi- managers/ cer, Vivien Hsu; Vice President, C.A. Chuang; Vice President, Ariel Hwang; Vice Managers Title and name President, Jay Hong; Vice President, H.S. Wang; Vice President, Andrew Wong; Total transferred Vice President, James Chang ;Vice President, Ruth Liaw; Vice President, Rosie to affiliated Yu; Vice President, Techi Juan; Vice President, Egon Chen; Vice President, companies Chien Chen; Deputy Chief Operating Officer of the Consumer Business Group, Jeff Ku; Vice President, Sean Hsieh; Vice President, Jerry Chu; Vice President, Paul Huang; Vice President, Simon Wang; Vice President, Joseph Yang

Stand-alone 105,877,607 17,300,813 123,178,420 Salary (A)

Consolidated 111,327,607 19,059,146 130,386,753

Stand-alone 2,097,000 153,000 2,250,000 Pension (B) (Note 1) Consolidated 2,268,000 216,000 2,484,000

Stand-alone 74,578,654 4,694,571 79,273,225 Performance- based salary (C) Consolidated 77,716,640 5,919,571 83,636,211

Cash 62,668,431 - 62,668,431 Stand-alone Stock - - - Employee profit sharing (D) Cash 62,668,431 - 62,668,431 Consolidated Stock - - -

Stand-alone 1.77% 0.16% 1.93% A+B+C+D as a % of net profit Consolidated 1.83% 0.18% 2.01% 23

Stand-alone - - -

Employee stock Chap. 2 Organization options Consolidated - - -

Compensation from investees other than - - - subsidiaries

Stand-alone 3,065,691 1,072,326 4,138,017 Other allowances Consolidated 4,447,392 1,072,326 5,519,718

Note 1: The Company’s contribution to employee’s pension account, not actual amount paid.

Names of managers and their employee bonus distribution were the same as the table above. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Range of compensation to managers

Name of senior management

Range of compensation 2009 to management

On a stand-alone basis On a consolidated basis

NT$0~NT$1,999,999 - -

NT$2,000,000~NT$4,999,999 Vice President, Joseph Yang -

Chief Technology Officer and Chief Operating Former Chief Strategy Officer, Dr. JC Dorng; Officer of the Home Business Group, James Jeng; Deputy Chief Operating Officer of the Consumer Former Chief Technology Officer, Frank Lin; Former Business Group, Jeff Ku; Former Chief Technol- Chief Strategy Officer, Dr. JC Dorng; Deputy ogy Officer, Frank Lin; Vice President, Rosie Yu; Chief Operating Officer of the Consumer Busi- Vice President, C.A. Chuang; Vice President, ness Group, Jeff Ku; Vice President, Rosie Yu; Vice Ruth Liaw; Vice President, Ariel Hwang; Vice President, C.A. Chuang; Vice President, Ruth Liaw; President, Simon Wang; Vice President, Jerry NT$5,000,000~NT$9,999,999 24 Vice President, Ariel Hwang; Vice President, Simon Chu; Vice President, Egon Chen; Vice President, Wang; Vice President, Jerry Chu; Vice President, Chien Chen; Vice President, Techi Juan; Vice Egon Chen; Vice President, Chien Chen; Vice President, Jay Hong; Vice President, Andrew Chap. 2 Organization President, Techi Juan; Vice President, Jay Hong; Wong; Vice President, H.S. Wang; Vice President, Vice President, Andrew Wong; Vice President, H.S. Paul Huang; Vice President, Sean Hsieh; Vice Wang; Vice President, Paul Huang; Vice President, President, Joseph Yang; Former Vice President, Sean Hsieh; Former Vice President, D.S. Chiou D.S. Chiou

Chief Operating Officer of the Consumer Busi- Chief Operating Officer of the Consumer Business ness Group, Cliff Lai; Chief Technology Officer Group, Cliff Lai; Chief Operating Officer of the and Chief Operating Officer of the Home Busi- NT$10,000,000~NT$14,999,999 Enterprise Business Group, George C. Chou; Vice ness Group, James Jeng; Chief Operating Officer President, James Chang of the Enterprise Business Group, George C. Chou; Vice President, James Chang

NT$15,000,000~NT$29,999,999 Chief Financial Officer, Vivien Hsu Chief Financial Officer, Vivien Hsu

NT$30,000,000~NT$49,999,999 - -

President and Chief Executive Officer, Harvey NT$50,000,000~NT$99,999,999 President and Chief Executive Officer, Harvey Chang Chang

NT$100,000,000 and above - -

Total 25 25

Note: Compensation paid to managers in the above table was based on tenure. Compensation paid to managers who also served as directors is detailed in the “Compensation to directors” table.

7. Accounting treatment for the deviation between estimated and actual distribution amount of employee bonus and compensation to directors and supervisors

Should there be a significant adjustment on the distribution amount approved by the Board from the previous accrued estimation after year-end, the accrued amount should be revised accordingly. But should there be another change in the amount approved at the annual shareholders’ meeting, the adjustment should be treated as a “change in accounting estimation” i.e. the difference from the BOD resolution should be booked in the year the AGM was held. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Management Team

Corporate Support

Corporate Support provides vital support and assistance to management and workers alike, focusing on improving operational work flow and execution, as well as adapting to changes in the market. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Corporate Support

President and Chief Executive Officer Harvey Chang

Effective date 2003.09.08 · Chairman, China Securities Investment · Director and President, Taiwan Cellular · Chairman, IC Broadcasting Co., Ltd. Trust Corp. Co., Ltd. · Chairman, Taiwan Fund Inc. Shareholding / % 1,526,780 · Vice Chairman, KG Telecommunications · Director and President, TCC Investment · Director, CX Technology Corp. Co., Ltd. Co., Ltd. · Independent Director, Lite-on Technology Spouse/minor’s · Senior Vice President and Chief · Director, Taiwan Super Basketball Co., Ltd. Corp. shareholding / % 0.040 Financial Officer, Taiwan Semiconductor · Director, TFN Media Co., Ltd. Manufacturing Co., Ltd. · Director, Union Cable TV Co., Ltd. Manager, director, or supervisor is a Education and experience : · Director, Yeong Jia Leh Cable TV Co., Ltd. spouse or consanguineous within two · MBA, Wharton School, University of Current position(s) in other companies : · Director, Phoenix Cable TV Co., Ltd. degrees : Pennsylvania · Director, Taiwan Mobile Co., Ltd. · Director, Globalview Cable TV Co., Ltd. · Senior Vice President, Chiao Tung Bank’s · Director and President, Taiwan Fixed · Director, Taipei New Horizons Co., Ltd. Title - Trust and Foreign departments Network Co., Ltd. · Director and President, Wealth Media Name - · Founding President of Grand Cathay · Chairman, Taiwan Teleservices & Technology Co. Ltd. Relationship - Securities Corp. Technologies Co., Ltd. · Chairman, TWM Communications · President, China Development Corp. (Beijing) Co. Ltd.

Vice President C.A. Chuang

Effective date 2003.12.01 Education and experience : Current position(s) in other companies : Manager, director, or supervisor is a 26 · MBA, International Institute for None spouse or consanguineous within two Shareholding / % 15,927 Management Development, Switzerland degrees : · MS in Industrial Education, National

Chap. 2 Organization Spouse/minor’s Taiwan Normal University Title - shareholding / % 0.000 · Manager, Human Resources Department, Name - China Steel Corp. Relationship - · Vice President, TransAsia Telecommunications Inc.

Vice President Ariel Hwang

Effective date 2004.03.01 Education and experience : Current position(s) in other companies : Manager, director, or supervisor is a · EMBA, National Taiwan University · Supervisor, Union Cable TV Co., Ltd. spouse or consanguineous within two Shareholding / % -· LL.B., National Taiwan University · Supervisor, Yeong Jia Leh Cable TV Co., degrees : · LL.M., National Taipei University Ltd. Spouse/minor’s · Judge, Taoyuan District Court, Taiwan · Supervisor, Phoenix Cable TV Co., Ltd. Title - shareholding / % -· Judge, Banciao District Court, Taiwan · Supervisor, Global View Cable TV Co., Ltd. Name - · Judge, Taipei District Court, Taiwan · Supervisor, Wealth Media Technology Co., Relationship - · Judge, Taiwan High Court Ltd. · Supervisor, Taipei New Horizons Co., Ltd. · Legal Consultant, Fubon Financial Holding Co., Ltd. · Legal Consultant, Taiwan Fixed Network Co., Ltd.

Vice President Jay Hong

Effective date 2004.05.06 Education and experience : Current position(s) in other companies : Manager, director, or supervisor is a · EMBA, National Sun Yat-Sen University None spouse or consanguineous within two Shareholding / % 100,000 · Engineering Supervisor, Engineering degrees : Division, Nan Ya Plastics Spouse/minor’s · Director, Procurement Division, TransAsia Title - shareholding / % 0.003 Telecommunications Inc. Name - · Vice President, Customer Service Division, Relationship - TransAsia Telecommunications Inc. · Vice President, Direct Store Division, Taiwan Mobile Co., Ltd. · President, Taiwan Teleservices & Technologies Co., Ltd. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Corporate Support

Vice President HS Wang

Effective date 2005.05.01 Education and experience : Current position(s) in other companies : Manager, director, or supervisor is a · Ph.D. in Electrical and Computer · Director, Taiwan Super Basketball Co., Ltd spouse or consanguineous within two Shareholding / % 51,241 Engineering, Rutgers, The State University degrees : of New Jersey Spouse/minor’s · Lecturer/Assistant Professor, Information Title - shareholding / % 0.001 Engineering Department, The Chinese Name - University of Hong Kong Relationship - · Vice President, Mediatec Corp. · Vice President, First International Telecom

Vice President Andrew Wong

Effective date 2003.12.01 Education and experience : Current position(s) in other companies : Manager, director, or supervisor is a · MBA, George Washington University None spouse or consanguineous within two Shareholding / % 31,764 · Manager, Johnson, Bassin & Shaw degrees : · Manager, MCI Communications Spouse/minor’s · Vice President, Far EasTone Title - shareholding / % 0.001 Telecommunications Co., Ltd. Name - Relationship -

Vice President James Chang

Effective date 2004.09.17 Education and experience : Current position(s) in other companies : Manager, director, or supervisor is a · MS in Computer Science, University of None spouse or consanguineous within two Shareholding / % 191,205 Illinois, Chicago degrees : · District Manager, AT&T Laboratories Spouse/minor’s · Senior Delivery Manager, IBM Global Title - shareholding / % 0.005 Services Name - · Senior Director, TBCommerce Network Relationship - Corp. · Director, AT&T Laboratories

Daphne Yang Vice President 27 Effective date 2010.01.04 Education and experience : Current position(s) in other companies : Manager, director, or supervisor is a · M.A. in Theatre Production, University of None spouse or consanguineous within two

Shareholding / % -Hull, UK degrees : Chap. 2 Organization · Strategic Planning Manager, JWT Spouse/minor’s Advertising Agency Title - shareholding / % -· Strategic Planning Director/Business Name - Development Director, D’Arcy Advertising Relationship - Agency · General Manager, Senses Strategic Network · Vice President, Acquisition & Terminals Marketing Division, Taiwan Mobile Co., Ltd. · President, Nanjing Xing-gi Real Estate Development Co., Ltd. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Finance Group

Finance Group

The Finance Group strives to meet international standards and practices in corporate governance, promote financial transparency through discreet information disclosure to the Board of Directors and related parties on the Company’s operation and road map, as well as maintain an open communication channel with local and foreign investors. The group also helps all business divisions to make good use of the Company’s financial resources through effective cost control and sound financial and investment planning.

28 Chap. 2 Organization WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Finance Group

Senior Vice President and Chief Financial Officer Vivien Hsu

Effective date 2007.07.02 · President and CEO, KGEx.com Co. Current position(s) in other companies : Manager, director, or supervisor is a · President and CEO, KG Satellite · Director, Taiwan Mobile Co., Ltd. spouse or consanguineous within two Shareholding / % -Communication Co., Ltd. · Director and President, Taipei New degrees : · Chief Financial Officer, Cathay Financial Horizons Co., Ltd. Spouse/minor’s Holding Co. · Director, Taiwan Cellular Co., Ltd. Title - shareholding / % -· Senior Vice President and Chief of Staff, · Director, Taiwan Fixed Network Co., Ltd. Name - Taiwan Mobile Co., Ltd. · Director, Union Cable TV Co., Ltd. Relationship - Education and experience : · Chairman, Taiwan Tele-Shop Co., Ltd. · Director, Yeong Jia Leh Cable TV Co., Ltd. · MBA, University of New South Wales, · Senior Consultant and Acting President, Director, Phoenix Cable TV Co., Ltd. Australia Taiwan Fixed Network Co., Ltd. · Director, Globalview Cable TV Co., Ltd. · MBA, National Chengchi University · Chairman, WinTV Broadcasting Co., Ltd. · Director, Wealth Media Technology Co., · Executive Vice President and Chief Ltd. Financial Officer, KG Telecommunications · Supervisor, TFN Media Ltd. Co., Ltd. · Supervisor, TCC Investment Co., Ltd. · President and CEO, Lambda Net Co. · Supervisor, WinTV Broadcasting Co., Ltd.

Vice President Rosie Yu

Effective date 2006.02.06 Education and experience : Current position(s) in other companies : Manager, director, or supervisor is a · BA, National Taiwan University · Supervisor, Taiwan Cellular Co., Ltd. spouse or consanguineous within two Shareholding / % -· Executive Vice President, China Securities degrees : Co., Ltd. Spouse/minor’s · General Manager, Citicorp International Title - shareholding / % - Securities Ltd., Taipei Branch Name - · General Manager, Credit Lyonnais Relationship - · Securities (Asia) Ltd., Taipei Branch · President, Global Investment Holdings Co., Ltd. · Chairman, Global Investment Advisory (HK) Ltd.

Vice President Ruth Liaw

Effective date 2006.05.15 Education and experience : Current position(s) in other companies : Manager, director, or supervisor is a · MBA, National Chengchi University · Director, Taiwan Fixed Network Co., Ltd. spouse or consanguineous within two Shareholding / % 36,000 · Partner, Arthur Andersen & Co. · Director, Taiwan Cellular Co., Ltd. degrees : · CFO, Arima Computer Corp. · Supervisor, Taiwan Teleservices & Spouse/minor’s Technologies Co., Ltd. Title - shareholding / % 0.001 · Supervisor, Union Cable TV Co., Ltd. Name - 29 · Supervisor, Yeong Jia Leh Cable TV Co., Relationship - Ltd. · Supervisor, Phoenix Cable TV Co., Ltd.

· Supervisor, Globalview Cable TV Co., Ltd. Chap. 2 Organization

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Technology Group

Technology Group

Stability and adaptability best describe the Technology Group’s short to long-term mission. Aside from offering a solid technology platform that ensures high network quality, the group continues to implement forward-looking analysis of technology and products on the deployment of network and base stations, together with adjustments to cope with real demand, industry and regulatory trends, and changes to enhance the Company’s leading edge.

Under the trend of digital convergence, the Group strives to support an array of new telecom and multimedia services via IP based technologies as well as consolidation of networks.

30 Chap. 2 Organization WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Technology Group

SVP, CTO and COO of Home Business Group James Jeng

Effective date 2009.01.01 Education and experience : Current position(s) in other companies : Manager, director, or supervisor is a · Ph.D. in Electrical and Computer · President, TFN Media Co., Ltd. spouse or consanguineous within two Shareholding / % 58,000 Engineering, New York State University, · Chairman, Win TV Broadcasting Co., Ltd. degrees : USA · Chairman, Union Cable TV Co., Ltd. Spouse/minor’s · Technical staff, AT&T, Bell Labs, USA · Chairman, Yeong Jia Leh Cable TV Co., Title - shareholding / % 0.002 · Executive Vice President, United Fiber Ltd. Name - Optic Communication, Inc. · Chairman, Phoenix Cable TV Co., Ltd. Relationship - · President, Asia Pacific Online · Chairman, Globalview Cable TV Co., Ltd. · CEO, Asia Pacific Broadband Telecom · Director, Wealth Media Technology Co., · CEO, Asia Pacific Broadband Wireless Ltd. · CEO, Asia Pacific Telecom Group · Senior Adviser, Taiwan Mobile Co., Ltd. · Chief Technology Officer and Chief Operating Officer of the Home Business Group, Taiwan Mobile Co., Ltd.

Vice President Techi Juan

Effective date 2002.05.21 Education and experience : Current position(s) in other companies : Manager, director, or supervisor is a · MS in Electronics Engineering, University None spouse or consanguineous within two Shareholding / % 103,960 of Missouri, Columbia degrees : · Engineer, Lucent Technologies Spouse/minor’s Telecommunications Taiwan Co. Title - shareholding / % 0.003 · Technical Manager, Asia Pacific Name - · Intellectual Property Association Relationship - · Senior Director, Taiwan Mobile Co., Ltd.

Vice President Egon Chen

Effective date 2004.02.16 Education and experience : Current position(s) in other companies : Manager, director, or supervisor is a · BS in Electronics Engineering, Tamkang None spouse or consanguineous within two Shareholding / % 123,259 University degrees : · Project Manager, Siemens Spouse/minor’s Telecommunication Systems Ltd. Title - shareholding / % 0.003 · Director, Suretone Telecom, Inc. Name - · Director, Taiwan Mobile Co., Ltd. Relationship - · Senior Director, Taiwan Fixed Network Co., Ltd. · Vice President, Howin Technologies 31

Chap. 2 Organization

Vice President Chien Chen

Effective date 2004.02.16 Education and experience : Current position(s) in other companies : Manager, director, or supervisor is a · National Taipei Institute of Technology None spouse or consanguineous within two Shareholding / % 6,000 · Manager, Siemens Telecommunication degrees : Systems Ltd. Spouse/minor’s · Director, Suretone Telecom, Inc. Title - shareholding / % 0.000 · Vice President, Taiwan Fixed Network Co., Name - Ltd. Relationship - · Vice President, Howin Technologies

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Consumer Business Group

Consumer Business Group

The Consumer Business Group (CBG) is devoted to promoting the Company’s vision of “creating the best mobile communications experience” to enable customers to embrace their lives with ease and confidence. Working from the perspective of the customer, the group develops products and services based on CBG’s observation of customer behavior to better anticipate their needs and demands. The group also provides useful, innovative and interesting value-added services such as mobile internet and 3.5G data cards that allow users to enjoy mobile broadband anytime and anywhere. The Company has built a comprehensive and convenient service network to ensure customer satisfaction and loyalty, and CBG is committed to de- livering the best mobile experience to make customers truly feel and believe its slogan “Taiwan Mobile, my mobile!” WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Consumer Business Group

Senior Vice President and Chief Operating Officer Cliff Lai

Effective date 2007.08.01 Education and experience : Current position(s) in other companies : Manager, director, or supervisor is a · EMBA, National Chengchi University · Director, Taiwan Teleservices & spouse or consanguineous within two Shareholding / % 224,611 · MS in Electrical Engineering, North Technologies Co., Ltd. degrees : Carolina State University, USA · Director and President, Taiwan Super Spouse/minor’s · Researcher, AT&T Laboratories Basketball Co., Ltd. Title - shareholding / % 0.006 · Vice President, Tecom Co. Ltd. · Director, Taiwan Internet Association Name - · Vice President, Mobitai Communications (TWIA) Relationship - Co., Ltd. · Director, Taiwan Network Information · President, Reach and Range, Inc. Center (TWNIC) · Senior Vice President, Taiwan Fixed Network Co., Ltd. · CEO, Fu Yang Media Technology Co., Ltd.

Vice President and Deputy Chief Operating Officer Jeff Ku

Effective date 2005.06.06 Education and experience : Current position(s) in other companies : Manager, director, or supervisor is a · EMBA, National Taiwan University · Director, TWM Communications (Beijing) spouse or consanguineous within two Shareholding / % 63.604 · MBA, University of Wollongong, Australia Co., Ltd. degrees : · Director, Far EasTone Telecommunications Spouse/minor’s Co., Ltd. Title - shareholding / % 0.002 · Vice President, Taiwan High Speed Rail Name - Corp. Relationship -

Vice President Sean Hsieh

Effective date 2003.12.08 Education and experience : Current position(s) in other companies : Manager, director, or supervisor is a · BS in Business Administration and None spouse or consanguineous within two Shareholding / % 303,774 Sociology, Fu Jen Catholic University, degrees : · University of Texas, Austin Spouse/minor’s · Account Supervisor, Bozell CCAA Title - shareholding / % 0.008 · Group Account Director, Series DMB&B Name - Communications Relationship - · Marketing and Sales Manager, PUMA North Asia Ltd., Taiwan Branch · Marketing Director, TransAsia Telecommunications, Inc. · Vice President, TransAsia Telecommunications, Inc. · Vice President, Enterprise Solution and 33 Channel Sales, Taiwan Mobile Co., Ltd. Chap. 2 Organization WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Consumer Business Group

Vice President Jerry Chu

Effective date 2003.12.01 Education and experience : Current position(s) in other companies : Manager, director, or supervisor is a · MBA, University of Toronto, Canada · Supervisor, Taiwan Fixed Network Co., spouse or consanguineous within two Shareholding / % 460,000 · LL.B., Department of Law, National Ltd. degrees : Taiwan University · Director and President, Taiwan Spouse/minor’s · Director, Finance Management Division, Teleservices & Technologies Co., Ltd. Title - shareholding / % 0.012 KG Telecom Name - · Director, Business Process Management Relationship - Division, KG Telecommunications Co., Ltd. · Director, Revenue Assurance Division, KG Telecommunications Co., Ltd. · Vice President, Quality Director, Corporate Banking, Citibank, N.A., Taipei Branch · Vice President, CitiService Head, Corporate Banking, Citibank, N.A., Taipei Branch · Vice President, Senior Country Operations Officer, Operations and Technology Head, Global Transaction Service, Citibank, N.A., Taipei Branch

34 Vice President Paul Huang Chap. 2 Organization Effective date 2008.01.21 Education and experience : Current position(s) in other companies : Manager, director, or supervisor is a · MS in Computer Science, Bradley None spouse or consanguineous within two Shareholding / % 221,487 University, USA degrees : · Supervisor, Siemens Telecommunication Spouse/minor’s Systems Ltd. Title - shareholding / % 0.006 · Account and Project Manager, Nortel, Name - Taiwan Branch Relationship - · Vice President, Business Development, Hong Kong Telecom, Taiwan Branch · Vice President, Sales and Services, Far EasTone Telecommunications Co., Ltd. · Vice President, Business and Operations, Far Eastern Electronic Toll Collection Co., Ltd.

Vice President Simon Wang

Effective date 2004.10.11 Education and experience : Current position(s) in other companies : Manager, director, or supervisor is a · EMBA, National Taiwan University None spouse or consanguineous within two Shareholding / % 101,024 · BS in Telecommunications Engineering, degrees : National Chiao Tung University Spouse/minor’s · Manager, Technology & Quality Division, Title - shareholding / % 0.003 Philips Electronics Industry Co., Ltd. Name - · General Manager, Philips Optel Division Relationship - Corp. · General Manager, Fu Shing Can Manufacturing Co., Ltd. · General Manager, ICAN Manufacturing Co., Ltd. · Director, TECO Optical Electronics Co., Ltd. · Factory Manager, YATE PCB Co., Ltd. · Executive Vice President, TransAsia Telecommunications, Inc. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Home Business Group

Home Business Group

Tasked with promoting “TWM Broadband,” the Home Business Group (HBG) consolidates the group’s mobile, fixed network, cable TV and channel resources to provide households with digital convergence services, including video (CATV/IPTV/DTV), broadband internet access (cable modem/FTTx), mobile and content. HBG hopes to excel in providing customers with the best experience, product offerings and services, and become the top choice for triple play for every family.

SVP, CTO and COO of Home Business Group James Jeng

Information please refer to Technology Group WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Enterprise Business Group

Enterprise Business Group

The Enterprise Business Group (EBG) provides enterprises with an integrated information and communication service called “TWM Solution” by consolidating the resources of TFN, TTN and TWM. To ensure high-quality information and communication services, EBG offers customized industry solutions that cater to businesses’ diverse requests. TWM Solution endeavors to meet enterprises’ telecommunications and management needs, increase their operational efficiency, and provide more value-added and user-friendly services. TWM aims not only to work with enterprise customers, but to grow and develop long-term win- win partnerships. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Enterprise Business Group

Senior Vice President and Chief Operating Officer George C. Chou

Effective date 2007.11.26 Education and experience : · Chairman, Union Cable TV Co., Ltd. Manager, director, or supervisor is a · MS in Mathematics, Colorado State · Chairman, Phoenix CATV Co., Ltd. spouse or consanguineous within two Shareholding / % 250,955 University, USA · Chairman, Globalview CATV Co., Ltd. degrees : · Business Development Manager, Siemens Spouse/minor’s Telecommunication Systems Ltd. Current position(s) in other companies : Title - shareholding / % 0.007 · Special Assistant to the President, · COO, Taiwan Fixed Network Co., Ltd. Name - Siemens Telecommunication Systems Ltd. · Director, Taiwan Teleservices & Relationship - · Managing Director, Siemens Nixdorf Technologies Co., Ltd. Information Systems Ltd., Taiwan Branch · Director, TWM Communications (Beijing) · General Manager, PCCW (formerly Hong Co. Ltd. Kong Telecom) · Director, Taiwan Acceptance Co., Ltd. · Director of Taiwan Operations, PCCW · Vice Chairman and CEO, Taiwan Telecommunication Network Services Co., Ltd. · CEO, Fu Yang Media Technology Co., Ltd. · Senior Consultant, Taiwan Mobile Co., Ltd. · Chairman, North Coast Cable TV Co., Ltd. · Chairman, Yeong Jia Leh Cable TV Co., Ltd.

Vice President Joseph Yang

Effective date 2007.11.09 Education and experience : Current position(s) in other companies : Manager, director, or supervisor is a · BS in Transportation Management, None spouse or consanguineous within two Shareholding / % 90,801 National Chiao Tung University degrees : · Advisory System Engineer, System Spouse/minor’s · Engineer, IBM Taiwan Title - shareholding / % 0.002 · Technical Manager, Central & South Name - Branch, IBM Taiwan Relationship - · Director, Finance Industry, IBM Taiwan · Sales VP, Eastern Broadband Telecom · Chief Operating Officer, Eastern Broadband Telecom · Senior VP, Asia Pacific Telecom Group · Chief Marketing Officer, Asia Pacific Telecom Group · Product Director, Asia Region, High Tech Computer

37 Chap. 2 Organization WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Human Resources

A wealth of outstanding and professional talent is the Company’s most valuable resource.

Human resources composition

Employee statistics for the most recent two years until the publication date

2010 Year 2008 2009 (as of Jan. 31)

Male 1,471 1,458 1,455 Number of Female 1,072 1,038 1,039 employees Total 2,543 2,496 2,494

Average age 36 36.7 36.9

Average years of service 6.3 6.8 6.9

38 Ph.D. 0.35% 0.36% 0.36%

Master 17.89% 19.99% 20.13% Chap. 2 Organization Education level University 50.53% 50.76% 50.72%

College 29.06% 26.89% 26.79%

Others 2.16% 2.00% 2.00%

Note: The numbers above were based on Taiwan Mobile alone.

Employee statistics by division As of Jan. 31, 2010

Division Number Percentage (%)

Corporate Support 586 23.50%

Finance 201 8.06%

Technology 833 33.40%

Consumer Business Group (Note) 873 35.00%

Home Business Group (Note) 0 0.00%

Enterprise Business Group (Note) 1 0.04%

Total 2,494 100%

Note: The Consumer Business Group does not include 811 employees from TT&T. The Enterprise Business Group does not include 396 employees from TFN. The Home Business Group does not include 138 employees from TFNM and 384 employees from four CATV subsidiaries. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Chap. 3 Corporate Governance

Corporate Governance Principles 2. Current Practices

The Company acknowledges the importance of good cor- To improve the Company’s corporate governance prac- porate governance and abides by the following practices: tices, the Company has implemented a number of policy and strategy changes. On June 15, 2006, the Company 1. Our Principle revised the “Rules and Procedures Governing Sharehold- ers’ Meetings,” which were set forth on January 30, 1997. • Timely disclosure of material information On June 5, 2002, the Company revised the “Rules and • Check-and-balance between the board and manage- Procedures on Conducting Transactions between Group ment Companies and Related Parties,” which were first passed • Audit Committee ensures fair and independent financial on August 31, 1999. On April 30, 2004, the Company ap- oversight proved the “Corporate Governance Committee Charter” • Fair representation of independent board members (later revised on June 13, 2008) and the “Audit Committee • Corporate Governance Committee ensures sound cor- Charter” (later revised on October 26, 2006). On January porate governance practices and systems be in place 31, 2008, the Company revised the “Rules and Procedures • Adoption of a cash dividend policy based on a high Governing Board of Directors’ Meetings,” which were earnings payout ratio promulgated on October 28, 2005. And on January 22, • Distribution of all employee bonuses in the form of cash 2009, the Company approved the “Regulations Govern- ing Internal Material Information” (For detailed information on the rules and charters, please refer to the Company’s official website). With these changes, not only does the Company’s corporate governance mechanism comply with Taiwan’s Securities and Exchange Act, but it also adheres to the highest international standards. Current Corporate Governance Practices

Item Current practice

Handling of shareholders’ suggestions and The spokesperson or secretarial division personnel handles all non-legal disputes issues; the legal division handles all legal issues. Shareholding 39 Identification of major shareholders and structure and The secretarial division provides a list of shareholders. investors with controlling interests shareholders’ Chap. 3 Corporate Governance interests The Company has established “Rules and Procedures on Conducting Risk control mechanisms and firewalls Transactions between Group Companies and Related Parties” and “Rules between the Company and its subsidiaries and Procedures on Monitoring Subsidiaries” as risk control mechanisms.

Board of direc- Independent directors The Company’s board includes four independent directors. tors and its responsibilities Periodic review of CPA’s independence The Audit Committee conducts periodic reviews.

The spokesperson and spokesperson’s mailbox serves as the main com- Communication channels with stakeholders munication channel between the Company and stakeholders.

Disclosure of financial, operational and Disclosure of financial-related and corporate governance information is Information corporate governance information posted periodically on the Company’s website. disclosure The Company has set up an English website, investor relations as well as Other ways of disclosing information spokesperson function to enhance information disclosures.

The Corporate Governance Committee oversees the functions of com- Functional committees mittees dealing with nominations of board directors and compensation. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Corporate Governance Implementation (4) Reviewing the employee compensation system and structure 1. Corporate Governance Committee and Au- dit Committee 2. Audit Committee

The Company’s corporate governance structure is com- Pursuant to the Securities and Exchange Act, sharehold- posed of two committees: a Corporate Governance Com- ers approved the establishment of an Audit Committee mittee and an Audit Committee. consisting of independent directors to take over the responsibilities of supervisors during its annual meeting on 1. Corporate Governance Committee June 13, 2008. The committee’s operation is bound by the “Audit Committee Charter” and its main responsibility is to The Corporate Governance Committee is composed en- assist the board in overseeing the following: tirely of independent board directors and its operation is bound by the “Corporate Governance Committee Charter.” (1) Integrity of the Company's financial statements Its main responsibilities cover the following: (2) Independent auditors' appointment (termination) and integrity/performance 40 (1) Maintaining a sound corporate governance mecha- (3) Internal risk control nism (4) Company's compliance with legal and regulatory

Chap. 3 Corporate Governance (2) Nominating independent directors and supervisors requirements (3) Supervising the operations of the board of directors, (5) Company's existing and potential risks supervisors and functional committees

2. Corporate Governance Operation 1. Attendance of board members at board meetings

1. The Board of Directors convened seven times in 2009 Attendance in Title Name By proxy Attendance ratio Remarks person Richard Tsai, Chairman 7 0 100% Representative of Fu-Chi Venture Corp. Daniel Tsai, Vice Chairman 6 1 86% Representative of Fu-Chi Venture Corp. Harvey Chang, Director Representative of TCC Investment Co., 7 0 100% Ltd. (Note 1) Vivien Hsu, Director Representative of TCC Investment Co., 7 0 100% Ltd. (Note 1) Victor Kung , Director 6 1 86% Representative of Fu-Chi Venture Corp. Independent Director Jack J.T. Huang 6 0 86% Independent Director Tsung-Ming Chung 6 1 86% Independent Director Wen-Li Yeh 6 1 86% Independent Director J. Carl Hsu 6 1 86% Benny Chen, Chen & Lin, who Director Representative of Taiwan Fixed Network 6 0 100% both resigned on Co., Ltd. September 18, Howard Lin, 2009, were re- Director Representative of Taiwan Fixed Network 6 0 100% quired to attend Co., Ltd. six meetings.

Note1: Former institutional director, TFN Investment Co., Ltd. was merged into TCC Investment Co., Ltd. on September 19, 2009. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 2. Any objections or issues raised by independent di- them to employees, managers and directors on rectors against resolutions passed by the Board of April 9, 2009 to ensure that they promote informa- Directors pursuant to Article 14-3 of the Securities tion transparency and timely disclosure. and Exchange Act: None. 2. Attendance of Audit Committee members 3. Directors’ adherence to Company rules on avoiding conflict of interests: During the annual shareholders’ meeting on June 13, At the 7th meeting of the Fifth Board of Directors on 2008, all independent directors were elected to the Audit April 30, 2009, during the discussion of the issue in- Committee taking over the responsibilities of supervisors. volving Taipei New Horizons Co., Ltd.’s – the Com- pany’s 49.9% indirectly owned investment – signing 1. The Audit Committee convened six times in 2009 of a construction management contract with Fubon Atten- Atten- By Title Name dance in dance Remarks Land Development Co., Ltd. (FLD), Chairman Rich- proxy ard Tsai and Vice Chairman Daniel Tsai abstained person ratio from voting to avoid conflict of interests in accor- Appoint- Inde- Tsung-Ming ed com- dance with Articles 178 and 206 of the Company pendent 6 - 100% Chung mittee Act as they are major shareholders of FLD. Director chairman

Inde- 4. Other BOD objectives: Jack J.T. pendent 5 - 83.33% Huang (1) BOD performance evaluation: The 11th meeting of Director the Fourth BOD approved the “Rules and Proce- Inde- dures on Evaluating BOD Performance” on October pendent Wen-Li Yeh 6 - 100% 26, 2006. The Corporate Governance Committee Director evaluates the BOD’s performance and submits a Inde- report on proposals for improvement. The 2008 pendent J. Carl Hsu 6 - 100% BOD performance self-evaluation was conducted Director by all members at the 7th meeting of the Fifth BOD on April 30, 2009. The 2009 BOD performance self- Note: evaluation was conducted by all members at the (1) Any objections or issues raised by the Audit Com- 12th meeting of the Fifth BOD on January 28, 2010. mittee against resolutions, pursuant to Article 14-5 (2) Training programs for directors and supervisors: The of the Securities and Exchange Act, that were ap- Company has conducted regular seminars in the of- proved by over two-thirds of the directors: None. 41 fice to facilitate interaction between the lecturer and (2) Any conflict of interests among independent direc-

directors and meet the required training hours since tors: None. Chap. 3 Corporate Governance 2008. (3) Communication between Independent Directors and (3) Information transparency: Committed to upholding the Internal Audit Chief and CPAs: transparency in operations and protecting share- a. In addition to presenting monthly reports to inde- holders’ interests, the Company discloses BOD pendent directors, the Internal Audit Chief sub- resolutions in a timely and consistent manner. In mits regular reports on the progress of its audit accordance with Interpretation No. 0970032392, program at the quarterly Audit Committee meet- promulgated by the Taiwan Stock Exchange on ings. November 19, 2008, the Company approved the b. The CPAs present audit reports and findings to “Regulations on Dealing with Internal Material In- independent directors during the committee’s formation” on January 22, 2009 and disseminated quarterly meeting. c. The Internal Audit Chief and CPAs also communicate with independent directors directly as needed. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 3. Major resolutions at the 2009 shareholders’ meeting 9. Gave the green light to the Company’s participation in future rights issues of Wealth Media Technol- Issues discussed and approved: ogy Co., Ltd., with the equity investment cap set at 1. 2008 business and financial reports NT$6.5bn 2. 2008 earnings distribution proposal 10. Approved a loan to Wealth Media Technology Co., 3. Amendments to the Company’s “Articles of Incorpo- Ltd. ration” 11. Approved a loan to Taiwan Cellular Co., Ltd. 4. Amendments to the “Rules and Procedures on 12. Approved the acquisition of Carlyle Group’s CATV- Lending and Making Endorsements/Guarantees” related assets in Taiwan, with the cap set at 15.5% Resolutions made in the 2009 general shareholders’ meet- of the Company’s treasury shares coupled with ing were all duly executed. cash 13. Approved a maximum of NT$3.5bn in endorsement 4. Major resolutions by the board (between 2009 and the /guarantee for Taiwan Fixed Network Co., Ltd publication date) 14. Approved a loan to TCC Investment Co., Ltd 15. Approved a loan to Taiwan Fixed Network Co., Ltd 1. Approved the removal of non-competition restric- 16. Approved a loan to TFN Media Ltd 42 tions on Company management 17. Approved 2010 stand-alone and consolidated fi- 2. Approved 2009 stand-alone and consolidated finan- nancial forecasts Chap. 3 Corporate Governance cial forecasts 18. Approved 2010 capital expenditure projects for 3. Gave the green light to the Company’s participa- network optimization and 3G implementation tion in future rights issues of Taipei New Horizons 19. Approved the removal of non-competition restric- Co., Ltd., with the equity investment cap set at tions on Company management NT$1.92bn 20. Approved the holding of the 2010 general share- 4. Approved 2009 capital expenditure projects for net- holders’ meeting work optimization and 3G implementation The above information is posted on http://newmops.tse. 5. Approved 2008 profit distribution proposal com.tw. 6. Approved the holding of the 2009 general shareholders’ meeting 5. Major disputes between directors and supervisors in 7. Approved expansion project for 3G network relation to board meeting resolutions from 2009 up to 8. Set record date for 2008 cash dividend distribution the publication date in 2010: None. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 3. Additional Information 1. Training program for directors Date of training

Title Name Organization Training program Hours From To

Director, Repre- Corporate Governance As- Enterprise mergers and the legal sentative of Fu-Chi Richard Tsai 2009/07/07 2009/07/07 3.0 sociation responsibility of directors Venture Corp. Corporate Governance As- Enterprise mergers and the legal Director, Repre- 2009/07/07 2009/07/07 3.0 sociation responsibility of directors sentative of Fu-Chi Daniel Tsai Corporate Governance As- Insider trading and the legal re- Venture Corp. 2009/07/31 2009/07/31 3.0 sociation sponsibility of directors Speaker at “Win-win enterprise Corporate Governance As- 2009/05/15 2009/05/15 strategy for shareholders, employ- 1.0 sociation ees and company” forum Director, Representa- Corporate Governance As- Insider trading and the legal re- Harvey 2009/07/31 2009/07/31 3.0 tive of TCC Invest- sociation sponsibility of directors/supervisors Chang ment Co., Ltd. Corporate Governance As- Discussing corporate governance 2009/10/05 2009/10/05 1.0 sociation and BenQ’s case Corporate Governance As- 2009/12/02 2009/12/02 Corporate governance forum 1.0 sociation “Win-win enterprise strategy for Corporate Governance As- 2009/05/15 2009/05/15 shareholders, employees and com- 1.0 sociation pany” forum

Director, Representa- Corporate Governance As- 2009/07/01 2009/07/01 “ECFA” forum 1.0 tive of TCC Invest- Vivien Hsu sociation ment Co., Ltd. Financial Supervisory Com- Orientation on regulations govern- 2009/07/24 2009/07/24 2.0 mission, Executive Yuan ing internal transfer of shares Corporate Governance As- Insider trading and the legal re- 2009/07/31 2009/07/31 3.0 sociation sponsibility of directors/supervisors Corporate Governance As- Enterprise mergers and the legal Director, Repre- 2009/07/07 2009/07/07 3.0 sociation responsibility of directors sentative of Fu-Chi Victor Kung Corporate Governance As- Insider trading and the legal re- Venture Corp 2009/07/31 2009/07/31 3.0 sociation sponsibility of directors 43 Corporate Governance As- Cross-strait business and trading 2009/02/05 2009/02/05 1.0 sociation amid the financial crisis Chap. 3 Corporate Governance Speaker at “Enterprise mergers and Corporate Governance As- Jack J.T. 2009/07/07 2009/07/07 the legal responsibility of directors/ 3.0 Independent Director sociation Huang supervisors” Speaker at “Enterprise mergers and 2009/11/17 2009/11/17 Securities & Futures Institute the legal responsibility of directors/ 3.0 supervisors” Tsung-Ming Taiwan Academy of Banking Board Meeting Practices and Cor- Independent Director 2009/07/02 2009/07/02 3.0 Chung and Finance porate Governance Insider trading and the legal Corporate Governance Independent Director Wen-Li Yeh 2009/07/31 2009/07/31 responsibility of directors/su- 3.0 Association pervisors Insider trading and the legal Corporate Governance Independent Director J. Carl Hsu 2009/07/31 2009/07/31 responsibility of directors/su- 3.0 Association pervisors

Note: The training requirements listed above have been fulfilled. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 2. Training program for management team

Training Program Organization Date Hours Participant List of management team [Corporate Governance Workshop] TWM HR Div./ Jeff Ku, James Chang, Egon Chen, Chien Chen, Paul Management strategies for coping Polaris Research 2009/07/20 3 Huang, Joseph Yang after the financial storm Institute [Corporate Governance Workshop] TWM HR Div./ Cliff Lai, JC Dorng*, Techi Juan, James Chang, Chien Enhancing organizational execution Polaris Research 2009/10/14 3 Chen, Joseph Yang with customer value management Institute Harvey Chang, Vivien Hsu, James Jeng, George C. Chou, [Corporate Strategy Workshop] JC Dorng*, Andrew Wong, Simon Wang, HS Wang, Jeff TWM HR Div. 2009/10/23 7 Win-win Strategies for Organizations Ku, Techi Juan, Jay Hong, C.A. Chuang, Egon Chen, Chien Chen, Paul Huang, Joseph Yang, Ruth Liaw

* JC Dorng resigned on October 31, 2009

3. Employees’ certification related to financial transpar- 5. Resigned/discharged officers responsible for financial ency reports: None. 44 Employees whose duties involve releasing Company’s fi- Achievements and Recognitions

Chap. 3 Corporate Governance nancial information are encouraged to obtain certifications in related fields. Certification details are as follows: Aside from continually focusing on its core business and 1. Certified Internal Auditor (CIA): One employee in Op- protecting shareholders’ interests, the Company has won eration Analysis Division; eight in Internal Audit Of- recognition locally and globally for its commitment to cor- fice. porate governance and corporate social responsibility. In 2. Basic examination on internal controls by the Securi- 2009, TWM was awarded the “Corporate Governance Asia ties and Futures Institute: Four in Secretarial Division. Recognition Award” in the Asia-Pacific region by Corporate 3. Qualified Internal Auditor (QIA): One employee in Op- Governance Asia for the third year in a row. The Company eration Analysis Division; eight in Internal Audit Of- was granted an A+, the highest ranking in Information fice; one in Accounting Division. Disclosure and Transparency Assessments, and ranked 4. Certified Public Accountant (CPA): One employee in among the top 10 listed companies by the Securities and the Office of the CFO; three in Operation Analysis Futures Institute for the fourth consecutive year. Moreover, Division; one in Accounting Division; one in Finance it was also awarded the “Excellence in Corporate Social Division. Responsibility” and ranked No.1 in the corporate governance category by CommonWealth magazine for the third 4. The Company has purchased liability insurance for its year in a row. TWM has become a benchmark for Taiwan- directors and supervisors. ese companies given its exemplary compliance with the strict rules on corporate governance and continuous pur- suit of sustainable development.

Certified Public Accountant (CPA) Information

1. CPA and CPA opinions for the past five years

Year Accounting firm Name of CPA Opinion

2005 Deloitte & Touche Peter Fan, Vita Kuo Unqualified opinion 2006 Deloitte & Touche Peter Fan, Vita Kuo Modified unqualified opinion 2007 Deloitte & Touche Peter Fan, Vita Kuo Modified unqualified opinion 2008 Deloitte & Touche Vita Kuo, Roger Tai Modified unqualified opinion 2009 Deloitte & Touche Peter Fan, S. C. Huang Unqualified opinion WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 2. Reasons for changing CPAs in the past five years

Regular job rotations within Deloitte & Touche resulted in the change of CPAs from 2005 to 2009.

3. CPA service fees Unit: NT$’000 Whether the CPA’s audit Non-audit fee period covers an Account- Audit Name of CPA entire fiscal year Note ing firm fee Company Other Subtotal Yes No registration

Fees for other non-audit ser- Deloitte & S.C. Peter Fan 9,220 257 1,802 11,279 v vices were mainly for tax related Touche Huang consultation

Unit: NT$’000

Range of CPA service fee Audit fee Non-audit fee Total

1 NT$0~NT$1,999,999 - - -

2 NT$2,000,000~NT$3,999,999 - 2,059 2,059

3 NT$4,000,000~NT$5,999,999 - - -

4 NT$6,000,000~NT$7,999,999 - - -

5 NT$8,000,000~NT$9,999,999 9,220 - 9,220

6 NT$10,000,000 and above - - -

4. Chairman, CEO, and chief officer of finance or accounting held positions in the Company’s audit firm or its affiliates: None 45

Internal Control System Chap. 3 Corporate Governance

1. Internal Control Office Organization

The Company’s Internal Audit Office is an independent unit that reports directly to the Board of Directors. The Internal Audit Office is responsible for the examination and assessment of the internal controls of the Company’s financial, sales, operations, and management departments. All departments, including those of the subsidiaries, are subject to its audit. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Regular internal audits are executed according to the annual audit plan. Special audit projects are implemented as needed. These audits enhance internal control and provide timely recommendations for future improvements. In accordance with corporate governance, audit reports are regularly submitted to and reviewed by the Chairman as well as the Audit Commit- tee.

The Internal Audit Office also examines the mechanisms and results of self-evaluations by departments and subsidiaries to ensure strict implementation. In addition, it generates and consolidates related inspection reports for the CEO and the Board of Directors to evaluate the overall efficiency of existing internal control systems before generating an internal control system statement.

Board of Directors

Internal Audit Office 46

Internal Audit Operations Unit Compliance Unit Chap. 3 Corporate Governance

1. Auditing of the Company and its subsidiaries 1. Conducting special audits 2. Monitoring and examining the effectiveness and 2. Handling staff and suppliers’ complaints efficiency of the Company’s internal control sys- 3. Collecting, disseminating and ensuring compli- tem ance with applicable laws and regulations 4. Conducting audits of information security management system

2. Report from CPA after examining the internal control system:None.

3. Violation of regulations and internal policies: None. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Taiwan Mobile Co., Ltd. Internal Control Statement

Date: January 28, 2010

Taiwan Mobile (TWM) states the following with regard to its internal control system for the year 2009: 1. TWM is fully aware that establishing, operating, and maintaining an internal control system are the responsibilities of its Board of Directors and management. TWM has established such a system to provide reasonable assurance in achieving objectives related to the effectiveness and efficiency of operations (including profits, performance, and safeguarding of assets), reliability of financial reporting, and compliance with applicable laws and regulations. 2. An internal control system has inherent limitations. An effective internal control system, no matter how per- fectly designed, can provide only a reasonable assurance in the accomplishment of the three goals mentioned above. Furthermore, the effectiveness of an internal control system may change along with changes in environment or circumstances. The internal control system of the Company contains self-monitoring mechanisms, and the Company takes corrective actions as soon as a deficiency is identified. 3. TWM evaluates the design and operating effectiveness of its internal control system based on the criteria provided in the “Regulations Governing the Establishment of Internal Control Systems” by Public Companies promulgated by the Securities and Futures Bureau, the Financial Supervisory Commission, and the Executive Yuan (herein referred to as “Regulations”). The internal control system evaluation criteria stated in the Regu- lations classify internal control into five key elements based on the process of management control: 1. Control environment, 2. Risk assessment and response, 3. Control activities, 4. Information and communications, 5. Monitoring. Please refer to the Regulations for details on these five key elements. 4. TWM has evaluated the design and operating effectiveness of its internal control system according to the aforesaid criteria. 5. Based on the findings of the evaluation mentioned in the third paragraph, TWM believes that as of Dec.31, 2009, its internal control system (including its supervision of subsidiaries), which encompasses internal controls for the knowledge of the degree of achieving operational effectiveness and efficiency objectives, reliability of financial reporting, and compliance with applicable laws and regulations, was effectively designed and operating and reasonably assured the achievement of the above-stated objectives. 6. This statement will form a major part of the Company's Annual Report and Prospectus and will be made pub- 47 lic. Any falsehood, concealment, or other illegality in the content made public will entail legal liability under

Articles 20, 32, 171 and 174 of the Securities and Exchange Act. Chap. 3 Corporate Governance 7. This statement has been passed by the TWM Board of Directors’ Meeting on January 28, 2010, where all of the nine attending directors did not express any dissenting opinion and affirmed the content of the same.

Taiwan Mobile Co., Ltd.

Richard Tsai Harvey Chang Chairman President WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Chap. 4 Financial Information

Capital and shares

1. History of capitalization As of January 31, 2010 Unit: shares / NT$

Authorized capital Paid-in capital Remarks

Date Par In form Source of capital Effective date & Shares Amount (NT$) Shares Amount (NT$) other (NT$) cert. no. than cash

Feb. CB conversion: 10 6,000,000,000 60,000,000,000 4,999,325,082 49,993,250,820 - N.A. 2007 NT$9,491,450 48 May CB conversion: 10 6,000,000,000 60,000,000,000 4,999,757,281 49,997,572,810 - N.A. 2007 NT$4,321,990 Chap. 4 Financial Information Aug. CB conversion: 10 6,000,000,000 60,000,000,000 5,000,414,054 50,004,140,540 - N.A. 2007 NT$6,567,730

Nov. CB conversion: 10 6,000,000,000 60,000,000,000 5,000,925,363 50,009,253,630 - N.A. 2007 NT$5,113,090

Dec. Cash capi- Authority approval 2007 10 6,000,000,000 60,000,000,000 3,800,925,363 38,009,253,630 tal reduction: - No.0960049978 NT$12,000,000,000 on Oct. 17, 2007

As of January 31, 2010 Unit: shares

Authorized capital Remarks Listed shares Unissued shares Total

Common stock 3,800,925,363 2,199,074,637 6,000,000,000

2. Shareholder structure As of July 12, 2009

Government Financial Foreign institutions Other institutions Individuals Total agencies institutions & individuals

No. of shareholders 6 17 305 43,623 607 44,558

Total shares owned 116,936,500 376,076,076 1,621,084,069 460,737,450 1,226,091,268 3,800,925,363

Holding percentage (%) 3.08 9.89 42.65 12.12 32.26 100.00 WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 3. Shareholding distribution As of July 12, 2009 Par value: NT$10/share

Shareholding range No. of shareholders Total shares owned Holding percentage

1 ~ 999 17,695 6,106,526 0.161%

1,000 ~ 5,000 19,554 41,805,806 1.100%

5,001 ~ 10,000 3,572 27,057,385 0.712%

10,001 ~ 15,000 984 12,168,137 0.320%

15,001 ~ 20,000 710 12,725,442 0.335%

20,001 ~ 30,000 540 13,465,668 0.354%

30,001 ~ 50,000 448 17,716,814 0.466%

50,001 ~ 100,000 318 23,079,226 0.607%

100,001 ~ 200,000 206 29,774,135 0.783%

200,001 ~ 400,000 119 33,413,984 0.879%

400,001 ~ 600,000 70 34,122,452 0.898%

600,001 ~ 800,000 44 31,086,460 0.818%

800,001 ~ 1,000,000 34 30,372,296 0.799%

1,000,001 and above 264 3,488,031,032 91.768%

Total 44,558 3,800,925,363 100.000%

4. Major shareholders As of July 12, 2009 49 Name Total shares owned Holding percentage

Taiwan Fixed Network Co., Ltd. 456,294,760 12.005% Chap. 4 Financial Information

TFN Investment Co., Ltd. 355,622,851 9.356%

Cathay Life Insurance Co., Ltd. 198,016,000 5.210%

Ming Dong Co., Ltd. 191,624,725 5.042%

Fubon Life Assurance Co., Ltd. 137,546,000 3.619%

Dao Ying Co., Ltd. 116,616,380 3.068%

DLK Holding Co. LLC 114,006,661 2.999%

Daniel Tsai 96,644,434 2.543%

Fubon Securities Co., Ltd. 93,806,640 2.468%

Richard Tsai 91,466,154 2.406% WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 5. Major shareholders of TWM’s institutional investors

Institutional investors Major shareholders

Taiwan Fixed Network Co., Ltd. Taiwan Cellular Co., Ltd. (100%)

TFN Investment Co., Ltd. Taiwan Fixed Network Co., Ltd. (100%)

Cathay Life Insurance Co., Ltd. Cathay Financial Holding Co., Ltd. (100%)

Fubon Land Development Co., Ltd. (16.36%), Chung Shing Development Co., Ltd. (11.77%), Fubon Construction Co., Ltd. (13.89%), Fu-Chi Investment Co., Ltd. (12.63%), Ming Dong Co., Ltd. Ru Chi Investment Co., Ltd. (12.63%), Dao Chi Co., Ltd. (12.63%), Dao Ying Co., Ltd. (9.6%), Fubon Charity Foundation (3.43%), Fubon Cultural & Education Foundation (2.53%), Daniel Tsai (1.31%)

Fubon Life Assurance Co., Ltd. Fubon Financial Holding Co. Ltd. (100%)

50 Fubon Land Development Co., Ltd. (17.69%), Chung Shing Development Co., Ltd. (8.84%), Fubon Construction Co., Ltd. (17.69%), Fu-Chi Investment Co., Ltd. (13.13%), Dao Ying Co., Ltd. Ru Chi Investment Co., Ltd. (13.13%), Dao Chi Co., Ltd. (13.13%), Chap. 4 Financial Information Ming Dong Co., Ltd. (9.6%), Fubon Charity Foundation (1.01%), Wan-Tsai Tsai (1.01%), Shiang-Shun Yang Tsai (1.01%)

Fubon Securities Co., Ltd. Fubon Financial Holding Co. Ltd. (100%)

Changes in shareholdings of directors, supervisors, managers and major shareholders

For 2009 and up to the publication date for 2010, the Company’s directors and major shareholders who own more than 10% of the Company’s outstanding shares did not conduct any major share transfers or pledges, except for Taiwan Fixed Network’s and TCC Investment ‘s (Note 1) establishment of new companies with 589,143,432 shares of the Company. The Company has maintained a good relationship with its directors, supervisors and major shareholders. With maximizing shareholder value as its goal, the Company is focused on maintaining a stable management to reduce shareholder risk. Below is a chart detailing net changes in shareholdings of directors, supervisors, managers and major shareholders. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 1. Insignificant changes in shareholder structure Unit: Shares 2009 2010 (as of January 31)

Title Name Net change Net change Net change Net change in sharehold- in shares in share- in shares ing pledged holding1 pledged Richard Tsai, Representative of Chairman Fu-Chi Venture Corp. Daniel Tsai, Representative of Fu- Vice Chairman Chi Venture Corp. 0 0 0 0 Victor Kung, Representative of Director Fu-Chi Venture Corp. Harvey Chang, Representative of Director (Note 1) TCC Investment Co., Ltd. (132,848,672) 0 0 0 Vivien Hsu, Representative of Director (Note 1) TCC Investment Co., Ltd. Benny Chen, Representative of Director (Note 2) Taiwan Fixed Network Co., Ltd. (456,294,760) 0 NA NA Frank Lin, Representative of Director (Note 2) Taiwan Fixed Network Co., Ltd. Independent Director Jack J.T. Huang 0 0 0 0 Independent Director Tsung-Ming Chung 0 0 0 0 Independent Director Wen-Li Yeh 0 0 0 0 Independent Director J. Carl Hsu 0 0 0 0 The Major Shareholder owns more than 10% TFN Union Investment Co., Ltd. 456,294,760 0 0 0 President & Chief Executive Officer Harvey Chang 1,241,000 0 0 0 SVP & Chief Financial Officer Vivien Hsu 0 0 0 0 SVP, CTO and COO of Home Business Group James Jeng 37,000 (69,000) SVP & COO of Consumer Business Group Cliff Lai 63,000 0 0 0 SVP & COO of Enterprise Business Group George C. Chou 190,000 0 0 0 Vice President C.A. Chuang (101,000) 0 (10,000) 0 Vice President Ariel Hwang 0 0 0 0 Vice President Jay Hong 30,000 0 (20,000) 0 Vice President HS Wang 60,000 0 (9,000) 0 Vice President Andrew Wong 5,000 0 0 0 Vice President James Chang 100,000 0 0 0 51 Vice President Daphne Yang (Note 3) NA NA 0 0 Vice President Rosie Yu 0 0 0 0

Vice President Ruth Liaw 50,398 0 (20,000) 0 Chap. 4 Financial Information Vice President Techi Juan 89,000 0 0 0 Vice President Egon Chen 20,000 0 0 0 Vice President Chien Chen (11,882) 0 0 0 Vice President and Deputy COO Jeff Ku 99,000 0 (65,000) 0 Vice President Sean Hsieh 66,000 0 (10,000) 0 Vice President Jerry Chu 41,216 0 0 0 Vice President Paul Huang 90,000 0 0 0 Vice President Simon Wang 54,000 0 0 0 Vice President Joseph Yang 68,000 0 0 0 Chief Strategy Officer JC Dorng (Note 4) (11,068) 0 NA NA Chief Technology Officer Frank Lin (Note 5) (13,000) 0 NA NA Vice President D.S. Chiou (Note 5) (1,000) 0 NA NA

Note 1: Former institutional director, TFN Investment Co., Ltd., was merged into TCC Investment Co., Ltd., on September 19, 2009 Note 2: The institutional Director, Taiwan Fixed Network Co., Ltd., resigned on September 18, 2009, due to transferring more than half of its shareholdings in the Company to establish TFN Union Investment Co., Ltd. Note 3: Daphne Yang took office on January 4, 2010. Note 4: JC Dorng resigned on October 31, 2009. Note 5: Frank Lin and D.S. Chiou resigned on August 1, 2009. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 2. Stock trade with related party

Trading price Name Reasons for trading Trading date Counter party Relationship Shares (NT$)

Taiwan Fixed Net- Establishment of new company TFN Union Invest- 2009.09.18 Designated party 456,294,760 49.90 work Co., Ltd. with the Company’s shares ment Co., Ltd. TCCI Investment TFN Investment Establishment of new company 2009.09.18 & Development Designated party 132,848,672 49.90 Co., Ltd. with the Company’s shares Co., Ltd Establishment of new company Bo-han Invest- Vivien Hsu 2009.12.22 Designated party 392,000 61.70 with the Company’s shares ment Co., Ltd.

3. Stock pledged with related party: None 4. Direct and indirect investments in affiliated companies As of December 31, 2009 Unit: shares, % 52 Direct & indirect investment Investment by TWM by TWM’s directors, supervi- Total investment Long-term investments sors and management Chap. 4 Financial Information Shares Holding (%) Shares Holding (%) Shares Holding (%) Taiwan Cellular Co., Ltd. 30,000,000 100.00 – – 30,000,000 100.00

Wealth Media Technology Co., Ltd. 27,200,000 100.00 – – 27,200,000 100.00

Taipei New Horizons Co., Ltd. 24,950,000 49.90 – – 24,950,000 49.90

Bridge Mobile Pte. Ltd. 2,200,000 10.00 – – 2,200,000 10.00

5. Share price, net worth, earnings, dividends and related information Unit: NT$, shares in thousand

2008 2009 As of Jan. 31, 2010 (Note 3)

High 60.50 62.50 62.90 Share price (NT$) Low 40.05 44.25 60.00 Average 52.49 53.44 61.48 Before earnings appropriation 17.17 17.42 17.42 Net worth per share (NT$) After earnings appropriation 12.46 Note 1 Note 1 Adjusted weighted average outstanding shares 2,966,368 2,979,311 2,979,311 Earnings per share (NT$) Before adjustment 5.18 4.66 4.66 Earnings per share After adjustment 5.18 Note 1 Note 1 Cash dividends 4.68704 Note 1 - Retained earnings - Note 1 - Dividends per share (NT$) Stock dividends Capital surplus - - - Accumulated unpaid dividends - - - Before adjustment 10.13 11.47 - Price earnings ratio (x) PE and dividend yield After adjustment 10.13 Note 1 - (Note 2) Price to cash dividend (x) 11.20 - - Cash dividend yield (%) 8.93 - -

Note 1: The appropriation amount indicated above is based on resolutions approved at the annual shareholders’ meetings in the subsequent year. The appropriation amount for 2009 has not yet been approved. Note 2: Price earnings ratio = Average closing price / earnings per share Price to cash dividend = Average closing price / cash dividend per share Cash dividend yield = Cash dividend per share / average closing price Note 3: Net worth per share and earnings per share are based on the most recent audited financial statements. All others are as of January 31, 2010. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 6. Relationship between TWM’s top 10 shareholders As of July 12, 2009

Current sharehold- Spouse’s/minor’s Name and relationship between TWM’s shareholders as defined in the Name (A) ing shareholding Statement of Financial Accounting Standards No. 6

Shares % Shares % Name (B) Relationship TFN Investment Co., Ltd. B is a subsidiary of A Ming Dong Co., Ltd. B’s chairman is a relative within two degrees of A’s chairman Dao Ying Co., Ltd. B’s chairman is a relative within two degrees of A’s chairman Taiwan Fixed Fubon Life Assurance Co., Ltd. Related party Network 456,294,760 12.005% – – Fubon Securities Co., Ltd. Related party Co., Ltd. Wan-Tsai Tsai B is a relative within two degrees of A’s chairman Daniel Tsai B is a director at A Richard Tsai B is A’s chairman Taiwan Fixed Network Co., Ltd. A is B’s chairman TFN Investment Co., Ltd. A is B’s chairman Ming Dong Co., Ltd. B’s chairman is a relative within two degrees of A’s chairman Chairman: Dao Ying Co., Ltd. B’s chairman is a relative within two degrees of A’s chairman Richard Tsai Fubon Life Assurance Co., Ltd. A is B’s Chairman Fubon Securities Co., Ltd. Related party Wan-Tsai Tsai B is A’s relative within two degrees Daniel Tsai B is A’s relative within two degrees Taiwan Fixed Network Co., Ltd. B is A’s parent company Ming Dong Co., Ltd. B’s chairman is a relative within two degrees of A’s chairman Dao Ying Co., Ltd. B’s chairman is a relative within two degrees of A’s chairman TFN Invest- Fubon Life Assurance Co., Ltd. Related party ment Co., 355,622,851 9.356% – – Fubon Securities Co., Ltd. Related party Ltd. Wan-Tsai Tsai B is a relative within two degrees of A’s chairman Daniel Tsai B is a director at A Richard Tsai B is A’s chairman Taiwan Fixed Network Co., Ltd. A is B’s chairman TFN Investment Co., Ltd. A is B’s chairman Ming Dong Co., Ltd. B’s chairman is A’s relative within two degrees Chairman: Dao Ying Co., Ltd. B’s chairman is A’s relative within two degrees Richard Tsai Fubon Life Assurance Co., Ltd. A is B’s chairman Fubon Securities Co., Ltd. Related party Wan-Tsai Tsai B is A’s relative within two degrees Daniel Tsai B is A’s relative within two degrees Cathay Life Insurance 198,016,000 5.210% – – - - Co., Ltd. Chairman: Hong-Tu - - Tsai Taiwan Fixed Network Co., Ltd. B’s chairman is a relative within two degrees of A’s chairman TFN Investment Co., Ltd. B’s chairman is a relative within two degrees of A’s chairman Dao Ying Co., Ltd. A and B have the same chairman Ming Dong Fubon Life Assurance Co., Ltd. B’s chairman is a relative within two degrees of A’s chairman 53 191,624,725 5.042% – – Co., Ltd. Fubon Securities Co., Ltd. Related party Wan-Tsai Tsai B is A’s chairman

Daniel Tsai A’s chairman is B’s relative within two degrees Chap. 4 Financial Information Richard Tsai A’s chairman is B’s relative within two degrees Taiwan Fixed Network Co., Ltd. B’s chairman is A’s relative within two degrees TFN Investment Co., Ltd. B’s chairman is A’s relative within two degrees Ming Dong Co., Ltd A is B’s chairman Chairman: Dao Ying Co., Ltd. A is B’s chairman Wan-Tsai Fubon Life Assurance Co., Ltd. B’s chairman is A’s relative within two degrees Tsai Fubon Securities Co., Ltd. Related party Daniel Tsai B is A’s relative within two degrees Richard Tsai B is A’s relative within two degrees Taiwan Fixed Network Co., Ltd. Related party TFN Investment Co., Ltd. Related party Ming Dong Co., Ltd. B’s chairman is a relative within two degrees of A’s chairman Fubon Life Dao Ying Co., Ltd. B’s chairman is a relative within two degrees of A’s chairman Assurance 137,546,000 3.619% - - Fubon Securities Co., Ltd. A and B are subsidiaries of Fubon Financial Holding Co., Ltd. Co., Ltd. Wan-Tsai Tsai A’s chairman is B’s relative within two degrees Daniel Tsai A’s chairman is B’s relative within two degrees Richard Tsai B is A’s chairman

(Continued) WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Current sharehold- Spouse’s/minor’s Name and relationship between TWM’s shareholders as defined in the Name (A) ing shareholding Statement of Financial Accounting Standards No. 6

Shares % Shares % Name (B) Relationship Taiwan Fixed Network Co., Ltd. A is B’s chairman TFN Investment Co., Ltd. A is B’s chairman Ming Dong Co., Ltd. B’s chairman is A’s relative within two degrees Chairman: Dao Ying Co., Ltd. B’s chairman is A’s relative within two degrees Richard Tsai Fubon Life Assurance Co., Ltd. A is B’s chairman Fubon Securities Co., Ltd. Related party Wan-Tsai Tsai B is A’s relative within two degrees Daniel Tsai B is A’s relative within two degrees Taiwan Fixed Network Co., Ltd. B’s chairman is a relative within two degrees of A’s chairman TFN Investment Co., Ltd. B’s chairman is a relative within two degrees of A’s chairman Ming Dong Co., Ltd. A and B have the same chairman Dao Ying Fubon Life Assurance Co., Ltd. B’s chairman is a relative within two degrees of A’s chairman 116,616,380 3.068% – – Co., Ltd. Fubon Securities Co., Ltd. Related party Wan-Tsai Tsai B is A’s chairman Daniel Tsai A’s chairman is B’s relative within two degrees Richard Tsai A’s chairman is B’s relative within two degrees Taiwan Fixed Network Co., Ltd. B’s chairman is A’s relative within two degrees TFN Investment Co., Ltd. B’s chairman is A’s relative within two degrees Ming Dong Co., Ltd A is B’s chairman Chairman: 54 Dao Ying Co., Ltd. A is B’s chairman Wan-Tsai Fubon Life Assurance Co., Ltd. B’s chairman is A’s relative within two degrees Tsai Fubon Securities Co., Ltd. Related party

Chap. 4 Financial Information Daniel Tsai B is A’s relative within two degrees Richard Tsai B is A’s relative within two degrees DLK Holding 114,006,661 2.999% - - - - Co. LLC Taiwan Fixed Network Co., Ltd. A is a director at B TFN Investment Co., Ltd. A is a director at B Ming Dong Co., Ltd. B’s chairman is A’s relative within two degrees Dao Ying Co., Ltd. B’s chairman is A’s relative within two degrees Daniel Tsai 96,644,434 2.543% 8,646,863 0.227% Fubon Life Assurance Co., Ltd. B’s chairman is A’s relative within two degrees Fubon Securities Co., Ltd. Related party Wan-Tsai Tsai B is A’s relative within two degrees Richard Tsai B is A’s relative within two degrees Taiwan Fixed Network Co., Ltd. Related party TFN Investment Co., Ltd. Related party Ming Dong Co., Ltd. Related party Fubon Secu- Dao Ying Co., Ltd. Related party rities Co., 93,806,640 2.468% - - Fubon Life Assurance Co., Ltd. A and B are subsidiaries of Fubon Financial Holding Co., Ltd. Ltd. Wan-Tsai Tsai Related party Daniel Tsai Related party Richard Tsai Related party Chairman: David - - Chang Taiwan Fixed Network Co., Ltd. A is B’s chairman TFN Investment Co., Ltd. A is B’s chairman Ming Dong Co., Ltd. B’s chairman is A’s relative within two degrees Dao Ying Co., Ltd. B’s chairman is A’s relative within two degrees Richard Tsai 91,466,154 2.406% 5,651,663 0.149% Fubon Life Assurance Co., Ltd. A is B’s chairman Fubon Securities Co., Ltd. Related party Wan-Tsai Tsai B is A’s relative within two degrees Daniel Tsai B is A’s relative within two degrees WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 7. Dividend policy 1. Dividend policy under Articles of Incorporation

Stock dividends should not exceed 80% of total dividends distributed in a single year and should take into account the Company’s major capital expenditure plans for the future. The dividend payout proposed by the board of directors has to be approved at the annual shareholders’ meeting.

2. Proposed dividend allocation for approval at the annual shareholders’ meeting

Cash dividend is proposed to be NT$15,028,234,973. The Company received letters of agreement on April 28, 2010, from TCC Investment Co., Ltd. (TCCI), TCCI Investment & Development Co., Ltd. (TID) and TFN Union Investment Co., Ltd. (TUI) to forfeit their share of dividends. After deducting the 811,917,611 shares held by TCCI, TID and TUI, the net number of shares that will be entitled to receive dividends is 2,989,007,752, representing $5.03 cash dividend per share.

8. Impact of stock dividend distribution on business performance and EPS

Not applicable. The board of directors proposed to distribute only cash dividends this year.

9. Share buyback As of January 31, 2010

Share buyback 5th

Purpose Transfer to employees

Buyback period 2008.10.08 ~ 2008.12.07

Buyback price range NT$40.40 ~ NT$49.90

Total number of shares bought back 24,193,000

Buyback amount (NT$) 1,059,731,914 55 Number of shares canceled/transferred 24,193,000

Treasury stock balance (shares) 0 Chap. 4 Financial Information

As a % of the Company’s total issued shares 0% WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Corporate bond issuance

1. Corporate bonds As of January 31, 2010 Second unsecured corporate Issuance First unsecured corporate bonds bonds Issue date December 13~31, 2002 November 14, 2008 Denomination NT$5,000,000 NT$10,000,000 Issuance and listing Not applicable Not applicable Issue price 100% 100% Total amount NT$15,000,000,000 NT$8,000,000,000 IA ~ IL: 2.60% p.a. IIA ~ IIL: 5.21% p.a. minus floating rate but not lower than 0% IIIA ~ IIIM: 2.80% p.a. Coupon IVA ~ IVM: 5.75% p.a. minus floating rate but not 2.88% p.a. lower than 0% 56 The floating rate is based on the USD 6-month LIBOR rate quoted on page 3750 of Hong Kong Bridge Telerate at 11 a.m. London time Chap. 4 Financial Information 5 years, maturing from Dec. 13-30, 2007 5 years, maturing on Nov. 14, Term 7 years, maturing from Dec. 13-31, 2009 2013 Guarantor None None

Trustee Bank SinoPac, Trust Division Hua Nan Bank, Trust Division Underwriter None None Legal counsel Cai-Sheng Lin, Attorney Jim Chen, Attorney Peter Lin, CPA, and Morris Yang, CPA Vita Kuo, CPA Auditor Deloitte & Touche Deloitte & Touche IA ~ IL: repayment of 50% of the principal at the end of the 4th year and the remaining 50% at the end of the 5th year Repayment of 50% of the prin- IIA ~ IIL: repayment in full upon maturity Repayment cipal in the 4th year and the IIIA ~ IIIM: repayment of 50% of the principal at the remaining 50% in the 5th year end of the 6th year and the remaining 50% at the end of the 7th year IVA ~ IVM: repayment in full upon maturity Outstanding balance NT$0 NT$8,000,000,000 Early repayment clause None None

Covenants None None Taiwan Ratings Co., Ltd., 2002.11.20, twAA- Taiwan Ratings Co., Ltd., 2003.03.18, twA+ Taiwan Ratings Co., Ltd., Taiwan Ratings Co., Ltd., 2004.12.22, twAA Credit rating agency, rating date, Company credit 2008.09.15, twAA Taiwan Ratings Co., Ltd., 2006.03.01, twAA+ rating Taiwan Ratings Co., Ltd., Taiwan Ratings Co., Ltd., 2007.04.24, twAA 2009.06.10, twAA Taiwan Ratings Co., Ltd., 2008.06.05, twAA Taiwan Ratings Co., Ltd., 2009.06.10, twAA

Amount converted/ exchanged into Not applicable Not applicable Ancillary common shares, ADRs or other securities rights Rules governing issuance or conversion Not applicable Not applicable (exchanged or subscription)

Dilution and other effects on shareholders’ equity Not applicable Not applicable

Custodian Not applicable Not applicable WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 2. Convertible bond information: None 3. Exchangeable bond: None 4. Shelf registration issuance: None 5. Bond with warrant: None

Other Significant Issues

1. Mergers and acquisitions by issuing new shares: None 2. Other Issuance:

1. Preferred shares: None

2. Depositary receipt issuance: None

3. Employee stock options: None

4. Private placement of company shares: None

5. Utilization plan and progress of rights issue: None

57 Chap. 4 Financial Information WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 3. TWM shares held / sold by subsidiaries:

Unit:NT$ ‘000

TCC Investment Co., TCCI Investment and Taiwan Fixed Network Co., TFN Union Investment Subsidiary Ltd. (TCCI, merged TFN Development Co., Ltd. Ltd.(TFN) Co., Ltd.(TUI) Investment Co., Ltd.) (TID)

Paid-in 21,000,000 21,000 4,000 4,000 capital TFN established TUI with TFNI established TID with Source of funding Equity Equity the shares of the Company the shares of the Company % owned by the 100% 100% 100% 100% Company Acquisition / disposal September As of Jan 31, September As of Jan 31, September As of Jan 31, September As of Jan 31, date 2009 2010 2009 2010 2009 2010 2009 2010 456,294,760 132,848,672 No. of shares acquired shares shares ------and payment costs NT$ NT$ 58 22,769,109 6,629,149 456,294,760 132,848,672 No. of shares sold and shares shares

Chap. 4 Financial Information ------proceeds NT$ NT$ 22,769,109 6,629,149

Investment income -(Note2) - -(Note2) - - - - -

Ending balance: 222,774,179 222,774,179 456,294,760 456,294,760 132,848,672 132,848,672 Total No. of shares shares shares shares shares shares shares - - and value NT$ NT$ NT$ NT$ NT$ NT$ (Note 1) 12,386,244 2,386,244 22,769,109 22,769,109 6,629,149 6,629,149

Pledges None None None None None None None None Guarantees / endorsements provided by the NT$20,383,160 NT$34,869,965 ------Company Financing provided by ------the Company

Note 1: Ending balance of value is carrying cost and does not include evaluation gains/losses. Note 2: As TFN and TCCI established TUI and TID respectively with the share of the Company, related investment gains or losses were classified as deferred credit.

4. Other significant events affecting shareholders’ equity or stock price:None WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Chap. 5 Operating Strategy

Macro Environment Overall Operating Results In 2009, the Company’s consolidated revenue dropped Consumer spending in communication and broadcasting 1% YoY, affected by falling revenues in the wireless market related services is largely influenced by the macroeconom- amid the financial crisis as well as the third year of manda- ic environment. The statistics released by the Directorate- tory mobile tariff cuts for certain mobile voice rate plans. General of Budget, Accounting and Statistics showed The revenue growth in mobile value-added services (VAS) that private consumption in 2009 recovered by 0.86%, and cable TV services failed to offset the decline in voice as the stock market bottomed out and consumer wealth revenue. As such, consolidated EBITDA declined 3% expanded. Looking at 2010, the DGBAS expects private from a year ago. Due to continuous 3G and 3.5G network consumption to rise 1.77% YoY on strengthening con- deployment and 2G telecom equipment upgrades, rising sumer confidence, as the domestic and global economies 3G depreciation expenses and 2G asset write-off losses continue to recover. Nonetheless, the Company expects weighed on net income, which fell 10% from a year ago. stiff challenges ahead from regulatory interventions in mobile tariff cuts inevitably. The Company’s business is divided into three main groups: Consumer Business Group (CBG), Home Business Group (HBG) and Enterprise Business Group (EBG).

Performance by division As of Dec. 31, 2009

By business group CBG HBG EBG

Brand name Taiwan Mobile TWM Broadband TWM Solution

• Voice and data mobile services for • Voice and data mobile services • Pay TV enterprises for consumers 59 Services • Cable broadband • Fixed-line • Mobile international direct dial- • Others • International simple resale (ISR)

ing (IDD) service Chap. 5 Operating Strategy services

2009 revenue (NT$m) 53,931 5,336 9,282

As a % of group 78% 8% 14% revenue

2009 EBITDA margin 45.7% 46.6% 22.2%

By business Mobile business Cable TV business Fixed-line business

One of the top three mobile op- Second-largest internet service pro- Fourth-largest multi-system operator erators, with around 30% market vider (ISP) with 5% share (TFN+TTN) Market position (MSO), covering 11% of households share in terms of mobile revenue of the market after Chunghwa in Taiwan and subscriber numbers Telecom

• 551K CATV subscribers • Around 200K ADSL/FTTx internet Subscriber base • 6,409K mobile subscribers • 114K cable broadband subscribers access users WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Industry value chain

Telecom equipment and system vendors

Content providers System aggregators Subscribers Handset makers (consumers, Taiwan Mobile Distribution channels/ enterprises, Channel aggregators agents households)

Domestic/Overseas carriers

Consumer Business Group terminal devices and new VAS, have been introduced to stimulate subscriber take-up. This will be 1. Industry Overview an important driver of revenue growth in the future. As for the prepaid segment, competition is intensify- 1. The three leading players continue to dominate Tai- ing due to continuous low-priced promotions from wan’s mobile communications market. However, the other existing operators and new entrants. smaller operators are gradually growing their market share by offering free on-net calls and promotional 2. Products and Services deals, resulting in intensified competition. With the number of 3G subscribers in Taiwan surpassing that The Company’s Consumer Business Group (CBG) is main- of 2G users in February 2009, the National Commu- ly engaged in providing mobile communications services nications Commission (NCC) has called for expand- to individual consumers. The Company provides mobile ing mobile tariff cuts to 3G services starting 2010 , services nationwide, covering Taiwan and the outlying is- which would weigh on the revenue of mobile opera- lands of Kinmen and Matsu. The Company offers a range tors. of derivative products that includes SIM cards for postpaid subscribers, SIM and reloadable cards for prepaid sub- 2. In the postpaid segment, operators are seeking to scribers to make/receive calls and uses its voice, data, expand the mobile broadband market. A variety of SMS, multimedia and video-messaging services. new rate plans for data services, combined with new

Launched first Android phone to bring customers into the mobile internet G era WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 1. Products and Services

Target Service Description Highlights customers category

Basic telecommunication voice services including calling and receiving calls from local fixed line, Voice domestic long distance and mobile phones

Value-added services including voice mail, call forwarding, call waiting, conferencing, short mes- Individual Mobile sage service (SMS), roaming, call barring, video calls, and multimedia & content services (e.g., consumers Data ringtones, games, screensavers, MP3, video clips, video streaming), and internet access using GPRS/3G/HSDPA transmission

IDD International direct dialing from mobile phones

2. Revenue breakdown by service 2009 2008 Amount Amount % of total % of total (NT$’000) (NT$’000) Telecom service revenue 55,159,348 96.74% 53,609,372 98.71% Other revenue* 1,856,104 3.26% 702,233 1.29% Total revenue 57,015,452 100.00% 54,311,605 100.00%

Includes revenue from handset sales and commissions from receipts under custody and payment on behalf of others

3. Mobile subscriber number and revenue for the past two years

2009 2008

Domestic Overseas Domestic Overseas

Average No. of Revenue Average No. of Revenue Average No. of Revenue Average No. of Revenue subscribers (NT$’000) subscribers (NT$’000) subscribers (NT$’000) subscribers (NT$’000)

Telecom 6,373,580 55,159,348 - - 5,694,536 53,609,372 - - service 61

Note: Average number of subscribers = (sum of monthly average number of subscribers)/12 Chap. 5 Operating Strategy

4. Major contracts

Counterpart Contract period Description Restriction clauses

Synnex Technology Inter- 2005.02.01~ Synnex is authorized to distribute Non-disclosure national Corp. (Under negotiation) (Note 1) TWM’s mobile phone services

Sales & 2009.07.01~ Aurora is authorized to distribute Aurora Telecom Corp. Non-disclosure distribution 2010.06.30 TWM’s mobile phone services

Tsann Kuen Enterprise Tsann Kuen is authorized to distrib- 2009.04.01~2010.03.31 Non-disclosure Co., Ltd. ute TWM’s mobile phone services WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Restriction Nature Counterpart Contract period Description clauses 2005.01.01 ~2005.12.31 Chunghwa Telecom Co., Ltd. Network interconnection contract Non-disclosure (Note 2) 2005.05.01 ~2006.04.30 New Century InfoComm Tech Co., Ltd. Network interconnection contract Non-disclosure (Note 2) 2007.07.01 ~2008.06.30 Taiwan Fixed Network Co., Ltd. Network interconnection contract Non-disclosure (Note 2) 2005.10.15 ~2006.10.14 Asia Pacific Telecom Co., Ltd. Network interconnection contract Non-disclosure (Note 2) Network 2006.01.16~2007.01.15 Voice and short message service intercon- VIBO Telecom Inc. Non-disclosure (Note 3) contract nection Asia Pacific Broadband Wireless Communi- 2003.07.23~2004.07.22 Voice and short messaging service Non-disclosure cations Inc. (Note 3) contract 2004.02.10 ~2005.02.09 Voice and short message service Far EasTone Telecommunications Co., Ltd. Non-disclosure (Note 3) contract 2004.03.01~2005.02.28 Voice and short message service KG Telecommunications Co., Ltd. Non-disclosure (Note 3) contract 2005.05.01 ~2006.04.30 Voice and short message service First International Telecom Corp. Non-disclosure 62 (Note 3) contract Synnex is a consignee selling Handset 2008.01.01~2008.12.31 Synnex Technology International Corp. TWM handsets and other com- Non-disclosure purchase (Note 1) Chap. 5 Operating Strategy munication products • PX Capital Partners B.V. • Wealth Media Technology Co., Ltd. • Wealth Media, the wholly (Wealth Media) 2009.09.16 till the Agree- owned subsidiary of TWM, Purchase • Cheng Ting Co., Ltd. (Cheng Ting) ment is terminated by purchased shares of Cheng and • Wei Mao Co., Ltd. TWM or PX Capital Part- Ting, owned by PX Capital Non-disclosure merger • Taiwan Fixed Network Co., Ltd. (TFN) ners B.V. in accordance • TUI and TID were merged with agreement • TCC Investment Co., Ltd. (TCCI) with the termination Wei Mao, with Wei Mao as • TFN Union Investment Co., Ltd. (TUI) clause of this Agreement the surviving company • TCCI Investment & Development Co., Ltd. (TID) Certain restric- tions on debt Syndicated Chinatrust Commercial Bank and 8 other Syndicated credit line of NT$13.5 ratios, interest 2008.02.21~2011.02.21 loan banks billion coverage ratio, net value of tangible assets Corporate The total amount of issuing the Chinatrust Securities and 9 other securities bonds issu- 2008.11.14~2013.11.14 second unsecured ordinary corpo- Non-disclosure companies ance rate bond is NT$8,000,000,000 Contract for 3G equipment and Nokia Siemens Networks Taiwan Co., Ltd. 2006.09.26~2009.12.31 service supply: Total contract Non-disclosure Equipment amounted to NT$4.8 billion purchase Contract for 3G equipment sup- Nokia Siemens Networks Taiwan Co., Ltd. 2009.04.01~2010.12.31 ply: Total contract amounted to Non-disclosure NT$3.22 billion. Customer Taiwan Teleservices & Technologies Co., TT&T to handle TWM’s customer 2006.01.01~2010.12.31 Non-disclosure service Ltd. (TT&T) service and product sales

Note 1: The contract will be automatically extended if neither party objects to its extension. Note 2: When the network interconnection contract expires, should the two parties not be able to conclude their negotiations within three months after their commencement, the process shall be as follows: (a) If the two parties concur to continue their negotiations, the contract terms will be the same as the originally negotiated terms or such other terms agreed by both parties, until a new agreement is reached. (b) Either party can appeal to the NCC for a ruling. Prior to the date of such a ruling, the contract terms shall be the same as those originally negotiated. Following the ruling, the new contract terms will be formed based on the ruling. Note 3: Negotiations for a new agreement shall commence three months prior to the expiry date of the original agreement. If negotiations are not completed prior to the expiry date, the parties agree to perform their obligations based on the original agreement until such time when a new agreement is finalized. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 3. Operating Status Indonesia’s Telkomsel and the Philippines’ Globe Telecom (both are members of the Bridge Alliance, the largest alliance of telecommunications service providers in the 1. Postpaid products and services Asia-Pacific region) to introduce the first transnational co- branded prepaid cards in Taiwan: the “OK Simpati-Kagen” Following the successful launch of the “New Line 299” card and the “OK Kababayan” card. Working on improving rate plan in 2008, the “My Saving 699” rate plan was call quality and network capacity for international calls, the introduced in August 2009, which offers 10 minutes of Company became the first mobile operator in Taiwan to free service for each on-net call, 80 minutes of free do- launch international video call service, further strengthen- mestic calls (both on-net and off-net) and a low charge of ing its position in these markets. NT$1.50 for every 3-minute mobile-to-fixed line call. The new rate plan helped boost the percentage of mid-to-high Thanks to the introduction of new products, flexible mar- rate plan subscribers to the total number of new subscrib- keting of prepaid cards and effective control of operating ers by 5ppts to more than 60% in 2009. costs, the Company was able to grow both its prepaid subscriber base and prepaid VAS revenue in 2009. The Company is focused on attracting high-end users. The percentage of mid-to-high rate plan subscribers to 3. Value-added services the total number of new subscribers held steady at over 60% in 2009 despite the global economic slow recovery. The Company posted a significant increase in VAS revenue The Company also has excellent loyalty programs in place in 2009. In particular, revenue from mobile internet access to help secure its customer base and minimize churn rose 65%, thanks to high-quality mobile internet services rates. For high average revenue per user (ARPU) custom- and flexible data rate plans, as well as the popularity of ers, the Company has an exclusive program called “my customized handsets, 3.5G data cards and netbooks. VIP.” It also offers a credit card program that allows cus- These helped attract a large number of mobile internet us- tomers to earn rebates based on their phone bills. ers and also encouraged existing subscribers to use value- added services. 2. Prepaid products and services In 2009, the Company introduced a large number of inno- In 2008, the Company launched the first pre-paid card for vative and popular VAS products, including: ”Catch Music” 3G services in Taiwan, enabling subscribers to experience the high transmission speed and new audiovisual services that 3G provides. In 2009, the “Tri-Service Hotline” “My Mobile Secretary”, a new value-added service, allows users to update their phone books and calendar 63 expanded on-net voice call any time anywhere. discounts to include mobile-to- Chap. 5 Operating Strategy fixed-line calls and on-net video calls. These packages have helped the Company maintain its brand leadership.

In the foreign worker segment, the Company has continued to strengthen its dominant position in the Thai and Vietnamese contract worker markets. To better serve Indonesian and Filipino contract workers in Taiwan, the Company has collaborated with WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 service that enables subscribers to listen to music wher- 3. With slow pickup of the economy, consumers have ever and whenever they want; Taiwan's first integrated become more cautious in spending, weighing on advertising service with mobile ring-back-tones; an inte- revenue growth in voice services. grated system for consolidating 3G SIM card and mobile phone book addresses, as well as allow users to import 3. Countermeasures external contact lists (e.g., from Yahoo!, Google, Hotmail and Outlook), effectively giving subscribers a round-the- 1. In 2010, the Company will closely monitor the rollout clock “mobile personal assistant,” an internet portal and of its 3.5G network to provide high-speed internet applications designed especially for smartphone users. access, as well as the development of long-term In addition, the consolidation of TWM, Mobitai and TAT’s evolution (LTE) technology. value-added service platform has helped the Company lift operating efficiency as well as VAS revenue growth. 2. The Company will draft appropriate strategies in response to government policy changes and new laws 4. Opportunities and Challenges and regulations.

The Company enjoys several advantages that will facilitate 3. The Company will introduce innovative value-added its development of the mobile communications markets, 64 services to stimulate data service revenue growth as detailed below: and compensate for voice revenue shortfalls. Chap. 5 Operating Strategy

1. Positive factors 4. The Company announced its acquisition of Kbro in 2009, adding 1 million new cable TV subscribers 1. With faster data transmission speeds, lower prices and creating new opportunities for cross-selling of for smart devices and data rate plans and the emer- mobile, fixed-line, cable TV and entertainment ser- gence of new, varied applications, mobile internet vices. The deal should help attract new subscribers access is rapidly spreading from business people and create new revenue streams from content inte- and professionals to ordinary consumers, contribut- gration. ing to the rapid growth in non-voice revenue. 4. Competitive edges 2. With information technology, communications and media trends converging, mobile communications 1. Better customer mix: operators have an important role to play in the sup- Although the global economic downturn led to a ply chain, providing consumers with multimedia slight decline in the number of new subscribers in content through wireless transmission. 2009, the Company succeeded in improving its subscriber base structure. The percentage of low usage 3. With the rapid growth of the internet, many innova- subscribers fell by 2.5ppts from a year ago, while tive technologies and business models have been the percentage of mid-to-high usage subscribers extended to the mobile internet. continued to rise.

2. Negative factors 2. Market leader in wireless broadband services: In 2005, the Company became the first mobile 1. NCC's mandatory tariff cuts have added a degree of communications operator in Taiwan to launch 3G uncertainty to the outlook for future earnings growth. services and in 2007, it rolled out Taiwan’s first 3.5G service. Subscribers enjoy flexible rate plans, high- 2. In 2009, both Tatung InfoComm and FarEasTone quality mobile phone handsets, and a wide range began to roll out WiMAX services. With its high of value-added services. By the end of 2009, the bandwidth, WiMAX is expected to stimulate in- Company had a 3G subscriber base of 3.65 million creased demand for wireless internet access, creat- users, who contributed more significantly to value- ing new challenges for existing players. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 added service ARPU than 2G subscribers and have the Company a lead over its competitors in offering become the main driver of VAS revenue growth. digital convergence services in Taiwan.

3. Industry leader in offering customer satisfaction: 2. Leveraging M2M (machine-to-machine) technology In 2009, the Company won, for the sixth year in into our product and services to integrate mobile a row, two Reader’s Digest Gold Trusted Brand handsets, high-quality mobile networks and cloud awards for best mobile service provider and best computing technology to expand service range and telecom company. The Company will continue to support the development of innovative, profitable pursue high service quality and efficiency to “create business models. the best user experience” and achieve even higher levels of customer satisfaction. 3. Implementing market segmentation to provide customers with differentiated service to meet their per- 5. Operating Results Review sonalized demands. Affected by an NCC-mandated price cut on certain mobile Home Business Group rate plans for the third year in a row and lackluster private consumption, which only recovered in the second half of 1. Industry Overview 2009, CBG’s revenue last year dropped 2% from a year ago. The Group continued pushing mobile internet ser- 1. New trends in digital convergence: Digital TV ready to vices by offering diversified data rate plans and catering to take off different customer needs. The popularity of smartphones, data cards and netbooks boosted VAS revenue by 24% Leading service operators in the US, Europe, Japan and from a year ago, far ahead of its major competitors. South Korea are aggressively rolling out digital TV services. This expansion into the media and entertainment 6. Short and Long-term Business Develop- sectors is expected to bring new sources of innovation- ment Plans driven revenue growth. In line with this trend, TWM Broad- band launched its “New TV” digital cable TV service in July 1. Short-term development plan 2009, offering a wide range of high-quality digital video content, including a number of exciting channels that are Besides encouraging existing subscribers to upgrade to only available from TWM Broadband. “New TV” promises 3G services, the Company will also seek to boost mobile to provide local households with a brand-new entertain- broadband and mobile internet access penetration rates ment experience. through innovative new services. At the same time, network 65 quality will be maintained and further optimized. New, high- With several other leading Taiwanese MSOs rolling out quality, affordable smartphones will be introduced for closer Chap. 5 Operating Strategy similar services last year, digital TV services have opened integration of mobile devices and value-added services en- up a whole new world of high-definition (HD) video for lo- abling customers to embrace an all mobile lifestyle. cal viewers.

2. Mid-to-long-term development plan 2. Movement toward free competition, establishment of a regulatory framework The Company aims to integrate the mobile phone, TV and computer platform to provide subscribers with a variety of In August 2009, the NCC approved an amendment to the digital convergence services. The focus will be on the fol- Radio and Television Act that analog broadcasting for ter- lowing: restrial TV be switched off in 2011. In addition, the Com- mission proposes “issuance of wireless digital TV second 1. Establishing a “quadruple-play” platform that inte- single-channel-network license plan” to give consumers grates mobile communications, fixed line, broad- more choices and encourage free competition in the digi- band internet access and cable TV services to give tal TV service market. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 In preparation for the new era of digital convergence, the Products and Services

NCC has invited experts from industry, government, and Service Products/ Details institution to form an integration task force team (“conver- category Services gence development policy study team”) to discuss major Using broad bandwidth coaxial cables, Analog cable issues and receive public opinions for the reference of fu- a wide range of analog TV content is TV ture law making. transmitted to customers’ terminals.

Transmitting domestic and interna- 2. Products and Services Pay TV tional digital TV content through cable Digital cable TV networks to customers’ homes. The Home Business Group (HBG) holds cable TV system TV Customers can use a set-top box and operating licenses and a Type II telecommunications busi- smart card provided by TWM Broad- band to receive HD digital videos. ness license. It mainly provides analog and digital cable service, as well as cable broadband internet access in the Using cable TV system operators’ cities of Sinjhuang and Sijhih in Taipei County, Yilan County Broadband Cable broad- hybrid fiber-coaxial networks and new- internet band access generation DOCSIS 3.0 broadband ac- and Fengshan City in Kaohsiung County. access (FTTx) cess technology to provide high-speed internet access. HBG is also the operator of the “Momo Kids Channel” 66 Distributing high-quality domestic and (which provides family-friendly TV content) through the Cable and international TV channel content for Content

Chap. 5 Operating Strategy Company’s subsidiary, Win TV Broadcasting Co., Ltd., and digital TV the Group’s own analog cable TV, digi- distribu- channel con- tal TV and “New TV” services, as well serves as a distribution agent for a number of popular do- tion tent as other system operators and video mestic and international TV channel contents. The Group service platforms. aims to provide its customers with a comprehensive range of digital audiovisual entertainment services. 3. Operating Status 1. Products and Services

1. Cable TV To maintain its customer base, HBG has launched a Taiwan Mobile launched “New TV” digital TV service ushering in the media entertainment business and a content integrator. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 special initiative to encourage existing customers to a local edge. NCC statistics shows that the CATV continue subscribing to analog cable TV services. penetration rate in Taiwan as of the end of 2009 was a high 63.80%, underlining local consumers’ 2. Cable broadband Internet access heavy reliance on this service. A survey of digital TV Fiber optic subscription is the major contributor service demand among Taiwanese households that to 2009 broadband access revenue growth. To was conducted in 2009 by the Market Intelligence stimulate broadband subscriber growth and raise Center (MIC) of the Institute for Information Indus- the cable broadband penetration rate, the Group try showed that consumers enjoyed having a wide has launched special promotions and incentive range of cable TV channels to choose from and that programs to encourage customers to upgrade to their preferences in regard to cable TV content was higher speed services in order to boost overall cable very distinctive. broadband subscribers’ ARPU. CHT’s MOD service suffers from a low take-up rate given a lack of variety of content and thus does not 3. Digital cable TV pose a threat to the CATV industry. In July 2009, TWM Broadband launched its “New TV” digital TV service, which offers users HD digital 2. Higher speed broadband services becoming the content, including select exclusive programs. “New mainstream: The Group has continued to invest in TV” is expected to develop new revenue streams for two-way fiber optic network deployment and to pro- the Group. mote its cable broadband access service. In 2009, the Group adopted the latest DOCSIS 3.0 broad- 2. Management band network access technology, offering subscribers data transmission speeds of up to 20M, which 1. TWM Broadband brand re-engineering can be upgraded to 160M in the future. This meets The Group continued to carry out its Excel Custom- users’ need for ever-faster broadband connection er Experience (ECE) program aimed at providing the and should help boost revenue from cable broad- best experience to increase customer satisfaction band. and loyalty. 3. Expanding regional operation scale: The NCC has 2. Expanding distribution channels begun studying the feasibility of expanding CATV In July 2009, the Group started promoting its “New operators’ licensing zones to facilitate multi-zone TV” digital TV display and experience at Taiwan Mo- CATV network operation and redefine operating re- bile “myfone” shops located in TWM’s CATV operat- gions in order to create a level playing field for CATV 67 ing areas. Giving customers a taste of this service at and MOD operators.

“myfone” stores enhances their willingness to sub- Chap. 5 Operating Strategy scribe to DTV services. 2. Negative factors

4. Opportunities and Challenges 1. The cable TV market in Taiwan is saturated and subscriber growth is decelerating. There is still the The Company believes that the CATV industry will contin- risk that local governments could lower the CATV ue to evolve. Factors, both advantageous and disadvanta- price cap during their annual review. geous, which may affect the CATV industry are outlined below: 2. The NCC has yet to clarify its policy on digitalization, e.g., will CATV operators be required to subsidize 1. Positive factors at least two set-top boxes? The Group will continue monitoring the commission’s digitalization policy and 1. CATV operators still benefit from local features and related legislation. rich content: CATV operators in Taiwan still enjoy WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 3. Countermeasures 3. Using HD digital content to stimulate DTV subscriber growth 1. The ongoing deployment of two-way fiber optic net- The Group will continue to secure high-quality HD works will help improve connection quality and sig- digital channel content (both domestic and internal stability, facilitating the adoption of DTV services. national) to provide consumers with a wide choice of content and a superior audiovisual experience 2. The Group will continue to maintain friendly relations to stimulate digital TV subscriber growth, enhance with local government authorities and residents. It viewing satisfaction and increase customer loyalty. will work with other organizations within the Taiwan Mobile Group, such as the Taiwan Mobile Founda- 4. Integrating Group resources to develop innovative tion, to sponsor local cultural and charitable activi- digital convergence products and services ties and improve network infrastructure in remote The Taiwan Mobile Group possesses significant mo- districts, thereby helping to reduce the digital divide bile, fixed network, CATV, ISP and content resourc- and fulfill its responsibilities as a good corporate es. These resources, combined with the support citizen as well as strengthening the Taiwan Mobile provided by the Group’s strong technology team Group’s corporate image as an enterprise that and its effective integration of marketing and sales 68 “draws from its strengths and gives back to the local community.”

Chap. 5 Operating Strategy Taiwan Mobile exclusively offers the first touch screen 3. The Group will closely monitor changes in the regu- BlackBerry® Storm™, the best mobile solution for the latory authorities’ policies on digitalization and the business people. revision of related laws and regulations, and will ac- tively lobby for and communicate with the authorities, while also planning appropriate countermeasures in advance.

4. Competitive edges

1. Building brand value through a customer-focused approach The Group will continue to adhere to the ECE phi- losophy to create the best user experience. At the same time, it will continue to strengthen frontline personnel’s understanding of the industry environment and their professional expertise through regular internal training activities to serve customers.

2. Advanced fiber optic cable broadband access The Group acquired more high speed service customers with the introduction of cutting-edge DOCSIS 3.0 technology. With a single coaxial cable connection, consumers can enjoy cable TV, ultra- high-speed internet access and a wide range of audiovisual entertainment services and other digital interactive services in the comfort of their own home. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 resources, represent a significant source of competi- 2. Mid-to-long-term development plan tive advantage for HBG in the household market segment. 1. The Group will continue to monitor changes in consumer needs and pursue collaborations with 5. Operating Results Review content service providers on the deployment of new services for online platforms. It will also monitor new HBG’s revenue is largely derived from CATV and cable trends in global digital convergence and strategies broadband services. On the CATV front, revenue rose 20% adopted by the world’s leading players to facilitate YoY, bolstered by its new content distribution business, the Group’s development of innovative digital con- steady growth in pay TV subscriber numbers and rising vergence services that leverage the Taiwan Mobile channel leasing revenue from a year ago. The Group of- Group’s extensive mobile, fixed network and digital fered premium quality cable broadband service at a lower cable TV resources. price and was able to boost its subscriber mix in high- speed service. In 2009, cable broadband subscribers and 2. In response to the global trend towards the “TV- revenue grew 31% and 44% YoY, respectively, boosting ization of the internet and the diversification of TV,” total HBG revenue by 22% YoY. the Group will undertake in-depth studies of digital convergence services that have been rolled out by 6. Short and Long-term Business Develop- telecommunications service providers and ISPs in ment Plans other parts of the world. Analyzing the experience of HBG will continue to focus on the home market, position- mature markets and the business models that have ing itself as a provider of integrated home communications been adopted in these markets will help the Group and audiovisual entertainment solutions. It will continue evaluate the opportunities that exist in the digital working to raise the broadband penetration rate, increase convergence services market in Taiwan. These can the percentage of broadband subscribers who use high help the Group roll out integrated digital TV product bandwidth connections, and grow the number of “New offerings in stages in line with market demand. TV” digital TV service subscribers. Enterprise Business Group 1. Short-term development plan 1. The Group will continue using cable access to chal- 1. Industry Overview

lenge the effective oligopoly that Chunghwa Telecom The Enterprise Business Group (EBG) offers enterprise enjoys on last-mile access. In addition, the Group customers voice, internet and data services. Given the 69 will launch special promotions targeting customer rising demand for integrated information and communica- segments and work to develop its cable broadband tion technologies (ICT) solutions and services, IP-based Chap. 5 Operating Strategy Internet service. applications have become more popular, resulting in mild growth for the domestic telecommunications market. 2. The Group will expand deployment of DOCSIS 3.0 to boost the number of high bandwidth users and 1. Voice service satisfy home users’ need for both high-speed Inter-

net access and HD audiovisual and multimedia ap- Because of the rise of VoIP and mobile telecom services, plications. revenue from traditional telecom services has been drop- ping. In contrast, subscribers to and revenue from Enter- 3. The Group will increase popular HD digital video prise E phone (VoIP) are expected to keep on increasing. channel content (both domestic and international) to enrich its “New TV” digital TV service. It will also work to develop a wide range of interactive audiovisual content and other new digital content. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 2. Data service 5. System integration service

Rising demand for enterprise data access will result in The current trend is for telecom operators to offer both steady growth in IP VPN and Metro Ethernet revenue. data and internet services along with unified threat management (UTM),and firewall facilities. With the demand for 3. Internet service enterprise data and internet services increasing, the Com- pany expects a steady increase in subscriber numbers As internet content services boom, FTTx is taking the and revenue. place of ADSL. Moreover, 3G/3.5G mobile broadband businesses are forecasted to expand. The market satura- 2. Products and Services tion and price decline is expected to weigh on revenue EBG offers enterprise customers integrated ICT solutions growth. and services under the name “TWM Solution.” The Group’s main market is Taiwan, but also offers international servic- 4. Mobile service es covering 231 countries. By the end of 2009, its roaming services covered: GSM: 142 countries, 269 networks; 3G: As demand for mobile office increases, data revenue from 46 countries, 84 networks; GPRS: 105 countries, 200 net- 70 smartphones and 3.5G data cards is expected to remain works. on the rise. Mobile voice revenue from enterprise should

Chap. 5 Operating Strategy benefit from the economic recovery and maintain moder- ate growth.

Products and Services

Service Category Description

EBG provides integrated voice solutions, including Enterprise E phone, PBX E phone (VoIP service), local calls, long- distance calls, international calls, Centrex, 080 domestic toll-free service, audio conference, intelligent network Fixed-line voice services (e.g., 0209 services) and ISR, enabling users to save on calling costs. TWM Solution continues to develop advanced technologies to enhance reliability and provide instant response to ensure customer satisfaction.

EBG offers different types of circuits for information transmission, including leased line, Metro Ethernet, IP VPN, IPLC Fixed-line data and ADSL VPN. These circuits and bandwidth for data transmission among terminals enable users to build a communications network and expand their business opportunities.

EBG offers internet access via leased line, Metro Ethernet, ADSL, FTTx and dial-up. The Company also provides inter- Internet net data center (IDC) services, including co-location, web hosting, super mail and domain name registration. EBG’s IDC services not only cover carrier-level facilities, but also managing/maintenance services for customers.

EBG offers enterprise customers the following mobile services: regular voice services, mobile virtual private network Mobile (VPN), intelligent transportation system (ITS), BlackBerry enterprise solution and mobile data VPN service.

System EBG provides sales, implementation, network manager and maintenance services for PBX, VoIP customer premises integration equipment (CPE), WAN and LAN CPE for customers. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 3. Operating Status rates gradually, adding to operation difficulties.

3. Countermeasures In May 2009, EBG launched its “Company Saving Pack- age,” a comprehensive enterprise and government solu- 1. Raising ARPU: Target high-usage customers by pro- tion package, comprising voice, mobile, data, internet viding services such as “Information and Commu- and system integration services in line with the growing nications Integrated Solution” that meet customers’ demand of small-medium enterprises for cost-saving varying needs; establish partnership with customers telecom services amid the economic slowdown. To meet to enhance customer loyalty. businesses’ need for instant info-com trouble shooting,

EBG introduced its “Network Manager” automatic network 2. Targeting high-quality services: Focus on IP VPN management system to provide automatic monitoring, and Metro Ethernet solutions to provide high-quality alarm and problem reporting services in July 2009. In ad- integrated platform infrastructure and voice/network dition, the Company launched Chinese BlackBerry touch CPE; provide device-monitoring service, CPE main- panel handset “Storm” in August 2009 to meet customers’ tenance and “Network Manager” (automatic network needs. management service), as well as trouble shooting and immediate status response. 4. Opportunities and Challenges

The Company believes that the overall macro environment 3. Expanding cost and operation synergy: Carefully remains neutral in terms of growth for the fixed-line indus- evaluate project expansion and revision of IP policy try. and submarine cable strategy to ensure short, mid and long-term benefits and improve core compe- 1. Positive factors tence. In order to reduce costs and enhance network quality, TWM expanded its point of presence

1. Future convergence products will be aimed at con- (POP) to the US and Singapore in 2009 and hooked solidating intranet, broadband management and in- up with several Tier-1 operators. formation security into a one-stop shop for customers. The Company has the advantage of possessing 4. Providing integrated services: The Company aims resources for both mobile and fixed-line services. not only to provide customers with premium services and stable network quality, but also to develop

2. Enterprises trading in the Greater China area will new VoIP products (e.g. Enterprise E phone and boost demand for integrated telecommunications PBX E phone) to meet users’ needs. EBG will keep 71 and network efficiency. leveraging the resources of the group to the benefit

and satisfaction of its customers. Chap. 5 Operating Strategy 2. Negative factors 4. Competitive edges 1. The local loop bottleneck is a major obstacle to fixed-line operators’ business expansion, as market 1. Premium brand equity leader CHT continues to dominate with its last mile The Company insists on providing customer-centric advantage. quality services to its customers. A new brand, called “TWM Solution,” was launched and has

2. NCC is pushing for rationalization of telecom tariffs and has demanded telecom operators lower retail WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 gained the recognition of major enterprises. TWM Despite revenue contraction, EBG’s EBITDA margin rose Solution received the highest rating in an online sat- to 22.2% in 2009 from 19% the previous year, aided by isfaction survey on companies conducted by Fore- good opex controls. seeing Innovative New Digiservices (FIND) of the Institute for Information Industry in 2009. 6. Short and Long-term Business Develop- ment Plans 2. Professional management team and efficient support group 1. Short-term development plan The Company leads the competition in achieving synergies from the integration of group resources, The Company will continue developing integrated telecom including mobile telephony, fixed network and cable applications to provide enterprises with a new network TV network, with integrated back-office functions, security service, data-voice integrated services and ad- e.g., network planning, operation and maintenance, vanced Metro Ethernet services to help users reduce ex- information technology and procurement, to sup- penses and enhance operating efficiency. port its frontline operations and provide enterprise customers with exclusive integrated information and 2. Mid-to-long-term development plan 72 communication technology for business expansion.

EBG’s vision is to expand its enterprise services from Chap. 5 Operating Strategy 3. Effective sales teams and channels network-centric to ICT-centric solutions and services by Expand services through direct sales teams, chan- taking the following directions: nel partners, and retail chains across the nation.

1. Speed up revenue growth of selective products by 4. Expanding resources from international alliances providing enterprises with end-to-end managed The Company is the sole Taiwanese member of the services and security operating center service. The Bridge Alliance, the largest mobile alliance in Asia Group has started developing cloud computing re- Pacific with a combined customer base about 300 lated services. million.

2. Raise the productivity of key accounts. Develop 5. Operating Results Review network-centric enterprise solutions. Expand small- and-medium enterprise segment by improving ser- In 2009, affected by the financial crisis, enterprise custom- vice quality. ers reduced usage of mobile / fixed-line voice, leased lines and internet services. Although it has picked up since 3. Improve the international business division’s operat- 2H09, EBG’s revenue was still down 4% from a year ago. ing efficiency by increasing direct peering coverage, managing quality and reducing international IP cost. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Chap. 6 Risk Management Analysis

In the course of operating its business, the Company faces TWM has aggressively deployed 3.5G technology three major types of internal and external risks, namely: in- and promoted 3.5G data cards and netbooks bun- dustry risk, financial risk and operating risk. The Company dled with mobile broadband access services to lock realizes the damage these risks may cause and therefore in heavy data users since late 2007. At the end of has established a risk management committee to set poli- 2009, TWM had acquired more than 200,000 3.5G cies in order to minimize the impact of any incident on the subscribers and started to rollout 14.4Mbps service Company’s operations. in metropolitan areas. This year, TWM will expand deployment of 7.2Mbps and 14.4Mbps in 3.5G Industry Risk base stations to provide more comprehensive higher-speed mobile internet services. The Company will 1. Technology Changes and Development also continue its evaluation of 3G extended long- term evolution (LTE) technology, another promising 1. Wireless Broadband Access (WBA), still a fairly new technology that could rival WiMAX. technology

To deal with long-term challenges, TWM has em- 1. Current status ployed a leading foreign telecom firm and a world- WBA is a communications technology based on renowned consulting agency for the past three years orthogonal frequency division multiplexing (OFDM). to analyze industry trends and formulate effective WiMAX is the one of the examples of OFDM tech- strategies to cope with the dynamic changes in the nologies and is capable of providing speeds of up to market. The Company has drawn up a long-term 10 Mbps on the equivalent frequency bandwidth of plan to strengthen its wireless broadband and multi- 3G’s 5MHz. It poses a reasonable threat to 3G data media services. service.

2. Rising popularity of internet protocol All six operators that were granted WBA regional licenses in 2007 adopted WiMAX as their core tech- 1. Current status nology and have soft-launched regional services The popularity of internet protocol (IP) has revo- one after another since 2Q09. However, as interop- 73 lutionized the telecommunications business and erability problems between WiMAX base stations network infrastructure, giving rise to increased IP- and customer premises equipment (CPE) have not Chap. Analysis Management 6 Risk based communications traffic. IP-based telecom been solved, CPE options are very limited. Roaming is able to simplify network infrastructure, translating between WiMAX networks managed by different op- into big savings on operating costs. The introduction erators is still far from achievable in 2010. of voice-over IP (VoIP) service has therefore had a great impact on traditional fixed-line operators’ long 2. Countermeasures distance and international voice call revenue. The technology for 3.5G high-speed downlink packet access (HSDPA), in comparison, is mature 2. Countermeasures and has been commercialized. The speed of the The necessity of building an IP core network infra- connection throughput for 3.5G is 14.4Mbps, and structure based on next generation network (NGN) should rise to 21Mbps in the near future, placing it is an urgent task. On the recommendations made on the same level as WBA. In the short term, HS- by its IP Infrastructure Committee over the past DPA should be a more commercially competitive three years, TWM has been building the latest IP- technology than WBA. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 based optical core network, studying and analyzing announced in June 2009 that it would hold public the demand for as well as the costs and benefits of consultations with industry players to gather their developing an IP multimedia subsystem (IMS) and IP opinions on proposed changes to the Telecom- core access and transmission technologies as well munications Act. The NCC said the law amend- as conducting laboratory tests of various IMS appli- ment was designed to encourage establishment of cation services to lead industry development. a new model to promote effective competition and strengthen oversight over cross-industry operation, In 2010, the Company will continue to develop and multimedia content services, major market players, test new IP application services and conduct re- tariff control, network bottleneck, accounting poli- search on the latest optical packet carrier ethernet cies, information security management and other technologies to introduce more services that provide areas. For one, the NCC aims to change the clas- households with the most advanced and innovative sification for major market players in line with market broadband services. changes as the current standard has been in use for over a decade. The commission plans to raise the 3. Digital convergence threshold for subscriber number or market share by revenue to over 25%. It also plans to change tariff 74 1. Current status control to apply to major market players only, as well The mobile and fixed-line communications and me- as to regulate wholesale pricing.

Chap. Analysis Management 6 Risk dia industries, which have similar service models and technologies, have been on a converging trend 2. Countermeasures in recent years. This has facilitated the exchange The Company will continue to communicate with the and transmission of digital content and services NCC and forward suggestions and recommenda- among different carriers, systems and platforms and tions on amending the law before a final decision is is a factor for potential consolidation in the telecom- made. munications and broadcasting industries. 2. Second round of mobile tariff cuts from April 1, 2010 2. Countermeasures After merging Taiwan Fixed Network (TFN) and Tai- 1. Current status wan Telecommunication Network Services (TTN) in On January 6, 2010, NCC announced that mobile 2007, the Company announced to acquire Carlyle’s tariffs should be cut per annum between April 1, cable business in Taiwan in 2009, enhancing its sta- 2010 and March 31, 2013. The adjustment coef- tus as a leader in the digital convergence era. TWM ficient (“X value) of 5% for SMS, mobile to fixed had integrated the group’s resources to facilitate and mobile to mobile off-net calls and last year’s research and development in digital convergence CPI contraction of 0.87% translate into a rate cut and launched fixed-mobile convergence (FMC) ser- of 5.87% for 2010. The NCC also plans to include vices for corporate accounts. It is also aggressively mobile voice interconnection under tariff control and planning new digital convergence services that will complete the law amendment before May 2010. integrate cable TV, digital TV, cable broadband, and 2G/3G mobile voice interconnection wholesale price interactive entertainment services. control will then be affected in the following year after the amendment. 2. Regulatory Changes 2. Countermeasures 1. Revision of Telecommunications Act As developed countries no longer regulate mobile retail tariffs, the Company will continue to communi- 1. Current status cate with the NCC on this issue to reduce its impact In response to the trend toward digital convergence, on revenues. the National Communications Commission (NCC) WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 3. Expiration of GSM licenses 5. Reducing IP peering charges

1. Current status 1. Current status GSM (or 2G) operators’ licenses will expire one after In August 2009, the NCC approved new IP peering another starting from end of 2012. According to the rates from Chunghwa Telecom (CHT) retroactive to “Regulations Governing Mobile Communications July 1, 2009. The adjustment translates into a 40% Businesses," the NCC shall start accepting 2G oper- drop in the unit price per Mbps that the Company ators’ applications for license renewal a year before pays CHT, reducing the Company’s internet busi- their expiration, but the regulations contain no details ness operating costs. on the procedures and conditions for renewal. The Cabinet is reviewing a plan by the Ministry of Trans- 2. Countermeasures portation and Communications (MOTC) to reclaim The Company will continue to push for lower IP 2G licenses in several stages. As 2G is expected to peering costs as it develops its broadband business. continue to play an important role in wireless communication in the short and medium term, the lack 6. Policy planning for mobile TV services of a concrete policy to address this issue could have a huge impact on the telecom industry. 1. Current status At the end of 2009, the Executive Yuan approved 2. Countermeasures the MOTC’s “Digital Wireless Television Plan” to offer The Company continues to encourage 2G subscrib- five digital wireless television licenses and two mo- ers to upgrade to 3G and has recommended that bile TV licenses. The NCC is charged with the task the government extend 2G licensing for a period of issuing licenses and overseeing management. while drawing new plans for utilizing the spectrum, Mobile TV still lacks a concrete business model, but such as following the international trend of adopting the two licenses represent a rare business opportu- UMTS 900MHz. nity that is expected to trigger intense competition in the industry. 4. Fixed-line interconnecting charge adjustment 2. Countermeasures 1. Current status Aside from providing customers with mobile video In December 2009, the NCC adjusted interconnec- streaming services through 3G networks, the Com- tion charges retroactively to January 1, 2009, based pany will carefully evaluate the cost and benefit of on the following rate per minute: a) reducing mobile bidding for a license. In the meantime, the Com- 75 to fixed-line calls by NT$0.0681/NT$0.1182 for pany will track and monitor business developments

regular/off-peak hours, and b) increasing fixed-line overseas to provide the NCC with sound advice on Chap. Analysis Management 6 Risk operator premium charges from mobile operator for regulatory changes and monitor local developments fixed-line to mobile calls by NT$0.127. The Com- to meet its long-term industry target. pany expects to save around NT$13mn annually in interconnection charges from the adjustment. 7. CATV required to provide guarantees for advanced receipts 2. Countermeasures The Company will continue to push for lower inter- 1. Current status connection charges to lower operating costs. To protect consumer rights and interests, the NCC has approved a regulatory provision requiring cable operators to provide subscribers with a performance bond for receipt of payment in advance. The draft bill is under review by the Executive Yuan’s Consum- er Protection Committee. This provision will increase cable TV operators' financial and operating costs. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 2. Countermeasures Operating Risk The Company will comply with the requirement on providing financial guarantees by coordinating with 1. Investment Policy and Reasons for Gains & banks to protect consumer interest. Losses for High-Risk/High-Leverage Finan- cial Products, Derivatives, Loans to Others, Financial Risk and Guarantees of Debts

1. Impact of interest rate fluctuations 1. The Company did not engage in high-risk, high- As the Company had no floating interest rate borrowing in leverage financial investment in recent years. 2009, interest rate fluctuations had a minimal impact on its profit. The Company has pegged the floating interest rate 2. The Company passed the “Rules and Procedures on for its first unsecured corporate bonds of NT$15bn with Lending and Making Endorsement/Guarantees” to a total value of NT$7.5bn at 2.25% and 2.45% through supervise financing and endorsement activities. As interest rate swap (IRS) agreements upon issuance. All the counterparties in its loans and guarantees are all other issued corporate bonds adopt fixed interest rates. its subsidiaries, there is minimal operating risk. 76 The Company is thus completely hedged against interest rate fluctuations. 3. The derivative product positions the Company held

Chap. Analysis Management 6 Risk in 2009 were for purposes other than trading. The The Company entered into IRS contracts to hedge against interest rate swap contracts were signed to minimize cash flow risk from inverse floating interest rate fluctua- the interest rate risks of inverse floating rate bond tion. As such, it was qualified to apply hedge accounting, issuance. The Company’s hedging strategies were according to the “Statement of Financial Accounting Stan- meant to avoid cash flow risks. No substantial earn- dards.” ings/losses resulted from the derivative transactions.

The main factors that affect mark-to-market estimations 2. Mergers and Acquisitions are US interest rates, the yield curve and the US$ to NT$ interest rate differential. When the bonds mature and the 1. Merger and acquisition update IRS agreement ends, gains/losses associated with the IRS will cease. 1. Taiwan Fixed Network Co., Ltd. (TFN), a subsidiary of the Company, merged Reach & Range Inc. on 2. Impact of exchange rate fluctuations May 1, 2009.

The Company’s main service area is Taiwan. Except for its 2. TCC Investment Co., Ltd. (TCCI), a subsidiary of international roaming business, all operating revenues are the Company, merged TFN Investment Co., Ltd. on denominated in NT dollars. Some of the Company’s capi- September 19, 2009. tal expenditures are denominated in Euros and US dollars. To minimize the impact from foreign exchange rate fluctua- 2. Expected benefits and potential risks tions, the Company hedges risks through foreign currency deposits and forward contracts. 1. Expected benefits: The mergers and acquisitions should contribute to In summary, exchange rate fluctuations had a minimal im- corporate integration and enhance operating efficiency. pact on the Company. 2. Potential risks: 3. Impact of inflation There are no potential risks involved as the Com- pany owned controlling interest in the above men- Inflation had a minimal impact on the Company’s operating tioned companies and had control over their opera- performance in the past year up until the publication date. tions prior to the mergers. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 3. Countermeasures: 3. Supply and Distribution Concentration Not applicable (Supplier and Customer Risk)

The Company’s main supplier is Chunghwa Telecom (CHT) 3. Future merger and acquisition plan for network interconnections and leased lines. These costs accounted for 18.53% of total operating costs in On September 16, 2009, the Company’s BOD approved 2009. The Company has been increasing usage of leased the acquisition of Carlyle Group’s CATV-related assets in lines supplied by other fixed-line operators (e.g. Taiwan Taiwan from PX Capital through the Company’s subsidiary Fixed Network) to diversify supplier risk. Wealth Media Technology Co., Ltd.. TFN Union Investment

Co., Ltd. and TCCI Investment & Development Co., Ltd., On the revenue side, CHT is the Company’s largest source subsidiaries of the Company (own 15.5% of the Com- of interconnection revenue. However, the Company has pany’s treasury shares), will merge with Wei Mao Co., Ltd., a very diverse subscriber base for its mobile services. As with Wei Mao as the surviving company. The deal will be such, there is no customer concentration risk. conducted after obtaining the regulatory authoritie’s approval.

1. Top supplier

2009 2008 Amount % of Operat- Nature of Amount % of Operat- Nature of Company Company (NT$'000) ing Costs Relationship (NT$'000) ing Costs Relationship Chunghwa Chunghwa 1 5,032,712 18.52 Third party 5,054,973 20.97 Third party Telecom Telecom Taiwan Fixed Taiwan Fixed 2 1,390,303 5.12 Subsidiary 965,962 4.01 Subsidiary Network Network Fubon Insur- Related party Fubon Insur- Related party 3 51,412 0.19 58,406 0.24 ance Co., Ltd. in substance ance Co. Ltd. in substance TransAsia 4 257,796 1.07 Subsidiary Telecom Others 20,691,498 76.17 Others 17,769,662 73.71 Total 27,165,925 100.00 Total 24,106,799 100.00 77 Chap. Analysis Management 6 Risk 2. Top customer

2009 2008 Amount % of Operat- Nature of Amount % of Operat- Nature of Company Company (NT$'000) ing Costs Relationship (NT$'000) ing Costs Relationship Chunghwa Chunghwa 1 8,730,057 15.31 Third party 8,956,659 16.49 Third party Telecom Telecom Taiwan Fixed Taiwan Fixed 2 2,276,319 3.99 Subsidiary 2,087,756 3.84 Subsidiary Network Network Taipei Fubon Taipei Fubon Related party Related party 3 Commercial 9,796 0.02 Commercial 13,848 0.03 in substance in substance Bank Co., Ltd. Bank Co., Ltd. TransAsia 4 459,338 0.85 Subsidiary Telecom Others 45,999,280 80.68 Others 42,794,004 78.79 Total 57,015,452 100.00 Total 54,311,605 100.00 WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 4. Impact of changes in brand image to the Parties Involved: TFN is the plaintiff and Kaohsiung Company’s risk management policies: None City Government is the defendant. Amount Claimed: NT$11,972,865 5. Expected benefits and risks related to plant Date of Filing: December 24, 2007 facility expansions: Not applicable Grounds: TFN laid pipes under land owned by the 6. Significant changes in shareholding of direc- Kaohsiung City Government. Citing related regulators, supervisors and major shareholders: tions, the city government said in 2007 that TFN should pay NT$13,094,147 for land usage fees Changes in the shareholding of directors, supervisors and between 2002 and 2004. Disagreeing with the ad- major shareholders, which are detailed in Chapter 4, had ministrative disposition, TFN filed an administrative minimal impact on the Company. appeal with the Ministry of Finance. Following the ministry’s dismissal of the administrative appeal, TFN 7. Changes in management control: Not appli- brought the case to the Kaohsiung High Adminis- cable trative Court, which revoked charges amounting to NT$1,121,282 claimed by the city government, 8. Significant Lawsuits and Non-litigious Mat- saying they had already expired, but ordered TFN 78 ters to pay the remaining amount. TFN believed the Ka- Summary of all material litigations, administrative proceed- ohsiung High Administrative Court’s ruling was in Chap. Analysis Management 6 Risk ings, and other non-litigious matters in which the Company contravention of the laws and regulations and filed or its directors, supervisors, managers, major shareholders an appeal with the Supreme Administrative Court. (with more than 10% shareholding) or subsidiaries were Status: The case is pending in the Supreme Admin- involved within the past year up to the report’s publication istrative Court. date that may have a significant impact on shareholders’ equity or the share price is listed below: 2. Globalview Cable TV Co., Ltd., Phoenix Cable TV Co., Ltd., Union Cable TV Co., Ltd., Yeong Jia Leh Cable TV 1. The Company Co., Ltd. (collectively “4 SOs”) The NCC fined the four SOs NT$100,000 each and The Fair Trade Commission (FTC) fined the Company ordered them to divest holdings by the Taipei City NT$3 million as administrative penalty for its “401/801 Government within one year after the ruling. Rate Plan” advertisement. Parties Involved: The four SOs are the defaulting Parties Involved: The Company is the defaulting party. parties. Date of Filing: February 19, 2008 Date of Filing Administrative Appeal: January Grounds: The Company disagreed with the FTC’s deci- 2009 sion and filed an administrative appeal. Grounds: The NCC ruled that the four SOs had Status: The Executive Yuan rejected the Company’s ad- violated Paragraph 4, Article 19 of the “Cable Radio ministrative appeal. The FTC’s administrative disposition is and Television Act” which states that political par- confirmed to be irrevocable and conclusive. ties, the government and foundations established with their endowments, and those commissioned by 2. The Company’s directors, supervisors, managers and them, should not directly or indirectly invest in cable, major shareholders (with more than 10% sharehold- radio and/or television system operators. The four ing): None SOs disagreed with the NCC’s disposition and have all filed administrative appeals. 3. The Company’s subsidiaries Status: The Executive Yuan has revoked the administrative dispositions imposed by NCC against these 1. Taiwan Fixed Network Co., Ltd. (TFN) 4 SOs in April, 2010. The above cases are now Dispute between TFN and Kaohsiung City Govern- pending in NCC. ment over land usage fee WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 3. Win TV broadcasting Co., Ltd. 3. Create a company-wide risk management structure The NCC fined Win TV broadcasting Co., Ltd. that can limit risks to an acceptable level NT$200,000 as administrative penalty and instruct- ed it to dispose of holdings by the Taipei City Gov- 4. Introduce best risk management practices and con- ernment within one year after the ruling. tinue to seek improvements Parties Involved: Win TV is the defaulting party. Date of Filing: February 2010 2. Risk Management Structure

Grounds: The NCC ruled that Win TV had violated The Company’s risk management structure is made up of Paragraph 3, Article 9 of the “Satellite Broadcast- three committee, which function as follows: ing Act,” which stipulates that political parties, the government and foundations established with their 1. Operations and Management Committee endowments and those commissioned by them,

should not directly or indirectly invest in satellite Conduct periodic reviews of each business group’s op- broadcasting businesses. Win TV disagreed with erating target and performance to meet the Company’s NCC’s disposition and has filed an administrative guidance and budget. appeal. Status: The case is under review by the Executive 2. Safety and Health Committee Yuan.

Tasked with supervising and reducing potential risks to Risk Management workers’ safety and health.

1. Risk Management Policies 3. Information Security Management Committee 1. Promote a risk management-based business model Supervise important information assets for confidentiality, 2. Establish a risk management mechanism that can integrity, availability, and regulatory compliance in order to effectively cite, evaluate, supervise and control risks control and reduce operational risks to an effective and reasonable level.

Board of Directors 79 Chap. Analysis Management 6 Risk Risk Management Committee

Information Security Man- Safety and Health Operations and Man- agement Committee Committee agement Committe

1. Information security audit 1. Telecom control room team security team 2. Information security incident 2. IT data center security management team team 3. Information security opera- 3. Office security team tions team 4. Direct stores’ security team WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 3. Risk Management Operation Mechanism 1. Three levels of controlling mechanism tees, which are composed of unit chief officers or executive vice presidents, to take necessary mea- 1. 1st level: Every risk factor shall be assigned to the sures when facing material change in risk. appropriate responsible unit to ensure timely and effective detection. On a daily basis, the units shall 3. Highest level: The Board of Directors is the high- ensure that risk is controlled under an acceptable est decision-making and supervisory unit and is level. Should there be any change in condition or responsible for confirming material risk assessment, additional factors, the units shall report to the Com- designating activities to control risk and track their pany for the appropriate course of action. execution. Additionally, the internal audit office shall monitor and confirm that risk controls are properly 2. 2nd level: The second controlling mechanism is executed on a daily basis and should report any dis- under the supervision of several examining commit- crepancy to the chief officer of the responsible unit.

80 2. Risk factors and management structure Chap. Analysis Management 6 Risk Decision- making Important risk factors Responsible unit Examining Committee and supervision Operating risk: Technology management meeting 1 telecom equipment shutdown and informa- Technology Group/ IT IT management meeting tion system failure 2 Changes related to technology and industry Systems Design Division Technology management meeting Information Security Management 3 Risks related to information security Quality Management Division Committee Market risk A. Marketing unit A. Competition B. Marketing unit 4 Board of B. New products C. Business Operations Management Directors: C. Channel management Division the highest Government policies and regulatory compli- decision- 5 Regulatory & Carrier Relations Division CBG management meeting ance making unit Brand Management & Customer 6 Corporate image Communication Division Internal au- 7 M&A and investments Presidential Office dit office: conduct Occupational Safety & Health Office 8 Employee safety Safety and Health Committee the ex- and Administrative Division amining, Human Affairs Appraisal Commit- 9 Employee behavior, code and ethics Human Resources Division monitoring, tee tracking Volatility of interest rates, exchange rates and report- 10 Finance Division Audit Committee and financial risks ing of risk items Financing and endorsement/ guarantee 11 provided to others, derivatives transaction Finance Division Audit Committee and working capital management 12 Financial report disclosure Accounting Division Audit Committee 13 Litigious and non-litigious Matters Legal Office Legal Office, Internal Audit Office Changes in shareholding of directors/super- 14 Secretarial Division Legal Office, Internal Audit Office visors and major shareholders 15 Board meeting facilitation Secretarial Division Legal Office, Internal Audit Office WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Chap. 7 Our Values

Best Service Quality ries. These awards underline the vital role that TWM plays in the telecom service distribution channels and the high Committed to creating the best experience for customers, reputation that TWM enjoys among consumers in Taiwan. Taiwan Mobile has expended a lot of effort into building high-quality communication platforms, continually devel- Excellent Brand Image oping a wide range of new products to facilitate “one-stop shopping” and conducting regular training activities for its The value of the Taiwan Mobile brand is built on its com- customer service personnel. Dedicated areas highlighting mitment to “Simplicity, Innovation, Passion and Integrity” the Company’s latest products, including smartphones, and on helping customers achieve the lifestyle they want. netbooks and GPS devices, have also been set up in di- Following a re-integration of the Taiwan Mobile Group’s re- rectly owned “myfone” shops nationwide to let customers sources in 2008, three brands were launched: Taiwan Mo- try out and experience the convenience that mobile digital bile, TWM Broadband, and TWM Solutions. These three technology and value-added services provide. brands work closely together to meet customers’ diverse In 2009, TWM won two Next Magazine Top Service needs in today’s digital world, seeking to create a simpler, Awards – in the mobile / fixed line operator and 3C retailer more human-centered user experience. categories – for the second year in a row. TWM was the With a view to becoming an integral part of customers’ only company to win top awards in two different catego- daily lives, Taiwan Mobile provides mobile communica-

Taiwan Mobile’s objective is to satisfy their customers’ needs and provide an easy, simple and user-friendly communication experience. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 tions, mobile value-added services and mobile broadband volume close to 5.6 tons. As a result, TWM received Internet access for individual customers. TWM Broadband recognitions from the ROC Environmental Protection Ad- expands on this position, offering a wide range of digital ministration and successfully set the recycling mode in the lifestyle and entertainment services to cover the whole industry. household. TWM Solutions, meanwhile, is focused on the enterprise market, providing customized information 2. Energy conservation and communications technology and systems integration Given concerns over the proliferation of telecom base sta- solutions for corporate customers. With its professional tions, TWM follows three major principles in setting up expertise and ability to provide “one-stop shopping” ser- base stations: one, co-stationing and co-construction; vice, TWM Solutions is able to work closely with corporate two, minimizing the number of base stations and antennas customers to help their business grow. to protect the environment; and three, using energy-saving As we enter the new era of integrated digital technolo- equipment at base stations. Since 2008, TWM has adopt- gies, the Taiwan Mobile Group is leading the way in digital ed energy conservation measures for its green equipment convergence by rolling out TIME – Telecommunications, room. This has raised its cooling efficiency and saved up Internet, Media and Entertainment – services throughout to 30% in energy consumption. Taiwan. The Company’s goal is to ensure that with Taiwan 82 Mobile in their life, people are able to enjoy user-friendly Additionally, under the condition of not interrupting nor- mobile communications, television and other services mal business operation, the Company urged employees Chap. 7 Our Values wherever and whenever needed. Taiwan Mobile – A Part of to carry on electricity and water saving programs. TWM Your Everyday Life! was able to reduce its office building’s power and water Green Company consumption by 8.02% and 1.6% from 2008 respectively. At a per employee basis, the average power and water In response to the threat of global warming, TWM estab- consumption dropped by 11.2% and 5.01% from last year lished a sustainable development committee to promote respectively. efficient energy use, protect the environment, and reduce greenhouse gas emissions. The Company seeks to com- 3. Recycling ply with international environmental protection standards 1. Wire and cable recycling as well as domestic laws and regulations while building an environmentally friendly green corporate system. TWM outsourced the treatment and disposal of waste copper wires and cables to waste cable management In November 2009, TWM received the “ROC Enterprise service providers qualified by the Environmental Protection Environmental Protection Award” for its promotion of en- Administration since 2000. A total of 600,568kg of bare vironmental protection in Taiwan. TWM was the first com- copper wires was disposed of and recycled in 2009. pany in the service sector to receive this recognition from the Environmental Protection Administration. 2. Battery recycling

1. Handset recycling To serve both energy and operating cost saving purposes, TWM introduced Taiwan's first recycling campaign in April batteries from main mobile switching centers and base 2008, encouraging consumers to bring their old batteries, stations have either been regenerated or outsourced to handsets and accessories such as chargers, headphones, qualified handlers for recycling since 2008. In 2009, TWM and transmission wires to TWM 600 myfone stores for recycled waste batteries and found 345 of them to be re- recycling. As of December 2009, 22,591 handsets had usable, while disposing of 7,089 (approximately 319,005 been recycled, yielding 753g of gold and 2,259g of silver. kg) as flawed. In addition, 4,477kg of handset accessories and 1,085kg of batteries were also recycled; bringing total recycling WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 3. Waste recycling in the office 5. Buying green

TWM purchases environmentally friendly low-impact prod- Complying with the government waste recycling policy, ucts in three categories, namely "EPA-approved Green a total of 78,731kg of waste items were recycled at the Mark products," "low-pollution, recyclable, resource-saving Company’s headquarters in 2009. products made from reusable materials," and "other products offering identical or similar performance and which 4. e-billing and paperless campaign benefit society or reduce societal costs." Furthermore, TWM began promoting e-billing in 2004, and by the end of TWM regularly collects information to formulate guidelines 2009, 405,288 users had switched to e-billing. Assuming and train staff on the concept of buying green. that each physical billing statement uses 2.42 sheets of A4-size paper, by the end of 2009, e-billing had conserved 6. Environmental protection education 980,000 sheets of A4-size paper. TWM also initiated a “pa- In order to encourage employees to conserve energy and perless store” campaign in 2006, customers can choose reduce carbon dioxide emissions, recent annual family to receive short message instead of paper receipts. This days focused on environmental protection as the theme, allowed the Company to conserve 3.34 million sheets of with managers leading employees and their families in tak- A4-size paper in 2009. ing action to care for the Earth. By formatting all of the Company’s internal announce- Corporate Social Responsibility ments, official documents, and meeting notices into electronic files, setting up employee pass-code system Corporate Social Responsibility (CSR) has been the gov- for print out, and encouraging use of recycle and light- erning rule for corporate management. TWM was the first weighted paper, the Company’s annual consumption of A4 to issue a CSR report among the Taiwan telecom opera- paper fell 20% year-on-year in 2009. That represented a 23% reduction of average paper usage per employee to 113 sheets from 147 sheets. Harvey Chang, the President and CEO of Taiwan Mo- bile, and the employees morphed into environmental conservation vanguards at Guandu Nature Park.

83 Chap. 7 Our Values WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 tors in 2007. Moving ahead, in 2009, TWM issued a CSR TWM provided monthly subsidies of NT$300 for telecom report, this time conforming to international standards on expenses to residents of affected areas for six months three major areas – corporate governance, environmen- after the disaster, as well as free replacement of lost SIM tal sustainability, and social responsibility. This report has cards and other services. TWM raised more than NT$30 been compiled using the GRI/G3 guidelines of the Global million by encouraging employees to donate a day's pay Reporting Initiative (GRI), verified by The British Standards to complement corporate donation. The Company also Institution (BSI). offered paid leave and allowance to encourage employees to help out on the affected area recovery. TWM established a dedicated social responsibility department in 2007 and contributed NT$50~60 million annually Looking at the damage inflicted by the typhoon, the Com- to public welfare. Of the 2009 TWM Foundation’s spend- pany found that it had destroyed a number of bridges, ing, 52% was used in social welfare activities, 22.3% for including Shanmei Bridge – the major means of access to bridging the digital divide and emergency communications, the villages of Shanmei, Shinmei, and Chashan – bringing 21.2% went toward telecom research and competition, tourism in the Danuoyi Valley to a standstill. To aid resi- and 4.5% went to lectures and others. A majority of the dents in these areas, TWM commissioned an experienced funds were used to care for underprivileged groups and specialist in building bridges – the Chiayi Do-good Orga- 84 people living in remote areas, art promotion and commu- nization – to rebuild Shanmei Bridge. The new Shanmei nity development, and youth activities. Bridge will be a concrete bridge 86 meters long and 8 me-

Chap. 7 Our Values ters wide and is expected to be completed in June 2010. 1. Corporate volunteers Chiayi Do-good relies on volunteer work for its projects, TWM set up a corporate volunteer program in 2007. The Company offers volunteer staff two-day paid leave each year, transportation allowance, insurance and advance training to encourage them to take part in activities that serve the local community. Aside from receiving a certifi- cate upon completion of the program, employees are able to share their insights and experiences on the Company’s volunteer website. Normalizing the corporate volunteer program not only ful- fills the Company’s social responsibility but also creates “Four wins” for the employees, the Company, society, and underprivileged groups.

2. Community feedback

1. Typhoon Morakot reconstruction

When Typhoon Morakot struck in August 2009, it caused severe devastation in southern Taiwan and caused extensive damage to communication devices and networks. TWM immediately organized a task force to repair network equipment and base stations in the stricken areas. The Company was able to restore communications in severely affected areas such as Taimali in Taitung County, Mudan and Jiadong in Pingtung County, and Dongpu in Nantou County. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 so there are no subcontractors or middlemen involved. By families working with this organization, TWM was spared the usual lengthy administrative process – from surveying to bud- TWM has participated in the Chinese Christian Relief As- geting, bidding, contracting and funding allocation – and sociation's "After-school Tutorial Program for Children from hopes to shorten the bridge reconstruction project by at Underprivileged Families" since 2005, sponsoring 10 tuto- least one year. The Company is spending NT$17 million on rial programs for 205 children from economically disadvan- this project but hopes to generate NT$50 million to NT$60 taged families. million in social value. 4. Outdoor community concerts 2. Caring for senior citizens living alone TWM held seven large outdoor concerts throughout Tai- In 2008 and 2009 TWM joined forces with the Kernel wan in 2009, with more than 70,000 people attending of Wheat Foundation to hold a New Year's Eve event, these events. Through these musical performances, the "Providing Companionship to Solitary Seniors” in Hualien Company hopes to soothe and touch people’s hearts. County. This event received the enthusiastic support of shops in the area. TWM hopes that local communities will jointly address the problem of long-term care for seniors 66 Taiwan Mobile volunteers helped to build Alisan’s living alone. bridge, which was washed away when Typhoon Mora- kot hit the island in August 2009, with Chaiyi Do Good Organization, a local NPO with more than 40 years 3. After-school tutorial for children from underprivileged of experience in building roads and bridges for the underprivileged.

85 Chap. 7 Our Values WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Taiwan Mobile’s outdoor concerts in 2009

Date Location Name No. of participants

Beinan Township, February 22 Lika Mengmei's Banquet Over 3,000 Taitung County

April 11 Taoyuan Cultural Park Taiwan Mobile Outdoor Concert in Taoyuan Over 11,000

September 9 Sun Moon Lake, Nan- October 3 Taiwan Mobile Outdoor Concert at Sun Moon Lake Over 38,000 tou County October 10

Wei-Wu-Ying Center, November 28 Violinist Hu Nai-yuan Over 10,000 Kaohsiung

Yuanman Theater, December 26 Fairytales, Movies, Symphonies Over 8,000 Taichung

86 5. Mobile treatment

With its telecoms infrastructure, TWM provides community emergency communications functions in conjunction with community assistance services conducted by the Kaohsi- ung/Pingdong, Mobile Medical Care Network, Department of Social Welfare - Taipei City Government, and Taidong Christian Hospital.

True concern is far better than mere material assistance. Taiwan Mobile volunteers helped seniors living alone purchase Chinese New Year supplies and enjoy a warm get-together year-end lunch.

Taiwan Mobile held large outdoor concerts throughout the years to elevate public appreciation of clas- sical music and to cultivate their understanding of different cultures as well as creativity. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 3. Bridging the digital divide 4. Promoting digital applications, enhancing creative skills To bridge the urban and rural divide, TWM has donated second-hand computers and established seven "e-learn- 1. myfone Mobile Creativity Awards ing centers" in Alishan County, Dajia in Taichung County, Jhushan in Nantou County, Minsyong in Chiayi County, TWM initiated the “myfone Mobile Creativity Awards” in Donggang in Pingtung County, and Wanrong in Hualien 2007. Awards are given to creators or composers of the County. The Company provides carrier-free cellphones, “Best Short Message Literature” and “Original Ringtones.” broadband Internet and cable TV services to facilitate The number of submitted works increased 400% in 2009; communication in remote areas and help local residents successfully encourage creativity using mobile technology. connect with and obtain first-hand information on improving their quality of life. The selection process involves three stages: preliminary review, secondary review and finals. Prominent figures from TWM has been working together with National Chengchi the literary and music world are invited to serve in the pan- University since 2009 to produce Internet security videos el of judges. Past judges include well-known figures such and teaching modules and promoting these programs as Yu Kwang-chung, Chang Hsiao-feng, Chang Ta-chuen, in schools. The Company is also working on turning a Chiang Hsun, Jerry Huang, Vincent Fang and Summer Lei. number of concerts and children’s plays on environmental protection into e-learning materials for students in remote areas, bringing them the latest ideas to bridge the digital divide and enhance their competitiveness.

87 Chap. 7 Our Values WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Entries/votes for the myfone Mobile Creativity Awards 909 cellphone audio guide usage in recent years

Year Usage amount Seconds 2007 2008 2009 2004 32,119 3,564,815

Short 5,232 4,745 22,612 2005 19,016 1,471,338 No. of messages submitted 2006 2,256 1,395,541 works Ringtones 138 331 436 2007 3,679 2,759,068

2008 62,697 41,497,473 No. of votes 40,581 35,832 49,674 2009 27,223 7,728,359

5. Caring for the underprivileged 88 2. 909 Cellphone audio guide 1. Training spinal injury patients to live independent lives

TWM pioneered the use of cellphones as a museum audio In July 2003, TWM, together with its customer service Chap. 7 Our Values guide with the introduction of its 909 service in 2004. In subsidiary and the Taoyuan Center for Developing the Po- 2009, the Company provided audio guide services for an tential of Spinal Injury Sufferers, developed a remote pro- exhibition of artifacts from Xinjiang, an international exhibi- gram to train spinal injury patients to become professional tion of the works of Andy Warhol and permanent exhibits customer service personnel. After receiving intensive pre- at the National Museum of Marine Biology in Pingtung. service training and complying with strict customer service quality requirements, each of these trained spinal injury patients can now respond to an average of 80 to 100 calls

Held Digital Camps for children throughout Taiwan and had well-known directors teach them how to use digital devices, such as digital cameras and mobile phones, to tell stories through images in order to increase their competitiveness in the digital era. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 The “myfone Mobile Composition Award” brought together heavyweight domestic critics from both the literary and music industries to guide the public into the Web 2.0 Art Sharing Age, which merges technology and art.

each day. These personnel are deserving of the title "cus- processes and 30 systems in the IT and customer service tomer service supermen and superwomen". departments, covering new subscription, billing, anti-fraud, and customer service to ensure that, without authorization, TWM has provided jobs to 58 spinal injury patients since no one is able to access clients’ private information. the "Customer Service Superman" program was initiated. A total of 131 patients have benefited from the different 2. Transparent and fair rate plans types of customer services classes that TWM offers. In accordance with the rules set forth by the NCC to pro- 2. 5180: Building a bridge for donations tect consumers’ rights and interests, the Company submits all service and rate plans for approval by the Commis- TWM introduced the "5180 Real-Time Donation" platform sion. All contracts with customers are drawn on the basis in December 2005 to provide a fund-raising channel for of fair and equal treatment and fulfill all the requirements social welfare groups. This voice donation hotline is free of stipulated in the Consumer Protection Law. The Company charge and allows donors to participate in charity activi- also provides clear and detailed billing information to cus- ties online. The service makes optimal use of cellphones' tomers. mobility and convenience, allowing users to show their 89 concern anytime, anywhere. 3. Special discount to underprivileged group Chap. 7 Our Values

Through this service, over 40 welfare groups have received TWM and Taiwan Fixed Network Co. jointly were first to of- more than NT$21 million in donations from 52,000 callers; fer special discount rate plans to the underprivileged group it has become a major channel for real-time donations. in 2007. In addition, TWM also offered mobile, local, long- distance and international integrated discount program to 6. Consumers’ rights and interests non-profit organizations to help them save on cost.

1. World-class information security For the elderly, TWM offered up to 50% discount on the monthly fee as well as supplied handsets with large Mindful of the importance of customer information security, screen, clear display and loud sound alert. TWM obtained a global first ISO 27001 Information Secu- rity Management System certification in 2006 and passed the global system’s three-year overall review in 2008. The certification included examining more than 200 operating WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 4. Teen protection (3) Job ranking, title and organizational structure policy: Formulated to correspond to employees’ career As the number of mobile internet users increases, the plan. Company has developed pass-code rules in compliance with the NCC’s regulations preventing children and teen- 2. Work regulations agers from accessing information which is not suitable The Company’s work regulations clearly define the to their age. In addition, parents can block the unsuit- rules and responsibility of management and labor. able services at the “Catch” portal. TWM will continue to The Company’s modern management approach has strengthen information security to screen content acces- effectively promoted cooperation among employees sible to children and teenagers. and benefited the Company.

5. Customer satisfaction survey 3. Divisional responsibilities The Company’s major divisions are separated by TWM’s dedication has won positive responses from cus- functions. Each division is tasked with specific job tomers, with Company surveys (including telephone and responsibilities and this separation of functions has internet polls and focus groups) over the years showing re- strengthened the core competency of the Company. 90 spondents giving high marks to improvements in network quality, SMS rates, retail services, call center services and

Chap. 7 Our Values billing information, etc. Based on the survey results, TWM will originate action plans for continuous improvement. Invited celebrity volunteers to record charity ringtones. They can be downloaded for free, 7. Employee benefits and employee rights through 5180 Mobile Donation Hotline, allowing anyone to become a public interest aware- protection ness ambassador.

The Company has set up an employee conduct/ethical standards policy to serve as guidelines for employee behavior and development. To motivate employees, the Company has launched various compensation and benefits programs that are performance-based. Overall, the Company’s human resources policies surpass basic labor law requirements, such as the Labor Standards Law. These policies are detailed as follows:

1. Employee behavior/ethical standards

The Company has established policies and rules as a guide for employee conduct, rights, responsibilities, and ethical standards. They are as follows:

1. Delegation of authority (1) Authorization guidelines and limitations: Aimed at streamlining business processes, strengthening distribution of responsibility, as well as detailing management authority at each job level. (2) Empowerment and delegation rules: Designed to ensure smooth and normal business operations. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 4. Reward and punishment policies ployee profit-sharing plan. To incentify employees, The Company has drawn up a number of policies on the Company has accumulatively transferred shares rewards and punishments to encourage employees bought back from the market (equivalent to 4.96% who have made special contributions to the Com- issued shares) at cost to employees as of the publi- pany as well as discourage employees from behav- cation date. ing in a manner deemed damaging to the Company. These policies are stated in Article 14 and Article 47 3. An Employees’ Welfare Committee was established to Article 58 in the Company’s “Work Regulations.” in July 1998 to handle and implement employee benefits programs. The committee is in charge of 5. Employee assessment policy a number of benefits designed to raise employees’ Supervisors provide feedback, assistance and map quality of life and promote physical and mental well- out individual development plans based on employ- being, including club activities, company outings, ee performance. family day, and benefits for special occasions such as weddings, festivals and funerals. Its current pre- 6. Attendance and leave policy vailing annual budget amounts to NT$70mn from Enforcement of this policy – designed to serve as a the Company’s contribution. guideline for employees – helps enhance work quality. 3. Employee stock ownership plan

7. Business confidentiality policy Designed to boost employee retention, the Employee To safeguard the Company’s competitive advan- Stock Ownership Plan was implemented in January 2006. tages, employees are required to sign a “Confidenti- Under the plan, employees are encouraged to invest a ality and Intellectual Property Rights Statement” and certain amount of their monthly pay – with the Company “Employment Contract” in order to protect the Com- contributing a similar percentage – to purchase company pany against potential damage from the disclosure shares. of trade secrets. The Company provides employees with the required information and training courses to 4. Employee training and education program strengthen their understanding of information security. 1. Training expense from 2009 to the publication date totaled NT$16,980,969 (including travel expense), 8. Sexual harassment prevention and handling proce- with 62,403 training hours and 10,137 participants. dures 91 The Company’s “Work Regulations” include rules 2. Orientation for new employees includes introduction

designed to prevent sexual harassment in the work- into the corporate culture, company organization, Chap. 7 Our Values place and promote gender equality. The Company telecommunications market, IT and network sys- disseminates information on laws and procedures tems, labor safety, as well as information security for filing complaints of sexual harassment on the in- training. tranet to serve as a guideline for employees. 3. Core competency development: Focus on basic 2. Benefits programs competencies, including problem solving, decision- making, communication, project management, basic 1. All employees are entitled to labor insurance, nation- legal knowledge of the telecommunications market, al health insurance, and group insurance coverage team building and service skills. starting from the first day of work. 4. Management training and development: Separate 2. The Company has an employee treasury stock sub- training programs for entry-level management, mid- scription plan, an annual bonus plan, and an em- dle management and senior management. Training WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 courses include performance management, leader- 6. Employee safety and sanitary policy ship, motivation skills, strategy management, project management, team dynamics skills and organiza- To fulfill the Company’s social responsibility in providing its tional development skills. employees with a safe, healthy and comfortable working environment, the Company endeavors to: 5. The Company sends large numbers of employees to local and international telecommunication confer- 1. Abide by and comply with regulations on environ- ences, management forums, consulting seminars, mental protection, safety and sanitation. and vendor training programs every year. These activities have a profound effect on upgrading the 2. Be on constant lookout for potential hazards in the Company’s technologies, developing new products, work environment to minimize accidents. introducing new and innovative ideas, and improving managerial skills. 3. Promote health education, conduct physical examinations, and implement health management pro- 6. To help employees develop their expertise in tele- grams. communication technologies and business admin- 92 istration, the Company has a scholarship program 4. Promote and instill energy-saving consciousness to designed to provide employees with on the-job help reduce waste of resources.

Chap. 7 Our Values training. The Company’s employee safety and sanitary policy is 7. The Company sponsors external training courses posted on its internal website and summarized as follows: for all employees annually. Employees can select courses that combine their personal interests and 1. A unit dedicated to conducting environmental in- job needs to reap the maximum benefits from these spections and carrying out employee sanitary train- training sessions. ing courses was established in accordance with regulations. 5. Retirement plan and implementation 2. A Health and Safety Committee was set up to draft 1. The Company has specific Employee Retirement a plan to prevent job injuries; ensure compliance and Guidelines. review related rules on employee health and sanitary improvement solutions through periodic meetings. 2. The Company has set up a Labor Pension Su- pervisory Committee, which was approved by the 3. Full-time professional nursing personnel are em- Taipei City Government in February 1998. Since ployed to conduct health examinations for employ- May 1988, the Company has been allocating on a ees, track the progress of staff who fail to pass their monthly basis, a retirement pension equivalent to health examination, and hold talks on how to pro- 2% of the employee’s monthly salary. mote health. Staffers who are able to administer first aid treatment have been placed in each work area. 3. The Company implemented the New Labor Pension System in July 2005. 4. Fire/flood protection exercises are performed periodically to reduce risks of employee injury and prop- 4. In accordance with Issue No. 18 of the Financial erty loss from natural disasters. Accounting Standards of the ROC, the Company shall retain the services of an actuary to assess and 5. Entrance guards and security systems have been calculate the labor pension reserve and provide a placed at all main base stations and work offices to detailed report. secure staff, property and information security. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 6. Energy-saving policies have been set to reduce car- relevant labor laws and regulations, held quarterly manage- bon emissions. ment/labor forums to facilitate communication, and promoted employee benefits to build a harmonious and satis- 7. Management/labor relations factory management/labor relationship. The Company has therefore not experienced any losses due to management/ The Company, working under the management and labor labor disputes and does not foresee any such situation in as one concept and belief that a win-win situation can be the future. achieved when the two sides work together, has followed

Year 2008 2009 As of Jan. 31, 2010

R&D expense (NT$’000) 488,744 594,509 45,188

As a % of total revenue 0.90% 1.04% 0.95%

Innovative Research and Development

1. Research and development expenditure

Investment in research and development and its ratio as a research and development for more advanced technolo- percentage of total revenue are shown in the table below. gies designed to increase customer satisfaction, which in For 2010, the Company plans to spend NT$782 million on turn should boost revenue and overall operations growth.

2. Major research and development achievements

Project name Details

SOA-based service delivery platform The function of service-oriented architecture (SOA) based services was integrated with informa- (SDP) tion management system (IMS) to develop SDP. 93 Front-end EBM system is used to produce campaign leads from data warehouse and integrated Front-end event-based marketing with front store sales system. Whether serving customers in stores or at call centers, TWM’s cus- Chap. 7 Our Values (EBM) tomer representative can draw on the recommendation produced by the front-end EBM system to respond to customers’ service request and produce more effective sales results.

A TWM brand portal was set up to serve as the overall entry for CBG, EBG and HBG. Products, TWM brand website system services and other related information are placed together for better content management.

NGOSS framework is used to plan TWM’s customer relationship management (CRM) system Next generation operational support covering customer information management, sales/channel management, marketing/selling ser- system (NGOSS) based customer rela- vices, order service, retention & loyalty, service assurance and billing service, and loosely-coupled tionship management (CRM) system with the back-end system to increase customer service efficiency.

Digital TV technology is used to provide cable TV viewers with diversified programs and chan- Digital TV (DTV) nels and develop interactive applications on DTV.

Advertisement ring back tone Subscribers who use this service are rewarded with billing discounts or merchandise coupons. (ADRBT) WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 3. Future research and development plans 1. Strategic plans

Project name Objective Status Completion date

IP-VPN video Finished feasibility analysis Develop IP based video service network architecture for IP-VPN service network and partial prototype func- June 2010 corporate accounts and build proof of concept (PoC) prototype. architecture PoC tions

Core capability completed. Workflow engine Establish a general purpose workflow engine that can be used in Currently undergoing June 2010 enabling project multiple applications such as order management and fulfillment. system analysis stage for 94 future release. Chap. 7 Our Values Build a CF-TTMS to support all business lines. The objective is to Customer-facing provide a customer centric trouble ticket management system trouble ticket Working on system plan- for triple/quad play and improve the quality of customer services. Dec. 2010 management ning It will provide a scalable and extendable infrastructure to fulfill system(CF-TTMS) future business needs.

Build an integrated infrastructure resources environment, and Working on technology Private Cloud provide TWM with private cloud computing to get the benefit of solution evaluation and Oct. 2010 Computing infrastructure as a service (IaaS). SOP.

Adopt International Financial Reporting Standards (IFRS) of accounting to provide domestic and international investors more Working on business plan- ERP IFRS transparent and reliable financial information. At the same time, Jan. 2012 ning TWM’s daily operation and internal reports will be fully in line with the internal control provisions set by regulators. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 2. Systems development

Project name Objective Status Completion date

Completed the study of Provide suggestions on deploying LTE system by comparing LTE the physical layer stan- and WiMAX’s major techniques: Evaluation of LTE dards of LTE and WiMAX • to track and study information developed by standard organi- & WiMAX systems 802.16m & 802.16j, as zation; and establishment well as comparison of the Mar. 2010 • to study the physical layer standards of LTE and WiMAX of an LTE system two systems. Channel 802.16m & 802.16j; channel model measurement and model • to create channel models of LTE and WiMAX, and compare development are in prog- the pros & cons of these two systems. ress.

Performance evalu- The project comprises four parts: an automatic fire alarm system, ation and integra- HSDPA/ femtocell deployment and compatibility, software define Fundamental research tion of wireless May 2010 radio (SDR) investigation, and multiple radio architecture, and completed. network architec- multiple input multiple output (MIMO) system performance tures

3. Value-added services

Project name Objective Status Completion date

Deliver a more flexible and widely supported mobile mail service Mobile mail to feature phone users who demand quick and easy access to Working on testing service Feb. 2010 their email anytime, anywhere.

As smartphones increase in popularity, the demand for applica- TWM application tions and games for these devices has also increased. TWM plans Planning and designing market “Match Mar. 2010 to build an app store that caters to this demand. The target system specifications Market” device platform is Android in the short run.

Establish an e-Book management platform and e-Book read- 95 ers. The digital content will be protected with encryption and Working on service plan- e-Book digital rights management (DRM) mechanism. Users will be able June 2010 ning

to easily purchase and download e-Books using their mobile or Chap. 7 Our Values e-Reader devices anywhere and anytime. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Chap. 8 Financial Report

Financial status leased out and an increase in deferred tax assets related to timing difference between financial accounting and tax 1. Balance sheet accounting in the recognition of asset write-off losses.

The Company’s condensed balance sheets for the past The 2009 amendment of Article 5 of the Income Tax Act five years and explanation of significant changes are as fol- provides for the corporate statutory tax rate to be reduced lows: from 25% to 20% effective 2010; as such, deferred income tax assets were revised downward accordingly. 1. Current assets 6. Current liabilities In 2007, the Company liquidated its bond funds to meet 96 funding requirements for acquiring Taiwan Fixed Network The Company’s raising of bank loans to meet its funding Co., Ltd. (TFN) shares, resulting in a decrease in current needs in acquiring TFN shares, together with payables Chap. 8 Financial Report assets. In 2009, the Company upstreamed cash from Tai- arising from capital reduction, resulted in increased cur- wan Cellular Co., Ltd’s (TCC) capital reduction, resulting in rent liabilities in 2007. Current liabilities decreased due to an increase in current assets. bank loan repayment and settlement of capital reduction in 2008. 2. Funds and long-term investments 7. Long-term liabilities In 2007, the Company increased its investment in TCC to acquire TFN shares. The long-term investments were, Starting in 2004, repayment of long-term bank loans as however, lower than the previous year as the Company well as settlement and conversion of convertible bonds shares held by its subsidiaries were reclassified as treasury contributed to a steady decline in long-term liabilities. In stock. Furthermore, TransAsia Telecommunications, Inc. 2008, however, issuance of the second unsecured cor- (TAT) and TCC had capital reductions in 2007 and 2009, porate bonds and increase in syndicated loans resulted in respectively, resulting in decreased long-term investments. increased long-term liabilities. In 2009, long-term liabilities decreased anew as the Company repaid its syndicated 3. Fixed assets loans.

The disposal of obsolete 2G equipment resulted in a de- 8. Other liabilities cline in fixed assets. In 2007, the Company injected capital into TCC, which fur- 4. Intangible assets ther invested in Taihsing International Telecommunications Co., Ltd. (TIT), using cash and TFN shares. The spread In 2008, intangible assets increased as the Company between the original cost and the disposal price of the TFN merged with TAT International (which was acquired at a shares on these transactions had been deferred and classi- premium) and inherited the goodwill. fied under other liabilities in accordance to SFAS No. 5.

5. Other assets 9. Stockholders’ equity

In 2007, other assets increased due to reclassification from The conversion of convertible bonds increased capital and fixed assets of one of the Company’s office buildings being capital surplus, while a 24% capital reduction approved WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 during the shareholders’ meeting in 2007 decreased capital. The Company’s shares held by subsidiaries were classified as treasury stock, decreasing shareholders’ equity. In 2008, the sale of 300,000 Company’s shares by its subsidiary decreased treasury shares, while the disposal gain increased capital surplus and shareholders’ equity accordingly.

Balance sheet for the past five years Unit: NT$’000

2005 2006 2007 2008 2009

Current assets 25,779,977 26,112,730 11,831,063 11,055,600 13,530,729

Funds and long-term investments 21,091,320 21,620,736 15,276,374 15,660,750 9,808,833

Fixed assets 57,638,728 57,224,824 42,568,638 43,018,691 39,033,012

Intangible assets 9,720,218 9,036,696 8,249,458 14,317,314 13,567,671

Other assets 3,139,195 2,976,458 6,076,924 5,608,974 4,823,691

Total assets 117,369,438 116,971,444 84,002,457 89,661,329 80,763,936

Before appropriation 15,477,853 16,564,043 42,763,948 23,717,197 18,833,732 Current liabilities After appropriation 28,766,184 29,919,728 50,565,070 37,686,061 (Note1)

Long-term liabilities 14,584,125 10,291,046 7,551,665 13,200,000 8,000,000

Other liabilities 318,704 248,561 1,833,915 1,841,534 1,856,978

Before appropriation 30,380,682 27,103,650 52,149,528 38,758,731 28,690,710 Total liabilities After appropriation 43,669,013 40,459,335 59,950,650 52,727,595 (Note1)

Capital stock 49,492,065 49,993,251 38,009,254 38,009,254 38,009,254

Capital surplus 7,905,337 8,748,571 8,785,159 12,297,839 12,431,704

Before appropriation 29,881,787 32,706,825 25,959,268 33,529,532 33,449,530 97 Retained earnings After appropriation 16,593,456 19,351,140 18,158,146 19,560,668 (Note1) Chap. 8 Financial Report Unrealized valuation loss on long-term - (147,423) (64,043) (5,897) 63,624 investments

Translation adjustments 3,240 3,860 5,764 17,840 12,011

Net loss not recognized as pension cost - - 1,534 2,862 (3,797)

Before appropriation 86,988,756 89,867,794 31,852,929 50,902,598 52,073,226 Total shareholders’ equity After appropriation 73,700,425 76,512,109 24,051,807 36,933,734 (Note1)

Note 1: 2009 earnings appropriation proposals are pending approval in the shareholders’ meeting. Note 2: 2005-2009 financial data have been duly audited by independent auditors. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 2. Income statement

The Company’s condensed income statements for the income decreased due to less investment income from past five years and explanation of significant changes are subsidiaries. as follows: 2. Non-operating expense 1. Non-operating income Significant losses from asset write-off of obsolete telecom In 2006, non-operating income rose on gains of NT$2.1bn equipment following its technology upgrade and network from the disposal of CHT shares. In 2009, non-operating integration were recognized in 2007.

Unit: NT$’000

2005 2006 2007 2008 2009

98 Revenue 47,408,572 47,891,289 51,284,856 54,311,605 57,015,452

Gross profit 28,056,234 27,464,393 28,908,257 30,204,806 29,849,527 Chap. 8 Financial Report

Operating income 17,170,785 14,981,243 16,025,677 16,861,395 16,632,797

Non-operating income 3,839,134 6,355,984 4,538,500 4,791,141 3,730,713

Non-operating expense 2,698,462 3,858,726 12,508,313 1,875,439 2,231,019

Pre-tax income 18,311,457 17,478,501 8,055,864 19,777,097 18,132,491

Net income 16,236,698 16,170,741 6,612,997 15,371,386 13,888,862

EPS (NT$) 3.31 3.28 1.68 5.18 4.66

Note: 2005-2009 financial data have been duly audited by independent auditors. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 3. Financial analysis for the past five years

2005 2006 2007 2008 2009

Financial Debt to asset ratio (%) 25.88 23.17 62.08 43.23 35.52 structure Long-term capital to fixed asset ratio (%) 176.22 175.03 92.57 149.01 153.90

Current ratio (%) 166.56 157.65 27.67 46.61 71.84

Solvency Quick ratio (%) 163.49 154.05 26.17 42.66 67.00

Interest coverage ratio (x) 31.82 42.94 21.58 29.91 33.17

Accounts receivable turnover (x) 7.77 7.37 7.75 8.02 8.56

Average collection days 46.98 49.53 47.10 45.51 42.64

Inventory turnover (x) - 2.53 2.02 5.44 7.85

Operations Accounts payable turnover (x) 13.57 14.03 14.76 12.62 13.18

Average days sales - 144.27 180.69 67.10 46.50

Fixed asset turnover (x) 0.82 0.84 1.20 1.26 1.46

Total asset turnover (x) 0.40 0.41 0.61 0.61 0.71

Return on assets (%) 13.98 14.07 6.87 18.29 16.80

Return on equity (%) 19.33 18.29 10.87 37.15 26.97

Operating income 34.67 29.97 42.16 44.36 43.76 Profitability % of paid-in capital Pre-tax income 36.98 34.96 21.19 52.03 47.71

Net income margin (%) 34.25 33.77 12.89 28.30 24.36

EPS (NT$) 3.31 3.28 1.68 5.18 4.66

Cash flow ratio (%) 174.16 69.93 79.87 106.27 139.10

Cash flow Cash flow adequacy ratio (%) 162.30 126.44 148.13 147.08 143.32

Cash reinvestment rate (%) 13.02 - 24.93 18.69 14.54 99 Operating leverage 1.43 1.64 1.70 1.69 1.77 Leverage Financial leverage 1.04 1.03 1.03 1.04 1.04 Chap. 8 Financial Report

EBITDA (NT$’000) 22,576,687 21,385,641 23,205,291 23,886,242 24,519,524

EBITDA margin (%) 47.62 44.65 45.25 43.98 43.01 Others ARPU (NT$) 842 827 821 785 721

MOU (in thousand minutes) 12,213,446 12,903,920 13,554,863 14,674,970 15,797,024

Explanation for items in 2009 with major changes > 20% from the previous year: (1) The decrease in current liabilities, long-term liabilities and total liabilities were due to repayment of the first unsecured corporate bonds and syndicated loan. Accordingly, current ratio, quick ratio and cash flow ratio increased while debt to asset radio decreased. (2) The decrease in net income from the previous year was due to less investment gain from subsidiaries and higher asset write-off losses. Return on assets, return on equity, pre-tax income as a % of paid-in capital, net income margin and EPS declined accordingly. (3) Increase in promotional handset sell-through resulted in higher cost of handset sold. As the inventory didn’t rise proportionally, the inventory turnover was up with shorter average days sales. (4) The cash reinvestment rate dropped due to increased cash dividends paid out. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Note: 2005-2009 financial data have been duly audited by independent (3) Net income margin = Net income / Net sales auditors. (4) EPS = (Net income – Preferred stock dividend) / Weighted average outstanding shares Formulas for the above table: 1. Financial structure 5. Cash flow (1) Debt to asset ratio = Total liabilities / Total assets (1) Cash flow ratio = Cash flow from operating activities / Current (2) Long-term capital to fixed asset ratio = (Shareholders’ equity + liabilities Long-term liabilities) / Net fixed assets (2) Cash flow adequacy ratio = Net cash flow from operating activities for the past 5 years / (Capital expenditures + Increases in inventory 2. Solvency + Cash dividend) for the past 5 years (1) Current ratio = Current assets / Current liabilities (3) Cash reinvestment rate = (Cash flow from operating activities – (2) Quick ratio = (Current assets – Inventory – Prepaid expenses) / Cash dividends) / (Gross fixed assets + Long-term investments + Current liabilities Other assets + Working capital) (Note: Use 0 if working capital (3) Interest cover = Income before interest and tax / Interest expense value is negative) 3. Operations 6. Leverage (1) Accounts receivable turnover = Net revenue / Average accounts (1) Operating leverage = (Net revenue – Variable operating costs and receivable expenses) / Operating income (2) Average collection days = 365 / AR turnover ratio (2) Financial leverage = Operating income / (Operating income – Inter- (3) Inventory turnover = COGS / Average inventory est expense) (4) Accounts payable turnover = COGS / Average accounts payable (5) Average days sales = 365 / Inventory turnover ratio 7. Others (6) Fixed asset turnover = Net revenue / Net fixed assets (1) EBITDA = Operating income + Depreciation + Amortization (7) Total asset turnover = Net revenue / Total assets (2) EBITDA margin = EBITDA/Net revenue (3) ARPU = Net telecom service revenue / Average number of subscrib- 4. Profitability ers (1) Return on assets = [Net income + Interest expense * (1 – Tax rate)] (4) MOU = Outgoing & incoming minutes / Average assets (2) Return on equity = Net income / Average equity 100 Financial and operating results analysis Chap. 8 Financial Report 1. Financial results 1. Taiwan Mobile Co., Ltd. – standalone balance sheet

Explanation of significant changes – i.e., at least a 10% 2. Amendment of Article 5 of the Income Tax Act change amounting to more than NT$10 million – in the provides for the corporate statutory tax rate to be past two years’ assets, liabilities and shareholders’ equity: reduced from 25% to 20% effective 2010. Deferred income tax assets have been revised downward ac- 1. Increase in current assets was due to receiving capi- cordingly. tal return of NT$3.5bn from the subsidiary, Taiwan Cellular Co., Ltd. 3. Current liabilities and long-term liabilities decreased due to repayment of the first unsecured corporate bonds and syndicated loan. 2008 - 2009 Standalone Balance Sheet Unit: NT$’000, % YoY change 2009 2008 Amount %

Current assets 13,530,729 11,055,600 2,475,129 22.39 Fixed assets 39,033,012 43,018,691 (3,985,679) (9.26) Other assets 4,823,691 5,608,974 (785,283) (14.00) Total assets 80,763,936 89,661,329 (8,897,393) (9.92) Current liabilities 18,833,732 23,717,197 (4,883,465) (20.59) Long-term liabilities 8,000,000 13,200,000 (5,200,000) (39.39) Total liabilities 28,690,710 38,758,731 (10,068,021) (25.98) Paid-in capital 38,009,254 38,009,254 - - Capital surplus 12,431,704 12,297,839 133,865 1.09 Retained earnings 33,449,530 33,529,532 (80,002) (0.24) Total shareholders’ equity 52,073,226 50,902,598 1,170,628 2.30 WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 2. Taiwan Mobile Co., Ltd. – consolidated balance sheet provides for the corporate statutory tax rate to be reduced from 25% to 20% effective 2010. Deferred Explanation of significant changes – i.e., at least a 10% income tax assets have been downward revised ac- change amounting to more than NT$10 million – in the cordingly. past two years’ assets, liabilities and shareholders’ equity: 2. Current liabilities and long-term liabilities decreased 1. Amendment of Article 5 of the Income Tax Act due to repayment of the first unsecured corporate bonds and syndicated loan.

2008 - 2009 Consolidated Balance Sheet Unit: NT$’000, % YoY change 2009 2008 Amount %

Current assets 11,600,054 12,712,754 (1,112,700) (8.75%) Fixed assets 46,543,617 49,720,231 (3,176,614) (6.39%) Other assets 3,331,469 4,119,087 (787,618) (19.12%) Total assets 85,899,832 91,939,109 (6,039,277) (6.57%) Current liabilities 24,761,119 26,735,149 (1,974,030) (7.38%) Long-term liabilities 8,000,000 13,200,000 (5,200,000) (39.39%) Total liabilities 33,816,723 41,002,576 (7,185,853) (17.53%) Paid-in capital 38,009,254 38,009,254 - - Capital surplus 12,431,704 12,297,839 133,865 1.09% Retained earnings 33,449,530 33,529,532 (80,002) (0.24%) Total shareholders’ equity 52,083,109 50,936,533 1,146,576 2.25%

3. Impact of changes on financial results: No significant impact sold increased due to higher promotional handset sell-through. 4. Preventive measures: Not applicable 101 2. Decrease in non-operating gain: Investment in-

come from subsidiaries decreased due to TAT was Chap. 8 Financial Report 2. Operating results merged with the Company in September 2008 and 1. Taiwan Mobile Co., Ltd. – standalone income statement its income was reclassified to operating revenue in 2009. 1. Increase in operating costs: Telecom operating cost increased upon consolidation with TransAsia Tele- 3. Increase in non-operating loss: Asset write-off communications, Inc. (TAT), and cost of handset losses increased due to increased network system integration in 2009. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 2008 – 2009 Standalone Income Statemen Unit: NT$’000, % YoY change 2009 2008 Amount %

Revenue 57,015,452 54,311,605 2,703,847 4.98 Operating costs (27,165,925) (24,106,799) 3,059,126 12.69 Gross profit 29,849,527 30,204,806 (355,279) (1.18) Operating expense (13,216,730) (13,343,411) (126,681) (0.95) Operating income 16,632,797 16,861,395 (228,598) (1.36) Non-operating income 3,730,713 4,791,141 (1,060,428) (22.13) Non-operating expense (2,231,019) (1,875,439) 355,580 18.96 Income before tax 18,132,491 19,777,097 (1,644,606) (8.32) Net income 13,888,862 15,371,386 (1,482,524) (9.64)

102 2. Taiwan Mobile Co., Ltd. – consolidated income statement

Chap. 8 Financial Report Decrease in non-operating gain: Non-operating income in 2009 was lower since there was a significant gain reported in 2008 from the disposal of Fubon Financial Holding Co., Ltd.

2008 – 2009 Consolidated Income Statement Unit: NT$’000, % YoY change 2009 2008 Amount %

Revenue 68,470,232 69,296,096 (825,864) (1.19%) Operating costs (33,195,238) (31,720,111) 1,475,127 4.65% Gross profit 35,274,994 37,575,985 (2,300,991) (6.12%) Operating expense (14,826,860) (15,814,145) (987,285) (6.24%) Operating income 20,448,134 21,761,840 (1,313,706) (6.04%) Non-operating income 596,131 1,032,166 (436,035) (42.24%) Non-operating expense (2,397,934) (2,257,296) 140,638 6.23% Income before tax 18,646,331 20,536,710 (1,890,379) (9.20%) Net income 13,890,516 15,382,249 (1,491,733) (9.70%) WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 3. Consolidated financial analysis (2009 versus 2008)

2009 2008

Debt to asset ratio 39.37 44.60 Financial structure (%) Long-term capital to fixed asset ratio 129.09 128.99

Current ratio 46.85 47.55

Solvency (%) Quick ratio 42.13 43.13

Interest coverage ratio (x) 34.21 30.80

Accounts receivable turnover (x) 8.81 8.69

Average collection days 41.43 42.00

Inventory turnover (x) 7.48 5.13

Operations Accounts payable turnover (x) 11.64 10.44

Average days sales 48.80 71.15

Fixed asset turnover (x) 1.47 1.39

Total asset turnover (x) 0.80 0.75

Return on assets 16.09 16.74

Return on equity 26.97 36.91

% of Operating income 53.80 57.25 Profitability (%) paid-in capita Pre-tax income 49.06 54.03

Net profit margin 20.29 22.20

EPS (NT$) 4.66 5.18

Cash flow ratio 96.73 103.00 103 Cash flow (%) Cash flow adequacy ratio 157.94 173.61

Cash reinvestment rate 11.64 22.31 Chap. 8 Financial Report

Operating leverage 1.83 1.75 Leverage Financial leverage 1.03 1.03

Explanation for items in 2009 with major changes > 20% from the previous year: (1) Total liabilities and debt to asset ratio were lower due to repayment of the first unsecured corporate bonds and syndicated loan. (2) Increase in promotional handset sell-through resulted in higher cost of handset sold. As the inventory didn’t rise proportionally, the inventory turnover was up with shorter average days sales. (3) Selling of the Company’s shares by its subsidiaries in 2008 resulted in increased capital surplus due to the disposal gain while decreasing treasury shares. Average shareholders’ equity increased accordingly, leading to a decrease in return on equity. (4) The cash reinvestment rate dropped due to increased cash dividends paid out. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 4. Revenue outlook, key assumptions, potential impact on the Company’s business and corresponding proposal

In 2010, the Company will continue to leverage mobile internet products to expand its wireless market share. Telecom operators are expected to become more aggressive in devising new acquisition strategies and investing more in the VAS market as the demand for smart devices continues to grow. To realize the full potential of this growth, the Company will focus on developing attractive value-added products and services in order to increase average revenue per user (ARPU). The Company will also pursue a bigger market share of the mid to high usage customers. In order to meet these targets, the Company will utilize the full potential of its growing number of direct stores as well as use its edge in handset procurement to help boost cost and marketing efficiency.

3. Cash flow analysis 1. Taiwan Mobile Co., Ltd. – standalone cash flow analysis

1. Cash flow from operating activities: Cash inflow increased in 2009 as more cash dividends were distributed from TCC, this in spite of higher income tax related cash outflow during the same year. 104 2. Cash flow from investment activities: Cash outflow was lower in 2008 due to a capital return from TCC. Chap. 8 Financial Report 3. Cash flow from financing activities: Cash outflow was lower in 2009 even after payment of cash dividends and repayment of bank loans since there was a significant capital reduction in 2008.

2008 – 2009 Standalone Cash Flow Statement Unit: NT$’000, % YoY change 2009 2008 Amount %

Cash inflow (outflow) 26,196,820 25,203,147 993,673 3.94 from operating activities Cash inflow (outflow) (5,082,512) (3,403,331) (1,679,181) (49.34) from investment activities Cash inflow (outflow) (21,601,641) (22,718,880) 1,117,239 4.92 from financing activities Net cash (487,333) (919,064) 431,731 46.98

2. Taiwan Mobile Co., Ltd. – consolidated cash flow analysis

1. Cash flow from operating activities: Cash inflow decreased in 2009 due to increase in income tax related cash outflow.

2. Cash flow from investment activities: Cash outflow was lower in 2008 due to consideration received from the disposal of Fubon Financial Holding Co., Ltd.

3. Cash flow from financing activities: Cash outflow was higher in 2008 on account of the payment of capital reduction. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 2008 – 2009 Consolidated Cash Flow Statement Unit: NT$’000, % YoY change 2009 2008 Amount %

Cash inflow (outflow) 23,950,872 27,537,370 (3,586,498) (13.02%) from operating activities Cash inflow (outflow) (6,747,699) (5,993,202) (754,497) (12.59%) from investment activities Cash inflow (outflow) (18,067,736) (24,816,247) 6,748,511 27.19% from financing activities Net cash (4,463) 8,440 (12,903) (152.88%)

3. Plans to improve negative liquidity: Not applicable

4. Projected cash flow for 2010

1. Projected cash inflow from operating activities: Projected operating cash inflow in 2010 will decrease from 2009 on account of lower cash dividends to be distributed by subsidiaries under the equity method of accounting. Other than this, the projected cash inflow from operating activities in 2010 is expected to remain stable.

2. Projected cash outflow from investment activities: For capital expenditures

3. Projected cash outflow from financing activities: For distribution of cash dividends and repayment of long-term debts

5. Source of funding for negative cash flow in 2010: Not applicable

2010 Cash Flow Analysis Unit: NT$’000 Source of funding for negative cash bal- Forecast cash Cash balance, be- Forecast net cash Cash balance, end ance outflow from invest- ginning of the year inflow from opera- of the year ment and financing Cash inflow from Cash inflow from (1) tions (2) (1) +(2) -(3) activities (3) investment activities financing activities 105

1,057,042 21,881,495 21,798,735 1,139,802 - - Chap. 8 Financial Report

4. Major capital expenditures and sources of capital analysis

Due to stable operations and cash flows, the Company was able to fund all major capital expenditures using internal capital; therefore, the Company’s financials are not affected. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 5. Investments

Investment policies, profitability analyses, and improvement plans: See chart below Unit: NT$’000

Explanation Improve- Carrying Future invest- Rationale Source for income/ loss ment Value ment plans Item plans

Investing in fixed network Taiwan Cellular Co., Ltd. Investment income from Taiwan 9,353,920 and other telecommunication - - (TCC) Fixed Network Co., Ltd. related business

Investing in a property develop- Dependent on Taipei New Horizons ment project located at the old In preparatory stage as of 2009 future construc- 211,974 - Co., Ltd. (TNH) Songshan Tobacco Factory site year end tion plan and for headquarter use fund requirement

106 TFM has The Company’s turned BOD decided to profitable provide addi- Wealth Media Technol- Investing in CATV related busi- Investment loss from Tai Fu Me-

Chap. 8 Financial Report 192,615 since Nov. tional funding ogy Co., Ltd.(WMT) ness dia Technology Co., Ltd.(TFM) 2009 after to WMT up to reducing its NT$6.5bn in July, debt 2009

Cooperation with other Asia - - Bridge Mobile Pte Ltd. 50,324 operators so as to enhance the - (Note) (Note) Company’s competitiveness

Note: Investment was booked as “Financial assets carried at cost”. The Company does not have significant influence on it

6. Financial difficulties for the Company and its affiliates: None WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Affiliates

1. Investment Holding Structure As of December 31, 2009

5.86% Taiwan Mobile Co., Ltd. 3.5% 12%

100% 100%

Wealth Media Tech- Taiwan Cellular Co., Ltd. nology Co., Ltd. (former Taihsing Den Syun Co., Ltd.)

100% 100% 100% 100% 100%

Tai Fu Media Tech- Taiwan Digital Com- TWM Holding Co. Ltd. TCC Investment Taiwan Fixed Network Co., Ltd. nology Co., Ltd. munications Co., Ltd. (former Simax Investment Co., Ltd. (former Taihsing International Telecommunications Co., Ltd) Holdings Ltd.)

100% 100% 100% 100% 100% 98.5% 100% 100% 100% 100% 100%

TWM Communica- TCCI Taiwan Teleservices Global Wealth Fu Jia Leh Global For- Win TV TFN Fu Sin Media tions (Beijing) Ltd. Investment & Technologies Co., Media Tech- Media est Media Broadcast- TFN Media Union In- Technology (former Hurray! Times and De- TFN HK Ltd. Ltd. (former VoPier nology Co., Technology Technology ing Co., Co., Ltd. vestment Co., Ltd. Communications velopment Communications Ltd. Co., Ltd. Co., Ltd. Ltd. Co., Ltd. (Beijing) Ltd. ) Co., Ltd. (Taiwan) Co., Ltd.)

6.694% 92.38% 96.66% 99.99% 29.53%(Note) 100% 100% 100% 107

Globalview Cable Phoenix Cable Union Cable Mangrove Cable Yeong Jialeh Taiwan Super TT&T Holdings TV Co., Ltd. TV Co., Ltd. TV Co., Ltd. TV Co., Ltd. Cable TV Co., Ltd. Basketball Co., Ltd. Co., Ltd. Chap. 8 Financial Report

100% 3.34% Xiamen Taifu Teleservices & Technologies Co., Ltd.

TWM's Investment ——— TCC's Investment———— TCCI's Investment———— TFN's Investment ————— Other Subsidiaries's Investment ———— Note: 70.47% shares are held under trustee accounts. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 2. Affiliates’ Profile Unit: NT$’000 (unless otherwise stated) Date of Name Address Paid-in capital Main business incorporation Wealth Media Technology Co., 2007.08.07 13F-1, No. 172-1, Jilong Rd., Sec. 2, Taipei 272,000 Investment Ltd. Tai Fu Media Technology Co., Ltd. 2007.10.18 13F-1, No. 172-1, Jilong Rd., Sec. 2, Taipei 270,000 Investment Global Wealth Media Technology 1F, No. 206, Datong Rd., Sec. 2, Sijhih City, 2007.10.26 84,000 Investment Co., Ltd. Taipei County Fu Jia Leh Media Technology Co., 2007.11.23 13F-1, No. 172-1, Jilong Rd., Sec. 2, Taipei 1,000 Investment Ltd. Fu Sin Media Technology Co., 2007.11.23 13F-1, No. 172-1, Jilong Rd., Sec. 2, Taipei 135,000 Investment Ltd. Global Forest Media Technology 2008.12.26 13F-1, No. 172-1, Jilong Rd., Sec. 2, Taipei 1,000 Investment Co., Ltd. Telecom engineer- Taiwan Cellular Co., Ltd. 2005.09.20 13F-1, No. 172-1, Jilong Rd., Sec. 2, Taipei 300,000 ing and IT services Fixed line service Taiwan Fixed Network Co., Ltd. 2007.01.30 13F-1, No. 172-1, Jilong Rd., Sec. 2, Taipei 21,000,000 provider 108 Taiwan Digital Communications Telecom engineer- 2007.06.06 13F-1, No. 172-1, Jilong Rd., Sec. 2, Taipei 12,000 Co., Ltd. ing and IT service TCC Investment Co., Ltd. 2009.08.10 13F-1, No. 172-1, Jilong Rd., Sec. 2, Taipei 21,000 Investment Chap. 8 Financial Report TCCI Investment and Develop- 2009.09.22 13F-1, No. 172-1, Jilong Rd., Sec. 2, Taipei 4,000 Investment ment Co., Ltd. 9F, No. 206, Dunhua S. Rd., Sec. 2, Daan Dis- TV program provid- Win TV Broadcasting Co., Ltd. 2005.10.17 181,774 trict, Taipei er Cable broadband 6F, No. 206, Dunhua S. Rd., Sec. 2, Daan Dis- TFN Media Co., Ltd. 2005.01.25 2,305,263 and value-added trict, Taipei service provider Nos. 28-23, Xiaoshe Lane, Donggang Rd., Cable TV service Union Cable TV Co., Ltd. 2005.02.04 1,704,633 Yilan City, Yilan County provider 10F, No. 651-5, Jhongjheng Rd., Sinjhuang Cable TV service Yeong Jialeh Cable TV Co., Ltd. 1994.09.26 339,400 City, Taipei County provider 5F, No. 33, Lane 3, Jhongjheng E. Rd., Sec. 1, Cable TV service Mangrove Cable TV Co., Ltd. 1996.01.23 211,600 Danshuei Township, Taipei County provider No. 312, Fongping 1st Rd., Daliao Township, Cable TV service Phoenix Cable TV Co., Ltd. 1996.08.22 680,902 Kaohsiung County provider No. 206, Datong Rd., Sec. 2, Sijhih City, Taipei Cable TV service Globalview Cable TV Co., Ltd. 1995.11.25 560,000 County provider c/o Arias, Fabrega & Fabrega Trust Co., BVI Ltd., TWM Holding Co., Ltd. 2006.06.09 US$1 (Note) Investment 325 Waterfront Drive, Road Town, Tortola, Brit- ish Virgin Islands Mobile application TWM Communications (Beijing) Room B05B, B Floor, Tong Heng Building, No. US$3,000,000 2002.09.17 development and Ltd. 4 Garden Road, Haidian District, Beijing, China (Note) design Taiwan Teleservices & Technolo- 2001.06.08 13F-1, No. 172-1, Jilong Rd., Sec. 2, Taipei 10,000 Call center service gies Co., Ltd. Basketball team Taiwan Super Basketball Co., Ltd. 2007.09.21 15F-1, No. 172-1, Jilong Rd., Sec. 2, Taipei 20,000 management TrustNet Chambers, P.O. Box 1225, Apia, US$1,300,000 TT&T Holdings Co., Ltd. 2004.10.08 Investment Samoa (Note) Xiamen Taifu Teleservices & Tech- 3F-B, No.2, Xiamen Software Park, Xiamen US$1,300,000 2005.04.05 Call center service nologies Co., Ltd. City, PRC (Note) Telecommuni- Unit 507, 5/F, Tower 1, Silvercord, 30 Canton HK$1,300,000 TFN HK LIMITED 2003.05.14 cations service Road, Tsimshatsui, Kowloon, Hong Kong (Note) provider TFN Union Investment Co., Ltd. 2009.09.22 13F-1, No. 172-1, Jilong Rd., Sec. 2, Taipei 4,000 Investment

Note : Exchange rate of US$1=NT$32.238 and HK$=NT$4.153 as of December 31, 2009. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 3. Affiliates’ Operating Highlights Unit: NT$’000 Paid-in Total Total Operating Operating Company Name Net worth Net income EPS (NT$) capital assets liabilities revenue income Wealth Media Technol- 272,000 237,801 45,186 192,615 - (286) (33,120) (1.22) ogy Co., Ltd. Tai Fu Media Technol- 270,000 236,389 45,211 191,178 - (229) (32,871) (1.22) ogy Co., Ltd. Global Wealth Media 84,000 91,105 4,123 86,982 - (245) 2,465 0.29 Technology Co., Ltd. Fu Jia Leh Media Tech- 1,000 1,094 125 969 - (248) (231) (0.001) nology Co., Ltd. Fu Sin Media Technol- 135,000 140,977 119 140,858 - (213) 5,386 0.40 ogy Co., Ltd. Global Forest Media 1,000 840 60 780 - (176) (145) (1.45) Technology Co., Ltd. Taiwan Cellular Co., 300,000 63,759,087 11,564,028 52,195,059 - (2,282) 2,648,823 7.08 Ltd. Taiwan Fixed Network 21,000,000 44,776,387 9,564,607 35,211,780 9,941,579 1,770,217 2,195,548 0.62 Co., Ltd. Taiwan Digital Commu- 12,000 11,010 60 10,950 - (156) (131) (0.11) nications Co., Ltd. TCC Investment Co., 21,000 24,596,613 20,965,635 507,372 502,374 502,577 386.60 Ltd. 3,630,978 TCCI Investment and 4,000 8,289,757 166,116 8,123,641 - (56) (56) (0.14) Development Co., Ltd. Win TV Broadcasting 181,774 710,316 455,581 254,735 877,852 74,002 72,961 4.01 Co., Ltd. TFN Media Co., Ltd. 2,305,263 12,860,238 9,256,853 3,603,385 2,451,888 1,176,109 1,012,976 4.39 Union Cable TV Co., 1,704,633 2,143,698 289,903 1,853,795 613,516 154,517 131,110 0.77 Ltd. Yeong Jialeh Cable TV 339,400 1,062,604 475,263 587,341 1,035,706 217,809 160,341 4.72 Co., Ltd. Mangrove Cable TV 211,600 468,194 184,854 283,340 379,541 64,210 47,872 2.26 Co., Ltd. Phoenix Cable TV Co., 680,902 1,285,734 336,938 948,796 1,117,616 221,487 166,870 2.45 109 Ltd. Globalview Cable TV 560,000 839,250 209,890 629,360 466,717 80,158 42,399 0.76 Co., Ltd. Chap. 8 Financial Report TWM Holding Co., Ltd. 0.032 271,492 200 271,292 - (403) (46,139) (46,139,054) TWM Communications 96,714 107,201 11,088 96,113 75,542 1,946 738 NA (Beijing) Ltd. Taiwan Teleservices & 10,000 433,064 340,001 93,063 1,015,569 77,837 57,320 57.32 Technologies Co., Ltd. Taiwan Super Basket- 20,000 27,118 7,095 20,023 35,532 80 14 0.01 ball Co., Ltd. TT&T Holdings Co., Ltd. 41,909 55,620 10,191 45,429 52,767 2,667 1,499 1.15 Xiamen Taifu Teleser- vices & Technologies 41,909 53,291 8,049 45,242 67,863 3,068 1,318 NA Co., Ltd. TFN HK LIMITED 5,399 13,239 9,893 3,346 28,414 449 457 0.35 TFN Union Investment 4,000 28,472,793 570,424 - (56) (56) (0.14) Co., Ltd. 27,902,369 WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Audit Committee Report

Date: January 28, 2010

The Board of Directors of Taiwan Mobile Co., Ltd. (TWM) has submitted the Company’s 2009 business report and financial statements. The CPA firm, Deloitte & Touche, was retained to audit TWM’s financial statements and has issued an audit report relating to the financial statements. The business report and financial statements have been reviewed and determined to be correct and accurate by the Audit Committee of TWM. According to Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act, I hereby submit this report on behalf of all members of the committee.

110 Chap. 8 Financial Report

Taiwan Mobile Co., Ltd.

Tsung-Ming Chung Chairman of the Audit Committee WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

) ’ ty ”

holders’ earch earch and hare of of Financial Corporation

“

(the (the

erall financial statement ccounting ccounting Res A , 2009 and 2008, and the results of and the 2009 2008, of , results in in conformity with the Guidelines , viously recorded asviously from appropriations ended

December 31 December the the Rules Governing the Audit - then then

by by Securities Issuers, requirements of the Business 1

- s as of

years tants tants and auditing standards generally accepted in the

., Ltd. ., standards require that we plan and perform the that to audit obtain plan require we and perform standards then then ended. These financial statements are the responsibili balance balance sheets of Taiwan Mobile Co., Ltd.

olders

years Financial Financial Report rules and Shareh

, in all material respects, with the financial statements referred to above. to referred statements financial the with respects, allin material , the statements financial referred to above present fairly, in all material respects, the , and accounting principles generally accepted in the Republic of China. of Republic in the accepted generally principles accounting and

it it includes examining, on a test basis, evidence supporting the amounts and disclosures in the counting counting Law and Guidelines Governing Business Accounting relevant to financial accounting e conducted our audits in accordance with financial position of Taiwan Mobile Mobile Taiwan Co of position financial its operations and its cash flows Governing the of Preparation for the Ac standards, Republic of China. of Republic China. Those As stated in Note 3 to the financial statements, in March 2007, the Statements Statements by Certified Public Accoun of the Corporation’s management. Our responsibility is to express an opinion audits. on our based statements on these financial presentation. opinion. for our basis reasonable a provide audits ourthat We believe In our opinion W misstatement. of arematerial free statements financial the whether about assurance reasonable An aud financial statements. An significant estimates audit made by management, also as well as includes evaluating the ov assessing the accounting principles used and

Development Development Foundation issued an interpretation that requires companies to recognize employees bonuses and remuneration paid to directors and supervisors as expenses starting from 2008. January 1, The mentioned bonuses and remuneration were pre earnings. We have also supplementary analysis, by audited applying the same procedures described above. the In accompanying our consistent are schedules opinion, such schedules of significant accounts, provided for as of December 31, 2009 and 2008, and the related statements of income, changes in s equity and cash flows for the Taiwan Mobile Co., Ltd. Co., Mobile Taiwan We have audited the accompanying INDEPENDENT AUDITORS’ REPORT and of Directors Board The

and 111 Chap. 8 Financial Report

December 31, 2009 2008 and 2009 31, December

Ended

Independent Auditors’ Report Auditors’ Independent

thefor Statements Financial Years Taiwan Mobile Co., Ltd. 2009 Financial Statements 2009 Financial WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 112 Chap. 8 Financial Report changes changes in language language auditors’ - the accompanying financial statements

- 2 -

Notice to Readers to Notice and and the related consolidated statements of income,

in in the interpretation of the two versions, the Chinese

blic blic of China and not those of any other jurisdictions. The standards,

equity, equity, and cash flows for the years then ended, on which we have issued an audit

’ report and financial statements shall prevail. shall statements financial and report have been translated into English from the Republic original of China. Chinese version prepared If there and is any used conflict between the in English version and version or the the any original difference Chinese We have also audited the consolidated balance sheets of the Corporation and its subsidiaries as of December 31, 2009 and 2008 shareholders report dated January 20, 2010, with an unqualified opinion and emphasis of a matter explanatory respectively. paragraph, 20, 2010 January The accompanying financial statements are intended only to present the financial position, results of operations and cash flows in accordance with accepted accounting principles in and practices the generally Repu procedures and practices to audit such China. of Republic in the applied financial statements are those generally accepted and For the convenience of readers, the auditors’ report and WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

)

------1 3 2 5 5 2 8 9 6 1 1 2 4 4

26 15 43 42 10 14 20 57 (37 100 %

) )

- -

2008 1,166 2,862 (5,897 68,096 27,095 17,840 372,286 246,885 356,271 1,300,000 2,218,193 2,139,263 4,686,201 4,071,747 1,361,411 7,500,000 8,000,000 5,200,000 1,238,378 1,841,534 8,775,819 3,493,759 3,406,744 23,717,197 13,200,000 38,758,731 38,009,254 12,406,775 17,716,013 50,902,598 89,661,329 Amount (32,948,832

$ $

)

------6 2 2 6 5 2 1 2 2 4 4

24 10 10 36 47 11 17 20 64 (39 100 %

) )

- - -

2009 100 3,395 3,743 (3,797 60,624 12,840 12,011 63,624 299,872 454,633 265,205 35 5,000,000 1,903,223 1,478,353 4,701,741 3,739,454 1,195,832 8,000,000 8,000,000 1,238,378 1,856,978 8,775,819 3,639,302 3,350,000 18,833,732 28,690,710 38,009,254 13,943,913 16,155,617 52,073,226 80,763,936 Amount (31,889,

$ $

and 20)

HOLDERS’ EQUITY HOLDERS’

term liabilities (Notes 16 and 23) 16 and (Notes liabilities term

- current HARE

gains on intercompany accounts (Notes 2 and 8) and 2 (Notes accounts intercompany on gains

- term liabilities term

- NT$10 par value

s - investments term posits -

term borrowings (Note 13) 14) (Note payable bills and notes term term borrowings (Note 17) (Note borrowings term

- - TERM TERM LIABILITIES - Total current liabilities Total long liabilities other Total liabilities Total equity shareholders’ Total - Authorized: Authorized: shares thousand 6,000,000 Issued: shares thousand 3,800,925 From convertible bonds transactions stock treasury From From long From employee stock options Other reserve Legal reserve Special earnings Unappropriated adjustments translation Cumulative Net loss not recognized as pension cost stock Treasury instruments financial on (losses) gains Unrealized Short Short 24) (Note payable Accounts 2 (Notes payable taxes Income 24) (Note expenses Accrued Other payables (Notes 2 and 24) Advance receipts (Note 15) long of portion Current deposits Guarantee 24) (Note liabilities current Other 23) and 16 (Notes payable Bonds Long de Guarantee Deferred credits Other (Note 2) Capital stock Capital surplu earnings Retained equity Other S AND LIABILITIES CURRENT LIABILITIES LONG OTHER LIABILITIES SHAREHOLDERS’ EQUITY (Notes 2and 19) TOTAL

3 -

)

------2 7 2 1 1 4 3 1 2 3 8 8 3 3 6

12 17 18 68 78 45 48 16 (33 100 %

)

008

2 5,469 7,882 4,853 82,484 14,139 10,000 60,064 67,776 544,375 174,008 251,410 309,898 628,337 142,605 249,500 100,333 138,679 317,568 313,034 1, 5,817,239 2,067,754 3,866,289 2,385,587 1,285,920 2,065,396 2,439,097 7,477,091 6,835,370 2,304,349 2,467,568 5,608,974 11,055,600 15,351,186 15,660,750 60,783,882 70,487,407 40,579,594 43,018,691 14,317,314 89,661,329 Amount (29,907,813

$ $

)

------1 7 7 1 1 5 3 1 3 2 8 9 3 1 2 6

17 12 12 72 84 46 48 17 (38 100 %

)

- -

113 2009 137 2,534 2,919 16,772 22,668 27,261 10,000 50,324 32,600 57,137 177,821 157,737 429,129 482,598 222, 312,915 406,765 ,567,671 1,057,042 5,538,852 5,608,315 9,758,509 9,808,833 3,866,289 2,385,587 1,285,920 2,142,596 1,620,547 6,729,382 6,835,370 2,198,291 1,626,446 4,823,691 13,530,729 58,134,357 67,847,349 37,412,465 39,033,012 13 80,763,936 Amount (30,434,884

$ $

Chap. 8 Financial Report

)

and 24) and

January 20, 2010

current (Notes 2, 23 and 27) current (Notes 2 and 9)

- current (Notes 2 and 5) -

- current (Notes 2 and 20)

- non

current (Notes 2 and 20) non

2008

- -

third parties (Notes 2 and 6) 2 (Notes parties related term investments (Note 8) (Note investments term AND

- -

third parties third related parties (Note 24)

- -

2009

, ,

sale financial assets assets financial sale - 31

for -

ldings

Total current assets current Total investments Total cost Total equipment and property Net assets other Total

payments for long for payments Land Bui equipment Telecommunication equipment Office assets Leased equipment Miscellaneous ther receivables Cash and cash equivalents (Notes 2, 4 and 24) and 4 2, (Notes equivalents cash and Cash Available assets financial derivative Hedging receivable Notes receivable Accounts receivable Accounts Other receivables O Inventories (Note 2) 24) and 7 (Notes Prepayments assets tax income Deferred 25) and 24 (Notes deposits time Pledged Other current assets 8) and 2 (Notes method equity the using for accounted Investments Pre cost at carried assets Financial Cost depreciation accumulated Less payments advance and progress in Construction concession 3G cost software Computer 11) (Note Goodwill 24) and 2, 12 (Notes to others leased Assets 12) 2 and (Notes assets Idle deposits Refundable Deferred charges (Note 2) assets tax income Deferred Other (Notes 2, 18 and 24) With Deloitte & Touche audit report dated dated report audit Touche & Deloitte With TAIWAN MOBILE CO., LTD. CO., MOBILE TAIWAN SHEETS BALANCE DECEMBER ASSETS CURRENT ASSETS INVESTMENTS 24) 2,10 and (Notes EQUIPMENT AND PROPERTY 2) (Note ASSETS INTANGIBLE OTHER ASSETS TOTAL statements. financial the of part integral an are notes accompanying The ( (In Thousands of New Taiwan Dollars, Except Par Value) Par Except Dollars, Taiwan New of Thousands (In WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

)

4.97 4.96

5.18 5.17

Tax After After $ $

Income Income $ $

2008 Concluded

( 18,857,118

2008 $

6.67 6.65

Tax

Before Before Income Income $ $

3.54 3.53

$ $

2009 13,412,955

4.66 4.65 $

Tax

After After

Income Income $ $

2009

6.09 6.07

Tax

Before Before Income Income $ $

5 - s stocks held by its subsidiaries be treated as an investment ’

Corporation

114

Chap. 8 Financial Report

Basic Diluted Basic Diluted 20, 2010) January dated report audit Touche & (With Deloitte 21) (Note PER SHARE EARNINGS Pro forma information should the NET INCOME PER SHARE EARNINGS statements. financial the of part notes an integral are accompanying The

instead of treasury stock (after income tax) income (after stock treasury of instead

------

1 7 8 1 9 2 2 4 8 99 44 56 18 25 31 36 28 % 100

(Continued)

2008 2,096 94,213 11,451 18,391 11,532 43,118 702,233 197,507 146,128 247,265 684,012 9,592,332 3,751,079 4,092,481 4,791,141 1,118,386 1,875,439 4,405,711 53,609,372 54,311,605 24,106,799 30,204,806 13,343,411 16,861,395 19,777,097 15,371,386 Amount

$ $

------

3 7 6 1 7 3 1 4 8 97 48 52 16 23 29 32 24 % 100

2009 9,740 49,057 10,405 22,892 257,612 193,415 175,864 563,715 104,770 1,856,104 9,200,370 4,016,360 3,044,360 3,730,713 1,529,902 2,231,019 4,243,629 55,159,348 57,015,452 27,165,925 29,849,527 13,216,730 16,632,797 18,132,491 13,888,862 Amount er Share) er

P $ $

4 -

ent (Note 2) (Note ent

2 and 24) 2

ME TAX ME

ME and gains income operating losses and expenses operating

- -

irment loss (Notes 2 and 9) 2 and (Notes loss irment Total operating revenues operating Total expenses operating Total non Total non Total OPERATING INCOME AND GAINS LOSSES AND EXPENSES OPERATING - - method, net (Notes 2 and 8) 2 (Notes net method, 2) (Note equipment Telecommunication service revenue service Telecommunication revenue Other Marketing Administrative equity the under recognized income Investment income Penalty 24) 2 and (Notes income Rental 24) and 2 (Notes income Interest 2) (Note income Dividend and equipm property of Gain on disposal and 6) 2 (Notes Other and of property retirement and Loss on disposal 27) 10, 24 and 2, (Notes expenses Interest expenses Financial Impa 2) (Note Other YEARS ENDED DECEMBER 31, 2009 AND 2008 AND 31, 2009 DECEMBER ENDED YEARS TAIWAN MOBILE CO., LTD. CO., MOBILE TAIWAN OFINCOME STATEMENTS Earnings Except Dollars, Taiwan New of (In Thousands 24) 2 and (Notes REVENUES OPERATING and 24) 2, 22 (Notes COSTS OPERATING GROSS PROFIT 2, 2 (Notes EXPENSES OPERATING OPERATING INCO NON NON INCO BEFORE INCOME 20) 2 and (Notes TAX EXPENSE INCOME NET INCOME WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

) ) ) ) ) ) ) - - - - 62

lders'

97,508 27,095 (18,116 (26,105 (52,695 112,306 134,541 (181,155 Total 1,056,478 Equity (7,601,851 (1,059,732 31,852,929 24,051,807 12,440,639 15,371,386 50,902,598 36,933,734 13,888,8 52,073,226 (13,968,864

$ $ Shareho

n o

) ) ) ) ) )

------(5,897 (5,897 97,508 63,624 (64,043 (64,043 (39,362 (52,695 122,216 inancial

F $ $ nstruments Unrealized

I Gains (Losses) Gains

) ) ) ) ) ) ------

8,954,907 1,059,732 (1,059,732 (40,844,007 (40,844,007 (32,948,832 (32,948,832 (31,889,100

$ $

Treasury Stock

a ) ) ------59

1,534 1,534 1,328 2,862 2,862 (6,6 (3,797

$ $

Net Loss Not Loss Net Pension Cost Pension Recognized

) ------5,764 5,764 (5,829 12,076 17,840 17,840 12,011

$ $

Cumulative Translation Adjustments

) ) ) ) ------

(18,116 (181,155 Total 9,560,668 (7,601,851 25,959,268 18,158,146 15,371,386 33,529,532 1 13,888,862 33,449,530 (13,968,864

$ $ .

) ) ) ) ) ) ------1 8,116 86,819 56,744 (1

(661,300 (181,155 2,344,627 2,266,755 (7,601,85 (1,537,138 10,720,230 15,371,386 17,716,013 13,888,862 16,155,617 (13,968,864

$ $

Unappropriated

) ) ------6 - Retained Earnings Retained eserve R (86,819 (56,744 3,493,563 3,406,744 3,406,744 3,350,000 3,350,000

$ $

Special

------have been expensed and deducted from 2008 earnings 2008 from deducted and expensed been have eserve R 661,300 1,537,138 11,745,475 12,406,775 12,406,775 13,943,913 13,943,913

$ $

Legal Legal

) ) ------(147 2,578 (3,254 27,095 134,541 8,785,159 8,785,159 3,485,732 12,297,839 12,297,839 12,431,704

$ $

Capital Surplus

115

------

Chap. 8 Financial Report ssued I 38,009,254 38,009,254 38,009,254 38,009,254 38,009,254

$ $ Capital Stock Capital

Authorized and

)

ck options ck 2008

January 20, 2010 20, January method method investments AND - method investments

2009 , ,

BER

cash

- ations shares held by heldsubsidiaries by shares ations NT$2.54326 per share per NT$2.54326 share per NT$4.68704

- - DECEM

he bonus to employees of $41,470 thousand and the remuneration to directors and supervisors of $414,697 thousand $414,697 of thousand supervisors and directors to $41,470the and of remuneration thousand heemployees to bonus ENDED ENDED

hdated Deloitte Touche & audit report Legal reserve Legal reserve special of Reversal directorsRemuneration supervisors and to Bonus to employees Cash dividends reserve Legal reserve special of Reversal Cash dividends TAIWAN MOBILETAIWAN CO., LTD. EQUITY STATEMENTS SHAREHOLDERS' OF CHANGES IN YEARS JANUARY 1, BALANCE, 2008 earnings 2007 the of Appropriation appropriation after Balance issued of shares Buyback equity in equity of change on Adjustments Disposal the of Corpor net instruments, on gain financial Unrealized options stock employee from Compensation cost recognized in income 2008Net DECEMBER 31,BALANCE, 2008 earnings 2008 the of Appropriation appropriation after Balance equity in equity of change on Adjustment treasuryto of stock employees Transfer net lossUnrealized instruments, on financial sto employee from Compensation cost recognized in income 2009Net DECEMBER 31,BALANCE, 2009 Note: T part thestatements. notes of financial an accompanying integral are The (Wit (In Thousands of New of Thousands Dollars) (In Taiwan WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) - -

11,296 (11,142 (18,116 124,754 652,276 640,980 (434,500 (900,000 (181,155 (919,064 (215,049 (356,271 2008 8,000,000 6,100,000 2,463,439 1,544,375 2,353,728 7,500,000 5,907,774 5,336,454 (Continued) (3,403,331 (7,601,804 (2,500,000 (1,594,753 (1,059,732 31,889,100 (10,954,391 (11,997,787 (22,718,880

$ $ $ $ $ $ $ $ $ $

) ) ) ) ) ) ------42

2,876 10,849 16,685 299,872 482,409 465,724 302,383 (487,333 2009 3,700,000 1,056,478 1,544,375 1,057,0 3,994,139 3,500,000 4,546,368 4,851,627 (5,082,512 (7,500,000 (5,200,000 31,889,100 (13,968,840 (21,601,641

$ $ $ $ $ $ $ $ $ $

8 -

other

payables term borrowings payable term bills notes and - -

term liabilities term

merger with subsidiaries merger the Corporation's shares held by its subsidiaries to subsidiaries its by held shares the Corporation's payable

116 term borrowings term

- term investments accounted for using the equity the equity for using accounted investments term borrowings term

- - excluding interest capitalized interest excluding nds payable

MOBILE CO., LTD. CO., MOBILE

Chap. 8 Financial Report tax paid e (decrease) in short e (decrease) Net cash used in investing activities investing in used Net cash activities financing in used Net cash equipment and property of acquisition for paid Cash CASH INVESTING AND FINANCING ACTIVITIES - method stock treasury Increase in long in Increase from received Cash paid dividends Cash in bonds Decrease long in Decrease in short (decrease) Increase employees to stock treasury of Transfer Increas deposits in guarantee (decrease) Increase reduction Capital stock of treasury Buyback of bo Issuance long in Increase employees to Bonus supervisors and directors to Remuneration paid Interest capitalized interest Less paid Interest Income capital reduction subsidiary's from Receivables long of portion Current of Reclassification equipment and property of Acquisition in other (increase) Decrease liabilities in other (increase) Decrease TAIWAN FLOWS OF CASH STATEMENTS ACTIVITIES FINANCING FROM FLOWS CASH NET DECREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR YEAR OF END EQUIVALENTS, CASH AND CASH FLOW INFORMATION CASH OF DISCLOSURE SUPPLEMENTAL NON CASH INVESTING AND FINANCING ACTIVITIES YEARS ENDED DECEMBER 31, 2009 AND 2008 AND 31, 2009 DECEMBER ENDED YEARS Dollars) Taiwan New of (In Thousands

) ) ) ) ) ) ) ) ) ) ) ) 970 470

1,680 5,447 (2,229 (9,617 (9,842 (2,716 21,701 15,732 11,532 71,901 10,346 67,594 48,301 (33,617 331,247 860, 627,260 469,193 393,574 524,341 2 255,000 (451,171 (459,877 (243,408 (305,684 (148,091 2008 6,163,877 3,245,715 1,116,290 1,238,504 2,152,688 (Continued) (4,092,481 (5,336,454 15,371,386 25,203,147

) ) ) ) ) ) ) ) ) ) ) ) ) ) -

9,740 2,531 5,348 4,571 9,611 5,356 4,653 (2,633 (1,686 15,540 82,779 10,176 (12,213 (17,199 (40,561 (45,000 977,088 866,210 601,127 108,153 137,027 145,739 (358,101 (107,018 (314,970 (660,910 (165,579 (213,995 2009 7,020,517 5,525,230 1,529,902 (3,044,360 (4,851,627 13,888,862 26,196,820

- 7 -

method investees method

rty and equipment rty

third parties third parties related

- -

third parties parties related

- -

ivable ivable

t income recognized under the equity method, net method, equity the under recognized t income

me Notes receivable Notes receivable Accounts rece Accounts receivables Other receivables Other Inventories Prepayments assets current Other payable Accounts taxes payable Income expenses Accrued payables Other receipts Advance liabilities current Other activities operating by provided Net cash Depreciation equity from received dividends Cash Investmen net and equipment, of property retirement and Loss on disposal taxes income Deferred Amortization debts Bad options stock employee from recognized cost Compensation on inventories loss of) (recovery for Provision loss Impairment cost Pension expenses other to transferred and equipment Property liabilities and assets in operating Net changes activities: Net inco operating by provided tocash net income net reconcile to Adjustments equipment and property of Acquisition charges deferred in Increase net investees, to provided in financing (increase) Decrease assets in other (increase) Decrease prope of disposal from Proceeds reduction capital investees' from Proceeds deposits in refundable (increase) Decrease costs software computer in Increase TAIWAN MOBILE CO., LTD. CO., MOBILE TAIWAN FLOWS OF CASH STATEMENTS Dollars) Taiwan New of (In Thousands ACTIVITIES OPERATING FROM FLOWS CASH ACTIVITIES INVESTING FROM FLOWS CASH YEARS ENDED DECEMBER 31, 2009 AND 2008 AND 31, 2009 DECEMBER ENDED YEARS WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

services.

current. Current liabilities are interpretation interpretation of the two versions, - accepted accepted in the ROC. In conformity

Counter Securities Exchange (known as GreTai - employees, respectively. employees, and 2,543 2,496 t of an annual license fee consisting of 2% of total

the -

- 10

current. -

Liabilities and Assets current on the ROC Over -

ading directors directors and supervisors, impairment loss on assets, etc. Actual results may tr

eaders, eaders, the accompanying financial statements have been translated into English

lude lude cash and cash equivalents, assets held for trading and those expected to be converted nying nying financial statements have been prepared in conformity with the Guidelines Governing language financial statements shall prevail. shall financial statements language remuneration remuneration to - value value of inventories, depreciation, pension, allowance for deferred income tax assets, bonus to DED DECEMBER 31, 2009 AND 2008 AND 31, 2009 DECEMBER DED rovide services from the issuance date of the license to December 31, 2018. to December license the of date the issuance from services rovide ORGANIZATION AND OPERATIONS Taiwan Mobile Co., Ltd. was incorporated in the Republic of China (ROC) on Corporation’s February shares 25, began 1997. The The Corporation’s services Telecommunications (DGT) of are the ROC. under The license allows the years the from Corporation to 1997 onwards. provide services for type 15 It also entails I the paymen license issued by the Directorate General of wireless wireless communication service revenues. generation (3G) concession operation license issued by the On DGT. March The 3G 24, license allows the Corporation to p 2005, the Corporation received the third had the Corporation 2008, and 31, 2009 of As December

Securities Securities Market) on September 19, 2000. On August 26, 2002, the Corporation’s shares were Exchange. listed Stock Taiwan the on communication wireless renders mainly The Corporation SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ACCOUNTING OF SIGNIFICANT SUMMARY Presentation Basis of The accompa the Preparation of Financial Reports Governing Business and Accounting, accounting principles generally by Securities Issuers, the Business Accounting Law, Guidelines with these guidelines, the Law, and principles, the Corporation is required to make assumptions certain estimates that and could affect the amounts of decline in allowance for doubtful accounts, provision for employees, losses on differ from these estimates. from differ For the convenience of r from the original Chinese version prepared and used in English version and the original Chinese the version or any difference in the ROC. If there is any conflict between the the Chinese as follows: summarized are policies accounting significant Corporation’s The Non and of C urrent Classification Current assets inc to cash, sold or consumed property within twelve and months from equipment the and balance intangible sheet date. assets are Other assets classified such as as non obligations held obligations for trading and those toexpected be the due within from months balancetwelve date. sheet as non classified are liabilities All other

1. 2. (In Thousands of New Taiwan Dollars, Unless Stated Otherwise) Stated Unless Dollars, Taiwan New of (In Thousands TAIWAN MOBILE CO., LTD. CO., MOBILE TAIWAN STATEMENTS FINANCIAL TO NOTES YEARS EN

415 570 322 5,107 38,355 35, 54,224 77,023 124,754 758,874 300,846 142,097 161,391 741,010 2,102,930 1,644,531 6,843,089 (Concluded) 11,548,518 10,807,508

$ $

117

Chap. 8 Financial Report

)

- 9 -

January 20, 2010 January

OF CASHFLOWS

ther accounts receivable accounts ther

TAIWAN MOBILE CO., LTD. CO., MOBILE TAIWAN STATEMENTS Dollars) Taiwan New of (In Thousands The Corporation merged with TransAsia Inc. Telecommunications on September 2, 2008. The book values of follows: as were the merger upon liabilities and the assets Cash receivable Accounts O Prepayments assets current Other and equipment Property assets Intangible assets Other payable Accounts taxes payable Income expenses Accrued payables Other receipts Advance liabilities current Other liabilities Other Net statements. financial the of part notes an integral are accompanying The dated report audit Touche & (With Deloitte YEARS ENDED DECEMBER 31, 2009 AND 2008 AND 31, 2009 DECEMBER ENDED YEARS WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

he and and 3 to

- to the

Leased Leased ns sale financial - the Accounting average method. average

for - - line basis over the - ted depreciation effective effective interest method

issued issued by of of the leasehold and the upstream transactio upstream operating operating gain or loss in the -

the

340 - o o 15 years; office equipment t 2

collectability he fair value of the instruments can be 3 to 5 years. - fered fered to the lessee upon maturity or estimated a a lease is identified as either an operating lease

”

g g fixed assets and restoring the leased premises housing 12 to its subsidiaries are deferred and included in deferred - in November 2008. in November line method over the estimated service lives, which range as - or loss is credited or charged to non

e e contract terms, the (ARDF) covered covered by agreements qualifying as capital leases are carried at the bargain bargain purchase price of s s

Accounting Accounting for Leases,

type of capital lease, leasehold receivables should be recognized as the “ - vables vables collected are periodically recognized as rental income during the lease publicly publicly traded and emerging stocks, etc, is measured at cost. The accounting - . Significant additions, renewals, betterments, and interest expenses incurred from from other determined method method investees that are not majority owned are deferred in proportion to the -

downstream downstream transactions - 20 years; and miscellaneous equipment equipment miscellaneous 20 years; and 50 to 55 years; equipment telecommunication -

- pre

ng ng non sulting gain or loss of an investment sold is determined by the weighted the by is determined sold investment an of loss gain or sulting

118 Leases

Chap. 8 Financial Report reimbursable costs to be incurred by the lessor. the by incurred to be costs reimbursable at Cost Carried Assets Financial If there is active no for market an instrument and equity a fair reliable value cannot be estimated, the equity instrument, includi income income (loss) and recorded as other liabilities (assets). Gains or losses on the Corporation by equity Gains or losses from with transactions through realized are sales until these the investees in percentages ownership Corporation’s third parties. re the and cost The for the dividends from financial asset carried at cost is the same as that for an available asset. Impairment losses are recognized if a decrease in t p roperty and equipment lower of the present value of future minimum lease payments or the market leases. the of dates starting value of the property on the For cost associated with dismantling and relocatin objectively related to an event. an event. to related objectively allowed. not is losses impairment of Reversal Others to Leased Assets and Equipment and Property Property and equipment and assets leased to others are accumulated stated at impairment cost less accumula during the construction period are capitalized, while maintenance and repairs are expensed. a as and accrued assets fixed to the as an addition recognized be should state the previous to assets our fixed potential liability accordingly, according to the Interpretation No. 2008 5 years; leased assets assets leased 5 years; Research and Development Foundation Foundation Development and Research lease. lease. The excess of total leasehold receivables over the present value of leasehold receivables should be deferred as unrealized interest income, and amortized as interest income by residual residual value. For a financing sum of present value derived from each future rental receivable based on an implicit interest rate of t collection. upon each follows: follows: buildings Depreciation is calculated using the straight or a capital lease based on the leas non - The asset held under an operating lease is stated at cost, and depreciated on the straight In accordance with SFAS No. 2, period of disposal. of period for Accounting Upon sale or retirement of property and removed from the accounts, and any equipment, gain the related cost and accumulated depreciation are estimated estimated useful life. Recei contract. contract. At the inception date of receivables plus the a capital lease, total leasehold receivables shall be recognized as all rental

as as current

aired. aired. If the pplies pplies the same es are stated at the

ofit or loss when an

term term investment by the equity method - ents ents the excess of the cost of acquisition dividend dividend date, but are accounted for as -

on the ex

- 11

- quired with repurchase rights and having quired rights with repurchase maturities and having of up to three recognized recognized as extraordinary gain. Starting January 1, 2006, the Equity Method Equity average average cost. Before January 1, 2009, inventori -

sale financial assets are recognized at fair value plus transaction costs. the -

ed r

fo - term bills ac bills term n comparing cost and net realizable value, inventories are evaluated by - hort

ubtful accounts is ubtful accounts on theprovided basis of past and an experiences of evaluation the aging

sale Financial Assets Financial sale - cises significant influence on an investee are accounted for under the equity method. equity the under for accounted are investee an on influence significant cises sale financial asset is derecognized from the balance sheet. The purchase or sale of the -

for - for - term term investments in which the Corporation owns 20% or more of an investee’s outstanding voting

- current assets (except for financial assets not under method, equity assets for disposal, income deferred calculated based on the new number of shares. number new the on based calculated - n accordance with the newly revised Statement of Financial Accounting Standards (SFAS), the cost of Cash Equivalents Cash bonds and Government s months from the date of purchase are classified as cash equivalents, whose carrying value approximates fair fair value approximates ascarrying cash the whose from months date equivalents, classified are of purchase value. Available On initial recognition, available available When subsequently measured at fair value, the fair value changes are recognized directly in equity. cumulative The gain or loss that was recognized in equity is recognized in pr Long exer or shares I acquisition is subjected to an initial analysis, and goodwill repres unamortized unamortized balance of the excess of the acquisition cost of the long over over the fair value of the identifiable net assets value. Goodwill is no longer amortized. of If the fair value identifiable net assets acquired non - exceeds the cost of investments, tax the assets and excess prepaid pension costs should or other be retirement benefit costs). assigned zero, to the If these remaining assets are excess all reduced should to be

over over the equity in the goodwill. as treatment accounting investee’s net assets value is also no longer amortized and a Cash dividends are recognized as dividend income financial instruments is recognized and derecognized using trade date accounting. date trade using and derecognized recognized is instruments financial reductions reductions to the original cost of investments if such dividends are declared attributable to periods on prior to the the purchase of investments. earnings of investees Stock dividends are not recognized Accounts for Doubtful Allowance Allowance for do date. sheet balance on the receivables of all and collectibility income income but are accounted for only as an increase re in the number of shares held. The cost per share is An impairment loss is recognized if there is objective evidence that a in equity. recognized is decrease such period, subsequent the in financial decreases loss of impairment amount asset is imp date. sheet the balance on price closing the ison based stocks listed of fair The value Inventories Inventories are recorded at weight lower of the cost or market value. realizable value. Market value Effective from is January 1, evaluated 2009, however, on inventories are the net stated at basis the lower of realizable of cost replacement or value. cost or net Whe Using for Accounted Investments individual items. individual WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 is

currency currency -

banks. gains gains and losses are in the year when the the when year in the major

except except for the differences

treated treated as treasury stock and

year are xes. xes. Deferred income tax assets and and development expenditures and monetary assets or liabilities carried at that cost carried or liabilities monetary assets provided for as income tax income for as provided -

- 14

- ce ce sheet date when the fair value was determined, and the monetary monetary assets and liabilities, any exchange component of -

shares shares held by its subsidiaries

ilities ilities do not relate to assets or liabilities in the financial statements, ervice ervice rendering process is completed or virtually completed, and current on the basis of the expected length of time before realized. before time of length expected the of the basis current on monetary monetary assets and liabilities in respect of which - -

ient ient to absorb the difference, the rest is recorded as a reduction of retained eet date, and the resulting exchange differences are included in profit or loss for are or for in loss included profit exchange eet differences and the date, resulting ive ive financial instruments are recorded in New Taiwan dollars at the exchange period period allocation method is used for income ta -

derivat - n foreign currencies are translated at the historical rates prevailing on the dates of

. current according to the classification of related assets or liabilities for financial reporting.

year ikely ikely than not such assets will not be realized. tax Deferred assets or liabilities are classified as period and intra - currency Transactions currency

- monetary monetary assets or liabilities carried at fair value that are denominated in foreign currencies are - transactions transactions of non the current Assets, liabilities, revenues or expenses denominated in foreign currencies as a result of foreign transactions. of dates on the rates prevailing Monetary assets or liabilities denominated on the prevailing sh balance in foreign currencies are translated at the exchange rates Income Taxes Income The inter arising arising on the retranslation of non resulting resulting exchange differences are included in profit or loss for the current Non retranslated at the rates prevailing on the balan credited credited to capital surplus from treasury stock. If the proceeds are less than the carrying value of treasury stock, the difference is debited to capital surplus from treasuryfrom treasury stock is stock. not suffic If the balance of earnings. capital surplus Foreign reclassified from investments accounted for using equity method to treasury stock. treasury to method equity using for accounted investments from reclassified If the proceeds on the disposal of treasury stock exceed the carrying value of treasury stock, the excess and liabilities are recognized for the lossoperating carryforwards. tax effects is tax Valuation provided allowance for deferred assetsincome to the extent of temporary differences, that more l unused tax credits and net current or non However, if deferred tax assets or liab or non as current classified are they Tax credits for certain purchases of equipment and research technology, method. the current by recognized are training personnel expense. tax year’s the current from or deducted to added are liabilities tax prior years’ to Adjustments is generated earnings tax of 10% on unappropriated Income earnings. the of retention the resolve shareholders Stock Treasury The purchase of issued shares shareholders’ equity. is accounted The Corporation’s for by debiting treasury stock, which is a reduction of recognized recognized directly in equity. For such non Recognition Revenue Revenues are recognized when the s earnings are realizable and measurable. measurable. and are realizable earnings as recognized are concurrently services of providing costs Related incurred. that gain or loss is also recognized directly in equity. directly that or is recognized loss also gain Non are denominated i transactions. of rates and ask of bid average the on based rates are exchange prevailing above The

7 to 3 recoverable recoverable line method

- over over 13 years its ht all all be expensed recognized. recognized. Any License License C. The 3G

- line method over -

line line method - ) is more than 3 years.

119 by by the straight employee employee stock options” by the same amount

Chap. 8 Financial Report -

and and deferred charge

line method over over line method -

- The value of stock option granted, the product of the are are amortized by the straight

13 - straight cost cost

3G services. services. 3G ions ions which falls on or1, January 2008 after SFAS should apply the

roperty and equipment, intangible assets, idle assets, assets leased assets assets, idle assets, intangible equipment, roperty and nts accounted for by the equity method. equity the by for nts accounted based Payment”. -

interior interior decoration

mainly mainly

not currently at used are in the stated lower not netof with value book currently realizable operations value, or investments investments accounted for using equity method ns. The contribution amounts of the pension costs under the defined contribution pension plan “Accounting “Accounting for Share ,

- ies based Compensation based -

Goodwill In accordance with the newly revised SFAS, of investme policy accounting goodwill is no longer amortized. Please refer to the Franchise Franchise refers to the payment for the 3G mobile telecommunication service concession is recorded at acquisition cost and is amortized and 9 months starting from the launch of launch the from starting and 9 months software Computer by amortized is cost software Computer

For the grant stock date opt of the employee Share No. 39 amount, amount, which indicates that an subsequent reversal of the impairment loss for the impairment increase in recoverable amount is recognized as income. exists, an impairment allowed. not is on goodwill loss impairment of reversal The loss should be Deferred charges, Charges Deferred over the estimated useful lives of the assets. of the lives useful estimated the over are recognized as current expenses during the employees’ service years. service employees’ the during expenses current as recognized are Pension Costs The pension costs under calculatio the defined benefit pension plan are recognized on the basis of actuarial over over the vesting period, and to increase “capital surplus accordingly. number number of vested stock options multiplies by the fair value of the option on grant date, sh years. Impairment Asset p (including assets value theof If carrying to others b. c. Idle Assets Propert the difference charged to current loss. Depreciation expense is computed using the straig Intangible Asset Intangible a. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

)

ship % of % 100.0 100.0 Owner

38,177

452,302

2008 2008 ( 2008 174,008 335,388 121,152 133,620 628,337

6,269,541 5,817,239 -

$ $ $

$ $ thousand thousand of the

2008

225,735 249,500

) Value

15,125,451 15,351,186 15,600,686 Carrying

21 December 31 December 31 December 31 December

$ $ 2,966,244

3,476

89,155

411,001 -

2009 2009 ( 2009 177,8 269,244 120,723 482,598

5,949,853 5,538,852

$ $ $

$ $ December 31 December

Asset Management Co., Asset Management Ltd. The 49.9 ship % of %

100.0 100.0 Owner

Second Second

2009 HC

211,974 192,615 9,353,920 9,758,509 9,758,509 Value EQUITY METHOD EQUITY Carrying CURRENT

- - $ $

THE 16 -

thousand. thousand. Under this contract, the Corporation would no longer

2008, the Corporation entered into an accounts receivable factoring

THIRD PARTIES THIRD

- 36,967 Co., Ltd. (WMT) Ltd. Co.,

SALE FINANCIAL ASSETS ASSETS FINANCIAL SALE term investments term

December December 31, - -

120 FOR -

commissions

Chap. 8 Financial Report

the the year ended

Chunghwa Telecom Co., Ltd. Co., Telecom Chunghwa TNH stocks listed Domestic receivable Accounts accounts doubtful for Less allowance Prepaid rents Prepaid insurance Prepaid Other (TCC) Ltd. Co., Cellular Taiwan Ltd. (TNH) Co., Horizons New Taipei Technology Media Wealth long for Prepayment aggregate aggregate selling price was $ receivable. on this risk the assume overdue accounts receivable, overdue which receivable, accounts had been written off, to contract contract with HC Second Asset Management Co., Ltd. The Corporation sold $ For AVAILABLE ACCOUNTS RECEIVABLE FOR USING ACCOUNTED INVESTMENTS PREPAYMENTS

. . . 5 6 8 7.

’

as ing ended

4,803 (hedging (hedging 25,923

have have been 521,224 485,439 391,879 115,107 account year 2008

1,544,375 8

$ $

were were previously as compensation

for for the derivatives ember 31 ember

0.12 Dec

5,833 45,139 21,999 517,071 265,000 202,000 2009 December December 31, 200 1,057,042 at at fair value, with subsequent remunerations

any applicable any discount, are applicable billed $ $

equity, equity, depending on the nature of the

’ measured measured

directors directors and supervisors

ilities (hedged position). (hedged ilities that that requires companies and their subsidiaries to

- evidence evidence that the net loss recognized in shareholders added services, net of - 15 -

rnings rnings or shareholders

in earnings, if gain or loss from the expected transaction of the

in ea

either

reclassified employees employees and remunerations to with repurchase rights repurchase with as as effective hedging instruments are

bonuses bonuses to

follows: follows: Gain or loss changes from in the fair value of which the derivatives, is recognized s equity, shall be ’

, 2008. that that qualify

those thousand thousand in net income and a decrease in basic earnings per share of $ starting starting from January 1, 2008. The mentioned bonuses and as appropriations from earnings. The adoption of this interpretation resulted in a decrease of

hand

term notes and bills notes term .

- banks in Cash rights repurchase bonds with Government Short deposits Time on Cash funds Revolving recognized are promotions to the Corporation’s pertaining costs subsidy phone and cellular Commissions Service Service from revenues wireless services and value rates. at predetermined usage. of minutes of on the basis recognized are services card Prepaid Expenses Promotion period. current the in basis accrual on an expenses marketing Instruments Financial Derivative Hedging Derivatives treatment treatment is as in shareholder The Corporation entered into interest rate swaps inverse floating interest rates (IRS) of liabilities, thus was contracts qualified to apply hedge accounting. to hedge against The cash flow risk from equity is expected to be not recoverable, the mentioned net loss should be reclassified in earnings as well. in earnings reclassified be should loss net mentioned the recoverable, not to be is expected equity Reclassification Certain accounts in the financial statements as of and for the year ended changes changes in fair value recognized hedged hedged position occurs. When there is objective hedge Accounting Hedge When hedge accounting is applied, gain or loss from changes in the fair value of the assets/liab that financial of by be offset shall instruments) reclassified to conform to the presentation of financial as statements 31, of and of for year tofinancial ended the December to conform presentation reclassified 200 9 . expenses REASONS AND EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES ACCOUNTING IN OF CHANGES EFFECT AND REASONS In March 2007, the ARDF recognize issued an interpretation recorded recorded $ 342,125 December 31 December

CASH AND CASH EQUIVALENTS

3. 4.

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

) -

The 100% 100% a a come come or

41,980 Kbro Co., Kbro Co., ( 60,064 2008 2008 buy 3,003,228 1,131,233 4,092,481

2 , 2008. $ $

plans plans to ) ) -

December 31 December 31 December

(37,526 (33,120 50,324 2009 2009 3,115,006 3,044,360 expects expects to close the deal after $

$ $

s treasury shares (up to 15.5% of total ’

. owned owned subsidiary, WMT, - AT The Corporation CURRENT

equity equity method and the related investment in 100% . -

s financial statements. statements. financial the

NON - - The record date of the merger was September all all the cable TV business and of content distribution

audited

An An impairment loss of $9,740 thousand and $11,532 thousand were the Corporation’

settled settled using the Corporation

ost. ’ approval. ’ and the remainder in cash will will be

ies

assumed all the rights and obligations of T of obligations and rights all the assumed purchase purchase The

expand expand its CATV business, .

TCC TNH WMT TAT Equity in investees’ net gains or losses or gains net investees’ in Equity The carrying value of the investments under of basis the on determined losses were follows: as losses were or income investment Corporation’s The

To Corporation On July 31, 2008, the Corporation as the surviving Board company. of Directors of the Corporation resolved to merge TAT, with the Inc. Telecommunications TransAsia stake stake in Ting Co., Cheng Ltd. to acquire Ltd the authorit obtaining outstanding outstanding shares), Bridge Mobile Pte Ltd. Pte Mobile Bridge . stocks unlisted Foreign All the financial statements Corporation. the of statements of subsidiaries have been consolidated into the consolidated financial COST AT CARRIED ASSETS FINANCIAL Because there is no active market quotation investments are and measured a at c reliable fair value can not be estimated, the above recognized for the years of 2009 and 2008, respectively. 2008, 2009 and of the years for recognized e d.

, WMT March

350 , 000 shares shares by

thousand, thousand, thousand, thousand, lular Co., on

Corporation sued

000 , 150 , 000 ), ), the its is par value 9 thousand. 26 , 200 thousand thousand based on its 100%

thousand thousand based on its 100%

the cancellation of

owned owned by Taiwan Cel capital capital by $1, capital capital by $1, - , 000 return to investors. to investors. return record the On return to investors. to investors. return record the On ock”, ock”, the Corporations’ shares held 500 , 000 its Based Based on the revised SFAS No. 5, its owned owned by TCCI) and TFN Union 150 , 000 - 3 , 000

December 121 ( cash cash cash cash

receive $ receive Treasury Treasury St Chap. 8 Financial Report , 5 00 thousand shares at $10 into into capital, which increased year BOT contract with Taipei City Government. City Taipei with contract BOT year

18 .

resolved to: resolved

of -

), the subscribed for Corporation all the shares and

17 8 - ance of of capital reduction was entitled to entitled was Accounting Accounting for capital surplus thousand shares and the and shares thousand thousand shares and the and shares thousand 1, 200

of capital to shareholders through owned owned by TFN), collectively held 811,918 thousand shares of the - from from

of the Corporation of April 00 , 000 15 , 000 (

s ’s Board of Directors of Directors ’s Board Taiwan Taiwan Fixed Co., Network Ltd. Taiwan through (TFN) Cellular indirectly Note 19 for details. for 19 Note in CC ’s ’s Board of Directors decided to reduce

thousand thousand thousand ’s Board of Directors decided to reduce

On On the record date CC 9 , T

8 ), the Corporation was entitled to receive $1, ares ares of this transaction should be treated as deferred gains. As of December 31, , T ), the Corporation was entitled to receive $1, January 15, 2009, TNH signed a 50 signed TNH 15, 2009, January 8

8 , T owned subsidiaryowned 00 8 -

On . . , 000 3,500 24 , 200 1, 200

$ 2 , 300 417

1, 200 CC CC

18 , 2

29 , 200 Board Board of Directors resolved the issu

. 8 . On the record date term term Investments in Equity Securities,” unrealized gains and losses on downstream transactions s s - May August educe $ ransfer term term investment value by the same amount as treasury stock account value of $31,889,100 ( July April based on its 100% ownership in TCC, in ownership 100% on its based 230,042 thousand on the record date of December 25, 2009; 25, of December record date the on thousand 230,042 R thousand shares. T December

he Corporation established he TNH established Corporation on December 31, 2008 with initial ofinvestment $249,500 thousand, s still a wholly s still On Taiwan Cellular Co., Ltd. Co., Cellular Taiwan resulting in the cancellation of 1 cancellation in the resulting date ( 2) thousand. $1,238,378 was Corporation the by recognized credits deferred of amount 2009, the The invested Corporation Co. Ltd. (TCC) with shares of the former “Long TFN as investment. be deferred. should of price investment the cost and carrying original the between the Thus, difference the former TFN sh As of December 31, 2009, TCC Investment Co., Ltd. (TCCI, 100%

resulting in the cancellation of 1 cancellation in the resulting date equity in T in equity On Wealth Media Technology Ltd. Co., Technology Media Wealth WMT’ TNH is established to invest in a property development project located in site. Factory the old Songshan Tobacco Ltd), TCCI Investment & Development Investment Co., Co., Ltd. Ltd. (TUI, 100% (TID, 100% Corporation. Based on SFAS No. 30, “ by subsidiaries are treated as treasury stock. long - This accounting treatment reduced the thousand. Corporation’s to refer Please T 49.9% ownership. representing equity in T in equity 1) On i

2 8 , 200 Taipei New Horizons Co., Ltd. Co., Horizons New Taipei . . a b . c WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

) ) ) ) ) - - - -

2.417%

- - - (54,493 (94,572 (84,447 505,217 138,679 2008 (136,721 (187,519 2008 2008

2,495,563 2,304,349 1,300,000 1,300,000

$ $ $ $ $ $ $ $

2.124%

) ) ) ) ) )

- -

December 31 December 31 December 31 December

(128 0.60%

- (10,591 (35,929 (43,053 427,548 222,137 300,000 299,872 2009 (129,343 (126,429 2009 2009 0.27% 2,338,2 2,198,291 5,000,000 5,000,000 2010.1.29

2009.12.10 $ $ $ $ $ $ $ $ 0.57%

20 -

term notes and bills payable bills andterm notes

- related parties

122 -

loans loans

TERM BORROWINGS TERM BILLS PAYABLE AND NOTES TERM - - allowance for value decline value for allowance Chap. 8 Financial Report

Cost depreciation Less accumulated impairment Less accumulated Cost Less depreciation Less accumulated impairment Less accumulated Corporation Finance Bills Grand others to leased Assets assets Idle Unsecured institutions financial from loans Unsecured rate Interest payable paper Commercial on short Less discount value Net carrying rate Interest Period ASSETS LEASED TO OTHERS AND IDLE ASSETS IDLE AND TO OTHERS LEASED ASSETS SHORT SHORT . . .

1 2 1 3 1 4

from

69,825 343,780 420,303 920,166 8.50% 8.50% and 2008

28,153,739 29,907,813

$ $

December 31 December

21,298 to operating revenues in revenues the to operating The The critical assumptions to

392,953 485,455 897,906

2009 . 28,637,272 30,434,884 ’s ’s management believes that the

cape cape into consideration, operating

$ $ .

amounted amounted to $16,685 thousand and used used the discount rate of

2.4% to 2.76% 2.4% to

9 and 2008 Corporation 9 and 2008 9 and Corporation , 2009 and 2008

, the - Mei, Taoyuan for the amount of $12,000 thousand rates ranging from from ranging rates - 19 - generating generating unit, the - generating generating unit in 200 mptions mptions used to estimate recoverable amounts as long as these - December December 31

cash capitalization ACCUMULATED DEPRECIATION ended December 31, 200 31, ended December cash -

s ended ended the

rporation o rporation merged with TAT, resulting in the recognition of goodwill at the

years years e

in calculating the asset recoverable amounts recoverable asset the calculating in commissions, commissions, customer retention costs, customer service costs and bill processing

viewed viewed as one

008, the C , respectively, with respectively, , as

nterest nterest for th

s which which

7.48%, respectively, 7.48%, Assumptions on discount rate discount on Assumptions For the years ended 31, December 2009 and 2008 revenues revenues were estimated on the basis minute. per revenue and average calls and outgoing incoming of the projected changes in subscriber numbers, minutes of expenses and costs operating on Assumptions The estimates of costs were based on the projected changes in subscriber numbers. and were based expenses oftheon the proportion actual and expenses costs The estimates of remaining costs Assumptions on operating revenues operating on Assumptions After taking changes in the telecom industry and competitive lands financial statements. 2009 financial

Building equipment Telecommunication equipment Office assets Leased equipment Miscellaneous carrying carrying amounts of these assets for operating and goodwill will not exceed their recoverable amounts even if there are changes in the critical year the for reasonable are changes assu Based Based on the key assumptions of $11,296 thousand $11,296 b . The Corporation bought farmland located in Yang TFN, based on the needequipment. telecom deploying for an only individual Because could be the owner of farmland according to related regulations, its contract. ownership is under the landholder through a fiduciary c. Capitalized i book value of $6,835,370 thousand. of $6,835,370 value book In conformity with SFAS No. 35, “Accounting for Asset Impairment,” the Corporation engaged in mobile service, a. GOODWILL On September 2, 2 follows: as were and goodwill assets of operating amounts recoverable the evaluate PROPERTY AND EQUIPMENT . .

1 10

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

) ) )

Please Please annual annual certain certain loan -

08 e 2,891 8,613 2,346 2,229 . 008 ( ( usand usand and 11,387 2 20

( 5,200,000 2.5916% $ $

Based Based on contract

borrowing

based based on semi

) 108,662 tho December 31 December

nd. The pension fund is 537 the the Corporation suspended TFN’s TFN’s Upon Upon maturity, th

3,127 2,531 10,656 11,789 2009 2009 (

s led by Chinatrust Commercial Chinatrust Commercial s led by Years Ended December 31 December Ended Years $ $

the Corporation to maintain

9 bank ith respect to with tangible tangible net asset ratio ount equal to 6% of the employees’ monthly wages is due upon maturity.

- , 2009 and 2008, respectively. 2008, 2009 and , contract contract requires of of Taipei City Government,

months months before retirement. The Corporation contributes

22 - is summarized as follows: summarized is The six 10 . principal , the Corporation and its subsidiary, TFN, entered into a . the repayment liability w

December 31 December of $13,500,000 thousand thousand of $13,500,000 interest coverage, and

provides provides for a defined benefit pension plan. Benefits are based on the

credit credit limits s ended s ended

also bears . The tenor is three years starting from May 20, 2008. its LSA ) by by Department of Labor year thin thin term working capital -

Approved Approved

with a joint credit line joint with a

he he Corporation medium T on the defined benefit pension plan plan pension benefit defined the on

thousand for the the for thousand . TERM BORROWINGS TERM - o n February 21, 2008

Labor Labor Standards Act ( provide cost Service cost Interest assets pension of return Projected Amortization cost Pension Pension cost Pension

o nformation loans Unsecured rate Interest financials financial financial ratio including debt ratios, refer to Note 24 for further information. further for 24 to Note refer 20 January 2007 to February from contributing I Bank term, term, interests are payable monthly and the allowed allowed to revolve wi to the employees’ individual pension accounts. $ 107,848 The contributed amount was $ PENSIONPLAN The Labor Pension Act (LPA) provides for a defined 2005, the Corporation should contribute monthly an contribution am pension plan. Starting from July 1, The syndicated loan loan syndicated length of service and average basic pay of the a. T monthly an amount equal to 2% of the employees’ monthly wages to a pension fu name in the and deposited committee’s fund committee an pension by administered independently managed in the Bank of Taiwan (formerly in the Trust Central of China, which was merged into the Bank of Taiwan in July 2007.) LONG

. 18 17.

. The The . s current - 8,000,000 4,000,000 4,000,000 8,000,000 Amount

% per annum $ $ $ Non

year year bond

2 . 88

- nterest payable payable nterest 2008

by by the Corporation

year year domestic unsecured -

Terms

five

7,500,000 Current

a coupon rate of

123

ent on maturity date, interest payable payable interest date, ent on maturity bonds bonds were repaid December 31 December

emiannually emiannually fourth and fifth years, interest payable annually payable interest years, fifth fourth and s payable interest years, seventh and sixth annually s Chap. 8 Financial Report current made made in the fourth and fifth years with equal - the in each thousand of $1,250,000 Repayment Repaym the in each thousand of $2,500,000 Repayment i date, on maturity Repayment 8,000,000 ,000 8 ,000 thousand

, 200 9 .

$ Non

corporate corporate

3 1

,000 thousand 10 ,000 a

housand. housand. The bonds have four types different based on

will will be 21 ed - 2009

corporate bonds are as follows: bonds are corporate -

year year bonds and Types III and IV are seven - Rate 6M LIBOR 6M LIBOR 6M LIBOR mention December - -

- Current mentioned mentioned

- $ 2.60% 5.21% 2.80% 5.75%

, 8 , the Corporation issued $

thousand as of as of thousand the above

2,500,000 2,500,000 5,000,000 5,000,000

15,000,000

Principal 1 4 , 200 respectively. thousand, . $4,000,000

$ $ 832,908

November omestic unsecured bonds unsecured d omestic I Type II Type III Type IV Type Year 2012 2013 On December 13, 2002, the Corporation issued $15,000,000 thousand of with each bond having a face domestic value of $5,000 t unsecured bonds, terms terms and dates. Types I and II both consist of A to L tranches. to M tranches. Types III and IV both consist of Types A I and II are five 1st interest rates and payment terms are as follows: are as terms and payment rates interest bonds, bonds, with each bond a having face of value $ December 2009. December bonds unsecured 2nd d omestic simple interest due annually. i.e Repayments installments, of repayments Future On The last installments of the above CC’s CC’s new policy effective on April 1, 2007. The guaranteed advance receipts from prepaid card . bonds unsecured Domestic b. a

ADVANCE RECEIPTS The Corporation entered into a provided contract performance with guarantee Mega for advance International receipts Commercial from N Bank prepaid Co., card Ltd., customers in which accordance $ were customers with

BONDS PAYABLE

. 15. 1 6

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

13, 2008 13, 2008

dends are are dends

$2.54326 For Fiscal For Year 200 Year dividends dividends if

June

made made from the

8 (NT$) oved oved by the Board

(net (net of the bonus to

to to employees, directors Dividend Per Share Dividend

$4.68704

For Fiscal For Year 200 Year is is available on the Market

19, 19, 2009 and

)

7 approval approval differs from the amount

18,116 on June ’ (86,819

661,300 181,155

7,601,851 8,375,603 and remuneration For Fiscal For Year 200 Year

$ $ AGMs

after after setting aside 10% net income as legal

) - - bonus

8 s P&L. If employee bonuses are paid in the form

’

- (56,744

1,537,138 earnings, earnings, 24 13,968,864 15,449,258 - Appropriation of Earnings Appropriation For Fiscal For Year 200 Year

n imputation credit account (ICA) is maintained by the meeting meeting (AGM), the difference will be treated as changes in $ $

’

, the bonuses to employees and remuneration to directors and If If the Board of Directors

9 . d be resolved by the shareholders in the following year and given adjusted adjusted in 2010 sing sing retained earnings. Any remainder is available for dividend , 200

on of $41,470 thousand to directors and supervisors. and to directors thousand of $41,470 on es the current year December December 31 earnings earnings appropriations resolved by the proposed proposed by Board of Directors and approved at 2009 AGM

200 7

124 s ended year 2008 2008 and

Chap. 8 Financial Report supervisors bservation Post System website of the Taiwan Stock Exchange. Stock Taiwan the of website System Post bservation reserve legal of Appropriation reserve of special Reversal and directors to Remuneration employe to bonus Cash dividends Cash

and supervisors Information on the appropriation of the 2008 The shareholders on June and remunerati employees 19, 2009 resolved to distribute 2008 bonus of $414,697 thousand to were as follows: were as employees employees and remuneration to directors and supervisors) shall be adjusted in supervisors supervisors were acc rued based on a respective 3% and 0.3% of net reserves. income The significant difference between annual accruals and the amount appr The Corporation’s dividend distribution is based Corporation first projects future capital needs on through a capital budgeting process and then provides for the availability of excess funds. the projected That capital is, needs the by distribution. u However, the amount in of dividends to a single year. be distributed stock dividends of divi the and percentage The type amount, final should not be more than 80% of the total subject subject to the approval by the Board of Directors and shareholders based on actual earnings and capital year. a particular in the Corporation of requirements A regulation issued by the Securities and Futures Bureau requires a special reserve be unappropriated earnings, equivalent to the debit balance of any account shown in shareholders’ equity. reverses. balance debit net the that extent the to be reversed will appropriated reserve special The of company shares, the number of employee bonus shares shall be derived from dividing the approved bonus amount by price its closing one day prior to the AGM, adjusted for cash and/or stock The appropriation of earnings shoul ratified at the annual general shareholders accounting estimation and will be any. The effect to in the financial statements of that year. that of statements financial the in to effect Under the Integrated Income Tax System, ROC resident shareholders are allowed a income tax credit for tax the paid by the Corporation. A Corporation for such income tax and the tax credit allocated to each shareholder. each to allocated credit tax the and tax income such for Corporation For the

) ) ) ) ) - -

421

7,241 41,205 36,643 12,224 ( 2008 2008 208,618 208,618 178,880 387,498 428,703

2.75% 3.00% 2.75% ( ( ( (

$ $ $

) ) ) ) ) - -

However, capital surplus surplus capital However, December 31 December

term term investments not may 399 - lders’ meeting. lders’ 6,726 9,693 20,790 18,222 ( 2009 2009 252,211 252,211 158,534 410,745 431,535 2.00% 2.50% 2.00% ( ( ( (

Years Ended December 31 December Ended Years $ $ $

irements, should be distributed as follows: as be distributed should irements,

up to 0.3% -

- Also, Also, the capital from surplus long

ng present values ng restricted restricted to a certain percentage of the capital surplus and may be made 3%

- ost

1% -

pension cost pension

ervice s

rior rior

cted benefit obligation benefit cted vested - Corporation’s Corporation’s Articles of Incorporation provide that a 10% legal reserve should be set aside from roje

Dividends and bonus to preferred shareholders to preferred and bonus Dividends Remuneration to directors and supervisors supervisors and directors to Remuneration Bonus to employees employees to Bonus Remainder, to be appropriated as dividends as determined in the shareho the in as determined dividends as appropriated to be Remainder, recognized net gain or loss or gain net recognized Vested Non Accumulated salaries future on based benefits Additional P

Benefit obligation Benefit assets plan of Fair value Funded status obligation transition net Unrecognized Unrecognized Un cost pension Prepaid benefit Vested determini in used rate Discount rate increase salary Future assets plan on return ofrate Expected generated generated from the excess of the issue price over issued the par for value of new capital stock, capital including the and stock dividends, the and this transfer is buyback of treasury stock, only within limits may prescribed each time. be transferred to capital as stock Capital surplus Capital only be useda to offset deficit. may Act, surplus capital Under the Company be used for any purpose. any for be used policy dividend and earnings of Appropriation Changes in the prepaid in Changes assumptions Actuarial The the annual net income after the reduction of accumulated deficit. The remainder, requ business or less regulations or laws on relevant based special reserve 1) 2) 3) 4)

. c b. a. b. d.

SHAREHOLDERS’ EQUITY SHAREHOLDERS’

. 19

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

) ) ) )

) ) ) ) ) )

assets assets

income income 5,221

(9,912 (3,105 (5,897 57,560 54,455 61,864 376,262 331,247 647,174 (38,749 (82,854 (39,362 2008 2008 ( (112,901 100,613 (122,216 4,944,264 4,405,711

(1,023,120

$ $

statutory

deferred tax

) ) ) )

its ) ) - - d 253

corporate corporate 5,932 9,169 (17,718 (10,002 54,455 63,624 61,864 63,624 483,947 977,088 (61,864 2009 2009 (761,090 ( 122,216 (122,216 4,533,113 4,243,629

Years Ended December 31 December Ended Years 31 December Ended Years

$ $

$ $ recalculate

orporation orporation

was was amended to reduce

The C s for the years ended December 31, 2009 and 2008

- . by the equity equity the by

uity 26 - ) recognized ) Income Income Tax Law

losses

(

on financial instruments financial on

year year year

)

20%, 20%, effective from 2010

losses on financial instruments on financial losses

. to

bills losses

sale financial assets sale financial 25% equity method method equity - term - gains ( gains gains or gains ’ adjustment

for

s - from

using using Investment income from domestic investees accounted for accounted investees domestic from income Investment Other

Balance, beginning of beginning Balance, in eq directly recognized changes Fair value of beginning Balance, in equity directly recognized changes Fair value method of beginning Balance, in equity directly recognized changes Fair value differences Permanent differences Temporary hanges in unrealized gains gains in unrealized hanges Available hedge flow of cash (losses) gains in unrealized Changes C Unrealized (25%) rate tax at statutory income on pretax Tax of effects tax (deduct) Add tax income Deferred tax credits Investment year Prior on short Tax tax expense Income The reconciliation of imputed income taxes on pretax income at statutory tax rate to income tax expense tax expense income to tax rate at statutory income on pretax taxes income imputed of reconciliation The follows: aswas Unrealized Unrealized Unrealized gains or losses on financial instrument as follows: were summarized In In May 2009, the Article 5 of the tax rate and liabilities in accordance with the expense tax income amended Article and recorded the resulting difference as an

. a.

e INCOME TAX EXPENSE TAX INCOME

ceed bought bought ousand. ousand. 24,193 thousand thousand 811,918 811,918 Shares Ending

by by $3,485,732

3,254 3,254

- -

50,663,659 th 50,663,659 $ s stocks s heldstocks by TCCI,

thousand thousand shares (Shares in Thousands) (Shares ’

24,193 556,332 of $12,000,000 thousand, Decrease p er Share) and dividend, the Treasury Treasury Stock”. Although

24,193

- - - of of treasury stocks can not exercise

the Corporation 125

24,193

increase increase in capital surplus Increase an lateral lateral and should not exercise shareholders’ Accounting Accounting for

Chap. 8 Financial Report ation ation transferred

- per per share, resulting in a reduction of $ owned owned by the were Corporation) - (Note) 24,193 25 - 811,918 43.8

The Corporation’s Board of Directors resolved the record 1,368,250 Shares

9 , the Corpor 1 00%

Beginning

at $

suspension suspension period started from February 1 to 19, 2008, and new ies

he carrying he and carrying market value of

9 8 Trading Trading subsidiar 9 ,

, the Corporation’s shares held by subsidiaries were reduced by 256,332 008, 008, TFN sold 300,000 thousand shares of the Corporation for $13,509,828

yees

, 200

in capital in excess of par value and realized capital surplus. In addition, the

- re re treated as treasury stock in the consolidated financial statements, the shareholders (all are the by cash by

ended December 31, 200

In In addition

. December 31, 200 31, December year

December 31 December

and ded reduction ended December 31, 200 31, December ended Purpose of Buyback of Purpose

Transfer of stock to employees stock of Transfer For the back from the market to employees the voting right. the voting In the first quarter of 2 thousand. Disposal gain from the sales resulted in The Corporation reclassified $31,889,100 thousand from investments accounted for method using to equity treasury stock based on SFAS No. 30, “ are toentitled theirexcise rights on these for inexcept shares, injection participation capital cash. by In addition, based on the ROC Company Act, the shareholders these these shares a in capital surplus. in capital Under the Securities and Exchange Law, the buyback amount of treasury stock should not ex of the retained earnings, sum the not exceed cost should and the buyback shares, issued 10% of total additional paid Corporation Corporation should not provide treasury stock as col rights on those shares before transfer. before shares those rights on subsidiaries by held Shares As of TID and TID TUI thous thousand shares due to the Corporation’s capital reduction. capital Corporation’s the to due shares thousand

apital Year en employees to transferred To be subsidiaries by held Shares Year emplo to transferred To be subsidiaries by held Shares Corporation’s Corporation’s AGM resolved on representing 24% of June outstanding shares. 15, 2007, a capital reduction C To increase ROE (Return of Equity) and maintain stable EPS (Earnings date of December 1, 2007, and completed approved the by the authority. procedure for registration changes, which 20, 2008. February is from trading resumed shares already stock Treasury Note: reduction. capital before held Shares 1) 2)

d . c. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

d d If

the

and had had Tax T

file from from Such Such

4.66 4.65 5.18 5.17

After

$ $ $ $ also also disagreed disagreed

Income

income income tax

derived

AGM AGM of

Tax EPS (NT$) Mobitai Mobitai 6.09 6.07 6.67 6.65 should should be include at the

Before

$ $ $ $ shares shares

former former TAT Income

) )

The income income tax returns and dilutions dilutions

the balance sheet date. 9,846 8,515 on 2003

outstanding 2,979,311 2,989,157 2,966,368 2,974,883 Shares

. Thousands)

and s reexamination reexamination of the 2006 Denominator

(

by by the tax authorities. - - for

requested requested a reexamination of the 2006 orded orded as appropriations from earnings.

shares, shares, the Corporation should presume that in in the calculation of diluted EPS until the

Tax or

had he he number of After ratified 13,888,862 13,888,862 15,371,386 15,371,386 to to apply

$ $ $ $ Income

- by by cash income tax return tax income

s s 28

- - -

on on results of the 2002 had had been 052 that requires companies to recognize bonuses paid to

Tax 6 were were previously rec the Supreme Court of the R.O.C.

Amounts (Numerator) Amounts 2007 - Before by 18,132,491 18,132,491 19,777,097 19,777,097

s by the closing price of the shares f 200 $ $ $ $ Income

taken taken into consideration 2007 had been examined by the tax authorities. TAT disagreed with

No. number number of shares to be distributed to employees

directors directors and supervisors as compensation expenses beginning January 1, be

bonus bonus to employees for 2004 and 2005’ and for 2004 as of 9 8 reviewed

of of the income tax returns and .

e actual

s s

should In In the calculation of diluted EPS, t and and remunerations

126 remunerations remunerations to

’s ’s income tax returns as o and

ended December 31, 200 31, December ended 200 31, December ended

dilutive dilutive effect

These bonuses examination examination result Chap. 8 Financial Report

Bonus to employees potential of effect dilutive common shares stocks common Bonus to employees potential of effect dilutive common shares TAT’s TAT’s income tax returns return. the return tax 2007 income administrative proceedings proceedings administrative former former TAT disagreed with the examinati filed an appeal, which is The former TAT’s income tax returns as of 2006 had been examined by the tax authorities. with the result on the tax income returns and plans Mobitai e e ARDF issued Interpretation Income of common shareholders common of Income dilutive of potentially effect Add with shareholders common of Income shareholders common of Income potentially dilutiv of effect Add with shareholders common of Income For the year EPSBasic Diluted EPS For the year EPSBasic Diluted EPS the Corporation may settle the dividing dividing the entire amount of the bonu the entire amount of the bonus will be settled in shares and the potential share in the weighted average number of shares outstanding used in the calculation of diluted EPS, if the shares have a dilutive effect. potential shareholders shareholders resolved the 2008. year. following Th employees EARNINGS PER SHARE PER EARNINGS .

) ) ) )

The also

5 7 6

(3,056 37,974 60,522 31,413 28,510 ear ( (20,622 683,659 142,605 2008 (287,101 2008 200 200 200 Y

2,154,822 2,897,274 2,610,173 2,467,568 2,610,173 2,797,888 pplicable

A $ $ $ $ $

filed filed requests for

he Corporation

) ) ) had - - December 31 December 31 December

(1,939 30,375 89,783 27,261 by by the tax authorities. 121,518 480,098 2009 ( (235,580 2009

1,412,488 1,889,287 1,653,707 1,626,446 1,653,707 2,990,179 earnings earnings appropriation may be 2005 2005 and

$ $ $ $ $ 9

and and the actual creditable ratio for the e tax returns. T

examined through

of 2002 , respectively.

- : 2005 2005 had been

27 - arnings arnings appropriation e

as of

2009 2009 ) were as follows: as ) were 32.17% and 35.28% 32.17%

the the income tax returns credits are distributed. are credits liabilities were e estimated creditable ratio for the 200

o n

, 9 , there were no unappropriated earnings generated before January 1, 1998.

s s

, , 200 income income tax returns for for corrections of its 1999 through 2001 incom s s

’

on financial liabilities liabilities financial on

creditable creditable ratio for the

oss on retirement of property and equipment property of on retirement oss gain

current - December December 31

estimated Current Non l Unrealized accounts doubtful for Provision goodwill of Amortization assets on idle losses impairment for Provision cost pension Accrued tax credits Investment Unrealized Other allowance Less valuation tax assets income Deferred (ICA) account credit imputation of Balance Corporation The TAT TAT former The Mobitai adjusted when the imputation the when adjusted Corporation filed disagreed with the result The latest through years which income tax returns had been examined and cleared by the tax authorities follows: were as reexamination.

The imputation credits allocated to the shareholders are based dividend on the distribution. ICA balance as of the date of 2008 earning appropriation 2008 earning Integrated income tax information was as follows as was tax information income Integrated As of The Corporation Deferred income tax assets ( tax assets income Deferred The . d .

b. c

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 er as parties in - term term notes , therefore, - $0 thousand thousand $0 es. es. Significant $522,139 $522,139 thousand and

term term borrowings, short - meet meet the cash flow demand

short

ultaneously determined by quoted prices in in quoted prices by determined ultaneously

, respectively, and the financial liabilities parties in financial instrument transactions - parties parties are engaged in business similar activities sheet commitments and guarante sheet commitments thousand thousand as of December 31, 2009 and 2008, - - r

sufficient sufficient to $13,299,872 $13,299,872 thousand and $17,000,000 thousand ure ure of each financial instrument is the same as its

parties are reputable financial institutions with good - - balance 30 - - tial impacts to financial assets that the Corporation might encounter unds are deemed

t t enter into any financial derivatives transactions, which will have big ’ notes notes and accounts payable and guarantee deposits. Because of the short

’s operating f f credit risk concentration include the nature of the debtors’ operating activities.

$509,232 $509,232 thousand and $595,637

ctively.2008, respe and 31, 2009 of December as thousand ayable,

parties parties or third parties breach the contracts. Factors that affect the impacts include

- thousand thousand as of December 31, 2009 and 2008

orporation mounted mounted to if counter credit risk concentration, components of financial instruments, contract amount and oth Market risk Market The Corporation didn risk Credit Credit risk represents the poten receivables. The Corporation’s evaluation of credit risk exposure 2008 as were of both December zero 31, because 2009 all and of counter ratings. credit exposure to exchange rate and interest rate risks. rate interest and rate to exchange exposure The Corporation’s maximum credit risk expos value. carrying The credit listed amount risk above is an over fair the evaluation contracts with positive value at the of the date sheet contracts off balance and maturities maturities of these instruments, the carrying values represent values. a reasonable basis to estimate fair significantly significantly concentrate on one individual, or when there are a number of counter concentration concentration of credit risk exists when counter and bills p The The above financial instruments do not receivables, include pledged cash time and deposits, cash refundable deposits, equivalents, notes and accounts financial financial instrument transactions, but these counte significant. to be considered not is risk liquidity and have similar economic characteristics so that their abilities to perform contractual obligations would be concurrently characteristics o affected in similar economic changes or other situations. The The Corporation does not rely significantly on single transaction and transact with single client or in or in client single with transact and transaction on single significantly not rely does The Corporation region. the same risk Liquidity The C

1) 2) Information on financial risks: financial on Information active markets and by estimations using valuation technique. valuation using estimations and by markets active The fair values of financial assets and liabilities were not sim not were liabilities assets and financial of fair The values respectively, and the financial liabilities exposed to cash flow interest rate risk amounted to amounted risk tointerest rate cash exposed flow financial liabilities and the respectively, and $5,000,000 $1,002,425 exposed to fair value interest rate risk amounted to The The financial assets exposed to fair value interest rate risk amounted to 6 ) of December 31, 2009 and 2008, respectively. The financial assets exposed to cash flow interest rate risk a 3)

e. d. c.

sheet sheet

89,029 126,885 124,362 859,636 d by the

Total 2,610,700 2,950,976 6,146,790

$ $ $

15,621,815

Fair Value

accounted accounted for using 2008

, 83,716 57,451 81,531 98,321 519,816

2008 1,758,648 1,981,346

Expenses

Operating $ $ $ Classified as Classified

Value

15,500,000 Carrying

43,169 31,578 42,831

evaluated theby evaluated bid price of counter

852,052 969,630 761,315

Costs 5,626,974

December 127

Operating $ $ $ was 6 Classified as Classified

can can be measured by net worth of investee

December 31 December

Chap. 8 Financial Report

Ended December 31

8,373,37 s

99,202 143,041 123,929 864,875 Fair Value

Total

2,866,588 3,232,760 7,001,781 $

Year

$ $ $

- 2009

term term investments

counter quotations in in counter quotations

based based on quoted prices in an active market on the balance

the - based on valuation results provided by banks. As of December - 92,099 62,491 80,745

- 553,142 103,117 2009 based on the present value of future cash flows discounte

1,943,443 2,178,778 - 8,000,000 Expenses Value

Operating $ $ $ Classified as Classified

Carrying

50,942 36,711 43,184 term term loans

- 923,145 761,758 Costs 1,053,982 6,448,639 based on the over the based on

Operating - or or prepayments for long $ $ $ Classified as Classified sale financial assets

for

the financial instrument held thethe by instrument financial Corporation -

formation

2008,

vailable

derivative financial derivative (including current current (including portion)

- A Fair Fair value of long equity equity method value. the book of or estimate payable Bonds Derivative Derivative financial instruments date. Because there is no active market and a reliable fair value reasonable cost, the fair could values of investments in unlisted stocks carried at cost only be verified at a more than maturities). similar (e.g., loans similar for obtain may the Corporation rates interest 31, party.

instruments payable Bonds

insurance Non Liabilities Fair value in Fair value The The methods and significant assumptions applied in determining fair follows: were as values of financial instruments 1) 4 ) 3) 5 ) 2)

Salary health and Labor Pension Other

cost Labor Depreciation Amortization

a. b. LABOR COST, DEPRECIATION AND AMORTIZATION EXPENSE FINANCIAL INSTRUMENT TRANSACTIONS

. . 22 23

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

- - 4 1 4 1

Costs

) Revenues on 1, 2008) % of% Total of% Total

(Concluded)

2008 2008 September

liquidated on liquidated August nt

15, 2008)

13,848 58,406 459,338 965,962 257,796

above above companies. The 2,087,756 2,560,942 1,282,164 Amou Amount May

TT&T Corporation the $ $ $ $

)

- - - - 4 5 , 2008) 2008) , Ended December 31 December Ended 31 December Ended 2

s s

liquidated on October 1, 2008 1, on October liquidated

Costs (merged into TFN on May 1, 2009) on May TFN into (merged 19, on September TCCI into (merged

rty in substance (liquidated on December on December (liquidated in substance rty y (merged into (merged y Revenues % of% Total of% Total

Relationship with the Corporation with the Relationship

method investee of TCC ( of investee method

Year Year

- - 2009 2009

2008) September 28, 2009 February 2009) 1, 2009) in substance party Related in substance party Related in substance party Related 1, 2008) January on TFN into (merged Subsidiary 15, 2008) March on (liquidated Subsidiary on (liquidated Subsidiary on TFN into (merged Subsidiary Subsidiar into (merged Subsidiary ( Subsidiary Equity Subsidiary Subsidiary pa Related 9,796

- 51,412 2,276,319 2,286,115 1,390,303 1,441,715

32 Amount Amount ) -

$ $ $ $

FPM

, Ltd.

Related Party Related

128 TT&T)

Life Insurance Agency Co., Ltd. Co., Agency Insurance Life

FCB average collection period for notes and accounts receivable was approximately two months. two was approximately receivable and accounts notes for period collection average costs Operating TFN T TAT The Corporation mainly rendered telecommunication service to the TFN Fubon Ins. TAT Operating revenues Operating the former former the Chap. 8 Financial Report

iwan Sport Lottery Corporation (TSL) Corporation Lottery Sport iwan Co., Ltd. Co., (TTN) Ltd. Co., ( 2) 1) Ins.) (Fubon Ltd. Co., Fubon Insurance ( Ltd. Co., Management Fubon Property Ta Ltd. Co., Communication United Taiwan Agency Insurance Property & Casualty TT&T TT&T Services Network Telecommunication Taiwan Co., Ltd. Technologies & Teleservices Taiwan (TAT) Inc. Telecommunications TransAsia Ltd. TV Co., Cable North Coast Co. Broadcasting Tai Digital Yi Inc. Range & Reach Ltd. Co., TFN Investment Ltd. TV Co., Shin Ho Cable

Significant transactions with related parties were summarized below: summarized were parties related with transactions Significant

) 8 , 13 , 200

) 24 (Continued) on April on April

on April on April

d er Communications er Communications

renamed

(

VoPi

(the former former (the

elationship with the Corporation with the elationship

party in substance party R ary ) method investee method - 9 (Taiwan) Co., Ltd., merged the former TT&T and TT&T former the merged Ltd., Co., (Taiwan) 1, 2008. on September TT&T as renamed the Corporation from 200 Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidi Subsidiary Subsidiary Subsidiary in substance party Related Subsidiary Subsidiary Subsidiary Subsidiary change (relationship Subsidiary came fund issued the Foundation’s of one third Over Equity chairman Same Related in substance party Related in substance party Related in substance party Related in substance party Related in substance party Related in substance party Related in substance party Related in substance party Related in substance party Related in substance party Related in substance party Related

)

(FMT)

formerly

)

WMT SBC

(TFMT)

TUI

( )

formerly named named formerly

TCCI (

(

nology Co., Ltd. Co., nology ices Co., Ltd. Co., ices

Co., Ltd. Co.,

undation (TWM Foundation) (TWM undation Related Party Related

) al Holding Company Holding al ia Technology Ltd. Co., Technology ia

PARTY TRANSACTIONS

- ) TID (TT&T) ( Communications Times Hurray! named Ltd. (Beijing) Ltd.) Co., Consulting Marketing Fubon Direct (TFCB) (TCC) Ltd. Co., Cellular Taiwan ( Ltd. Co., Technology Media Wealth Ltd. Co., Technology Media Tai Fu Ltd. Co., Technology Media Wealth Global Med Fu Sin Ltd. Co., Technology Media Jia Leh Fu Ltd. Co., Technology Media Forest Global Ltd. Co. Holding TWM (T Ltd. Co., Basketball Super Taiwan Co., Ltd. Holdings TT&T Ltd. Technologies & Teleservices Taifu Xiamen Ltd. (TFN) Co., Network Fixed Taiwan Co., Ltd. Communications Digital Taiwan Co., Ltd. Technologies & Teleservices Taiwan Ltd. Co., TCC Investment Ltd. Co., Investment TFN Union Ltd. Co., and Development Investment TCCI Ltd. Co., TV Broadcasting Win (TFNM) Co., Ltd. TFN Media Ltd. TV Co., Jialeh Cable Yeong TV Corporation Cable Mangrove Ltd. TV Co., Cable Phoenix TV Cable Globalview Ltd. TV Co., Cable Union LIMITED TFN HK ( Ltd. (Beijing) Communications TWM Fo Mobile Taiwan Ltd. Co., Horizons New Taipei Ltd. Co., Assurance Fubon Life Ltd. Trust Co., Investment Fubon Securities Ltd. Co., Fubon Marketing Ltd. Capital Co., Venture Fubon Financial Tech Fubon Multimedia Ltd. Co., Management Fubon Asset Ltd. Co., Constructions Hsing Chung Ltd. Co., Development Fubon Land Fubon Financi Ltd. Co., Bank Commercial Fubon Taipei Ltd. Co., Fubon Securities Ltd. Co., Fubon Future Serv Fubon Investment The related parties and their relationships with the Corporation were as follows: as were the Corporation with relationships their and parties related The

RELATED a. . 2 4

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

- - -

2 1

87 ) 69 % 371

2,893

40,132 43,465 50,869 10,793 61,662

(1,360

13,727 12,367 - - - Total Income Income Interest Interest Interest

$ $

$ $ $ $ 2008

46,733 12,942

9 8

2,008,079 2,067,754 Amount

)

$ $

2.417 2.568 2.548

- - - (840 (%) (%)

9,892 0.838 0.838 0.847 - -

1 1 10,732 61 35

Assets) % 0.838 2.417 2.538 $ $ December 31 December Interest Rate Interest Rate Interest

(Classified (Classified

Under Other Other Under Maturities of Maturities

Over One Year One Over

2009 ) 5,996

53,418 45,065 60,000 Ended December 31, 200 31, December Ended 200 31, December Ended ,045,000

(520 3,500,000 2,003,836 5,608,315 2,000,000 2 8,000,000 2,005,000 1,250,000 3,255,000 2,995 2,475 Balance Balance Amount 12,105,000

Maximum Maximum Maximum $ $ $ $ $ $

Portion

Current Current Year Year $ $

- - -

34 - s was as follows: aswas s 45,000

2,000,000 2,045,000 2,000,000 2,000,000 Ending Ending Balance Balance

$ $ $ $

Financing to related partie related to Financing Receivables from capital reduction. capital from Receivables Leasehold receivables from TSL were as follows: TSL were from receivables Leasehold

T (Note 2) (Note T FMT (Note 2) (Note FMT

2: Note Note: 31, 2008 December receivables Leasehold income interest Less unrealized receivables Other 1) TCC (Note 2) (Note TFNM TFN WM T Other 1: Note Party Related TFNM WMT TFMT TCC Party Related TFMT TFNM

5,469

214,172 219,641 - -

18 2 % % 100

$ $

70,390 29,97 10,640

11,582 2008

111,002

Amount

$ $ $

2008 2008

5,469 5,469 December 31 December

10,000 275,104

Amount Amount

$ $ $ $

Ended

33,423 10,784

2009

119,447 163,654 - -

Years $ $ % % 100

December 31 December 31 December

129 Description 2009 2009 Year Ended December 31, 2009 31, December Ended Year

3,321 99,376 10,000 19,347 22,668 Amount Amount Chap. 8 Financial Report

$ $ $ $

equipment Telecommunication

33 -

Leased Sites/Equipment Leased

etc. and BTS, Offices etc. appliance, Office Offices

g) Ltd. g)

rendered rendered telecommunication, maintenance and insurance services to t

mainly

s s

(Note)

counts receivable counts income

Cash in bank in Cash TFCB deposits time Pledged TFCB Ac TFN Other N

These companies (Bejin TWN Communications TF FMT TFNM monthly. collected was rent and price on market based were transactions lease above The a) b) a) Rental Cash in banks banks in Cash Receivables and payables Receivables

Corporation. Corporation. The average payment term for notes and months. accounts payable was approximately two transactions Property equipment and property of Acquisition

4 ) 5 ) 6 ) 3)

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

s s

’

3,813 8 16,869 15,205 19,018 3,210 22,883 32,000 41,470 77,293 200 2008 192,440 314,413 Interest Interest Interest Expense Expense

$ $ $ $ $ $ $

December 31 December December 31 December

had had not made any 9 8

2.417 2.604 2.417

- - - 9 2,330 (%) (%) 23,485 34,300 37,483 62,668 200 2009 204,702 307,183 in accordance with NCC’s new 1.068 2.572 2.124

Years Ended Years Years Ended Years Interest Rate Rate Interest Rate Interest $ $ $ $ poration poration provided a guarantee for

Ended December 31, 200 31, December Ended 200 31, December Ended

the Corporation and TFN

1,600,000 1,745,609 1,300,000 3,045,609 Balance Balance

9 , Maximum Maximum Maximum $ $ $

Year Year

- - issued issued by July 31, 2008

36 -

1,300,000 1,300,000 00,000 21 , 5 00,000 thousand guarantee for TFN’s bank loan. The Ending Ending Ending Balance Balance

$ $ $

, the Corporation had provided TFN $50,000 thousand as performance 9 , TFN the as performance thousand Corporation had $50,000 provided

. ling ling card service

bonus to employees bonus

130

he he Corporation and its subsidiary, TFN, obtained $13,500,000 thousand of syndicated loan

The Corporation provided $ Corporation Corporation also provided $21,328,330 thousand in promissory notes outstanding for TF T from 9 banks led by Chinatrust Commercial Bank. The Cor TFN’s bank loan. As of December 31, 200 borrowing borrowing with banks. TFN has amount. guarantee drawn down $1,848,322 thousand from banks within the policy effective on April 1, 2007. 1, on April effective policy drawdown on this loan this on drawdown guarantee for IDD cal As As of 31, December 200

Repairs and Maintenance and Repairs FPM expenses Advertisement TSBC Party Related TFN Party Related TAT TFN compensati and special incentives Salaries, to directors remunerations as paid Earnings as paid Earnings fee Professional Financing from related parties was as follows: as was related parties from Financing provided Endorsement/guarantee a) b)

Compensation to directors, supervisors and managers: supervisors to directors, Compensation c) Chap. 8 Financial Report

) ) 3 4 1 1 15 ) 16 ) 17)

- -

7 2 4 2 2

9,029 79,002 13,594 21,537 22,000

200 911,679

20 $ $ $ $ $ $

2008

43,604 55,609 79,715 20,000 99,249 92,455 December 31 December

197,416 297,151

Amount

$ $ $ $ $ $

- - -

78,101 10,029 25,611 30,400 13,304 2 6 1 5 200 859,159 18 %

Years Ended Years

December 31 December $ $ $ $ $ $

2009 8,712 4,300 65,790 10,607 83,059 265,004 345,701 176,836 Amount

$ $ $ $ $ $

- 35 -

) collections and collections

al service fees service al

include the former TT&T former the include (

Prepayments Fubon Ins. payable Accounts TFN expenses Accrued TFN TT&T Fubon Ins. TSBC payables Other TFN liabilities current Other following the for credits temporary TFN

Telecommunication service expenses expenses service Telecommunication TFN Profession TT&T expenses Insurance Fubon Ins. expenses Other FPM Donation Foundation TWM expenses Rental TFN c) d) e) f) g)

) ) ) ) ) ) 7 8 9 0 1 2 1 1 1

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

in - for

23 None.

in capital: in capital: - - Due Date Due December 2009 December

in capital: in -

$84,485 $84,485 thousand and

of 2002 2002 to hedge fluctuation

addition addition to interest expense

gains 5,000,000 Amount Contract

floating floating interest rate fluctuation. For the a, the main businesses and products, issued deduction deduction and

. inverse inverse

- 38 Term - the the Corporation recognized for fixed interest rate rate interest fixed for

. floating interest rate in rate interest floating

exchange of 2.45% Inverse

Mainland China on financial reports: reports: financial on China Mainland None.

thousand, thousand, respectively, recorded as

investment: investment: 8 (attached). Table

. floating floating interest rates of bonds, which are settled semiannually. Please refer to Note 6 (attached).

in capital: in capital: 4 (attached). Table ncing provided: provided: ncing 1 (attached) Table - The The name of the investee company in Mainland Chin capital, capital, method of investment, information on inflow or outflow of capital, ownership, investment gain or loss, ending balance, received amount as from earnings distributions the and investment, the on limitation Significant Significant direct or indirect transactions payment, unrealized gain with or loss, and the other related information which investee is helpful to company, understand the in investment of impact its prices and terms of Financial Instrument Financial inverse inverse

contract swap rate Interest The Corporation entered into IRS contracts to hedge years ended December 31, 2009 and 2008, Fina losses of $30,531 None. paid the of 20% or million least $100 at of at prices estate real individual of Disposal Endorsement/guarantee provided: provided: Endorsement/guarantee 2 (attached) Table held: securities Marketable 3 (attached). Table Marketable securities acquired and disposed of at costs or prices of at least $100 million or 20% of the paid Acquisition of individual real estate at costs of at least $100 million or 20% of the paid Investment in Mainland China: in Mainland Investment respectively 1) Total Total purchase from or sale to related parties amounting to at least $100 million or 20% of the paid capital: (attached). Table 5 2)

transactions Derivative The Corporation entered into interest rate swap (IRS) contracts in December on information. related the Receivables Receivables from related parties amounting to at least $100 million or 20% of the paid Table Names, locations, and related information of investees on which the Corporation exercised significant influence: (attached). Table 7

ADDITIONAL DISCLOSURES the Corporation for Bureau and Futures the Securities by required disclosures additional were the Following investees: and its a. f. b. d. k. c. e.

g. h. j. i. . 2 7

. As .

8,976 8,976 10,000 42,352 26,268 17,893 2008 2008 377,035 488,422 865,457

Amount to companies $ $ $ $

December 31 December While While that for the

earnings earnings subject to 9

December 31 December

AGM.

10,000 2009 2009 458,519 458,519

Years Ended Years

$ 2009 $ $

Siemens Siemens Networks Taiwan Co., Ltd.

131 for for significant operating lease agreements 9 ere recorded as deductions from related costs Chap. 8 Financial Report

- earnings earnings approved in , which w 37 and $3,242,661 thousand in May 2009, respectively -

2008 , expand network coverage and increase the service functions, included included the bonus appropriation from 200 9 rs, rs, supervisors and managers for the year ended December 31, 200

More detailed information may be referred in the Corporation’s annual

the the purchase amount was $4,693,485 thousand and $975,556 thousand, 9 , AGM 10

oval oval in 20

and expenses. and expenses. follows: as were charges service Corporation’s The below and fees received by the Corporation included included the bonus appropriation from Other For the years ended December 31, 2009 and 2008, the Corporation provided services The The compensation to directo reports TFN TAT year year ended December 31, 200 appr 2

summarized as follows: summarized 2010 2011 201 2013 2014 1 8 ) for $4,800,000 thousand in September 2006 To To enhance 3G mobile communications the Corporation entered into a 3G expansion contract with Nokia respectively. Future minimum rental payments as of December 31, 200 of December 31, 200 are SETS PLEDGED

deposits Time follows: as were overdraft deposit of line credit for collaterals as pledged assets The

b . AS EVENTS CONTINGENT AND COMMITMENTS a. . . 2 5 2 6

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 132 Chap. 8 Financial Report

16 of

Revenue

Operating Operating Percentage Percentage

2008

8,956,659 Amount C.

nue Ended December 31 December Ended 15

of provider s

Reve Operating Operating Percentage Percentage

Year

2009

- 8,730,057 39 Amount -

generating unit that operates outside the RO the outside operates that unit generating - wireless communication services communication wireless

is primarily a primarily is Company

Ltd. Co., Telecom Chunghwa Industry Corporation The operations Foreign no revenue has Corporation The Foreign revenues Foreign revenues. no foreign has Corporation The as follows: were revenues operating total net the 10% of exceeding revenues with Customers

b. d. a. c.

SEGMENT INFORMATION SEGMENT

28. WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

)

TABLE 1 (Note 1) (Note 1) (Note 1 (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 2) (Note 2) (Note 2) (Note 2) (Note 2) (Note 2) (Note 2) (Continued) 8,386,254 8,386,254 Limits Lending Lending 20,829,291 20,829,291 20,829,291 20,829,291 20,878,023 20,878,023 14,084,712 14,084,712 14,084,712 13,500,000 12,000,000 12,000,000 12,000,000 12,000,000 24,000,000 15,000,000

Company’s Company’s $

Lending Amount Amount Lending

084,712 (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 2) (Note 2) (Note 2) (Note 2) (Note 2) (Note 2) (Note 2) ing Limit ing Limit 8,386,254 8,386,254 for Each Each for 20,829,291 20,829,291 20,829,291 20,829,291 20,878,023 20,878,023 14, 14,084,712 14,084,712 13,500,000 12,000,000 12,000,000 12,000,000 12,000,000 24,000,000 15,000,000 Company

Borrowing $

Lend

------

Value Collateral

------Item

------

Doubtful Accounts

$ Allowance for for Allowance

term -

requirements requirements Financing in minorities acquiring in minorities acquiring operation and requirements in minorities acquiring Reasons for Short for Reasons itsneeds financing meet To Operation Operation requirements Operation requirements itsneeds financing meet To Operation requirements itsneeds financing meet To Operation Operation requirements Operation requirements Operation requirements Business requirements Business requirements Business requirements Business requirements Business requirements Business requirements Business requirements

------

1,350 32,440 57,336 270,213 221,977 563,225 478,941 Amounts

Transaction Transaction $

- term term term term term term term term term term term term ------sactions Purpose 40 Financing - financing financing financing financing financing financing financing financing financing financing financing Short Short Short Short Short Short Short Short Short Short Short Transactions Transactions Transactions Transactions Transactions Tran Transactions

04% 2.417% 2.417% 2.602% 2.581% 2.417% 0.847% 2.604% 2.594% 2.604% 2.594% 2.6 2.594% 0.862%

------0.838% 0.838% 0.847% 0.845% 2.417% 838% Interest Rate Interest 0.838% 0.838% 0.929% 0.862% 1.068% 0.838% 0.838% 0.844% 0.862% 0. 0.839% 0.838% 0.839%

------45,000 700,000 200,000 680,000 360,000 307,000 2,000,000 4,670,000 2,270,000 8,040,000

Ending Balance

60,000 700,000 188,000 450,000 680,000 207,700 360,000 470,000 2,045,000 2,000,000 8,000,000 5,040,000 2,270,000 1,000,000 2,900,000 1,320,000 1,600,000 8,410,000 Period

Maximum 133 $

Balance for the

------

Chap. 8 Financial Report vables

d parties eceivables Account Financial Financial Statement Statement her receivables relate related partie related parties related parties related parties related parties related parties Other receivables Other receivables Other receivables Other receivables Other r Other recei Other receivables Other receivables Other receivables Other receivables Ot Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables

Co., Ltd. Co., Ltd. Co., Technology Ltd. Borrowing Company

Fu Tai Media Technology Wealth Media Media Co.,TFN Ltd. Cellular Co.,Taiwan Ltd. Media Co.,TFN Ltd. Investment Ltd. Co., TCC Media Co.,TFN Ltd. Media Co.,TFN Ltd. Media Co.,TFN Ltd. CorporationThe Cellular Co.,Taiwan Ltd. Media Co.,TFN Ltd. Media Co.,TFN Ltd. Media Co.,TFN Ltd. Media Co.,TFN Ltd. Media Co.,TFN Ltd. Media Co.,TFN Ltd. Broadcasting WinTV Co.,

Dollars)

Lending Company Lending “Corporation”) (Note 3) Ltd. Corporation Ltd. (Note 4) Ltd. (the Ltd. Co., Mobile Taiwan Cellular Co.,Taiwan Ltd. Investment Ltd. Co., TCC Co., Network Fixed Taiwan Ltd. Union Cable TV Co., Cable TV Mangrove Cable TV Co., Globalview Phoenix Cable TV Ltd. Co., Shin TV Ltd. Co., Ho Cable Yeong Jialeh Cable TV Co., Media Co.,TFN Ltd.

0 1 2 3 4 5 6 7 8 9 10 No.

TAIWAN MOBILE CO., LTD. AND SUBSIDIARIES MOBILETAIWAN CO., LTD. AND PROVIDED FINANCING YEAR ENDED DECEMBER ENDED YEAR 31, 2009 (In Thousands of New of Thousands (In Taiwan WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

77,046 76,471 (Note 1) (Note 1) (Conclude Limits Lending Lending

Company’s Company’s $

Lending Amount Amount Lending

77,046 76,471 (Note 1) (Note 1) for Each Each for Company

Borrowing $

Lending Limit Limit Lending

- -

Value amount of the following items: items: following the of amount the of percent 40 1)

Collateral

- - company’s capital, or 2) the amount of business dealing. capital, of orthe 2) amount company’s Item

- -

Doubtful Accounts

$ Allowance for for Allowance

* the (the of loaningamounts * total entities). loaning company financing a that Inevent the

term -

134 Financing in minorities acquiring Reasons for Short for Reasons Repayment of financing itsneeds financing meet To

- -

Chap. 8 Financial Report mpany’s net worth. mpany’s mpany's net worth. worth. net lowest mpany's the to limited be shall fund loaning individual The Amounts

Transaction Transaction $

cing

- term term term - - Purpose 41 Finan - financing financing Short Short

nds shall be both limited to the higher amount of the following items: items: the amount of following to ndshigher belimited the both shall the of multiple financing a 1)

the share portion of the loaning entities that the financing company invests) the company financing portionthe of loaning entitiesthe that share 0.838% 0.867% Interest Rate Interest

4,000 45,000

Ending Balance

9,000 60,000 Period

Maximum $

Balance for the

- -

. Account Financial Financial Statement Statement related related parties related parties Other receivables Other receivables

party, the individual lending amount and the aggregate amount of loaning funds shall not exceed 40% exceed the amountco of financing not loaning funds of shall aggregate the amount and individual party, lending -

term financing needs (loaning entities), the aggregate amount of loaning fund shall not exceed 40 percent of the financing co liquidated on December 1, 2009 1, December on liquidated - Co., Ltd. Co., Ltd. Co., Technology Borrowing Company Fu Tai Media Technology Media Wealth Global was

gy ology ology

Lending Company Lending Co., Ltd. Co., Ltd. Co., financing company's net worth; 2) the amount that the financing company invests in invests net theor worth; company's loaning2) financing 3) ( amount = the company entities; the amount thatfinancing the directly or a counter100%owns indirectly directly TCC Investment Co., Ltd. assumed all TFN Investment Co., Ltd.’s financing provided to others due to merger. to due providedothers financing to Co., Ltd.’s Investment Investment all TFN Ltd. Co., assumed TCC Shin TV Ltd. Co., Ho Cable For the entities which have short Where funds are loaned for reasons of business dealings, the individual lending amount and the aggregate amount loaning fu of the amount and individualaggregate dealings, business the lending of Where reasons fundsloaned for are Media Technolo Wealth Fu Tai Media Techn

11 12 No. Note 3: Note 4: Note 1: Note 2: WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

TABLE 2 93,063 (Note 5) (Note or/Endorser or/Endorser 52,073,226

Provided by the the by Provided Guarant Endorsement Can Be Be Can Endorsement Maximum Guarantee/ Maximum

0.16% 66.98% Worth of the of Worth Endorsement/ Guarantee to Net to Net Guarantee Guarantor (Note 1) (Note Guarantor Ratio of Accumulated Accumulated Ratio of

- -

limit to each subsidiary shall be the double of the investment amount. investment the of double the shall be subsidiary tolimit each - Value of Collaterals Collaterals of Value nd not over double of the investment amount in TT&T. in amount investment the of double over nd not

146 34,878,330 (Note 1)

Ending Balance Ending

n the net worth of TT&T, a TT&T, of net worth n the

th of the Corporation, and the upper the and Corporation, the th of

146 34,878,330 (Note 1) the Period the

- $

42 - Maximum Balance for Balance Maximum

20,000 (Note 3) (Note 5) (Note 42,000,000

Can Be Provided Provided Be Can Each Receiving Party Receiving Each Endorsement Amount Amount Endorsement Maximum Guarantee/ Guarantee/ Maximum

appropriation. actual not allowed, amount the are

(Note 2) (Note 4) (Note (B is(B A’s) Nature of of Nature Relationship

135 Chap. 8 Financial Report

Receiving Party Receiving (B) Name

Ltd. Co., Network Fixed Taiwan Ltd. Co., Network Fixed Taiwan

(A) Endorsement/Guarantor “Corporation”) Ltd. Co., Technologies Maximum guarantee/endorsement amount for the period and the ending balance balance ending the and period the for amount guarantee/endorsement Maximum Direct/indirect subsidiary Direct/indirect wor net the exceed not shall provided amount endorsement/guarantee aggregate the subsidiaries, owned direct/indirect For 100% Parent company Parent TT&T is directly and indirectly 100% owned by TFN. by owned 100% and indirectly directly is TT&T withi limited be shall TT&T, by provided amount endorsement/guarantee The (the Ltd. Co., Mobile Taiwan & Teleservices Taiwan

0 1 No. YEAR ENDED DECEMBER 31, 2009 DECEMBER ENDED YEAR Dollars) Taiwan New of (In Thousands SUBSIDIARIES AND LTD. CO., MOBILE TAIWAN ENDORSEMENT/GUARANTEE PROVIDED 1: Note 2: Note 3: Note 4: Note 5: Note

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

Note TABLE 3 (Continued)

------

968 780 e 3) e 8,415 86,982 42,130 31,657 177,821 192,615 211,974 191,178 140,858 (Note 5) (Note (Not 3) (Note 3) (Note 3) (Note 3) (Note 3) (Note

52,195,059 (Note 1)

Market Value Value Market $ US$

0.028 0.19 6.694 3.34 5.21 3.00 3.17 10.00 49.90 12.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 Ownership Percentage of Percentage

- - 968 780 6,773 8,415 50,324 86,982 89,199 67,731 20,207 177,821 192,615 211,974 191,178 140,858 131,937 (Note 2) (Note 4) (Note 2) (Note December 31, 2009 31, December 9,353,920

$ US$ Carrying Value Carrying

74 100 100 803 share 2,989 2,200 8,400 3,749 2,272 6,998 3,000 1,200

27,200 30,000 24,950 27,000 13,500 136 1 (Thousands) Shares/Units

Chap. 8 Financial Report

current current current current current current ------current

- non non non non non non

------

- equity method equity method equity method equity method equity method equity method equity method equity method equity method equity method equity method

------43 - sale financial assets sale financial - for - Financial Statement Account Statement Financial term investments investments term investments term investments term investments term investments term investments term investments term investments term investments term investments term investments term ------Available cost at carried assets Financial cost at carried assets Financial Long Long Long Long Long Long Long Long Long Long cost at carried assets Financial cost at carried assets Financial cost at carried assets Financial cost at carried assets Financial Long

------method method - diary the Investing the Investing investee Relationship with Relationship Company (B is(B A’s) Company Subsidiary Subsidiary Equity Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsi Subsidiary

Co., Ltd. Co.,

(B)

edia Technology Ltd. Co., Technology edia view Cable TV Cable view Marketable Securities Invest Securities Marketable Point Co., Ltd. Co., Point

arawin Venture Capital Corp. Capital Venture arawin Stock Ltd. Co., Telecom Chunghwa Ltd. Pte Mobile Bridge Company Holdings Mobile Yes Ltd. Co., Technology Media Wealth Ltd. Co., Cellular Taiwan Ltd. Co., Horizons New Taipei Stock Ltd. Co., Technology Media Tai Fu Stock Ltd. Co., Technology Media Wealth Global Ltd. Co., Technology Media Jia Leh Fu M Fu Sin Ltd. Co., Technology Media Forest Global Stock Global Stock Ltd. TV Co., Cable Phoenix Stock Ltd. Co., Arcoa Communication P Inc. Tech High Transportation WEB Ltd. Co. Holding TWM

(A)

alth Media alth Investing Company he “Corporation”) he (t Ltd. Co., Ltd. Co., Ltd. Co., Technology Ltd. Co., SUBSIDIARIES AND LTD. CO., MOBILE TAIWAN HELD SECURITIES MARKETABLE 31, 2009 DECEMBER Dollars) U.S. or Dollars Taiwan New of (In Thousands Ltd. Co., Mobile Taiwan Technology Media Wealth Technology Media Tai Fu We Global Technology Media Fu Sin Ltd. Co., Cellular Taiwan

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

Note (Continued)

- - - -

2,982 3,346 10,950 93,063 250,914 587,341 283,339 917,139 581,407 (Note 5) (Note 3) (Note 3) (Note 5) (Note 6) (Note 3) (Note 3) (Note 5) (Note 3,603,385 8,123,641 8,289,757 1,853,557

35,211,780 20,965,635 13,901,109 27,902,369 28,472,793 (Note 1)

Market Value Value Market $ US$ $

5.86 6.67 1.24 3.50 3.47 0.84 98.50 29.53 96.66 99.99 92.38 12.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 Ownership Percentage of Percentage

2 3,87 3,346 10,950 46,074 93,063 253,732 500,000 546,514 187,042 December 31, 2009 31, December 1,763,621 8,123,641 8,289,757 2,111,821 3,141,644 2,058,304 1,203,928 2,120,829

35,211,780 21,092,818 13,901,109 27,902,369 28,472,793

$ US$ $ Carrying Value Carrying

100 400 400 , 1,200 2 6,248 1,300 1,000 17,905 10,000 50,000 33,940 65,818 51,733 21,890 222,774 230,526 132,849 170,441 225,531 456,295 2,100,000 (Thousands) Shares/Units

current current current non - - -

- - - - non non non

- - -

- equity method equity method equity method equity method equity method equity method equity method equity method equity method equity method equity method equity method equity method equity method equity method

------44 - sale financial assets sale financial assets sale financial assets sale financial

- - - nvestments nvestments for for for - - -

m investments investments m Financial Statement Account Statement Financial current current current - - - term investments investments term investments term investments term investments term investments term investments term investments term ter investments term investments term investments term i term investments term investments term investments term ------non current non non Long Long Long Long Available Long Long Long cost at carried assets Financial cost amortized at measured Bonds Available Long Long Long Long Long Long Long Long cost at carried assets Financial cost at carried assets Financial Available

- - - - ry the Investing the Investing substance Relationship with Relationship Company (B is(B A’s) Company Subsidiary Subsidiary Subsidiary Subsidiary Corporation The Subsidiary Subsidiary Subsidiary Corporation The Subsidiary in party Related Subsidia Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Corporation The

137

, Ltd.

Chap. 8 Financial Report

rporation

Co., Ltd. Co.,

(B)

asting Co., Ltd. Co., asting

Network Co., Ltd. Co., Network

tment Co., Ltd. tment Co., Mobile Co., Ltd. (the “Corporation”) (the Ltd. Co., Mobile

view Cable TV Cable view Marketable Securities Invested Securities Marketable

HK LIMITED HK Unlisted Convertible Preferred Stock Stock Preferred Convertible Unlisted Series A Ltd. Ltd. Fixed Taiwan Ltd. Co., Communication Digital Taiwan TCC Inves Stock Ltd. (Beijing) Communications TWM Stock “Corporation”) (the Ltd. Co., Mobile Taiwan Broadc WinTV Co., Ltd. TFN Media Co. Development & Investment TCCI Ltd. Co., Taipei Broadband Great stock Preferred Corporation Speed Rail High Taiwan Stock Taiwan Stock Ltd. TV Co., Jialeh Cable Yeong TV Corporation Cable Mangrove Ltd. TV Co., Cable Phoenix Ltd. TV Co., Cable Union Global Stock Ltd. Co., Investment TFN Union TFN Co., Technologies & Teleservices Taiwan Co Speed Rail High Taiwan Co., Technology InfoComm Century New Stock “Corporation”) (the Ltd. Co., Mobile Taiwan

(A)

Investing Company N Union Investment Co., Co., Investment Union N Development Co., Ltd. Co., Development Ltd. Ltd. Ltd. Co., Holding TWM Ltd. Co., TCC Investment & Investment TCCI Co., Ltd. TFN Media Co., Network Fixed Taiwan TF WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

Note (Concluded)

1,409 1,403 20,023

(Note 1) Market Value Value Market US$ US$

100.00 100.00 100.00 Ownership Percentage of Percentage

1,409 1,403 20,023 December 31, 2009 31, December

carrying carrying cost of $52,195,059 thousand on TCC shall be reduced by

US$ US$ s Carrying Value Carrying ’

of $7,529 thousand. of $7,529 gain 1,300 2,000 Corporation

138 the (Thousands) Shares/Units

Chap. 8 Financial Report

- equity method equity method equity method

- - - recognition of upstream transactions of upstream recognition 45

- book, book, 2) excluding $11,420,417 thousand unrealized gain from financial assets investment, 3) adding back $475,907 thousand

s ’

excluding Financial Statement Account Statement Financial term investments investments term investments term investments term - - - Corporation the Long Long Long shares, and 4) and 4) shares,

s ’ owned owned by TCC) are classified as treasury shares. Therefore, - worth was not available. not was worth

Corporation the Investing the Investing the Relationship with Relationship Company (B is(B A’s) Company Subsidiary Subsidiary Subsidiary

(B) ounts. Marketable Securities Invested Securities Marketable

ulted from TFN and TFNI’s disposal gain from from disposal gain TFNI’s TFN and from ulted Ltd. Stock Co., Ltd. T Holdings TT & Ltd. Co., Basketball Super Taiwan Stock Technologies & Teleservices Taifu Xiamen ee’s net worth as shown in its audited financial statements if market value was not available. not was value if market statements financial audited its in as shown worth net ee’s shares shares held by TCCI, TID and TUI (all are subsidiaries 100%

’

Corporation (A) eservices & & eservices Based on the invest the on Based As of January 20, 2010, the independent auditors’ report date, the investee’s net investee’s the report date, auditors’ independent the 20, 2010, January of As The Impairment loss recognized in 2004 reduced the value to zero. to value the reduced in 2004 recognized loss Impairment downward downward adjusting $31,889,100 thousand, the carrying value of total treasury shares on 70.47% shares are held under trustee acc trustee under held are shares 70.47% Based on the closing price on December 31, 2009 31, on December price closing the on Based income tax expenses res expenses tax income

Investing Company Technologies Co., Ltd. Ltd. Co., Technologies Tel Taiwan Co., Ltd. Holdings TT&T 1: Note 3: Note 4: Note 2: Note 6: Note 5: Note WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

- -

(Note 4) TABLE 4

8,289,757 28,472,793 Amount

- -

Ending Balance 456,295 132,849 (Note 4) (Thousands) Shares/Units Shares/Units

)

- -

1,451 ( (Note 2) (Note 3)

Disposal Gain (Loss) on Gain US$

- - 5,771 5,552,137 18,616,561

$ US$ Carrying Value

- - Disposal

4,320 6,629,149 22,769,109

Amount

$ US$

- -

ds) 1,080 as deferred credits. as nothis or transaction. gain on was loss There 456,295 132,849

gnized as deferred gnized credits. as nothis or transaction. gain on was loss There (Thousan Shares/Units Shares/Units

- - -

6,629,149 22,769,109

Amount

- - -

Acquisition 456,295 132,849

- (Thousands) 46 Shares/Units Shares/Units -

on assets. financial

IN CAPITAL CAPITAL - IN - -

or loss

2,052 osal price of shares, $4,152,548 thousand, was recognized was $4,152,548 shares, thousand, of price osal

posal price of shares, $1,077,012 thousand, was reco was $1,077,012 shares, thousand, of price posal 22,221,555 17,318,833

Amount

$ US$

- -

revaluation gain 1,080 Beginning Balance 456,295 355,623 unrealized (Thousands) Shares/Units Shares/Units

ded the the ded

Nature of of Nature Relationship

Subsidiary Subsidiary Parent Parent 139

thousand (including unrealized gain of financial instruments) from due instruments) TFNI financial to of gain from merger. unrealized (including thousand

party

- Chap. 8 Financial Report

I Investment 13,901,109 $

Investment Co.,Investment Ltd Development & Ltd. Co., Co., Network Ltd. Ltd. Co., Counter UnionTFN TCC Taiwan Fixed Investment TFN and

- - - - - sale sale sale sale sale

- - - - - shares shares

for for for for for - - - - -

current current current current - - - - able Account Financial Financial Statement Statement financial assets assets financial non assets financial non assets financial non assets financial non assets financial current Available Available Avail Available Available aiwan Mobile aiwan

Ltd.

Co., Ltd. Co.,

and Issuer

Marketable Securities Type Type Securities Marketable Stock Ltd. Co., Mobile Taiwan Stock Ltd. Co., Mobile Taiwan Stock Ltd. Co., Mobile Taiwan Stock Mobile Taiwan ADS Hurray!Holding Co.,

TFN resolved to inject capital into TUI with its Taiwan Mobile its with Taiwan resolved to shares. into TFN TUI inject capital original between disp the cost and the difference The The amount of beginning and ending fund balance that belongs to marketable securities inclu securities marketable tobelongs balance that fund amount ending and The beginning of TFNI resolved to inject capital into TID with its Taiwan Mobile its resolved with Taiwan to shares. intoTFNI injectTID capital original between dis the cost and the difference The T thousand 222,774 the assumed TCCI ny Name ENDED DECEMBERENDED 31, 2009

Ltd.

Investment , ,

Network Co., Network Ltd. Co., Co., Investment Development & Co. Ltd. Ltd. Ltd. Co., Compa Note 2: (In Thousands of New of Thousands Dollars) (In Taiwan TAIWAN MOBILE CO., LTD. AND SUBSIDIARIES MOBILETAIWAN CO., LTD. AND PAID OF THE AT LEAST TO $100MILLION DISPOSED AMOUNTING 20% OR OR MARKETABLEACQUIRED SECURITIES YEAR Taiwan Fixed Investment TFN Union TFN TCCI Holding TWM Note 1: Note 3: Note 4:

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

Note TABLE (Note 1)

) ) ) ) ) ) ) 6 5 85 15 15 27 13 23 11 (21 (82 (82 (84 (79 (89 (Note 3) (Note 5) (Note

% % to Total

48,836 thousand 48,836

) ) ) ) ) ) ) ) ) totaled$3 65,804 11,240 53,205 97,917 45,862 (65,790 (11,240 (35,916 (45,862 (53,205 (97,917 368,183 294,399 115,122 (301,974 (367,857 (115,122

Ending Balance Notes/Accounts Payable or Receivable or Payable Notes/Accounts

------

(Note 6) (Note 6) (Note 6) (Note 6) (Note 6) (Note 6) (Note 6) (Note 6) (Note 6) Payment Terms Payment

from Others

------(Note 6) (Note 6) (Note 6) (Note 6) (Note 6) (Note 6) (Note 6) (Note 6) (Note 6) Unit Price Unit Transactions with Terms Different with Terms Transactions

140 on terms contract

Payment Terms Payment Chap. 8 Financial Report onBased terms contract onBased terms contract onBased terms contract onBased terms contract onBased terms contract onBased terms contract onBased terms contract Based onBased terms contract onBased terms contract onBased terms contract onBased terms contract onBased terms contract onBased terms contract onBased terms contract onBased terms contract onBased terms contract thousand after deducting accounts payable and accrued custodial receipts/payments custodial accrued receipts/payments and payable deducting accounts thousand after

) ) ) ) ) ) ) ) (4 (9 (7 32 59 58 60 59 63 (85 (15 (15 (19 (16

19,347 (Note 2) (Note 4) (Note 4)

% % to Total

IN CAPITAL CAPITAL - IN 47 ) ) ) ) ) ) ) ) -

Transaction Details Transaction 859,159 156,205 143,665 182,643 212,096 388,009 459,667 (859,350 (156,205 (459,667 (212,096 (388,009 (182,643 2,276,319 1,390,303 2,273,452 Amount ( (1,464,178

The net accounts receivable should$ be netreceivable accounts The

Sale Purchase/

Sale Purchase Purchase Sale Sale Sale Purchase Purchase Channel fee leasing Channel fee leasing Channel fee leasing Channel fee leasing Royalty of copyright Royalty of copyright Royalty of copyright Royalty of copyright Royalty of copyright

(B is A’s)

diary Nature of Relationship of Nature Subsidiary Subsidiary parent Ultimate Parent parent Ultimate Subsidiary Subsidiary Subsi Subsidiary Subsidiary in substance Related party Parent Parent Parent Parent

)

. (B

Related Party Related view Cable TV Co.,view Ltd.

Ka Ltd. Ka

- Co., Ltd. Ltd. Co., Ltd. Co.,

Ltd. Co., Network Fixed Taiwan Teleservices Technologies & Taiwan CorporationThe Ltd. Co., Network Fixed Taiwan CorporationThe Teleservices Technologies & Taiwan Phoenix Cable TV Ltd. Co., Ltd. Union Cable TV Co., Yeong Jialeh Cable TV Ltd. Co., Global Dai Media Co.,TFN Ltd. Media Co.,TFN Ltd. Media Co.,TFN Ltd. Media Co.,TFN Ltd. h kind of transactions. h of kind

thousand accounts receivable amount was expressed on a gross basis in accord with sales amount. sales basis expressed inwith on amount accord gross a was receivable thousand accounts

(A)

368,183

Company Name Included operating costs and operating expenses operating Included costs and operating The $ Included accounts payable and expenses. accrued Included payable accounts operating as Recognized expenses. expenses. accrued as Recognized onNo comparables suc

view Cable TV Co.,view Ltd. “Corporation”) Ltd. Co.,

Note 2: TAIWAN MOBILE CO., LTD. AND SUBSIDIARIES MOBILETAIWAN CO., LTD. AND MILLIONPAID 20% OF THE OR AT LEAST FROM TO $100 PURCHASE PARTIES AMOUNTING SALETOTAL RELATED TO OR (the Ltd. Co., Mobile Taiwan Teleservices Technologies & Taiwan Ltd. Co., Network Fixed Taiwan Media Co.,TFN Ltd. Cable TV Corporation Mangrove Global Ltd. Union Cable TV Co., Yeong Jialeh Cable TV Ltd. Co., Phoenix Cable TV Ltd. Co., Note 1: (In Thousands of New of Thousands Dollars) (In Taiwan YEAR ENDED DECEMBER ENDED YEAR 31, 2009 Note 6: Note 3: Note 4: Note 5:

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

------

TABLE Debts

Allowance for Badfor Allowance

------41 14 167 8,989

240,632 148,488 240,584

Subsequent Period Subsequent Amount Received in Received Amount

------

Action Taken

Overdue ------

Amount

.00 5.92 6.06 5.37 5.57 6.11 Rate 11.81 11.07 13.33 13.37 11 14.13 Turnover Turnover

116 2,859 5,767 1,933 3,020 53,418 65,804 11,240

368,183 294,399 268,588 134,306 115,567 307,000 680,139 700,055 200,036 360,127 2,003,836 3,500,000 4,679,014 2,274,467 8,055,329

IN CAPITAL IN CAPITAL s -

- receivable 48 Ending Balance Ending - receivable Accounts receivables Other receivables Other receivable Other receivables Other receivables Other receivable Accounts receivable Accounts receivable Accounts receivables Other receivables Other receivable Accounts receivable Accounts Accounts receivables Other receivable Accounts receivables Other receivable Accounts receivables Other receivable Accounts receivables Other receivable Accounts receivables Other

(B is(B A’s)

substance Nature of Relationship of Nature Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary parent Ultimate Parent parent Ultimate Parent Subsidiary Subsidiary in party Related Parent Parent Parent Parent

td.

141

(B)

ted Party ted Chap. 8 Financial Report Rela he Corporation he L Co., Network Fixed Taiwan Co., Ltd. TFN Media Ltd. Co., Cellular Taiwan Co., Ltd. TFN Media Ltd. Co., TCC Investment Corporation The Ltd. Co., Network Fixed Taiwan T Ltd. Co., Cellular Taiwan Ltd. TV Co., Cable Phoenix Ltd. TV Co., Jialeh Cable Yeong Ltd. Co., Broadcasting WinTV Co., Ltd. TFN Media Co., Ltd. TFN Media Co., Ltd. TFN Media Co., Ltd. TFN Media

(A) Co., Ltd. Co.,

td. Company Name Company eleservices & Technologies Co., Ltd. Co., Ltd. Technologies & eleservices view Cable TV Cable view DECEMBER 31, 2009 DECEMBER Dollars) Taiwan New of (In Thousands SUBSIDIARIES AND LTD. CO., MOBILE TAIWAN PAID OF THE 20% OR $100 MILLION LEAST TO AT AMOUNTING PARTIES RELATED FROM RECEIVABLES “Corporation”) (the Ltd. Co., Mobile Taiwan Ltd. Co., Cellular Taiwan Taiwan T Ltd. Co., Network Fixed Taiwan Co., L TFN Media Ltd. TV Co., Cable Phoenix Ltd. TV Co., Cable Union Global Ltd. TV Co., Jialeh Cable Yeong

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

Note excluding TABLE

) ) A NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA N NA NA NA NA NA NA NA NA NA NA (37,526 (33,120 shares, shares, and 4) 3,115,006

’ s

Investment Investment $

Income (Loss) Income

) ) ) ) ) ) ) ) )

96 22 45 14 40 (56 (56 457 (231 (145 (131 2,465 5,386 1,3 ( Corporation 42,400 72,961 47,872 42,400 57,320 (75,203 (33,120 (32,871 166,870 502,577 160,341 166,870 131,110

2,648,823 2,195,548 1,012,976 the Investee

Net Income Income Net (Loss) of the of (Loss) $ US$ US$ US$ US$

968 780 8,415 3,872 3,346 1,409 1,403

86,982 89,199 10,950 93,063 20,023 211,974 192,615 191,178 140,858 131,937 253,732 546,514 (Note 1)

Value 9,353,920 1,763,621 8,123,641 2,111,821 3,141,644 2,058,304 1,203,928 35,211,780 21,092,818 27,902,369 Carrying

, 2009 $ US$ US$ US$ US$

0 0 .00 .00 .00 .00 .00 .00 .00 .00 .00 .00 .00 .00 .00 .00 .00 .00 .00 .00 .00 .00 .00 0 6.694 3.34 December 31 49.9 98.5 29.53 96.66 99.99 92.38 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 10 Ownership Percentage of of Percentage CC shall be reduced by 1) downward adjusting $31,889,100 thousand, the carrying the carrying thousand, $31,889,100 adjusting 1) by downward be CC reduced shall

- - 100 100 400 400 share 8,400 3,749 2,272 1,200 2,100 6,248 1,300 1,000 1,300 2,000

Balance as of Balance 30,000 24,950 27,200 27,000 13,500 17,905 33,940 65,818 51,733 1 230,526 170,441 (Note 2) 2,100,000 Shares (Thousands)

- - -

1,000 5,005 5,816 1,300 1,300 84,000 82,882 10,800 12,000 10,000 20,000 249,500 272,000 270,000 135,000 133,358 252,141 397,703 841,413

2008 2,001,700 2,035,714 1,616,824 2,294,967 1,904,440 41,058,330 40,000,000

142 tax expenses ncome resulted TFN andfrom TFNI’s disposal gain from $ US$ US$ US$ US$ December 31,

, , 0

1,700 1,000 4,936 5,816 1,300 1,300 84,000 90,099 10,800 12,000 10,00 20,000 Chap. 8 Financial Report 249,500 272,000 270,000 135,000 133,358 179,047 397,703 841,413 Investment Amount Investment

2009 carrying cost of $52,195,059 thousand on T thousand of $52,195,059 cost carrying 2,035,714 6,629,149 1,616,824 2,294,967 1,904,440

37,558,330 21,000,000 20,451,000 22,769,109

’ s $ US$ US$ US$ US$ December 31

Corporation vice

the

- 49

sses and Products sses

Main Busine design provider service resales) (international simple nvestment Telecom engineering and IT service Rental Estate andReal Sale Investment Investment Investment Investment Investment Investment provider Cable TV service provider Cable TV service Investment providerFixed line service Telecom engineering and IT ser Investment and Mobiledevelopment application provider TV program added Cable broadbandvalue and I provider Cable TV service provider Cable TV service provider Cable TV service provider Cable TV service provider Cable TV service Investment provider service Telecommunications and ISR service Call center Investment Basketball team management service Call center

wan

iwan Location

Taipei, Taiwan Taipei, Ta Taipei, Taiwan Taipei, Taiwan Taipei County, Taiwan Taipei, Taiwan Taipei, Taiwan Taipei, Taiwan Taipei County, Taiwan Tai Kaohsiung County, VirginBritish Islands Taipei, Taiwan Taipei, Taiwan Taipei, Taiwan Beijing, China Taipei, Taiwan Taipei, Taiwan Taipei, Taiwan Taipei County, Taiwan Taipei County, Taiwan Taiwan Kaohsiung County, Taiwan Yilan County, County, Taiw Taipei Taipei, Taiwan Hong Kong Taipei, Taiwan Samoa Taipei, Taiwan ChinaXiamen,

owned - owned by TCC) are classified as treasury shares. Therefore,

td.

Ltd.

Co., Ltd. Co., Ltd. Co.,

Investee

book, 2) excluding $11,420,417 thousand unrealized gain from financial assets investment, 3) adding back $475,907 thousand i thousand $475,907 back adding 3) investment, assets financial from gain unrealized thousand $11,420,417 excluding 2) book,

’ s

view Cable TV view Cable TV view of $7,529 thousand. $7,529 of

gain Corporation Cellular Co.,Taiwan Ltd. Horizons New Taipei Co., Ltd. Co., Ltd. Media Technology Wealth Co., Ltd. Fu Tai Media Technology Co., Lt Media Technology Wealth Global Co., Ltd. Fu Media Technology Leh Jia Co., L MediaFu Technology Sin Co.,Forest Technology Global Media Ltd. Global Phoenix Cable TV Ltd. Co., Holding Co.TWM Ltd. Ltd. Co., Network Fixed Taiwan Communication Digital Taiwan Ltd. Co., Investment Ltd. Co., TCC Ltd. Communications TWM (Beijing) Broadcasting Ltd. WinTV Co., Media Co.,TFN Ltd. Investment Co., Development & TCCI Ltd. Yeong Jialeh Cable TV Ltd. Co., Cable TV Corporation Mangrove Phoenix Cable TV Ltd. Co., Ltd. Union Cable TV Co., Global UnionCo.,TFN Ltd. Investment HK LIMITED TFN Co., Teleservices Technologies & Ltd. Taiwan HoldingsTT&T Co., Ltd. Taiwan Super Basketball Co., & Ltd. Teleservices Technologies Taifu Xiamen

the

, 2009

shares shares held by TCCI, TID and TUI (all are subsidiaries 100% CO., LTD. AND SUBSIDIARIES CO., LTD. AND

’ s

echnology Co., Ltd. Co., echnology

Investor

DECEMBER31 Corporation obile Co., Ltd. (the (the Ltd. Co., obile The 70.47% shares are held under trustee accounts. under 70.47%held trustee are shares recognition of upstream transactions upstream recognition of value value of total shares treasury on

Ltd. “Corporation”)

Note 2: TAIWAN MOBILETAIWAN THE OF SIGNIFICANT INFLUENCE INFORMATION INVESTEES ON COMPANY OTHER WHICH AND EXERCISES NAMES, LOCATIONS, Taiwan M Co., Ltd. Media Technology Wealth Co., Ltd. Fu Tai Media Technology Media T Wealth Global Co., Ltd. MediaFu Technology Sin Cellular Co.,Taiwan Ltd. Holding Co.TWM Ltd. Investment Ltd. Co., TCC Media Co.,TFN Ltd. Ltd. Co., Network Fixed Taiwan Co., Teleservices Technologies & Taiwan HoldingsTT&T Co., Ltd. Note 1: (In Thousands of New Taiwan Dollars U.S.New of Thousands Dollars) or Dollars (In Taiwan ENDED YEAR WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

- -

TABLE 2009 Inward Inward ccumulated ccumulated

A December 31, 31, December Remittance of of Remittance Earnings as of as of Earnings $

) )

1,403 3,872 45,230 124,826 as of 2009

$ December 31, 31, December US$ US$ Carrying Value Value Carrying (NT (NT$

) ) 40 22 709

1,290 (Loss)

(Note 3) US$ US$ (NT$ (NT$ Investment Gain Gain Investment

Investment indirect indirect the by investment Corporation’s subsidiary indirect the by investment Corporation’s subsidiary % Ownership of Ownership % Direct or Indirect Indirect or Direct of 100% ownership of 100% ownership

) )

1,300 4,872

41,909 157,064 2009

Outflow of Taiwan as of Taiwan Accumulated Accumulated December 31, 31, December US$ US$ (NT$ (NT$ Investment from from Investment

- -

Inflow

) -

255 8,221 NT$4.7213 as of December 31, 2009. December as of NT$4.7213 50 - = Investment Flows Investment

Outflow

$ US$ (NT$

) )

1,300 4,617

41,909 NT$32.238, RMB1 NT$32.238, 148,843

= low of

93,063 Outf S$ Taiwan as of Taiwan Accumulated Accumulated US$ U January 1, 2009 1, January (NT$ (NT$ (Note 2) Investment from from Investment 52,195,059

Commission, MOEA Commission, Authorized by Investment Investment by Authorized Upper Limit on Investment Limit Upper

e by the e by 143

Investment Type Type Investment & Technologies Co., Ltd. and Taiwan Cellular Co., Ltd., subsidiaries of the Corporation. of subsidiaries Ltd., Co., Cellular Taiwan and Ltd. Co., Technologies &

Chap. 8 Financial Report Mainland China through a through China Mainland third plac subsidiary, Corporation’s & Teleservices Taiwan Ltd. Co., Technologies a through China Mainland the by third place subsidiary, Corporation’s Ltd. Co., Cellular Taiwan

) )

in investment Indirect in investment Indirect

) ) 0,861

1,909

1,300 3,000 MOEA (Note 2) 41,909 96,714 US$1,300 US$5,300 (NT$ (NT$17 in Capital

US$ US$ Paid (NT$ (NT$ Total Amount of Total Amount by Investment Commission, Commission, by Investment

Investment Amounts Authorized Authorized Amounts Investment

and

made by Taiwan Teleservices Teleservices Taiwan by made s

O., LTD. AND SUBSIDIARIES AND LTD. O.,

) and Products and ) development design

Main Businesses Businesses Main service center Call application Mobile 064 909

, 7,

China as of as of China

US$1,300 US$4,872 (NT$4 (NT$15 The indirect investment indirect The The above amounts were translated into New Taiwan dollars at the exchange rate of US$1 rate exchange the at dollars Taiwan New into translated were amounts above The Calculation was based on audited financial statements. financial on audited based was Calculation December 31, 2009 31, December

Mainland Mainland Investee Accumulated Investment in Investment Accumulated Teleservices & & Teleservices Ltd. Technologies Communications Ltd. (Beijing) Company Name Company (In Thousands of New Taiwan Dollars or U.S. Dollars) U.S. or Dollars Taiwan New of (In Thousands 2: Note YEAR ENDED DECEMBER 31, 2009 DECEMBER ENDED YEAR TAIWAN MOBILE C MOBILE TAIWAN CHINA IN MAINLAND INVESTMENT Taifu Xiamen TWM 1: Note 3: Note

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

)

3,321 19,347 22,668 411,001 704,095 ( 5,245,758 5,949,853 5,538,852 5,561,520 Amount

$ $ SCHEDULE

- 52 -

accounts accounts Client

144 )

Note ( Each of the account was less than 5% of the total account balance. account total the of 5% than less was account the Each of

Chap. 8 Financial Report Thousands of New Taiwan Dollars) Taiwan New of Thousands Taiwan Fixed Network Co., Ltd. Co., Network Fixed Taiwan Other Ltd. Co., Telecom Chunghwa (Note) Other doubtful for Less allowance n I

LTD. CO., MOBILE TAIWAN ACCOUNTS RECEIVABLE 31, 2009 DECEMBER ( parties Related parties Third Note:

73 7,838 5,833 39,057 45,139 21,999 470,103 517,071 265,000 202,000 1,057,042 Amount

$ $ SCHEDULE 1

4, 2010

Due Date Due 5, 2010 January January

) )

Otherwise) )

32.238 32.238 - tated 46.294 51 -

rate at US$1=NT$ at rate

rights

Item

purchase (exchange rate at US$1=NT$ rate at (exchange (exchange

ew Taiwan Dollars, Unless S Unless Dollars, Taiwan ew

(exchange rate at EUR1=NT$ rate (exchange

with re ncy deposit ncy

bonds with repurchase rights repurchase bonds with deposits

currency deposits deposits currency curre - - 1,570.25 1,211,527.94 1,211,527.94 1,400,193.62 term bills term - EUR US$ US$ Foreign Checking deposits Demand Foreign n Thousands of N of n Thousands I

LTD. CO., MOBILE TAIWAN CASH AND CASH EQUIVALENTS banks in Cash Government Short deposits Time on hand Cash funds Revolving DECEMBER 31, 2009 DECEMBER ( WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

Equity 211,974 192,615 and 5) and (Notes 52,195,05

$ Market Price Market or Net

SCHEDULE

211,974 192,615 9,353,920 9,758,509 Amount

$ $

49.90 100.00 100.00 % of % Ownership Ending Balance Ending

30,000 24,950 27,20 Shares Thousand

) )

(37,526 (33,120 3,253,699 3,183,053 justments Method (Note 3) on Equity

$ $ Ad

- -

) 2

9,025,230 9,025,230

(Note Amount

$ $

- -

Decrease

350,000 Shar Thousand

- -

54 -

249,500 249,500

(Note 1) Amount

) ) $ $

(5,829 (6,659 28,965 Increase

249,500 122,216 5,525,230 3,500,000 9,025,230 3,044,360 3,183,053

24,950 230,042

$ $ $ $ $

Thousand

225,735 Amount 15,125,451 15,351,186

$ $

145

27,200 Beginning Balance Beginning 149,958 Chap. 8 Financial Report

Shares Thousand

Otherwise) following: the cluded following: the cluded

Stated Stated

NT$10 NT$10 NT$10 ion gain (loss) on financial assets of investees. of assets on financial (loss) gain ion Taiwan Cellular Co., Ltd. Ltd. Co., Cellular Taiwan included the following: the included Par Value Par

, Ltd. , ACCOUNTED FOR USING EQUITY METHOD Taiwan Cellular Co., Ltd. Co., Cellular Taiwan method investments in investments method method investments in investments method - -

from evaluation evaluation from

in equity in equity

djustment djustment ation was based on audited financial statements as of December 31, 2009. 31, as of December statements financial on audited based was ation crease crease INVESTMENTS in Distributing cash dividends by by cash dividends Distributing of reduction Capital investees. from income investment Recognized of investees. adjustment translation in cumulative changes Recognized in revaluat changes Recognized investees. of cost as pension recognized notloss in net changes Recognized investees. of in capital in paid changes Recognized IN

. . . None of the above investments were provided as collateral. as provided were investments above the of None The decrease The Calcul Other a Other Taipei New Horizons Co. Horizons New Taipei a b a. b. c d. e.

: : : : : 5 1 2 4

3 Note

YEAR ENDED DECEMBER 31, 2009 DECEMBER ENDED YEAR Unless Dollars, Taiwan New of (In Thousands LTD. CO., MOBILE TAIWAN CHANGES Ltd. Co., Cellular Taiwan Ltd. Co., Horizons New Taipei Ltd. Co., Technology Media Wealth Total Note Note Note Note

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

217,151 3,500,000 2,048,901 5,766,052 Amount

$ $ SCHEDULE

- 53 -

Item was less than 5% of the total account balance. account total the of 5% than less was

146

for capital reduction reduction capital for

ER 31, 2009 ER RECEIVABLE Each of the account the Each of (Note)

Chap. 8 Financial Report n Thousands of New Taiwan Dollars) Taiwan New of n Thousands I

LTD. CO., MOBILE TAIWAN OTHER DECEMB ( Receivable provided financing for Receivable Other Note:

) ) )

814 10,591 35,928 35,929 ( ( 126,429 635,709 238,960 109,607 384,495 222,137 ( Value 1,572,359 2,208,068 2,208,882 2,198,291

$ $ $ $ SCHEDULE

Net Carrying

- - 27,403 15,650 43,053 129,343 129,343

$ $ $ $ Depreciation Accumulated

51,578 - 765,052 238,960 137,010 427,548 Cost 1,572,359 2,337,411 56

- $ $ $ $

OPERATING ASSETS s leased to others to s leased - allowance for price decline price for allowance impairment accumulated Land Buildings Land Buildings equipment Telecommunication

DECEMBER 31, 2009 DECEMBER Dollars) Taiwan New of (In Thousands LTD. CO., MOBILE TAIWAN NON Asset net charges, Deferred impairment Less accumulated assets Idle Less Less WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

32,600 21,298 392,953 485,455 897,906 3,866,289 2,385,587 1,285,920 2,142,596 1,620,547 Ending Balance 58,134,357 67,847,349 28,637,272 30,434,884 39,033,012

$ $ SCHEDULE SCHEDULE

) ) ) ------7,373 5,727 thousand. (7,373 (5,727

4,686,400 4,686,400 (4,686,400

$ $ $ $ $

Reclassification

30,527,264

- - - - -

1,569 61,997 53,421 595,995 561,498 7,345,415 8,003,407 5,859,791 6,474,710 Decrease

$ $ $ $ $

Changes for the Period for the Changes - - -

9,490 1,637 49,173 10,621 65,152 payments payments included capitalized interests amounting to $16,685

665,822 676,949 533,511 - 6,343,324 7,001,781 3,869,419 Increase

55 $ $ $ $ $ -

0,166 69,825 100,333 343,780 420,303 92

3,866,289 2,385,587 1,285,920 2,065,396 2,439,097 Balance 60,783,882 70,487,407 28,153,739 29,907,813 43,018,691 Beginning $ $

PROPERTY ANDPROPERTY EQUIPMENT

s of News of Dollars) Taiwan IN

The total insurance for property and equipment and assets leased to others amounted to $ othersto to leased and amounted assets totalproperty for The equipment insurance The increase of the construction thousand. in progress and advance aneous equipment

communication equipment communication

Land Buildings equipment Telecommunication equipment Office Leased assets Miscell Buildings Tele equipment Office Leased assets Miscellaneous equipment payments

YEAR ENDED DECEMBER ENDED YEAR 31, 2009 Thousand (In MOBILETAIWAN CO., LTD. CHANGES Cost Accumulated depreciation advance and progress in Construction equipment and property Net Note 1: Note 2:

321,521 1,581,702 1,903,223 Amount

$ $ SCHEDULE

147

Chap. 8 Financial Report

- 58 -

sion

Suppliers

LTD. CO., MOBILE TAIWAN ACCOUNTS PAYABLE 31, 2009 DECEMBER Commis Communication National (Note) Other Note: balance. total account the 5% of than less was account the of Each (In Thousands of New Taiwan Dollars) Taiwan New of (In Thousands WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

or None None None None Mortgage Guarantee

SCHEDULE SCHEDULE

Line 2,200,000 3,000,000 2,000,000 Credit 10,000,000 17,200,000

$ $

500,000 300,000 2,200,000 2,000,000 5,000,000 Amount

$ $

0.60 0.59 0.57 0.57 Rate Interest

- 57 -

January 29, 2010 29, January 2010 29, January 2010 29, January 2010 29, January

- - - -

10, 2009 2009 10, 2009 30, 2009 30, 2009 30, Financing Period Financing

cember

December De December December

148

and Creditor and Chap. 8 Financial Report

pe - TERMBORROWINGS Taiwan Cooperation Bank Bank of Taiwan Bank Hua Nan Commercial Bank First Commercial Bond Ty

MOBILETAIWAN CO., LTD. SHORT DECEMBER200 31, Unsecured loans (In Thousands of New of Thousands Dollars) (In Taiwan

156,349 1,355,332 2,227,773 3,739,454 Amount

$ $

SCHEDULE

- 60 -

S Nature

payables

s of New Taiwan Dollars) Taiwan New s of

for equipment and constructions constructions and equipment for

added tax

LTD. CO., MOBILE TAIWAN OTHERPAYABLE Payables Value Other DECEMBER 31, 2009 DECEMBER (In Thousand WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

842,491 406,548 333,678 328,898 304,752 1,167,974 1,317,400 4,701,741 Amount

$ $ SCHEDULE

59 -

llars)

Nature

and maintenance expenses expenses and maintenance

LTD. CO., MOBILE TAIWAN ACCRUED EXPENSES Do Taiwan New of (In Thousands bonuses and Salaries Commissions directors to remunerations and employees to Bonus fees service Professional BTS expenses Repair (Note) Other Note: balance. account total the of 5% than was less item the of Each DECEMBER 31, 2009 DECEMBER

943,794 922,666 467,505

8,941,581 6,448,639 2,977,141 1,785,716 1,638,978 1,606,407 1,433,498 27,165,925 Amount

$ $

SCHEDULE 1

149

Chap. 8 Financial Report

62 -

)

(Note 1) (Note

Item

cost

ssion fee and 3G license amortization license 3G and fee ssion line charges line

Including Including airtime and interconnection charges paid to other telecommunication providers. service and equipment. network telecommunication maintaining for expenses Including - service costs service costs

eased nterconnection I Depreciation sold goods Cost of L Rents conce 2G constructions and materials Maintenance stations base radio of expense and utilities Administrative fee usage Frequency 2) (Note Other

LTD. CO., MOBILE TAIWAN COSTS OPERATING 31, 2009 DECEMBER ENDED YEAR Telecom 1: Note 2: Note (In Thousands of New Taiwan Dollars Taiwan New of (In Thousands WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

34 109

599,482 569,911 553,142 375, 329,792 Total 5,952,338 2,005,9 1,320,733 1,510,289 13,216,730

$ $

SCHEDULE 1

- 50,522 261,172 599,482 529,052 530,265 222,359 681,164 1,142,344 4,016,360

$ $

Administrative

40,859 22,877

- 863,590 324,587 107,433 829,125 5,952,338 1,059,561 9,200,370 63 - Marketing

$ $

and postage postage and

150 Item

and pension and

Chap. 8 Financial Report expenses

LTD. CO., MOBILE TAIWAN OPERATING EXPENSES 31, 2009 DECEMBER ENDED YEAR Dollars) Taiwan New of (In Thousands Commissions Salaries fees service Professional debts Bad charges Service Depreciation Advertising Telecommunication (Note) Other Note: balance. account total the of than 5% less was item Each

943,794 922,666 467,505

8,941,581 6,448,639 2,977,141 1,785,716 1,638,978 1,606,407 1,433,498 27,165,925 Amount

$ $

SCHEDULE 1

62 -

)

(Note 1) (Note

Item

cost

ssion fee and 3G license amortization license 3G and fee ssion line charges line

, ) ” in

and ,

audit 2008

. rules and ended and bonuses bonuses and

’ Corporation “ then then 2009

al al position, results 31 ,

(the (the years ed ed financial statements financial financial statements are ccounting ccounting Research and A urance urance about whether the

express an opinion on these December statements statements of income, changes

as of financial financial statements. An audit also of Financial Statements by Certified Certified by Statements of Financial consolidated consolidated cash cash flows for the consolidated consolidated Taiwan Mobile Taiwan Co., Ltd. Mobile

ting ting from January 1, 2008. The mentioned ’ report and consolidat

consolidated consolidated nd subsidiaries a

ended. ended. These uditors

- ese version prepared and used in the Republic of China. of used and China. in the prepared Republic ese version 1 - its its consolidated and and the related

balance sheets of sheets balance years years then language language a Notice to Readers to Notice 2008 , - ’ report and the accompanying consolidated financial statements ns ns and the Rules Governing the Audit Governing the Rules

and and

for for the

s. auditors financial financial statement presentation. We believe that our audits provide a ce with ce operatio 2009 consolidated consolidated Taiwan Taiwan Mobile Co., Ltd. audit its 31 , financial statements referred to statements infinancial above present allfairly, the material respects,

consolidated consolidated results of December to to the consolidated financial statements, in March 2007, the based on our based consolidated consolidated

as of the ed financial statements are those generally accepted and applied in the Republic of China the Republic in applied and accepted generally those are statements financial ed ed the accompanying ed the accompanying

financial financial statements are free of material misstatement. An audit includes examining, on a test financial financial position of

ssessing ssessing the accounting principles used and significant estimates made by management, as well as audit consolidated consolidated

holders’ holders’ equity and cash flows the the convenience of readers, the accompanying accompanying consolidated financial statements are intended only to present the financi hare

e conducted our audits in accordan in our audits e conducted accounting principles generally accepted in the Republic of China. Republic in the accepted generally principles accounting As stated in Note 3 conformity conformity with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers Development Development Foundation issued an that interpretation requires companies to recognize employees remuneration paid to directors and supervisors earnings. from as appropriations as recorded were previously remuneration and bonuses expenses star 20, 2010 January in s and the the responsibility of the Corporation’s management. statements financial Our responsibility is to W Public Accountants and auditing standards generally accepted in the Republic of China. Those consolidated standards standards require that we consolidated plan and perform the audit to obtain reasonable includes a ass evaluating the overall opinion. our for basis reasonable In our opinion, basis, basis, evidence supporting the amounts and disclosures in the Shareholders and of Directors Board The and subsidiaries INDEPENDENT AUDITORS’ REPORT Ltd. Co., Mobile Taiwan We have The of operations and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to such consolidat For have been translated into English from the original fromChin into the original English have translated been If there is any conflict between the English version and the original interpretation of the two Chinese versions, the version Chinese or any difference in the shall prevail.

and

151 Chap. 8 Financial Report

and Subsidiaries Subsidiaries and

Financial Statements for the for Statements Financial Independent Auditors’ Report Auditors’ Independent Years Ended December 31, 2009 2008 and 2009 31, December Ended Years Taiwan Mobile Co., Ltd. Consolidated 2009 Consolidated Financial Statements Financial 2009 Consolidated WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

)

------3 3 6 5 3 8 1 9 6 1 1 9 4 4

29 15 45 41 14 19 55 55 (36 100 %

) )

- - -

2008 000 1,166 2,862 (5,897 68,096 90,388 27,095 17,840 33,935 186,506 431,101 346,316 630,723 2,794,305 2,798,352 5,909,947 4,762,548 2,284,294 7,500,000 8,000,000 5,200, 1,067,427 8,775,819 3,493,759 3,406,744 26,735,149 13,200,000 41,002,576 38,009,254 12,406,775 17,716,013 50,902,598 50,936,533 91,939,109 Amount (32,948,832

$ $

)

------8 1 3 2 7 5 2 1 9 9 1 1 5 4

29 39 44 10 16 19 61 61 (37 100 %

) )

- - - 5

2009 ,617 3,743 9,883 (3,797 60,624 12,840 12,011 63,624 799,638 277,571 524,869 324,243 125,956 605,40 6,800,000 2,447,324 1,665,244 5,806,865 4,321,341 2,057,643 8,000,000 8,000,000 1,055,604 8,775,819 3,639,302 3,350,000 24,761,119 33,816,723 38,009,254 13,943,913 16,155 52,073,226 52,083,109 85,899,832 Amount (31,889,100

$ $

current (Notes 2 and 20) -

152

non

HOLDERS’ EQUITY HOLDERS’

ES term liabilities (Notes 16 and 23) 16 and (Notes liabilities term

- HARE

current

Chap. 8 Financial Report

$10 par value

- investments term term liabilities term - -

term borrowings (Note 13) 14) (Note payable bills and notes term term borrowings (Note 17) (Note borrowings term

- - TERM LIABILITI - Total current liabilities Total long liabilities other Total liabilities Total Authorized: shares thousand 6,000,000 Issued: shares thousand 3,800,925 From convertible bonds transactions stock treasury From From long From employee stock options Other reserve Legal reserve Special earnings Unappropriated adjustments translation Cumulative Net loss not recognized as pension cost stock Treasury instruments financial on (losses) gains Unrealized equity shareholders’ Total - L Capital stock surplus Capital earnings Retained equity Other BILITIES AND S Short Short payable Notes 24) (Note payable Accounts 20) 2and (Notes payable taxes Income 24) (Note expenses Accrued 2) (Note payables Other Advance receipts (Note 15) long of portion Current deposits Guarantee liabilities current Other 23) and 16 (Notes payable Bonds Long deposits Guarantee liability tax income Deferred Other (Note 2) equity shareholders’ Parent’s interests Minority LIA CURRENT LIABILITIES LONG OTHER LIABILITIES SHAREHOLDERS’ EQUITY (Notes 2and 19) TOTA

2 -

)

------4 7 1 1 1 3 1 4 7 4 1 3 3 8 3 2 5 1 3 4

14 71 86 51 54 11 24 (35 100 %

)

2008 ,534 ,653 82,485 66,589 38,015 12 61,577 30,112 241,442 233,029 426,418 359,119 823,697 149 249,500 500,000 173,887 543,924 228,269 393,438 338,151 136,821 3,868,062 6,411,711 2,515,168 3,264,668 6,087,548 3,918,908 1,285,921 2,240,123 2,982,128 7,477,091 2,686,541 1,382,000 4,098,653 2,478,484 4,119,087 12,712,754 65,293,248 78,999,635 46,738,103 49,720,231 10,485,048 22,122,369 91,939,109 Amount (32,261,532

$ $

)

------3 8 1 1 3 1 4 7 5 1 3 3 8 3 2 5 1 1 2 4

13 73 89 51 54 12 25 (38 100 %

)

- -

2009 3,944 68,498 29,132 32,157 71,471 33,184 177,821 163,998 319,201 472,058 696,279 211,974 500,000 148,627 438,611 311,726 388,391 421,839 139,332 2,999,036 6,637,930 2,498,980 3,210,954 6,097,370 3,924,993 1,285,920 2,367,848 2,230,518 6,729,382 2,511,760 1,382,000 3,926,944 1,631,570 3,331,469 11,600,054 63,148,505 76,973,263 44,313,099 46,543,617 10,485,941 21,213,738 85,899,832 Amount (32,660,164

$ $

s 2, 23 and 27)

current (Notes 2 and 9)

S tes 2 and 6) current (Note current (Notes 2 and 8)

non - current (Notes 2 and 5)

- - current (Notes 2 and 20)

- non

current (Notes 2 and 20) non

- -

third parties (No parties third related parties (Notes 2 and 24)

term investments (Note 7) (Note investments term - - -

18, 24 and 25) and 24 18,

nication equipment nication sale financial assets assets financial sale -

for -

accumulated depreciation accumulated Total current assets current Total investments Total cost Total equipment and property Net assets intangible Total assets other Total

sets leased to others (Notes 2 and 12) and 2 (Notes to others sets leased Land Buildings Telecommu equipment Office assets Leased equipment Miscellaneous 11) (Note relationship Customer Operating rights (Note 11) Other intangible assets Cash and cash equivalents (Notes 2, 4 and 24) and 4 2, (Notes equivalents cash and Cash Available assets financial derivative Hedging receivable Notes receivable Accounts receivable Accounts Other receivables Inventories (Note 2) Prepayments (Note 24) assets tax income Deferred 25) and 24 (Notes deposits time Pledged Other current assets 7) and 2 (Notes method equity the using for accounted Investments Prepayment for long cost at carried assets Financial Bonds measured at amortized cost Cost Less equipment for payments and progress in Construction concession 3G cost software Computer 11) (Note Goodwill Other intangible assets As 12) 2 and (Notes assets Idle deposits Refundable Deferred charges (Note 2) assets tax income Deferred Other (Notes 2, TAIWAN MOBILE CO., LTD. AND SUBSIDIARIES AND LTD. CO., MOBILE TAIWAN CONSOLIDATEDBALANCE SHEET DECEMBER31, 2009 AND2008 ASSETS CURRENT ASSETS INVESTMENTS 24) 2,10 and (Notes EQUIPMENT AND PROPERTY 2) (Note ASSETS INTANGIBLE OTHER ASSETS TOTAL statements. financial consolidated the of part integral an are notes accompanying The (In Thousands of New Taiwan Dollars, Except Par Value) Par Except Dollars, Taiwan New of Thousands (In 2010) 20, January dated report audit Touche & Deloitte (With WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

22 22

5.18 5.17

Tax

After After

Income Income $ $

(Concluded)

2008 2008

10,863

6.67 6.65 15,371,386 15,382,249 Amount Tax

Before Before Income Income $ $ $ $

20 20

4.66 4.65

Tax

After After

Income Income $ $

2009 2009

1,654

6.09 6.07 13,888,862 13,890,516 Amount

Tax

Before Before Income Income $ $ $ $

4 -

Dollars, Except Earnings Per Share) Per Earnings Except Dollars,

STATEMENTS OF INCOME STATEMENTS

Shareholders of the parent of Shareholders interests Minority Basic Diluted TAIWAN MOBILE CO., LTD. AND SUBSIDIARIES AND LTD. CO., MOBILE TAIWAN CONSOLIDATED TO ATTRIBUTED 21) (Note PER SHARE EARNINGS statements financial consolidated the of part notes an integral are accompanying The YEARS ENDED DECEMBER 31, 2009 AND 2008 AND 31, 2009 DECEMBER ENDED YEARS Taiwan New of (In Thousands 20, 2010) January dated report audit Touche & (With Deloitte

------

0 7 1 1 2 2 1 3 8 46 54 16 23 31 30 22 % 10

- - (Continued)

2008 74,935 49,859 11,451 18,837 23,656 63,909 212,756 103,583 262,759 316,823 689,043 4,857,476 1,032,166 1,461,851 2,257,296 5,154,461 69,296,096 31,720,111 37,575,985 10,956,669 15,814,145 21,761,840 20,536,710 15,382,249 Amount

$ $

------

7 1 1 3 1 4 7 48 52 15 22 30 27 20 % 100

- 153

2009 71,453 27,605 16,501 10,405 49,044 37,526 24,578 16,188 81,541 265,387 204,780 596,131 561,364 Chap. 8 Financial Report 4,769,956 1,627,693 2,397,934 4,755,815 68,470,232 33,195,238 35,274,994 10,056,904 14,826,860 20,448,1 18,646,331 13,890,516 Amount

$ $

3 -

thod

(Note 2) (Note

STATEMENTS OF INCOME STATEMENTS

and 6) and gain income operating losses and expenses operating

- - n

Total operating expenses operating Total non Total no Total OPERATING INCOME AND GAINS LOSSES AND EXPENSES OPERATING quipment (Notes 2 and 24) 2 and (Notes quipment - - e 7) 2 and (Notes Marketing Administrative income Penalty 24) 2 and (Notes income Rental and equipment property of Gain on disposal 2) (Note income Interest 2) (Note income Dividend 2) (Note net investments, of Gain on disposal 2 (Notes Other and of property retirement and Loss on disposal and 10) 2 (Notes expenses Interest 2) (Note investments of Loss on disposal me equity the under recognized loss Investment expenses Financial and 12) 2, 8 (Notes loss Impairment 2) (Note Other TAIWAN MOBILE CO., LTD. AND SUBSIDIARIES AND LTD. CO., MOBILE TAIWAN CONSOLIDATED 2008 AND 31, 2009 DECEMBER ENDED YEARS Share) Per Earnings Except Dollars, Taiwan New of (In Thousands 24) 2 and (Notes REVENUES OPERATING and 24) 2, 22 (Notes COSTS OPERATING GROSS PROFIT and 24) 2, 22 (Notes EXPENSES OPERATING OPERATING INCOME NON NON TAX INCOME BEFORE INCOME 20) 2 and (Notes TAX EXPENSE INCOME CONSOLIDATED NET INCOME WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

) ) ) ) ) ) ) ) ) ) )

- - - -

(592 (1,148 27,095 97,508 (18,116 (26,105 (52,695 (25,114 112,306 134,541 (181,155 (528,012 Total 1,056,478 Equity (7,601,851 (1,059,732 32,405,161 24,604,039 15,382,249 12,440,639 50,936,533 36,967,669 13,890,516 52,083,109 (13,968,864

$ $ Shareholders' Shareholders'

) ) ) )

------

(592 1,654 9,883 (1,148 10,863 33,935 33,935

(25,114 552,232 552,232 (528,012 Interests Minority

$ $

es ) ) ) ) ) )

------(5,897 (5,897 97,508 63,624 (64,043 (64,043 (39,362 (52,695 122,216

Instruments on Financial on $ $

Unrealized Loss Unrealized

) ) ) ) ) )

------732

8,954,907 1,059,732 (1,059, (40,844,007 (40,844,007 (32,948,832 (32,948,832 (31,889,100

$ $

Treasury Stock Treasury

) )

s ------a

Not

1,534 1,534 1,328 2,862 2,862 (6,659 (3,797

Net Loss Net Pension Cost Pension $ $ Recognized

)

------

5,764 5,764 (5,829 12,076 17,840 17,840 12,011

154 Cumulative Translation Adjustments $ $

) ) ) )

------

Chap. 8 Financial Report

(18,116 (181,155 Total (7,601,851 25,959,268 18,158,146 15,371,386 33,529,532 19,560,668 13,888,862 33,449,530 (13,968,864

$ $

) ) ) ) ) )

------7 86,819 56,744

(18,116

(661,300 (181,155

2,344,627 2,266,755 (7,601,851 (1,537,138 - 10,720,230 15,371,386 17,716,013 13,888,862 16,155,61 (13,968,864

$ $ 5

- Unappropriated

) )

------Retained Earnings Retained

(86,819 (56,744 3,493,563 3,406,744 3,406,744 3,350,000 3,350,000

$ $

Special Reserve Special

------

661,300 1,537,138 11,745,475 12,406,775 12,406,775 13,943,913 13,943,913

$ $ Legal Reserve Legal

) )

------(147 2,578 (3,254 27,095

134,541 8,785,159 8,785,159 3,485,732 12,297,839 12,297,839 12,431,704

$ $

Capital Surplus

------

Issued 38,009,254 38,009,254 38,009,254 38,009,254 38,009,254

$ $ Capital Stock

Authorizedand

method investments method investments - -

TS OF CHANGES IN SHAREHOLDERS' EQUITY SHAREHOLDERS' IN OF CHANGES TS n equity n

2008

, 2008

cash cial instruments, net instruments, cial

- NT$2.54326 per share per NT$2.54326 share per NT$4.68704

- -

iation of the 2007 earnings Legal reserve Legal reserve special of Reversal Remuneration to directors and supervisors Bonus to employees dividends Cash reserve Legal reserve special of Reversal dividends Cash TAIWAN MOBILE CO., LTD. AND SUBSIDIARIES AND LTD. CO., MOBILE TAIWAN STATEMEN CONSOLIDATED BALANCE, JANUARY 1 Appropr appropriation after Balance in income net Consolidated Buyback of issued shares Compensation cost recognized from employee stock options equity in equity of change on Adjustments subsidiaries by held shares Corporation's the of Disposal finan on gain Unrealized subsidiaries by interests minority to paid dividends Cash Decrease in minority interests 2008 31, DECEMBER BALANCE, earnings 2008 the of Appropriation appropriation after Balance 2009 in income net Consolidated i equity of change on Adjustments employees to stock treasury of Transfer Unrealized loss on financial instruments, net Compensation cost recognized from employee stock options subsidiaries by interests minority to paid dividends Cash Decrease in minority interest 2009 31, DECEMBER BALANCE, statements. financial consolidated the of part integral an are notes accompanying The 2010) 20, January dated report audit Touche & Deloitte (With YEARS ENDED DECEMBER31, 2009 AND2008 (In Thousandsof NewTaiwan Dollars) WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) - - -

9,691 2,688 8,440 (1,148 12,292 (31,418 (18,116 103,610 (249,500 (900,000 (181,155 2008 6,100,000 8,000,000 7,028,091 3,868,062 (Continued) (1,222,018 (5,993,202 (7,601,804 (2,500,000 (1,594,753 (7,313,488 (9,434,461 (2,450,000 (1,059,732 (3,160,029 13,509,828 (19,340,000 (24,816,247

$ $

) ) ) ) ) ) ) ) ) ) ) ) ------952 (592

5,358 5,356 5,047 (3,742 (3,474 (4,463 (29,545 (21,401 799,638 (869,026 2009 6,800,000 2,500,000 1,056,478 3,868,062 2,999,036 (6,747,699 (7,700,000 (7,500,000 (13,968,840 (18,067,736

$ $

7 -

for using the equity the equity for using

term borrowings payable term bills notes and - -

term notesterm payable - STATEMENTS OF CASH FLOWS OF CASH STATEMENTS term borrowings term

- term investments accounted accounted investments term borrowings term - - long

from investees' capital return capital investees' from of bonds payable of bonds

Net cash used in investing activities investing in used Net cash activities financing in used Net cash method T DECREASE IN CASH AND CASH EQUIVALENTS Decrease in pledged time deposits time in pledged Decrease Proceeds deposits in refundable Decrease goodwill in Increase assets idle of disposal from Proceeds long in Increase paid dividends Cash in Decrease payable in bonds Decrease in short (decrease) Increase long in Increase employees to stock treasury of Transfer in short (decrease) Increase deposits in guarantee Decrease interest to minority return Capital interests in minority Decrease interests to minority paid dividends Cash stock of treasury the disposal from Proceeds reduction Capital Issuance long of Repayment stock of treasury Buyback employees to Bonus supervisors and directors to Remuneration SUBSIDIARIES YEARS ENDED DECEMBER 31, 2009 AND 2008 AND 31, 2009 DECEMBER ENDED YEARS Dollars) Taiwan New of (In Thousands TAIWAN MOBILE CO., LTD. AND SUBSIDIARIES AND LTD. CO., MOBILE TAIWAN CONSOLIDATED ACTIVITIES FINANCING FROM FLOWS CASH EFFECT OF EXCHANGE RATE CHANGES ACQUISITION OF CASH AND CASH EQUIVALENTS FOR NE CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR YEAR OF END EQUIVALENTS, CASH AND CASH

) ) ) ) ) ) ) ) ) ) ) ) ) ) ) - 4

9,660 (9,617 27,095 23,656 19,126 28,48 18,514 10,270 (23,543 (58,497 (54,565 (36,714 (68,105 (15,376 426,497 675,057 131,973 379,368 178,969 502,378 290,635 316,435 (262,759 (325,236 (112,395 (184,026 (218,254 (149,644 (140,919 2008 7,188,030 1,411,992 1,095,670 1,081,841 2,089,511 (Continued) (6,636,745 15,382,249 27,537,370

) ) ) ) ) ) ) ) ) ) ) ) ) ) - - 16 252

9,215 8,709 8,928 9,663 (1,909 (4,463 49,044 37,526 16,188 69,031 92,908 95,853 10,176 (12,860 (10,983 (97,414 (14,922 (11,066 605,708 134,541 104,424 127, 139,259 (874,448 (339,822 (103,478 (187,652 (220,214 2009 7,754,522 1,600,088 1,089,051 1,023,505 (1,133,108 (6,673,566 13,890,5 23,950,872

155

Chap. 8 Financial Report

- 6 -

sale financial assets sale financial -

for -

re cost and other intangible assets intangible and other re cost

third parties third parties related

- -

term notes payable notes term -

STATEMENTS OF CASH FLOWS OF CASH STATEMENTS

les

term capital lease receivables capital lease term -

Financial assets held for trading for held assets Financial receivable Notes receivable Accounts receivable Accounts receivables Other Long Inventories Prepayments assets current Other Notes payable payable Accounts taxes payable Income expenses Accrued payab Other receipts Advance liabilities current Other activities operating by provided Net cash Depreciation net and equipment, of property retirement and Loss on disposal Amortization taxes income Deferred debts Bad options stock employee from recognized cost Compensation investments of disposal on Loss (gain) net method, equity the under recognized loss Investment loss Impairment cost Pension on inventories loss of) (recovery for Provision Other long of Amortization liabilities and assets in operating Net changes activities: Consolidated net income net Consolidated operating by provided tocash net income net reconcile to Adjustments equipment and property of Acquisition charges deferred in Increase available of disposal from Proceeds softwa computer in Increase subsidiaries of Acquisition assets in other (increase) Decrease and equipment property of disposal from Proceeds SUBSIDIARIES AND LTD. CO., MOBILE AIWAN T CONSOLIDATED 2008 AND 31, 2009 DECEMBER ENDED YEARS Dollars) Taiwan New of (In Thousands ACTIVITIES OPERATING FROM FLOWS CASH ACTIVITIE INVESTING FROM FLOWS CASH WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 nses nses of at at could listed listed on

employees, employees, and and 4,552 If If there is any conflict

4,416

Corporation Corporation to provide services for 15

financial financial statements have been translated

and principles, the Corporation and subsidiaries and and the subsidiaries principles, Corporation Counter Securities Exchange (known as GreTai - rities rities Issuers and accounting principles generally the -

irect irect subsidiaries with at least 50% shareholding and - consolidated ent loss on assets, etc. Actual results may differ from 9 -

financial statements shall prevail. shall statements financial 200 8 impairm

ated ated in the Republic of China (ROC) on February 25, 1997. The AND SUBSIDIARIES

on the ROC Over consolidated consolidated

trading was was incorpor language language

Ltd. directors directors and supervisors, 156 concession operation license issued by the DGT. The 3G license allows the Corporation

Chap. 8 Financial Report ion of consolidat Basis The consolidated financial statements have been prepared in accordance with the Statement of Financial of Statement Financial the with in accordance prepared have been statements financial The consolidated Accounting Standards (SFAS) No. 7, “Consolidated Financial Statements,” and included the financial statements of the Corporation, its direct and ind the by other controlled Corporation. investees the of of the As equity majority obtaining shareholder’s the subsidiaries during the year, the company starts to consolidate the related revenues and expe the subsidiaries since the date of having the controlling interest. controlling the having of the date since the subsidiaries

Corporation’s Corporation’s shares began ORGANIZATION AND OPERATIONS Taiwan Mobile Co., Securities Securities Market) on September 19, 2000. On August 26, 2002, the Corporation’s shares were Exchange. Stock Taiwan the services. communication wireless renders mainly The Corporation years from 1997 onwards. It also entails the payment wireless of an annual license communication fee consisting of service 2% of total revenues. generation (3G) On March 24, 2005, the Corporation received the third Consolidation a. The Corporation’s services Telecommunications (DGT) of are the ROC. under The license allows the the type I license issued by the Directorate 31, 2018. to December license the of date the issuance from services to provide General of As of December 31, 2009 and 2008, the respectively. Corporation and subsidiaries had estimates. these For the convenience of readers, the accompanying into English from the original Chinese version prepared and between the used English version in and the the original Chinese version ROC. or any difference in the interpretation of the the Chinese versions, two SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ACCOUNTING OF SIGNIFICANT SUMMARY (hereinafter referred to as the “Group”) are required to make certain estimates and assumptions th affect the amounts of inventories, allowance for depreciation, doubtful pension, accounts, allowance provision remuneration to for for losses deferred on income decline in tax value assets, of bonus to employees, Presentation Basis of The consolidated financial statements accompanying have been prepared in with conformity the Guidelines Governing the Preparation of Financial Reports by Secu inaccepted the ROC. with conformity these In guidelines IWAN MOBILE CO., LTD. CO., MOBILE IWAN

1. 2. TA STATEMENTS FINANCIAL CONSOLIDATED TO NOTES YEARS ENDED DECEMBER 31, 2009 AND 31, 2009 DECEMBER ENDED YEARS Otherwise) Stated Unless Dollars, Taiwan New of (In Thousands

) )

- ) 50

320 146 844 270 6,812 Hurray! Hurray! 11,296 1,590 2,727 7,841 6,326 100% 849,930 838,634 46,443 16,595 31,876 29,193 (291,027 (610,979 (21,955 2008 103,610 154,886 123,010 123,010 130,248 3,259,187 7,500,000 7,531,939 6,636,745 (Concluded)

$ $

$ $ $ $ $ $

) - (395

(formerly (formerly named 1,842

16,685 25,318

470,605 453,920 402,160 2009 4,869,494 6,244,641 6,673,566

$ $ $ $ $ $

8 -

Beijing) Ltd. Beijing)

TWM Communications (Beijing) Ltd.

other

on April 24, 2008. The fair values of the assets and liabilities upon -

term liabilities term

STATEMENTS OF CASH FLOWS OF CASH STATEMENTS

Hurray! Times Communications (Beijing) Ltd.) Ltd.) (Beijing) Communications Times Hurray!

excluding interest capitalized interest excluding

able n acquired 100% shares of -

rtion of long rtion of

ceipts CASH INVESTING AND FINANCING ACTIVITIES - Cash paid for acquisition of property and equipment and property of acquisition for paid Cash

goodwill

SUBSIDIARIES AND LTD. CO., MOBILE IWAN

Interest paid Interest capitalized interest Less paid Interest tax paid Income po Current equipment and property of Acquisition payable in notes Decrease expenses accrued in Increase payables in other (increase) Decrease liabilities in other (increase) Decrease (formerly named named (formerly ercentage of equity interest equity of ercentage Times Times Communications (Beijing) Ltd.) acquisition were as follows: as were acquisition TA CONSOLIDATED 2008 AND 31, 2009 DECEMBER ENDED YEARS Dollars) Taiwan New of (In Thousands FLOW INFORMATION CASH OF DISCLOSURE SUPPLEMENTAL NON CASH INVESTING AND FINANCING ACTIVITIES The Corporatio Cash receiv Accounts Prepayments assets current Other and equipment Property assets Intangible assets Other payable Accounts expenses Accrued payables Other re Advance liabilities current Other Net P Add payable investment Less ( TWM Communications of acquisition for paid Cash statements financial consolidated the of part notes an integral are accompanying The 20, 2010) January dated report audit Touche & (With Deloitte WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

an)

Ltd.

) )

4 4

surviving

- - - (Concluded) Note (VoPier) merged

(Note (Note

) 3 The The Corporation

Ltd.

Holding and consolidated consolidated and Holding on statements financial into 2008 24, April September 1, 2008 1, 2008 2008. 1, Communications (Taiw Co., the former TT&T on September 1, 2008 with VoPier as the as renamed and company Taiwan Teleservices & Technologies Co., 2009 September 19, 2009 2009 (Note 9 .

Liquidated on October 1, 2008 TWM by acquired 100% Merged into TT&T on 2008 15, March on Liquidated Liquidated on May 15, 2008 Merged into TFN on January Merged into TFN on August Formerly VoPier Established on September 22, Merged into TCCI on 1, May on TFN into Merged

n September 1, 2008. 1, n September , 200 19 , ------1

3 Direct Direct 2008

100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

e cable TV and content distribution 09

wnership as of December owned subsidiary, WMT, plans to buy to buy plans WMT, subsidiary, owned ------O September 20 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 Percentage of of Percentage

to to acquire all th

unications service

Products 11 Ltd. - ining the authorities’ approval. authorities’ the ining elated business elated Operator) and development design IT and international simple resale (ISR) and management r maintenance and Main Businesses and Businesses Main Cable TV SO (System Investment application Mobile service center Call agency Insurance agency Insurance Equipment installation Telecommunications and service center Call team Basketball Investment service center Call Telecomm Investment Investment equipment sales Telecom

The The purchase will be settled using the Corporation’s treasury

Ltd.

(the Ltd.

Ltd.

Ltd. (TWM

Ltd. Ltd. Ltd. Ltd.

) Ltd. . (R&R) .

ormerly f

( Ltd. Co., Co.,

ervices Co., Co., ervices

nsurance Agency Agency nsurance Ltd. (TLIA) (TUC)

Subsidiary

Ltd.

Ltd. Ltd. (TSB) (TUI) ) (NCCTV) Holding) (Beijing) Times Hurray! named Communications (Beijing) Ltd. Technologies former TT&T) Co., Agency Insurance (TCPIA) Co., Co., Network S (TTN) Technologies Co., (TT&T) Ltd. Holding (TT&T Technologies Ltd. (TFNI) Co., TV Cable Coast North TWM Holding Co. Communications TWM Taiwan Teleservices & Property & Casualty TT&T I Life TT&T Communication United Taiwan Telecommunication Taiwan Taiwan Teleservices & Co., Basketball Super Taiwan Co., Holdings TT&T & Teleservices Taifu Xiamen TFN HK Co., Investment Union TFN Co., Investment TFN Inc Range & Reach

shares shares (up to 15.5% of total outstanding shares), and the remainder in cash. obta after deal the to close expects To expand its CATV business, the Corporation’s 100% Corporation’s the business, CATV its To expand a 100% stake in Cheng Ting Co., business of Kbro Co., Became a subsidiary of TCCI, which merged TFNI on TFNI merged which TCCI, of a subsidiary Became Became a subsidiary of TFN, which merged TTN on August 1, 2008. August TTN on merged which TFN, of a subsidiary Became o TT&T former the merged which TT&T, of a subsidiary Became

: : : 2 3 4

Investor

TFNM TCC Holding TWM TCC The former TT&T The former TT&T TFN TFN TFN TT&T TT&T Holding TT&T TFN TFN TFN TFNI Note 1: Note Note Note Note

, 2009,

of the ) ) )

1 2 2

representing representing ------owned 811,918 811,918 owned (Continued) Note (Note (Note (Note of total outstanding idation.

under trustee accounts trustee under December 31 on September 2, 2008 2008 2009 2009 TUI and TID TCCI, collectively thousand shares Corporation 21.36% shares. 2009 held 2009. Another 69.85% shares were held under trustee accounts. Merged into the Corporation Established on December 26, 28, February on Liquidated 10, August on Established As of Established on September 22, were shares 70.47% Another Liquidated on December 31,

- - - 1 0. 6.179 3.34 3 Direct Direct 2008 49.90 98.50 99.99 29.53 96.66 92.38 3

100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 reholders’ reholders’ equity accounts are

wnership as of December - - - 6.694 3.34 O 2009 98.50 99.99 29.53 96.66 92.38 157 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 Percentage of of Percentage

Chap. 8 Financial Report

number number

SO (System (System SO

Products ent ent 10 - Operator) Operator) service IT and phone cell agency service IT and Operator) Operator) Operator) Operator) Operator) Operator) Main Businesses and Businesses Main able TV SO (System provider service Wireless Investment Investm Investment Investment Investm Investment Cable TV SO (System Cable TV SO (system Equipment installation and business Broadcasts service network Fixed Equipment installation Investment Investment TV program producing Cable broadband service Cable TV SO (System Cable TV SO (System Cable TV Cable TV SO (System Cable TV SO (System C

Ltd.

Ltd. Ltd. (TID)

Ltd. Ltd.

Ltd. Ltd. (TFNM) Ltd. Ltd.

Ltd. Ltd. Co., Co.,

Ltd.

(FJLMT) (TDC)

Subsidiary

ia Telecommunications Telecommunications ia Ltd. Ltd. (WMT) (TFMT) (FSMT) (TYDB) (YJCTV)

Investment & & Investment Inc. (TAT) Inc. Ltd. Ltd. Co., Technology (GWMT) Co., Ltd. Co., Technology (GFMT) (GCTV) (PCTV) (TCC) Ltd. (TFN) Co., (TCCI) Development Co., (WTVB) (UCTV) Ltd. (MCTV) Corporation (SHCTV) TransAs Co., Technology Media Wealth Co., Technology Media Fu Tai Media Wealth Global Technology Media Leh Jia Fu Co., Technology Media Sin Fu Global Forest Media Co., TV Cable Globalview TV Cable Phoenix Co., Cellular Taiwan Co., Broadcasting Digital Yi Tai Co., Network Fixed Taiwan Communications Digital Taiwan Co., Investment TCC TCCI Co., Broadcasting TV Win TFN Media Co., Co., TV Cable Union Co., TV Cable Jialeh Yeong Mangrove Cable TV PCTV GCTV Co., TV Cable Ho Shin

Investor C Corporation Corporation WMT TFMT TFMT TFMT TFMT GWMT FSMT Corporation TCC TCC TCC TC TCCI TCCI TCCI TFNM TFNM TFNM TFNM TFNM TFNM For foreign subsidiaries using their local currency as their functional currency, assets and liabilities are translated at exchange rates in effect on the balance sheet date; sha translated translated using historical exchange rates and income statement accounts are translated using average period. the during rates exchange follows: as were entities consolidated the consolidation, of basis the above Under consol upon been eliminated have transactions and balances intercompany All significant b.

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

ation. sale financial - If the fair value average method. average

for - -

term term investment by the t cost. The accounting - cost cost that would have been available

ital ital leases are carried at the ong , impairment or amortiz , impairment he weighted he an These These bond portfolios are initially of of the instruments can be objectively

equity method. equity

recognized using trade date accounting. trade date using recognized derecognized - under

- f Financial Accounting Standards (SFAS), the cost of 13 20% or more of an investee’s outstanding voting shares or voting outstanding of an investee’s or more 20% - s own

average average cost. Before January 1, 2009, inventories are stated at the

- Equity Method he Equity Group t ss decreases and the decrease can be related objectively to an event

d d pension costs or other retirement benefit costs). If these assets are all Using publicly publicly traded and emerging stocks, etc, is measured a - nt. Significant additions, renewals, betterments, and interest expenses incurred . not allowed. is losses impairment of Reversal

158

n event Chap. 8 Financial Report to a term investments in which the the which in investments term - current assets (except for financial assets not under the equity method, assets for disposal, deferred ealizable ealizable value. Effective from January 1, 2009, however, inventories are stated at the lower of cost or assets. Impairment losses are recognized if a decrease in fair value In accordance with the newly revised Statement o acquisition is subjected to an initial analysis, and goodwill represents the excess of the cost of acquisition over the fair value of the identifiable net assets value. Goodwill is no longer amortized. related of identifiable net assets acquired exceeds non - the cost of investments, income the tax excess assets should and be prepai assigned reduced to to zero, the remaining excess should be 2006, recognized as the unamortized extraordinary balance gain. of the excess Starting of January the 1, acquisition cost of the l Long equity method over the equity in the investee’s net assets value is also no longer amortized and applies the as goodwill. treatment accounting same t by is determined sold investment an of loss gain or resulting the and cost The at Cost Carried Assets Financial Inventories Inventories are recorded at weighted If there is active no for market an instrument and equity a fair reliable value cannot be estimated, the equity instrument, including non for the dividends from financial assets carried at cost is the same as that for If there is objective evidence of impairment loss as of the balance recognized. sheet date, impairment loss should be If the impairment lo exercise significant influence on an investee are accounted for accounted are investee on an influence significant exercise occurring after impairment loss recognition, the impairment loss should be reversed. This reversal should not result in the carrying amount of the financial asset exceeding the amortized lower lower of the cost or market value. r Market value is evaluated on the net basis of realizable replacement value. cost or net items. individual When comparing cost and net realizable value, for inventories Accounted Investments are evaluated by Bond portfolios with fixed or determinable payments and with no carried quoted prices in at an active market amortized are cost using the effective interest method. and de recognized is assets of financial sale or purchase regular A recognized recognized at fair value plus transaction costs that are directly attributable to the acquisition or the issuance assets. financial of the of the time at recognized oris loss Profit lower of the present value of future minimum lease payments or the market leases. the of dates starting value of the property on the determined had no impairment loss been recognized. recognized. been loss no impairment had determined Others to Leased Assets and Equipment and Property Property and equipment and assets leased to others are accumulated stated at impairme cost less accumulated depreciation and during the construction period are property and capitalized, equipment from others while covered by agreements maintenance qualifying as cap and repairs are expensed. Leased Bonds Measured at Amortized Cost at Amortized Measured Bonds

be converted

ilities held for

on on the earnings of investees current. Current liabilities are -

dividend dividend date, but are accounted for as -

- value value changes are recognized directly in equity. The 12

d on the net assets value on the balance sheet date. sheet balance the on value assets net the d on cted cted to be the due within from months balancetwelve date. sheet current. - Liabilities and Assets current

sale financial assets are recognized at fair value plus transaction costs. - -

for - bles on the balance sheet date. sheet balance on the bles term term bills rights acquired with repurchase maturities and having of up to three - accounting policies are summarized as follows: as summarized are policies accounting nd are subsequently measured at fair value with fair value changes recognized in

end mutual funds is base is funds mutual end -

sed on the new number of shares. number new the sed on sale Financial Assets Financial sale - sale financial asset is derecognized from the balance sheet. The purchase or sale of the the date of purchase are classified as cash equivalents, whose carrying value approximates fair fair value approximates ascarrying cash the whose date equivalents, classified are of purchase significant

- ue of listed securities is based on the closing price on the balance sheet date. sheet balance the price on closing the on based is securities listed ue of for - for -

ncial instruments is recognized and derecognized using trade date accounting. date trade using and derecognized recognized is instruments ncial calculated ba calculated - The Group’s Group’s The Non and of Current Classification Current assets include cash and cash equivalents, assets held for trading and those expected to to cash, sold or consumed property within twelve and months from equipment the and balance intangible sheet date. assets are Other assets classified such as as non obligations held obligations for trading and those expe All other liabilities are classified as non classified are liabilities All other open of fair The value Equivalents Cash frommonths value. or Loss Profit through Fair Value at Instruments Financial Financial instruments at fair value through profit trading or and those loss designated include on initial financial recognition assets to or be recognized in measured liab profit or at loss. fair value with fair On initial value recognition, the changes financial instruments plus are recognized transaction at costs fair value a profit or loss. The purchase or accounting. date trade sale of the financial instruments is recognized and derecognized using bonds and Government short On initial recognition, available Available When subsequently measured at fair value, the fair cumulative cumulative gain or available loss that was recognized in equity is recognized in profit or loss when an An impairment loss is recognized if there is objective evidence that a in equity. recognized is decrease such period, subsequent the in financial decreases loss of impairment amount asset is impaired. If the fair The val Accounts for Doubtful Allowance is Allowance for doubtful accounts on theprovided basis of past and an experiences of evaluation the aging receiva of all and collectibility reductions reductions to the original cost of investments if such dividends are declared attributable to periods prior to the purchase of investments. Stock dividends are not recognized as current income but are accounted for only as an increase re in the number of shares held. The cost per share is Cash dividends are recognized as dividend income on the ex fina WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 7 its to 3 actuarial actuarial

line method - line method over - using using the straight

rment rment loss should be recognized.

ion on grant date, shall be expensed

t have a definite useful life in light of employee employee stock options” by the same amount

- are are amortized by the straight

, 15 -

based Payment”. The value of stock option granted, the product of the - (including property and equipment, intangible assets, idle assets, assets leased assets assets, idle assets, intangible equipment, and property (including

interior interior decoration costs line method over 6 to 20 years. Operating rights is based on a license issued by

sets as he employee stock options which falls he employee on or1, January 2008 after SFAS should apply

- traight ce of goodwill impairment due to certain circumstances. to certain due impairment goodwill ce of , mainly

by the purchase price allocation report. allocation price purchase the by

not currently at used are in the stated lower not netof with value book currently realizable operations value, or “Accounting “Accounting for Share

- ies based Compensation based -

Customer relationship and operating rights are measured on the basis of the future economic value and useful life of the subsidiaries’ amortized by s cable TV and data the network Ministry of Transportation and Communications. businesses. Although the Customer license has a statutory period, relationship the subsidiary can file for is license renewal. Furthermore, it does no The customer relationship and operating acquisition cost rights over the shall ownership in be net assets identified value provided of when an investee, analyzing and the be booked at excess fair of values future competition from IPTV. Thus, this intangible asset instead should of be being tested amortized in annually for accordance with impairment SFAS No. 37. eviden is there An impairment test is also required if Customer relationship and operating rights operating and relationship Customer accordingly. Pension Costs The pension costs under the defined benefit pension plan are recognized on the basis of number number of vested stock options multiplies by the fair value of the opt over the vesting period, and to increase “capital surplus calculations. The contribution amounts of the pension costs under years. service employees’ the the during expenses current as recognized are defined contribution pension plan years. Impairment Asset value theof If carrying to others and investments accounted recoverable for amount, which indicates using that an equity impairment exists, an method impai and Any deferred subsequent reversal charges) of the is impairment loss more for than the increase income. in recoverable amount allowed. is not is on goodwill loss impairment of reversal The recognized as Share No. 39 For the grant date of t over the estimated useful lives of the assets. of the lives useful estimated the over Charges Deferred Deferred charges Idle Assets Propert the difference charged to current loss. Depreciation expense is computed d. ed 3 to type

- - over over 13 years remises remises housing line basis over the leasehold leasehold and the -

License License C. The 3G

ting gain or loss in the - . value value derived from each line line method of of the - opera -

5 years.

as as rental income during the lease 2 to

2 to 15 years; office equipment

- 159 collectability by by the straight 2 to 9 years. - a a lease is identified as either an operating lease tized tized Chap. 8 Financial Report

” line method over over line method -

14 - straight line method over the estimated service lives, which range as - the effective interest method upon each collection. each upon method interest effective ales ales revenue should be deferred as unrealized interest income, and effective effective interest method upon each collection. For a financing the bargain bargain purchase price offered to the lessee upon maturity or estimat fference the cost between fference and the in equity of acquisition the investee’s

Accounting Accounting for Leases, 340 in November 2008. 340 in November - “ the type capital lease, sales revenue should be recognized as the sum of present - determined -

n No. 2008 n No. 20 years; and miscellaneous equipment equipment miscellaneous 20 years; and n accordance with the newly revised SFAS, goodwill is no longer amortized. amortized. longer is no goodwill SFAS, revised newly the with n accordance Please 20 to 55 years; equipment telecommunication - I

- pre

interest income by by income interest Leases

leased assets assets leased

reimbursable costs to be incurred by the lessor. the by incurred to be costs reimbursable Goodwill Goodwill is the di unidentifiable value. net asset refer to the accounting policy of investments accounted for by the equity method the equity by for accounted of investments policy accounting to the refer Franchise Franchise refers to the payment for the 3G mobile telecommunication service concession is recorded at acquisition cost and is amor

software Computer by amortized is cost software Computer and 9 months starting from the launch of 3G services. services. 3G of launch the from starting and 9 months

c. For cost associated with dismantling and relocating fixed assets and restoring the leased p a as and accrued assets fixed to the as an addition recognized be should state the previous to assets our fixed potential liability according accordingly, to the Accounting Research and Development Foundation (ARDF) Interpretatio the issued Depreciation is calculated using the straight follows: buildings Assets Intangible a. b. 8 years; residual value. For a sales value value derived from each future rental receivable based on an implicit interest rate of the lease. The excess of total leasehold receivables over s amortized as interest income by of capital lease, leasehold receivables should be recognized as the sum of present future rental receivable based on an income, interest as unrealized deferred be should receivables of leasehold value the over present receivables implicit interest rate of the lease. as and amortized The excess of total leasehold non - The asset held under an operating lease is stated at cost, and depreciated on the straight or a capital lease based on the lease contract terms, the Upon sale or retirement of property and removed from the accounts, and any equipment, gain or loss is credited the or charged to non related cost and accumulated depreciation are In accordance with SFAS No. 2, estimated useful life. Receivables collected are periodically recognized for Accounting period of disposal. of period contract. At the inception date of receivables plus the a capital lease, total leasehold receivables shall be recognized as all rental WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

’ 8

ing (hedging (hedging 3 1 , 200

account gs as well. gs compensation compensation were were previously

December derivatives rvisors rvisors as

ended ended

at at fair value, with subsequent remunerations the year financial financial statements as of and for the

equity, equity, depending on the nature of the

’ the the fair value of the measured measured

directors directors and supe monthly are TVfees cable services on basic monthly -

consolidated , if gain or loss from the expected transaction of the d services, and fixed network services, net of any

- adde 17 - -

in earnings

ing ing instruments are in earning or shareholders

financial financial statements as of and for net net income and a decrease in basic earnings per share of NT$0.12 for

either

reclassified ted ted

9 . employees employees and remunerations to as as effective hedg consolidated consolidated consolida

3 1 , 200 est est rates of liabilities, thus was qualified to apply hedge accounting. The

ses bonuses bonuses to 160

s equity, shall be ’ that that qualify

December those Chap. 8 Financial Report . e ended ended expenses expenses starting from January 1, 2008. The mentioned bonuses and applicable discount, are billed at predetermined rates; the the rates; fixed billed at discount, are predetermined applicable usage. of minutes of basis the on recognized are service card prepaid accrued; Expen Promotion as recognized are promotions to the Corporation’s pertaining costs subsidy phone and cellular Commissions year. current the in basis accrual on an expenses marketing Instruments Financial Derivative Hedging Derivatives Service revenues from wireless services, value the year ended December 31, 2008. 31, December ended the year recorded recorded as appropriations from earnings. The $343,629 adoption thousand in of this interpretation resulted in a decrease of

year changes changes in fair value recognized hedg Accounting Hedge When hedge accounting is applied, gain or loss from changes in position). (hedged assets/liabilities that financial of by be offset shall instruments) The Corporation entered into interest rate swaps inverse floating inter (IRS) contracts to hedge against cash treatment is as follows: flow risk from Gain or loss changes from in the fair value of which the derivatives, is recognized in shareholder hedged position occurs. When there is in earnin reclassified be should loss net mentioned the recoverable, not to objective be is expected equity evidence that the net loss recognized in shareholders Reclassification Certain accounts in the have been reclassified to conform to the presentation of REASONS AND EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES ACCOUNTING IN OF CHANGES EFFECT AND REASONS In March 2007, the ARDF recognize issued an interpretation that requires companies and their subsidiaries to

currency currency - the the extent

tock, tock, the excess is in the year when the the when year in the

treated treated as treasury stock and

are espect espect of which gains and losses are monetary assets or liabilities carried at that cost carried or liabilities monetary assets provided for as income tax income for as provided used used for income taxes. Deferred income tax -

are

s - d technology, d research technology, and development expenditures and 16 - monetary monetary assets and liabilities, any exchange component of -

earnings generated is generated earnings current on the basis of the expected length of time before realized. before time of length expected the of the basis current on monetary monetary assets and liabilities in r - -

ing ing on the balance sheet date when the fair value was determined, and the the earnings. the period allocation method - he he Corporation’s shares held by its subsidiaries

to retain to retain derivative derivative financial instruments are recorded in New Taiwan dollars at the exchange - ck ck is not sufficient to absorb the difference, the rest is recorded as a reduction of retained rred rred tax assets or liabilities do not relate to assets or liabilities in the financial statements,

ecognized ecognized when the service rendering process is completed or virtually completed, and current according to the classification of related assets or liabilities for financial reporting.

n the balance sheet date, and the resulting exchange differences are included in profit or loss for are or for in loss included profit exchange differences and the n the date, resulting sheet balance s of non period and intra - currency Transactions currency

- monetary monetary assets or liabilities carried at fair value that are denominated in foreign currencies are - re denominated in foreign currencies are translated at the historical rates prevailing on the dates of a transactions. banks. of principal rates and ask of bid average the on based rates are exchange prevailing above The Recognition Revenue Assets, liabilities, revenues or expenses denominated in foreign currencies as a result of foreign Revenues are r earnings are realizable and measurable. measurable. and are realizable earnings as recognized are concurrently services of providing costs Related incurred. Monetary assets or liabilities denominated o prevailing in foreign currencies are year. the current translated at the exchange rates transaction transactions. of dates on the rates prevailing Non retranslated at the rates prevail resulting exchange differences are included in profit or loss for the current year except for the differences arising on the retranslation of non recognized directly in equity. For such non in equity. directly that or is recognized loss also gain Non assets and liabilities are recognized for the tax effects of temporary differences, unused tax credits and net lossoperating carryforwards. is tax Valuation provided allowance for deferred assetsincome to The inter earnings. Foreign Income Taxes Income credited to capital surplus from treasury stock. If the proceeds are less than the carrying value of treasury stock, the difference is debited to capital surplus from treasuryfrom treasury sto stock. If the balance of capital surplus If the proceeds on the disposal of treasury stock exceed the carrying value of treasury s Stock Treasury that that more likely than not such assets will not be realized. tax Deferred assets or liabilities are classified as current or non However, if defe or non as current classified are they Tax credits for certain purchases of equipment an method. the current by recognized are training personnel expense. tax year’s the current from or deducted to added are liabilities tax prior years’ to Adjustments tax of 10% on unappropriated Income resolve shareholders The purchase of issued shares shareholders’ equity. is accounted T for by stock. treasury to method equity using for accounted investments from reclassified debiting treasury stock, which is a reduction of WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 ,

7 8

6,773 99,252 67,731 50,52 22,202 60,064 515,681 420,303 187,042 2008 2008 2008 500,000

on the need 1,017,139 2,120,829 2,515,16 30,209,157 32,261,532

thousand thousand and

$ $ $ $

armland armland according

Fangshan, Pingtung Fangshan,

16,685

%. and

December 31 December 31 December 31 December

6,773 65,726 2.76 67,731 46,074 20,207 50,324 595,463 485,455 997,258 009 187,042

2009 2009 2 500,000 2,660,164 2,120,829 2,498,980 30,516,262 3

$ $ $ $

% to 2.40 % to

Mei, Taoyuan

- Yang CURRENT - CURRENT -

- NON - rates ranging from from ranging rates 19 NON - nd a reliable fair value can not be estimated, the above - ation

ht farmland located located in ht farmland Ltd. Ltd.

unlisted convertible preferred preferred convertible unlisted

- ACCUMULATED DEPRECIATION Because Because only an individual could be the owner of f -

thousand and $11,532 thousand, respectively. thousand, $11,532 and thousand 16,188

Ltd.

AT AMORTIZED COST

Ltd. Ltd.

y Information Tech. Co., Tech. Information y

series A

- eign unlisted stocks stocks unlisted eign Taiwan High Speed Rail Corporation Speed Rail High Taiwan Centur New Co., Arcoa Communication Co., Taipei Broadband Great Corp. Capital Venture Parawin Co., Point WEB Pte Mobile Bridge Co., Tech. Information Century New stock Domestic emerging stocks emerging Domestic stocks unlisted Domestic For stock preferred unlisted Domestic Corporation Speed Rail High Taiwan Buildings equipment Telecommunication equipment Office assets Leased equipment Miscellaneous for deploying telecom equipment. recognized recognized as land of $12,000 thousand and idle asset of $35,787 thousand, respectively, based contract. a fiduciary through landholder the is under ownership its regulations, to related

its boug and subsidiary The Corporation $11,296 thousand, respectively, with capitaliz respectively, thousand, $11,296 investments investments are measured at $ of loss impairment an recognized cost. For the years ended December 31, 2009 and 2008, the Group Because there is no active market quotation a Capitalized interest for the years ended December 31, 2009 and 2008 amounted to $ FINANCIAL ASSETS CARRIED AT COST COST AT CARRIED ASSETS FINANCIAL PROPERTY AND EQUIPMENT BONDS MEASURED . . . 8 9 1 0

)

7,469 26,124 67,43 996,349 270,108 391,879 2008 2008 2008 (464,499 174,008 241,442

ontract ontract with 2,176,133 3,868,062 6,876,210 6,411,711

$ $ December December 31,

$ $ $ $

able.

ended ended )

- year BOT c BOT year - December 31 December 31 December 31 December

The The Corporation and its year 8,496

22,239 838,313 347,350 202,000

2009 2009 2009 (419,919 177,821 177,821 1,580,638 2,999,036 7,057,849 6,637,930 Ltd.

$ $

$ $ $ $

161

thousand thousand for the Chap. 8 Financial Report

37,526 EQUITY METHOD EQUITY

CURRENT

- -

THE TNH. 18 -

The aggregate selling price was $60,525 thousand. Under this he overdue accounts receivable, which had been written off, to

Ltd.

Investment Investment loss was $

THIRD PARTIES THIRD

(TNH) (TNH) is established to invest in a property development project located in -

(NASDAQ listed company) (NASDAQ

Ltd. Ltd.

Ltd.

SALE FINANCIAL ASSETS ASSETS FINANCIAL SALE -

udited financial statements of of statements financial udited

FOR -

anks term notes and bills with repurchase rights repurchase with and bills notes term - Chunghwa Telecom Co., Co., Telecom Chunghwa Co., Holding Hurray! rights repurchase bonds with Government b in Cash deposits Time Short on hand Cash funds Revolving stocks listed Domestic stocks listed Overseas receivable Accounts accounts doubtful for Less allowance For the year ended December 31, receivable 2008, factoring the contract Corporation and with its HC subsidiaries Second entered Asset into Management an Co., accounts CASH AND CASH EQUIVALENTS AVAILABLE ACCOUNTS RECEIVABLE subsidiaries subsidiaries sold $5,188,398 thousand of t HC Second Asset Management Co., contract, the Corporation and its subsidiaries would no longer assume the risk on this receiv on this risk the assume longer no would subsidiaries its and Corporation the contract, the old Songshan Tobacco Factory site. On January 15, 2009, TNH signed a 50 Taipei City Government. City Taipei The Corporation established TNH on December 31, 2008 with representing initial 49.9% ownership. investment of $249,500 thousand, INVESTMENTS ACCOUNTED FOR USING FOR USING ACCOUNTED INVESTMENTS Taipei New Horizons Co., a the on 2009 based

. . . 4. 5 6 7

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

ll s type, busines fixed fixed network

generating generating units. s, - by

in in calculating the asset

evaluated were and competitive landscape into

independent independent cash

o r wireless phone s ervice separate, separate,

and and 7.60%, respectively,

is is of the projected changes in subscriber numbers,

% were as follows: as were

- 8.31

21 - was

operating operating assets and goodwill engaged engaged in mobile

financial statements. 8 financial 9 and 200 financial statements. 8 financial 9 and 200

the

the the telecom industry and competitive landscape into consideration,

and 7.48% respectively. 7.48% and unt rate %

, the discount rate used to calculate the asset recoverable amounts of the

, the discount rate 8.50

9 and 2008 9 and 2008

162 s members, which were ’ p itical assumptions used for this evaluation this for used assumptions itical nd average revenue per minute. minute. per revenue nd average The estimates of commissions, processing costs were based on the projected changes in customer subscriber numbers. retention The estimates of costs, customer remaining costs and expenses were service based on the proportion of the costs actual costs and expenses to and 200 in the revenues operating bi In 200 was Corporation After After taking changes in the telecom operating revenues industry were estimated on the bas and competitive landscape into consideration, minute. per revenue average calls and and outgoing incoming of minutes

recoverable amounts of TFN. of amounts recoverable revenues operating on Assumptions After taking changes in the cable television industry consideration, consideration, operating revenues were estimated subscriber. per revenue average and on numbers subscriber the basis of the projected changes in The The costs and expenses were based 200 in the revenues operating on the proportion of the actual costs and expenses to disco on Assumptions In 200 revenues operating on Assumptions expenses andcosts operating on Assumptions Assumptions on discount rate discount on Assumptions Assumptions on operating costs and expenses. and costs operating on Assumptions operating operating revenues were estimated on the basis of the projected changes in subscriber numbers, the types of data transmission, bandwidth on demand, minutes of incoming and outgoing calls a revenues operating on Assumptions After taking changes in the recoverable amounts of

business television Cable a) c) a) b) Wireless service Wireless c) b) Fixed network service Fixed network a) Chap. 8 Financial Report

he he Grou T 3) services services and the cable television business, were viewed Thus, Thus, and the cr and the 1) 2)

------

000

8 1,382,000 1,382,000 1,382,000 1,382, Rights Rights Operating Operating

$ $ $ $

“Accounting “Accounting for

) ) -

- - - - -

(174,781 (174,782 2,686,541 2,511,760 2,861,323 2,686,541

, acquired more than 50% of Customer Customer

Relationship Relationship $ $ $ $

) ) - -

generating generating units, fixed network service - 478 478 ( 3,742 2,359 generating generating unit. Accordingly, customer Year Ended December 31, 2009 31, December Ended Year 200 31, December Ended Year (2,371 -

9,231, 1,251,211 owned subsidiary - 10,485,048 10,485,941 10,485,048 Goodwill Goodwill owned subsidiary, acquired more than acquired 50% of the owned more subsidiary,

- $ $ $ $

- le asset. le 20 - Business Business Combinations” and No. 37

and and its subsidiaries into two cash Accounting Accounting for generating units by years and entities as follows: as entities and years by units generating “ -

sets as well as the amortization periods. the amortization as as well sets

balance

former former TFN through a public tender offer divided the at former TFN the price of NT$8.3 pre share. The Corporation On On April TFN,17, 2007, 100% the Corporation’s relationship is identified as major intangib major as identified is relationship On On September 2007, TUC, the Corporation’s 100% and cable TV. Accordingly, customer relationship assets. intangible and operating rights are identified as major TTN’s shares at NT$13.843 per share. The Corporation measured assets, the fair value and of the acquired viewed TTN’s ISP services as one cash

acquisition transaction acquisition

: Customer relationship and operating rights operating and relationship Customer Under SFAS No. 25 Intangible Intangible Assets”, the Group should measure the fair value of the acquired assets and as identify intangible major 1) 2) Goodwill the smallest identified the Group with conformity No. for 35, In Asset SFAS Impairment,” “Accounting cash of group identifiable Acquired from merger from Acquired of consideration in contingent Adjustment changes rate to exchange Effect merger from Acquired changes rate exchange Effect of

Cost Beginning Add: Amortization balance Ending Cost balance Beginning Add Amortization balance Ending a. INTANGIBLE ASSETS INTANGIBLE b. . 1

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

- - - -

, which

- - current - 2008

8,000,000 (Continued) Ltd.

$ $ $

Non

year year bonds. The

- 2008

) -

December 31 December

(362 0.33%

- .01.29 .12.10 7,500,000 Terms Current 2009 thousand thousand as of December 31, 500,000 300,000 799,638

$ $ 2010 2009

0.27%

48,322 December 31 December current -

8,000,000 9 .

Non fourth and fifth years, interest payable annually payable interest years, fifth fourth and semiannually

the in each thousand of $1,250,000 Repayment payable interest date, on maturity Repayment

stomers stomers were $

2009

23 - st st of A to L tranches. Types III and IV both consist of A

6M year year bonds and Types III and IV are seven - - with with Mega International Commercial Bank Co.,

Current Rate

2.60% LIBOR $

5.21%

thousand as of December 31, 200 31, December as of thousand term notes and bills payable bills andterm notes 500,000 - mentioned mentioned IDD calling card cu 2, 2,500,000

- Principal

832,908 unsecured bonds unsecured $

TERM NOTES AND BILLS PAYABLE AND NOTES TERM Bills Finance Corporation Finance Bills

, which provided performance guarantee for advance receipts from IDD calling card customers i omers were $ were omers I Type II Type 1st domestic 1st domestic On December 13, 2002, the Corporation issued $15,000,000 thousand of with each bond having a domestic face value of $5,000 thousand. unsecured bonds, The bonds have four types different based on terms and dates. Types I and II both consi to M tranches. Types I and II are five interest rates and payment terms are as follows: are as terms and payment rates interest s discount on short s discount International Bills financial Corporation financial Bills International Grand

Commercial paper payable paper Commercial Les value Net carrying rate Interest Period bonds unsecured Domestic

a. accordance accordance with NCC’s new policy effective on April 1, 2007. The Corporation also bears the repayment liability with respect to TFN’s drawdown from its credit line with Mega Bank. receipts from The above guaranteed advance TFN, the Corporation’s subsidiary, entered into a contract with Mega International Commercial Bank Co., Ltd. provided provided performance guarantee for advance receipts from NCC’s prepaid new card policy customers in effective accordance on cust with April 1, 2007. The guaranteed advance receipts from prepaid card SHORT ADVANCE RECEIPTS The Corporation entered into a contract 200 9 . BONDS PAYABLE . . .

1 4 1 5 1 6

- ) ) ) ) )

(41,279 (54,493 (96,571 2008 2008 639,696 543,924 612,975 228,269

(187,519 (100,616

$ $ $ $

, respectively. ,

) ) ) ) ) December 31 December 31 December

0.60% for for each System Operation - (22,462 (10,591 (35,929 (43,053 2009 2009 126,429 471,664 438,611 517,137 311,726 ( 6,800,000

$ $ $ $

0.57%

eir eir net realizable value. The Group

163 Chap. 8 Financial Report

3.21% to 5.92% in 2009 and 2008 and in 2009 to 5.92% 3.21%

- ical assumptions used to estimate recoverable amounts generating generating unit, the Group’s management believes that - from 22 -

sts, network maintenance costs, customer service costs and bill

% and 6.42 %

% to

cline from 2.90 from

BORROWINGS from financial institutions financial from ating revenues in the 2009 and 2008 financial statements. financial and 2008 2009 in the revenues ating

Assumptions on discount rate discount on Assumptions The The discount rate used to calculate the asset recoverable amounts ranging was processing processing costs were based on the projected changes in subscriber numbers. The estimates of remaining costs and expenses were based on the proportion of the actual costs and expenses to oper The estimates of copyright co Assumptions on operating costs and expenses and costs operating on Assumptions

TERM - the carrying amounts of these assets for operating and goodwill will not amounts exceed even if their there are recoverable changes in the crit 2008. and 31, 2009 December ended years the for reasonable are changes as these as long Based Based on the key assumptions of each cash c) b)

Cost depreciation Less accumulated impairment Less accumulated Cost de value for Less allowance depreciation Less accumulated impairment Less accumulated Assets leased to others to leased Assets assets Idle loans Unsecured rate Interest

ASSETS LEASED TO OTHERS AND IDLE ASSETS IDLE AND TO OTHERS LEASED ASSETS The impairment losses of idle equipment were determined based on th recognized impairment losses of $12,124 thousand for the year ended December 31, 2008. 31, December ended the year for thousand $12,124 of losses impairment recognized SHORT . . 1 2

1 3

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

) ) ) ) ) ) ) ) ) )

506 ,056 213 2.75% 2.75% 6,505 4,523 - - 4,386 2,581 (3,878 ( 20,900 28 50,984 (1,087 13,920 (64,247 (29,694 2008 2008 2008 657,784

(14,851 3.00% (358,040 (361,918 (295,360 (657,278

$ $ $ $ $

2.50% 2.5

poration poration suspended

) ) ) ) ) ) ) ) ) ) ) ) enefits are based on the

December 31 December

the the Cor 2.25% 3.00% 4,238 5,172 (6,540 (7,364 , 17,821 26,662 90,981 12,160 - - (1,907 16,620 (51,060 (35,345 (36,899 2009 2009 2009 665,367 (16,280 (11,657 2.00% (427,856 (434,396 (282,031 (716,427

Years Ended December 31 December Ended Years 31 December Ended Years $ $ $ $ $

2.00 2.50

Taipei Taipei City Government -

- 10 .

dministered pension fund committee and deposited in the committee’s name name in the and deposited committee’s fund committee pension dministered

164

Approved Approved by Department of Labor

ost

vested

- ected benefit obligation benefit ected Chap. 8 Financial Report Vested Non Accumulated salaries future on based benefits Additional Proj cost Service c Interest assets pension of return Projected Amortization settlement Gain on cost Pension obligation Benefit assets plan of Fair value Funded status obligation transition net Unrecognized cost service prior Unrecognized loss or gain net Unamortized gain net Unrecognized liability Additional cost pension Prepaid benefit Vested present values determining in used rate Discount rate increase salary Future assets plan on return ofrate Expected Pension cost cost Pension Changes in the prepaid pension cost pension the prepaid in Changes assumptions Actuarial

contributing from February 2007 to January 20 January 2007 to February from contributing as follows: summarized is plan pension benefit defined the on Information a.

The Labor Standards Act (LSA) provides for a defined benefit pension plan. B b. d. length length of service and average basic monthly an amount equal to pay 2% of the employees’ monthly wages to a pension fund. of the six The pension fund is months before an by a independently managed retirement. The Group contributes in the Bank of Taiwan (formerly the Central Trust of China, which was merged into the Bank of Taiwan in July 2007.)

d in

to the the to

annual annual

- 00,000 00,000 0 , 2008

4,000,000 4,000,000 8 5,2 (Concluded) Amount 2.5916%

$ $ $

by by the Corporation thousand thousand and $174,989

December 31 December

year year domestic unsecure -

Terms 2009 rth u rth and fifth year with equal 172,910

ires ires the Corporation to maintain certain bonds bonds were repaid and seventh years, interest payable annually payable interest years, and seventh semiannually

sixth the in each thousand of $2,500,000 Repayment payable interest date, on maturity Repayment

corporate corporate 24 -

6M -

mentioned mentioned Rate - 2.80%

LIBOR 5.75% mentioned corporate bonds are as follows: bonds are corporate mentioned -

above

of the term working capital, the Corporation and its subsidiary, TFN, entered into a - 5,000,000 5,000,000

15,000,00 Principal

$ $

for further information. further for

6 2009. ruary ruary 21, 2008. The tenor is three years starting from May 20, 2008. Based on contract r

e repayments of the above of e repayments

last installments

TERM BORROWING TERM - III Type IV Type Year 2012 2013 The Decembe 2nd domestic unsecured bonds unsecured 2nd domestic On November 14, 2008, the Corporation issued $8,000,000 thousand five bonds, bonds, with each bond a having face of value thousand $10,000 and a coupon rate of 2.88% per annum, simple interest due annually. Repayment will be made in the fo installments, i.e. $4,000,000 thousand, respectively. thousand, i.e. $4,000,000 installments, Futur

fer to Note 2 to Note fer loans Unsecured rate Interest financial financial ratio including debt ratios, interest coverage, and tangible net asset ratio based on semi syndicated loan with a joint credit line of $13,500,000 thousand with 9 banks led by Chinatrust Commercial Chinatrust Commercial led by 9 banks with thousand credit of line $13,500,000 joint with a loan syndicated Bank on Feb term, interests are payable monthly and the principal is due allowed upon to maturity. revolve within Upon its maturity, the credit loan is limits. The contract requ To provide medium financials. The Corporation also bears the repayment liability with respect to TFN’s borrowing. re Please employees’ individual pension accounts. The contributed amount was $ PENSIONPLAN The Labor Pension Act (LPA) provides for a defined 2005, the an should Group monthly amount contribute equal to 6% of wages the monthly employees’ contribution pension plan. Starting from July 1, thousand for the years ended December 31, 2009 and 2008, respectively. 2008, and 31, 2009 December ended the years for thousand

LONG b. . . 1 8 1 7

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

rd -

24,193 811,918 811,918 (NT$)

Shares Ending 2.54326

For Fiscal For Year 2007 Year

- -

months ended June 30, 2008 June 30, ended months 24,193 (Shares in Thousands) (Shares

556,332

Decrease

19, 2009 and June 13, 2008

Nine 4.68704

$ eration eration to employees, directors Dividend Per Share Dividend

For Fiscal For Year 2008 Year

- - - June

)

24,193 Increase

AGMs AGMs on

18,116

(86,819 661,300 181,155

7,601,851 8,375,603

- For Fiscal For

Year 2007 Year by the $ $ ote)

(N 24,193 -

811,918 ) - -

Shares 1,368,250 27 Beginning

resolved resolved

56,744 ( 1,537,138 13,968,864 15,449,258 Appropriation of Earnings Appropriation For Fiscal For Year 2008 Year

$ $

9 8

Equity) Equity) and maintain stable EPS (Earnings per Share) and dividend, the

, 200 , 200 , earnings earnings appropriations

pecial reserve pecial December 31 December 31 December and and 2007 8 ry stock stock ry ended ended ended Purpose of Buyback of Purpose

supervisors

reserve legal of Appropriation of s Reversal and directors to Remuneration employees to bonus Cash dividends Cash Year employees to transferred To be subsidiaries by held Shares Year employees to transferred To be subsidiaries by held Shares Corporation’s Corporation’s AGM resolved on representing 24% of June outstanding shares. 15, The 2007, date Corporation’s of Board a of December Directors 1, resolved capital 2007, the and reco reduction completed approved the by the authority. procedure of for registration $12,000,000 Trading changes, suspension period which started thousand, from 20, 2008. February isFebruary from trading resumed shares 1 to already 19, 2008, and new Treasu Capital reduction by cash cash by reduction Capital To increase ROE (Return of were as follows: were as Information on the appropriation of the 2008 earnings, bonus and remun The 200 The shareholders on June supervisors. and to directors thousand of $41,470 and remuneration employees 19, 2009 resolved to distribute 2008 bonus of $414,697 thousand to and supervisors proposed by the Board of Directors and Exchange. Stock Taiwan websitethe of approved System Post Market Observation at 2009 AGM is available on the Note: reduction. capital before held Shares

e stock

term term investments not may -

’ ’ approval differs from the amount 165 to each shareholder. each to If If employee bonuses are paid in the form of

Chap. 8 Financial Report ds should not be more than 80% of the total es shall be derived from dividing the approved P&L.

- 10 Board Board of Directors up to 0.3%.

. supervisors) supervisors) after setting aside 10% net income as legal -

26 o, o, the capital from surplus long - 9 , the bonuses to employees and remuneration to directors and

3%. -

1% ctors and supervisors supervisors and ctors - me me after the reduction of accumulated deficit. The remainder, less special reserve

quirements of the Corporation in a particular year. in a particular Corporation the of quirements

Dividends and bonus to preferred shareholders. to preferred and bonus Dividends meeting. shareholders’ the in as determined dividends as appropriated to be Remainder, Remuneration to dire to Remuneration employees to Bonus

Capital surplus Capital only be useda to offset deficit. may Act, surplus capital Under the Company surplus capital However, generated from the excess of the issue price over issued the par for value of new capital stock, capital including th and dividends, the and this transfer is restricted to buyback a certain percentage of the of capital surplus and may be made treasury stock, only within limits prescribed may each time. be transferred Als to capital as stock bonus amount by its closing price one toprior bonus its by for AGM, dividends if closing day cash adjusted stock amount the and/or any. company company shares, the number of employee bonus shar be used for any purpose. purpose. any for be used Appropriation of earnings and dividend policy dividend and earnings of Appropriation The The Corporation’s Articles of Incorporation provide that a 10% legal reserve should be set aside from the annual net inco based on relevant laws or regulations or business requirements, should be distributed as follows: as be distributed should requirements, business or regulations or laws on relevant based The Corporation’s dividend distribution is based Corporation first future projects capital on needs through a capital process budgeting and then for provides the availability of excess funds. the projected That capital is, needs th by distribution. using retained However, earnings. the amount Any of dividends to stock be remainder distributed in dividen is a single year. available for The are dividend final subject amount, type to and the percentage of approval the by dividends the Board of Directors re capital and shareholders based on actual earnings and 1) 4) 2) 3) A regulation issued by the Securities and Futures Bureau requires a special reserve be made from unappropriated earnings, the equivalent to the debit balance of any account shown in shareholders’ equity. The special reserve appropriated will be reversed to the extent that the net debit balance reverses. reverses. balance debit net the that extent the to be reversed will appropriated reserve special The The appropriation of earnings should be resolved by the shareholders in the following year and year that of statements financial the ingiven to effect Under the Integrated Income Tax System, ROC resident shareholders are allowed a tax credit income for the tax paid by the allocated credit tax the and tax income such for Corporation Corporation. An imputation credit account (ICA) is maintained by the For the year ended December 31, 200 supervisors were accrued based on a employees respective and remuneration 3% to directors and and 0.3% of net income (net of the bonus to ratified at the annual general shareholders’ meeting (AGM), the will difference be treated as changes in accounting estimation and will be adjusted in 20 reserves. reserves. The significant difference between annual accruals and the amount shall approved by be the Board adjusted in the current year. If the

a. SHAREHOLDERS’ EQUITY SHAREHOLDERS’ b.

. 19 WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

) ) ) ) ) ) ) ) )

(2,526 91,238 11,601 66,416 41,599 (26,001 (39,901 (20,622 426,497 509,901 195,172 163,926 690,256 484,494 101,901 2008 (507,231 (316,878 2008 (136,519 (842,400

(Continued) 7,351,511 5,154,461 2,155,031 3,380,030 2,537,630 (2,705,374

$ $ $ $

) ) ) ) ) ) ) ) - - - - 266 31 December

extend extend the operating losses (4,571 22,135 27,760 66,022 30,375 64,240 (23,226 (20,412 (15,857 482,476 106,288 2009 (544,301 2009 (256,598 (329,494 6,509,331 1,023,505 4,755,815 1,412,488 1,8 1,534,746 (2,195,626 Years Ended December 31 December Ended Years

Article Article 5 of the Income Tax Law $ $ $ $

amended amended to

was

- . In May 2009, the

ed its deferred tax assets and liabilities in accordance with the amended Article

NSE

carryforward on financial liabilities financial on

to to reduce corporate statutory income tax rate from 25% to 20%, effective from 2010.

term bills term -

166 loss

gain loss on retirement of property and equipment and equipment property of on retirement loss ’

exempt income exempt using equity method method equity using -

Investment income from domestic investees accounted for accounted investees domestic from income Investment Other Chap. 8 Financial Report x on short x Permanent differences Permanent differences Temporary Tax (25%) rate tax at statutory income on pretax Tax of effects tax (deduct) Add taxes income Deferred adjustment years’ Prior carryforward loss years’ Prior tax credits Investment Ta earnings unappropriated tax (10%) on Income basic tax Income tax expense Income Unrealized accounts doubtful for Provision tax credits Investment goodwill of Amortization years Prior assets on idle losses impairment for Provision Unrealized cost pension Accrued Other allowance Less valuation The reconciliation of imputed income taxes on pretax income at statutory tax rate to income tax expense tax expense income to tax rate at statutory income on pretax taxes income imputed of reconciliation The follows: aswas carryforward carryforward period from five years to ten years was amended The Group recalculat In In January 2009, the Article 39 of the Income Tax Law expense. tax income as an difference resulting the and recorded follows: as were (liabilities) tax assets income Deferred

a. b. INCOME TAX EXPE TAX INCOME

2 0

) ) ) ) ) )

CCI, CCI,

bought bought 8 thousand. (3,105 (5,897 57,560 54,455 61,864 (38,749 (82,854 (39,362 200 100,613 (122,216

$ $ by by $3,485,732

retained earnings, retained earnings, December 31 December

) ) 50,663,659 $ 50,663,659 - - thousand thousand shares

9 9,169 Treasury Treasury Stock”. Although 54,455 63,624 61,864 63,624 (61,864 200 122,216 122,216 24,193 (

Years Ended Ended Years $ $

increase increase in capital surplus an Accounting Accounting for

equity equity

3.8 3.8 per share, resulting in a reduction of $3,254

- by the by

owned owned by the Corporation) were 28 - - 9 , the Corporation transferred

ld ld 300,000 thousand shares of the Corporation for $13,509,828 89,100 89,100 thousand from investments accounted for using equity f cash flow hedge flow f cash ) recognized )

3 1 , 200

losses

financial instruments financial (

, the Corporation’s shares held by subsidiaries were reduced by 256,332 008, 008, TFN so n o

) December , the2009, and carrying market value of the heldstocks Corporation’s by T surplus. to employees losses on financial instruments on financial losses in capital in excess of par value and realized capital surplus. In addition, the

- (all are subsidiaries 100% losses

ended I capital In In addition U sale financial assets sale financial - . year beginning of year beginning gains ( gains gains or gains

for December 31 December

- entitled toentitled theirexcise rights on these for inexcept shares, injection participation capital cash. by usand shares due to the Corporation’s capital reduction. capital Corporation’s the to due shares usand Transfer of stock of Transfer As of back back from the market to in employees thousand at NT$4 Under the Securities and Exchange Law, the buyback amount of treasury stock should not exceed of the sum the not exceed cost should and the buyback shares, issued 10% of total subsidiaries by held Shares TID and T Corporation Corporation should not provide treasury stock as collateral and should not transfer. before shares those rights on exercise shareholders’ additional additional paid For the The Corporation reclassified $31,8 method to treasury stock based on SFAS No. 30, “ thousand. thousand. Disposal gain from the sales resulted in these these shares are treated as treasury stock in the consolidated financial statements, the shareholders are In addition, based on the ROC Company Act, the shareholders of treasury stocks can not exercise right. the voting In the first quarter of 2 thousand tho

Balance, beginning of year beginning Balance, in equity directly recognized changes Fair value of year beginning Balance, in equity directly recognized changes Fair value method Balance, in equity directly recognized changes Fair value

hanges in unrealized gains gains in unrealized hanges Available o (losses) gains in unrealized Changes C Unrealized 1) 2) Unrealized Unrealized Unrealized Unrealized gains or losses on financial instruments for the years ended December 31, 2009 as follows: were summarized and 2008

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

------

10 29

8 llows: 9,641 7,914

44,364 54,683 31,588 33,738 ------0.05% 123,168 198,248 35.28% 29.90% 33.33% 33.33% 33.33% 25.98% 33.33% 30.52% 33.35% 33.33% 33.33% 33.37% 32.59% 33.34% 200 2008

1,615,935 (Concluded)

Not applicable Not applicable Not applicable Not $

------

December 31 December 562

27,364 56,870 14,119 34,556 28,694 ------712,967 148,001 32.17% 30.56% 33.33% 33.33% 33.33% 33.33% 33.33% 27.61% 33.35% 29.75% 33.33% 33.39% 33.37% 33.34% 200 2009

Not applicable Not applicable Not applicable Not applicable Not $ applicable Not applicable Not applicable Not

earnings appropriation were as fo as were appropriation 200 8 earnings 9 and

- 3 1 - for the 200 for

actual creditable ratio creditable actual

estimated or estimated TDC TCCI TID TSB TFN TUI TT&T TFNI R&R WTVB TFNM UCTV SHCTV YJCTV MCTV PCTV GCTV Corporation The TCC WMT TFMT FJLMT GWMT FSMT GFMT TYDB TDC TCCI TID TSB TFN TT&T TUI TFNI R&R WTVB TFNM UCTV SHCTV YJCTV MCTV PCTV GCTV

As As of December 31, 2009, there were no unappropriated earnings The generated before January 1, 1998.

) 3 2 - - - - 4

201 201 2014 2015 2016 2017 2018 2019 Year Year Expiry Expiry 2,668 1,62 1,950

(90,388 149,534

2008 2008 ) Continued

( - - 2,478,484 2,628,018 2,797,888

(Concluded)

$ $ $ $ 899

9 : 1,471

62,951

26,861 27,760 139,148 126,539 330,109

Amount Amount ) $ $ $ $ - - - - Creditable Creditable Creditable Remaining Remaining Remaining

December 31 December 31 December

2,674 1,627 2,370

29,132

2009 (125,956 99 2009 1,631,570 1,660,702 2,990,179 8 8,733 1,471

22,558 65,226 $ $ $ $ applicable Not 42,718 43,617

184,627 129,144 411,759 Total Total

Amount Amount

$ $

$ $ Creditable Creditable of December 31, 200 31, December of 167

’ investment tax credits consisted of the

Chap. 8 Financial Report the Group

- 30

- and its subsidiaries

Item

9 , the Corporation Purchase of machinery and equipment and machinery of Purchase training Personnel

information was as follows: as was information

current current

- -

Tax Credits Tax Current Non Non Industries Corporation The TCC WMT TFMT FJLMT GWMT FSMT GFMT TYDB ollowing: Regulatory Basis of Basis Regulatory Deferred income tax assets income Deferred tax liabilities income Deferred Upgrading for Statute Year 2004 2005 2006 2007 2008 2009 (ICA) account credit imputation of Balance Integrated income tax income Integrated As As of December 31, 200 Following were the net operating loss carryforwards of of carryforwards loss the operating net were Following f

d. e.

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 s

4.66 4.65 5.18 5.17 Tax After

Income $ $ $ $

examination examination of

EPS (NT$) Mobitai Mobitai disagreed 6.09 6.07 6.67 6.65 Tax

Before

Income $ $ $ $

9,846 8,515 Shares 2,979,311 2,989,157 2,966,368 2,974,883

(Thousands)

(Denominator)

res, res, the Corporation should presume that

- -

After

13,888,862 13,888,862 15,371,386 15,371,386 -

Income Tax $ $ $ $

052 that requires companies to recognize bonuses paid to

- - - were were previously recorded as appropriations from earnings. If

urns urns and plans to apply for a reexamination of the 2006 income tax Amounts (Numerator) Amounts Before aken aken into consideration in the calculation of diluted EPS until the 18,132,491 18,132,491 19,777,097 19,777,097

Income Tax $ $ $ $ directors directors and supervisors as compensation expenses beginning January 1,

and and remunerations

of potentialof

168

d d remunerations to an

Chap. 8 Financial Report ember 31, 200 31, ember common stocks common Bonus to employees potential of effect dilutive with common shares stocks common Bonus to employees effect dilutive with common shares the 2006 income tax return. tax income the 2006 Mobitai’s income tax returns as of 2006 had been ratified with the result on theby tax income ret the tax authorities. return TFNM’s income tax returns as of 2006 had been examined by the tax authorities. disagreed with the examination result on the 2006 income However, tax TFNM return and requested a re Dec 2008 31, December Income of common shareholders common of Income potentially dilutive of effect Add shareholders common of Income shareholders common of Income potentially dilutive of effect Add shareholders common of Income For the year ended EPSBasic Diluted EPS For the year ended EPSBasic Diluted EPS the Corporation may settle the bonus to employees by cash or sha the entire amount of the bonus will be settled in shares and the potential share dilutions should be included in the weighted average number of shares outstanding used in the calculation of diluted EPS, if the share have a dilutive effect. In the calculation of diluted EPS, the number of shares outstanding is derived from dividing the entire amount of the bonus by the closing price of the shares on the balance sheet date. Such potential dilutive effect should be t shareholders resolved the actual number of year. following shares to be distributed to employees at the AGM of the 2008. These bonuses employees The ARDF issued Interpretation No. 2007 EARNINGS PER SHARE PER EARNINGS .

The The

7 6 8 7

2005 200 200 2007 2007 2007 2007 2007 2007 200 2007 2007 2007 2007 2007 200 2007 2007 2006 2005 2007 2007 2007 2007 2007 Year TAT disagreed with The The Corporation also

All applicable All applicable All applicable All applicable All applicable All applicable Not applicable Not

The The former TAT also filed

by by the tax authorities.

2006, only 2005 not applicable 2005 not 2006, only

h 2005 and had filed requests for

. s 2009 2009 earnings appropriation may be examined

- eme eme Court of the R.O.C. income tax return tax income

s 32 ’ - 2004 and 2005 and 2004

The The estimated creditable ratio for the

poration’s poration’s income tax returns as of 2005 had been ome tax returns. tax ome

mer TAT mer

Corporation The for The TAT Mobitai TCC WMT TFMT FJLMT GWMT FSMT GFMT TYDB TDC TT&T former The TCPIA TLIA TSB TFN TFN former The TUC TTN TT&T TFNI R&R WTVB TFNM UCTV SHCTV YJCTV MCTV NCCTV PCTV GCTV the examination results of the income tax returns and had requested a reexamination 2007 inc of the 2006 and TAT’s income tax returns as of 2007 had been examined by the tax authorities. disagreed disagreed with the results on the income tax returns of 2002 throug reexamination. Corporation Corporation filed for corrections of its 1999 through 2001 income tax returns. administrative proceedings for proceedings administrative former former TAT disagreed with the examination results of the 2002 and 2003 income tax returns and filed had an appeal, which is reviewed by the Supr The former TAT’s income tax returns as of 2006 had been examined by the tax authorities. The The imputation credits allocated to the shareholders are based dividend on the distribution. ICA balance as of the date of The Cor The The latest through years which income tax returns had been examined and cleared by the tax authorities follows: were as adjusted when the imputation credits are distributed. are credits imputation the when adjusted

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 r if ies. parties in - thousand 0 thousand term term notes

- thousand thousand and

, , short Because Because of the short 2,006,775

borrowings ancial ancial instrument transactions December December 31, 2009 and 2008,

term - thousand thousand and $15,700,000 thousand as

parties in fin - f December 31, 2009 and 2008 were both zero parties parties are engaged in business similar activities sheet commitments and guarantees. and guarantees. sheet commitments Significant - - 15,599,638

- include include the nature of the debtors’ operating activit

balance 35 - - . oncentration haracteristics haracteristics so that their abilities to perform contractual obligations

thousand thousand and $1,173,229 thousand as of

parties are reputable financial institutions with good credit ratings. credit good with institutions financial reputable are parties - onsidered to be significant. to be onsidered 975,905

d by estimations using valuation technique. valuation using estimations d by

risk amount listed amount risk above is an over fair the evaluation contracts with positive value at the

air air value interest rate risk amounted to $ parties or third parties breach the contracts. Factors that affect the impacts include credit risk -

bove bove financial instruments do not include cash and cash equivalents, notes and accounts The a receivables, pledged time deposits, refundable deposits, short and bills payable, notes and accounts payable and guarantee deposits. maturities maturities of these instruments, the carrying values represent values. a reasonable basis to estimate fair Market Credit Credit risk represents the potential impacts to financial assets that the Group might encounte Credit risk Credit counter risk concentration, components of financial instruments, contract The Group’s amount evaluation of credit risk and exposure as o other receivables. of counter all because The Group’s maximum credit risk exposure of each financial instrument is the same as its carrying value. The credit of the date sheet contracts off balance and The Group didn’t enter into any financial derivatives transactions, which will have big exposure to risks rate interest and rate exchange significantly significantly concentrate on one individual, or when there are a number of counter concentration concentration of credit risk exists when counter financial financial instrument transactions, but these counter would would be concurrently characteristics of credit affected risk c in similar economic changes or other situations. The The Group’s operating funds are c is not risk liquidity deemed sufficient to meet the cash flow demand, therefore, and have similar economic c The Group does not rely significantly on single transaction and transact with single client or in the region. same risk Liquidity

6) The fair values of financial assets and liabilities were not simultaneously determined by quoted prices in in quoted prices by determined simultaneously not were liabilities assets and financial of fair The values an markets active 1) Information on financial risks: financial on Information of December 31, 2009 and 2008, respectively. The financial assets exposed to cash flow interest rate risk amounted to $ 2008, respectively. and 31, 2009 of December as thousand and $5,000,000 $2,764,594 thousand as of December 31, exposed to 2009 f and 2008, respectively, and the financial liabilities to $ amounted risk tointerest rate cash exposed flow financial liabilities and the respectively, The financial assets exposed to fair value interest rate risk amounted to $

2) 3)

c. d. e.

term -

251,919 158,786 214,875

Total 4,725,748 5,351,328 7,179,601 1,095,670

$ $ $

15,621,815

Fair Value

2008

173,194 104,273 148,617 581,7 122,067 2008

3,362,099 3,788,183 verified verified at a more than Expenses

Operating ue $ $ $ Classified as Classified

prepayment prepayment for long

Val

15,500,000 Carrying

78,725 54,513 66,258

973,603 Cost evaluated theby evaluated bid price of counter

1,363,649 1,563,145 6,597,880

Operating

$ $ $ 169 ecember 31 as Classified

was

December 31 December

8,373,376 Chap. 8 Financial Report

determining determining fair values of financial instruments Fair Value

268,070 169,131 192,451 maturities). similar (e.g., loans ar

Total $ 4,637,901 5,267,553 7,747,175 1,089,051

Years Ended D Years

$ $ $

2009

or the estimated book value. book the estimated or

counter quotations in December. in counter quotations - 32,977 based based on quoted prices in an active market on the balance sheet 180,163 110,564 1 610,460 127,125

2009 8,000,000 Value the accounted accounted for using equity method, - based on valuation results provided by banks. As of December 3,289,262 3,712,966 -

Expenses

Carrying - Operating based on the present value of future cash flows discounted by the $ $ $

Classified as Classified

$ -

carried carried at cost or bonds investment with no active market can be

may obtain for simil for obtain may

87,907 58,567 59,474 961,926 investments investments

Cost

1,348,639 1,554,587 7,136,715

term term loans Operating orporation

- $ $ $ Classified as Classified

the

based on the over the based on

- sale financial assets -

for

- , the financial instrument held , thethe by instrument financial Corporation

derivative financial derivative current portion) current

- Available date. Because Because there is no active market and a reliable fair value reasonable could only cost, be Bonds payable payable Bonds investments, investments, financial assets measured by the net worth of the investees’ investees’ of the theworth net by measured Fair value of long interest rates the C rates interest Derivative Derivative financial instruments 31 , 2008 party.

instruments (including payable Bonds

insurance Non Liabilities Fair value information Fair value were as follows: were as The The methods and significant assumptions applied in 1) 2) 3) 4) 5)

Salary health and Labor Pension Other

cost Labor Depreciation Amortization

a. b. FINANCIAL INSTRUMENT TRANSACTIONS

LABOR COST, DEPRECIATION AND AMORTIZATION EXPENSE . . 2 2 3

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

- -

14 97 % 7,038

% of% 29,972 Total Costs Loss 2008

$ $

2008 2008

76,375 62,807 33,423 36,965

2009 155,199 231,574 556,278

Amount $ $

Amount 8 Amount

$ $ $ $

1, 2009 1,

- -

14 31 s from the above transaction were December 31 December %

% of% Total Costs

Years Ended December 31 December Ended Years

2009 2009 t

66,336 10,000 146,948 213,284 408,101

Amount Amoun - $ $ $ $

WTVB’s WTVB’s receivable Year Ended December 31, 200 31, December Ended Year 3 December Ended Year

- Description

Leased Sites/Equipment Leased

equipment

and miscellaneous equipment Telecommunication etc. appliance, Offices

n amount of WTVB’s sale of equipment to FMT was negotiated based on the value ased on regular terms. regular on ased

170

Cash in banks in Cash TFCB deposits time Pledged TFCB

DKL Fubon Ins. The above companies programs mainly licensing services rendered to telecommunication, the Group. b was payable maintenance, The insurance average and payment term TV for notes and accounts transactions Property and equipment property of Disposal FMT FMT a) b) appraised appraised by an independent third party. Operating costs Operating The transactio 2008. 31, December of as collected fully monthly. collected was rent and price on market based were transactions lease above The Rental income income Rental banks in Cash Chap. 8 Financial Report

3) 2) 4) 5)

------

% of% Total

Revenues

2008

(renamed on (renamed

,634

73,494 14,510 47,429 15,765 149,783 102,147 408,762 Foundation’s issued issued Foundation’s

Amount $ $

substance

------method investee method

% of% Relationship with the Group with the Relationship Total

- Revenues

fund came from the Corporation from fund came 13, 2009) April Years Ended December 31 December Ended Years

the of one third Over Equity chairman Same in substance party Related in substance party Related in substance party Related in substance party Related in substance party Related in substance party Related in substance party Related in substance party Related in substance party Related in substance party Related in substance party Related in substance party Related in substance party Related in substance party Related in substance party Related in party Related in substance party Related

2009

25,203 24,822 18,359 16,565 16,521 133,447 108,446 343,363

Amount

- $ $

)

Ltd. (TFCB)

. (FMT)

Ltd. Ltd. (FPM)

Ltd

Ltd.

Ltd. Ltd.

Ltd. (FLA)

Ltd. Ltd.

formerly named named formerly es and accounts receivable was based on regular terms. regular on based was receivable and accounts es Ltd. ( (FSC)

Ltd. (Fubon Ins.) (Fubon

ons Co., Co., ons

Ltd. Ltd. Ltd. Related Party Related

Ltd.

s. ect Marketing Consulting Co., Co., Consulting Marketing ect (DKL) ance Co., Co., ance

PARTY TRANSACTIONS

- Ltd. Ka

TFCB FMT FLA TSL Company Holding Fubon Financial FSC Fubon In The Group mainly rendered telecommunication service not for period collection to the above companies. The average Operating revenues Operating -

Fubon Dir 1) Foundation) (TWM Foundation Mobile Taiwan Co., Horizons New Taipei Co., Assurance Fubon Life Trust Co., Investment Fubon Securities Constructi Hsing Chung Co., Development Fubon Land Co., Bank Commercial Fubon Taipei Co., Fubon Securities Fubon Insur Co., Technology Fubon Multimedia Co., Management Fubon Property Co., Fubon Marketing Company Holding Fubon Financial Co., Management Fubon Asset Capital Co., Venture Fubon Financial Co., Fubon Future Co., Services Fubon Investment Co., Consulting Capital Venture Fubon Dai (TSL) Corporation Lottery Sport Taiwan The related parties and their relationships with the Group were as follows: as were the Group with relationships their and parties related The Significant transactions with related parties are summarized below: summarized are parties related with transactions Significant

b. a. RELATED

. 2 4

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

- 6 1 ) )

99 % 978 0 , ,

879

( 89,980 14 14

Total Total (11,712 101,692

(Concluded) (Concluded) $ $ $ $

2008

) ) 46,502 38,800

34 391 721

Amount , , 670 $ $ $ ( 9 8

(7,1 70,841 63,707

Year Year Year

Assets) Assets)

$ $ $ $ Over One One Over One Over

(Classified (Classified (Classified

Under Other Other Under Other Under Maturities of Maturities of Maturities 3 1 1

December 31 December %

)

587 378 , , 209

( 5 5

(4,578 30,851 26,273

2009

Portion Portion Current Current Current $ $ $ $

20,543 35,916 13,176

as follows: as

Amount - $ $ $

ere

- w FLA

rued expenses rued Prepayments Fubon Ins. payable Accounts DKL Acc Fubon Ins.

easehold receivable easehold ) 31, 2008 December receivable Leasehold income interest Less unrealized 31, 2009 December L income interest Less unrealized b) c) d Note: from receivables Leasehold

- - - - 2 1 ) ) )

(1,445 (2,293 (4,936 13,583 12,138 18,143 15,850 49,435 44,499

Total Total

(Continued) 8 $ $ $ $ $ $

200

of ) ) ) 29,715 42,716 14,436 13,455 17,885

114,822 233,029 s)

Amount (766 $ $ 9,288 8,522

(1,425 (2,498 12,700 11,275 33,340 30,842

Year Year Year

Asset Assets)

$ $ $ $ $ $ Over One One Over One Over

(Classified (Classified (Classified

Under Other Other Under Other Under - - - - - Maturities of Maturities Maturities 1

December 31 December %

) ) )

171

(679 (868 4,295 3,616 5,443 4,575

(2,438 16,095 13,657

2009

Portion Portion Current Current Current $ $ $ $ $ $

Chap. 8 Financial Report

79,594 17,983 15,835 15,199 14,566 20,821

163,998 as follows:

Amount follows: as - $ $

ere ere

- w FSC

ote)

Accounts receivable Accounts TFCB (Note) FSC (Note) TSL Fubon Ins. FLA Other sehold receivable sehold

a) Note: from receivables Leasehold 31, 2009 December receivable Leasehold income interest Less unrealized 31, 2008 December Lea income interest Less unrealized Note: TSL w from receivables Leasehold 31, 2009 December receivable Leasehold income interest Less unrealized

Receivables and payables Receivables

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

8,976 8,976 eptember eptember in capital: - 159,153 141,873 131,152

Amount $

he Corporation , 9 , the purchase

in capital: in capital: None.

- . T borrowings with borrowings banks.

s loans ’

TFN

uarantee for TFN’s obligation of

had not made any drawdown on this

for for significant operating lease agreements 0,000 0,000 thousand of syndicated loan from 9 . As of December 31, 200 9 , respectively. and TFN

- thousand 41 - from banks within the guarantee amount. amount. the guarantee within banks from

thousand thousand guarantee for TFN’s bank . the the Corporation $ 975,556

both both ). thousand and

9 ,

21,500,000 thousand thousand in notes promissory for outstanding

9 , the Corporation had provided TFN $50,000 thousand as performance 9 , TT&T provided an $146 thousand g thousand

31, 200

4,693,485

172 d $21,328,330

and and $3,242,661 thousand in May 2009, respectively in capital: in capital: 4 (attached Table

. . As of December 31, 200 - Chap. 8 Financial Report summarized as follows: summarized he Corporation and its subsidiary, TFN, obtained $13,50 2010 2011 2012 2013 2014 As As of December 31, 200 T loan banks banks led by Chinatrust Commercial Bank. The loan Corporation provided a guarantee for TFN’s bank construction and equipment sales. equipment and construction As As of December guarantee for calling IDD card issued July by 31, in2008, accordance with NCC’s new policy effective 1, 2007. on April TFN has drawn down $1,848,322 $1,848,322 down drawn TFN has also also provide To To enhance 3G mobile communications, expand network coverage and increase the service functions, the a entered into Corporation 3G expansion with contract thousand Nokia for in $4,800,000 S 2006 None. paid the of 20% or million least $100 at of at prices estate real individual of Disposal Acquisition Acquisition of individual real estate at costs of at least $100 million or 20% of the paid Financing provided: provided: Financing 1 (attached) Table Endorsement/guarantee provided: provided: Endorsement/guarantee 2 (attached). Table held: securities Marketable 3 (attached). Table Marketable securities acquired and disposed of at costs or prices of at least $100 million or 20% of the paid Future Future minimum rental payments as of December 31, 200 are The Corporation provided $ amount was $ was amount

. e. d. c f.

b. d. f. b . COMMITMENTS AND CONTINGENT EVENTS CONTINGENT AND COMMITMENTS a.

e. the Corporation for Bureau and Futures the Securities by required disclosures additional were the Following investees: and its a. c.

ADDITIONAL DISCLOSURES . . 26 27

012 463 , ,688 , 3 4 15,887 22,000 23,347 28,085 41,470 77,293 38,015 38,015 2008 2008 2008 202 32

$ $ $ $ $ $ $ $

ecember 31 ecember

earnings earnings subject to 9

December 31 December

500 AGM. AGM. While that for the s Ended December 31 December s Ended 3,092 9 12,065 30,400 24,709 27,392 37,483 62,668 32,157 32,657 2009 2009 2009 216,507 319,750

Years Ended D Ended Years Year $ $ $ $ $ $ $ $

earnings earnings approved in 200 dit dit line of deposit overdraft, guarantees and refundable

40 - s, cre

loan included included the bonus appropriation from 200

9 to directors to

AGM. AGM. More detailed information may be referred in the Corporation’s annual

remuneration

cember cember 31, 200 10

time deposits time

- time deposits deposits time expenses

Insurance expenses Insurance Fubon Ins. Donation Foundation TWM maintenance and Repairs FPM Other FPM compensation and special incentives Salaries, as paid Earnings to employees as bonus paid Earnings fee Professional The compensation to directors, supervisors and managers for the year ended December 31, 200

Compensation to directors, supervisors and managers: supervisors to directors, Compensation The and its Corporation provide contracts for subsidiaries guarantee related party. Please see Note 2 6 . Endorsement/guarantee provided Endorsement/guarantee included included the bonus appropriation from 200 approval approval in 20 reports. year year ended De

) ) ) ) 7 8 9 0 1 1 2 ) 1 )

assets Current assets Other ASSETS PLEDGED The assets pledged as collaterals for bank deposits for construction contracts were as follows: as were contracts construction for deposits .

2 5

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

) ) ) )

------1 0 4 668 927 , , 8,583 16,50 61,840 68,253 264 579,63 177,821 103,583 92 323 (561,364 (689,043 3,210,954 3, (1,836,570 (1,5 68,470,232 68,470,232 20,448,134 18,646,331 82,511,057 85,899,832 69,296,096 69,296,096 21,7 20,536,710 88,350,51 91,939,109

Consolidated Consolidated $ $ $ $ $ $ $ $ $ $ $ $

) ) ) ) ) ) )

- - ) ,452 (20,134 (50,222 (3,904 (3,904,452 (3,363,963 (3,363,963 (3,013,134 (2,570,126

Adjustments Adjustments $ $ $ $ $ $ $ $

and Elimination and Elimination

)

395 321

8,843 3,657 1,027 1,377 63,762 35,070 98,832 27,118 33,500 19,204 (55,338 142,174 175,674 240,474 Others Others

$ $ $ $ $ $ $ $ $ $ $ $ $ $

28,527 50,900

491,537 142,468 487,341 483,282 142,913 397,916 5,244,538 5,273,065 1,984,498 4,186,480 4,237,380 1,686,003

12,642,162 12,511,028 Cable Cable TV Cable TV

Year Ended December 31, 2009 Year Ended December 31, 200 $ $ $ $ $ $ $ $ $ $ $ $ $ $

business. service TV and cable line - -

43 . line line - - - 72,801 26,187 87,509 62,990 866,249 222,258 232,577 8,399,835 1,541,744 9,941,579 1,778,066 6,427,772 1,183,005 8,862,67 1,127,584 9,990,259 1,7 5, 1, Fixed Fixed

$ $ $ $ $ $ $ $ $ $ $ $ $ $

accounted for using equity method. equity using for accounted

872,755 455,210 888,390 2,299,111 7,026,751 4,573,900 2,151,979 6,598,035 5,911,444 Mobile Mobile 54,762,097 57,061,208 16,696,861 65,984,131 56,104,767 58,256,746 18, 72,745,89

$ $ $ $ $ $ $ $ $ $ $ $ $ $

divided into mobile, fixed mobile, into divided

term investments investments term -

Advances or loans to another segment. another to loans or Advances Long Asset not for use by any specific segment. specific any by use for not Asset

ure

The Group is Group The 2) 3) Represents sales or service revenue between segments. between revenue service or sales Represents Represents revenue minus cost and expenses expenses and administrative on general segment basis, not included the Group’s Represents Represents tangible and intangible assets which can be separately allocated to each segment. include: not do assets these However, 1)

term term investment term investment - - the Groupthe (Note 2) Groupthe (Note 2) Industry Note 1: Note 2: Note 3: Note 4: Note Revenues outside from of the Group Revenues other segmentsfrom in revenuesTotal Gross (loss)profit (Note 3) Interest income Other income Interest expenses Operating expenses Other expenses tax income before Income Identifiable assets (Note 4) Financial assets Long General assets assetsTotal Depreciation expenses Amortization expenses expenditCapital Revenues outside from of the Group Revenues other segmentsfrom in revenuesTotal Gross (loss)profit (Note 3) Interest income Other income Interest expenses Operating expenses Other expenses tax income before Income Identifiable assets (Note 4) Financial assets Long General assets assetsTotal Depreciation expenses Amortization expenses expenditureCapital

SEGMENT INFORMATION SEGMENT .

28 in

84,485 , issued

in capital: - of $

s Due Date Due December 2009 December gain

addition addition to interest

5,000,000 Amount Contract

$ deduction deduction and

173 : None. contracts contracts in December 2002 to hedge

) nverse nverse floating interest rate fluctuation. For i IRS Chap. 8 Financial Report te in te

- 42 - Term

interest interest rate swap ( exchange for fixed interest rate ofrate interest fixed for exchange 2.45%

ra interest floating Inverse

$30,531 $30,531 thousand, respectively, recorded as sale sale to related parties amounting to at least $100 million or 20% of the paid verse verse floating interest rates of bonds, which are settled semiannually. Please refer and and related information of investees on which the Corporation exercised significant

in losses losses

for the related information. information. related the for 3 , respectively contracts Financial Instrument Financial to Note 2 to Note the years ended December 31, 2009 and 2008, the Corporation recognized swap rate Interest The Corporation entered into IRS contracts to hedge The The Corporation entered into fluctuation fluctuation o thousand thousand and expense The The name of the investee company in Mainland China, the main businesses and products capital, capital, method of investment, information on inflow or outflow of capital, ownership, investment gain or loss, ending balance, received amount as from earnings distributions the and investment, the investment: on limitation 8 (attached). Table Significant Significant direct or indirect transactions payment, unrealized gain with or loss, and the other related information which investee is helpful to company, understand the reports financial on China in Mainland investment of impact its prices and terms of

Total Total purchase from or capital: capital: (attached). Table 5 transactions Derivative 1)

Receivables Receivables from related parties amounting to at least $100 million or 20% of the paid Names, Names, locations, influence: (attached). Table 7 China: in Mainland Investment Business relationships and significant intercompany transactions: transactions: intercompany significant and relationships Business 10 (attached). Table 9 and Table Table 6 (attached). Table 1) 2)

h. j. k. i.

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 174 Chap. 8 Financial Report

4 1

Operating Operating

Percentage of Percentage Revenues (%) Revenues

2008

9,850,395 Amount

13 Years Ended December 31 December Ended Years Operating

Percentage of Percentage Revenues (%) Revenues

net operating revenues were as follows: were revenues operating net

- 2009

44 -

8,833,137 Amount

generating unit that operates outside the ROC. the outside operates that unit generating -

Ltd.

Company Co., Telecom Chunghwa no revenue has Corporation The revenues Foreign revenues. no foreign has Corporation The total the 10% of exceeding revenues with Customers operations Foreign

d. b.

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

91 00

ote 2) TABLE 1 (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 2) (Note 2) (N (Note 2) (Note 2) (Note 2) (Note 2) (Continued) 8,386,254 8,386,254 Limits Lending Lending 20,829,2 20,829,291 20,829,291 20,829,291 20,878,023 20,878,023 14,084,712 14,084,712 14,084,712 13,500,000 12,000,0 12,000,000 12,000,000 12,000,000 24,000,000 15,000,000

Company’s Company’s $

Lending Amount Amount Lending

,712 (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note (Note 2) (Note 2) (Note 2) (Note 2) (Note 2) (Note 2) 8,386,254 8,386,254 for Each Each for 20,829,291 20,829,291 20,829,291 20,829,291 20,878,023 20,878,023 14,084,712 14,084,712 14,084 13,500,000 12,000,000 12,000,000 12,000,000 12,000,000 24,000,000 15,000,000 Company

Borrowing $

Lending Limit Limit Lending

------

Value Collateral

------Item

------

Doubtful Accounts

$ Allowance for for Allowance

term - ities ities

Financing in minorities acquiring in minor acquiring operation and requirements in minorities acquiring Reasons for Short for Reasons itsneeds financing meet To Operation requirements Operation requirements Operation requirements itsneeds financing meet To Operation requirements itsneeds financing meet To Operation requirements Operation requirements Operation requirements Operation requirements Business requirements Business requirements Business requirements Business requirements Business requirements Business requirements Business requirements

------

1,350 32,440 57,336 270,213 221,977 563,225 478,941 Amounts

Transaction Transaction $

- rm term term term term term term term term term term te term ------Purpose 45 Financing - financing financing financing financing financing financing financing financing financing financing financing Short Short Short Short Short Short Short Short Short Short Short Transactions Transactions Transactions Transactions Transactions Transactions Transactions

2.417% 2.417% 2.602% 2.581% 2.417% 0.847% 2.604% 2.594% 2.604% 2.594% 2.604% 2.594% 0.862%

------0.838% 0.838% 0.847% 0.845% 2.417% Interest Rate Interest 0.838% 0.838% 0.929% 0.862% 1.068% 0.838% 0.838% 0.844% 0.862% 0.838% 0.839% 0.838% 0.839%

------45,000 700,000 200,000 680,000 360,000 307,000 2,000,000 4,670,000 2,270,000 8,040,000

Ending Balance

,000 60,000 700,000 188,000 450,000 680,000 207,700 360,000 470,000 2,045,000 2,000 8,000,000 5,040,000 2,270,000 1,000,000 2,900,000 1,320,000 1,600,000 8,410,000 Period

Maximum 175 $

Balance for the

------

Chap. 8 Financial Report

Account Financial Financial Statement Statement related related parties related parties related parties related parties related parties related parties related parties Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables

Ltd. Ltd. Ltd.

Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd.

Ltd.

AND SUBSIDIARIES AND Co., Co., Co., Technology Ltd. Borrowing Company

FN Media Co.,

Fu Tai Media Technology Wealth Media Media Co.,TFN Cellular Co.,Taiwan Media Co.,TFN Investment Co., TCC Media Co.,TFN Media Co.,TFN T CorporationThe Cellular Co.,Taiwan Media Co.,TFN Media Co.,TFN Media Co.,TFN Media Co.,TFN Media Co.,TFN Media Co.,TFN Broadcasting WinTV Co., LTD.

(the

Ltd. Ltd. Ltd. Ltd. Ltd.

Ltd.

Lending Company Lending iwan Mobile Co., Co., Mobile iwan “Corporation”) (Note 3) Ltd. Corporation Ltd. (Note 4) Ltd. Ta Cellular Co.,Taiwan Investment Co., TCC Co., Network Fixed Taiwan Union Cable TV Co., Cable TV Mangrove Cable TV Co., Globalview Phoenix Cable TV Co., Shin TV Co., Ho Cable Yeong Jialeh Cable TV Co., Media Co.,TFN

0 1 2 3 4 5 6 7 8 9 10 No.

TAIWAN MOBILETAIWAN CO., PROVIDED FINANCING YEAR ENDED DECEMBER ENDED YEAR 31, 2009 (In Thousands of New of Thousands Dollars) (In Taiwan WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

77,046 76,471 (Note 1) (Note 1) (Concluded) Limits Lending Lending

Company’s Company’s $

Lending Amount Amount Lending

77,046 76,471 (Note 1) (Note 1) for Each Each for Company

Borrowing $

Lending Limit Limit Lending

- -

Value Collateral

e e lowest amount of the following items: 1) 40 percent of the

- - Item nancing company’s capital, or 2) the amount of business dealing. capital, of orthe 2) amount nancing company’s

- -

Doubtful Accounts

$ Allowance for for Allowance

term -

invests)* theinvests)* (the of loaningamounts total entities). loaning company financing a that Inevent the

176 Financing in minorities acquiring Reasons for Short for Reasons Repayment of financing itsneeds financing meet To s net worth.

- -

Chap. 8 Financial Report Amounts

Transaction Transaction $

- term term term - - Purpose 46 Financing - financing financing Short Short

0.838% 0.867% Interest Rate Interest

4,000 45,000 ng fund shall not exceed 40 percent of the financing company's net worth. worth. net th to company's limited be financing the shall of fund percent 40 loaning exceed not individual shall The fund ng

Ending Balance

aggregate amount of loaning funds shall be both limited to the higher amount of the following items: items: the amount of following to amounthigher belimited loaning funds the both of shall aggregate the of multiple fi a 1)

9,000 60,000 Period

Maximum $

Balance for the

- -

ny invests in the loaning entities; or 3) the amount = (the share portion of the loaning entities that the financing company in ny invests the company thefinancing orportionthe loaningof loaning entities 3) (the that amount = share entities; the

. ’s financing provided to others due to merger. to due providedothers financing to ’s Account Financial Financial Statement Statement Ltd. related related parties related parties Other receivables Other receivables

Ltd. party, the individual lending amount and the aggregate amount of loaning funds shall not exceed 40% exceed the amountcompany’ of financing not loaning funds of shall aggregate the amount and individual party, lending -

Ltd. term term financing needs (loaning entities), the aggregate amount of loani liquidated on December 1, 2009 1, December on liquidated - Co., Co., Co., Technology Borrowing Company Fu Tai Media Technology Media Wealth Global wns a counterwns was

assumed all TFN Investment Co., Investment all TFN assumed

Ltd.

Ltd. Ltd. Lending Company Lending Co., Co., Co., TCC Investment Co., TCC financing company's net worth; company's 2)financing the compa amount thatfinancing the or 100%o indirectly directly For the entities which have short Where funds are loaned for reasons of business dealings, the individual lending amount and the amount and individual dealings, business the lending of Where reasons fundsloaned for are Shin TV Co., Ho Cable Media Technology Wealth Fu Tai Media Technology

11 12 No. Note 3: Note 1: Note 2: Note 4:

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

TABLE 2 93,063 (Note 5) (Note 52,073,226

Provided by the the by Provided Guarantor/Endorser Guarantor/Endorser Endorsement Can Be Be Can Endorsement Maximum Guarantee/ Maximum

umulated

0.16% 66.98% Worth of the of Worth Endorsement/ Guarantee to Net to Net Guarantee Guarantor (Note 1) (Note Guarantor Ratio of Acc Ratio of

- -

limit to each subsidiary shall be the double of the investment amount. investment the of double the shall be subsidiary tolimit each - Value of Collaterals Collaterals of Value

he upper he

TT&T, and not over double of the investment amount in TT&T. in amount investment the of double over and not TT&T,

146 34,878,330 (Note 1)

Ending Balance Ending

146 34,878,330 (Note 1) the Period the

- $

47 - Maximum Balance for Balance Maximum

20,000 (Note 3) (Note 5) (Note 42,000,000

Can Be Provided to to Provided Be Can Each Receiving Party Receiving Each Endorsement Amount Amount Endorsement Maximum Guarantee/ Guarantee/ Maximum

(Note 2) (Note 4) (Note (B is(B A’s) Nature of of Nature Relationship

177

Ltd. Ltd. Chap. 8 Financial Report

Receiving Party Receiving (B) Name

AND SUBSIDIARIES

Co., Network Fixed Taiwan Co., Network Fixed Taiwan

ed subsidiaries, the aggregate endorsement/guarantee amount provided shall not exceed the net worth of the Corporation, and t and Corporation, the of worth net the exceed not shall provided amount endorsement/guarantee aggregate the ed subsidiaries,

(the (the

Ltd. Ltd. nd indirectly 100% owned by TFN. by owned 100% nd indirectly of net worth the within limited be shall TT&T, by provided amount endorsement/guarantee The

(A) Endorsement/Guarantor “Corporation”) Co., Technologies Parent company Parent TT&T is directly a directly is TT&T Direct/indirect subsidiary Direct/indirect own direct/indirect For 100% Maximum guarantee/endorsement amount for the period and the ending balance are the amount allowed, not actual appropriation. actual not allowed, amount the are balance ending the and period the for amount guarantee/endorsement Maximum Co., Mobile Taiwan & Teleservices Taiwan

ousands of New Taiwan Dollars) Taiwan New of ousands

0 1 No. 4: Note 5: Note 2: Note 3: Note YEAR ENDED DECEMBER 31, 2009 DECEMBER ENDED YEAR (In Th TAIWAN MOBILE CO., LTD. CO., MOBILE TAIWAN ENDORSEMENT/GUARANTEE PROVIDED 1: Note

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

Note TABLE 3 (Continued)

------

968 780 6,982 8,415 8 42,130 31,657 177,821 192,615 211,974 191,178 140,858 (Note 5) (Note 3) (Note 3) (Note 3) (Note 3) (Note 3) (Note 3) (Note

52,195,059 (Note 1)

Market Value Value Market $ US$

0.028 0.19 6.694 3.34 5.21 3.00 3.17 10.00 49.90 12.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 Ownership Percentage of Percentage

- - 968 780 6,773 8,415 50,324 86,982 89,199 67,731 20,207 177,821 192,615 211,974 191,178 140,858 131,937 (Note 2) (Note 4) (Note 2) (Note December 31, 2009 31, December 9,353,920

$ US$ Carrying Value Carrying

74 100 100 803 share 2,989 2,200 8,400 3,749 2,272 6,998 3,000 1,200

Units 27,200 30,000 24,950 27,000 13,500 1 178 (Thousands) Shares/

Chap. 8 Financial Report

current current current current current current ------current

- ethod non non non non non non

------

- equity method equity method equity method equity method equity method equity method equity method equity method equity m equity method equity method

------48 - sale financial assets sale financial - for - Financial Statement Account Statement Financial term investments investments term investments term investments term investments term investments term investments term investments term investments term investments term investments term investments term ------Available cost at carried assets Financial cost at carried assets Financial Long Long Long Long Long Long Long Long Long Long cost at carried assets Financial cost at carried assets Financial cost at carried assets Financial cost at carried assets Financial Long

------method method - the Investing the Investing investee Relationship with Relationship Company (B is(B A’s) Company Subsidiary Subsidiary Equity Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary

Ltd. Ltd.

Ltd.

Ltd. Ltd.

Ltd.

Co., Co.,

Ltd. (B)

Ltd. Ltd. . Ltd. AND SUBSIDIARIES

view Cable TV Cable view Marketable Securities Invested Securities Marketable

al Forest Media Technology Co., Co., Technology Media Forest al k Stock Co., Telecom Chunghwa Pte Mobile Bridge Company Holdings Mobile Yes Co., Technology Media Wealth Co., Cellular Taiwan Co., Horizons New Taipei Stock Co., Technology Media Tai Fu Stock Co., Technology Media Wealth Global Co., Technology Media Jia Leh Fu Co., Technology Media Fu Sin Glob Stock Global Stock TV Co., Cable Phoenix Stoc Co., Arcoa Communication Corp. Capital Venture Parawin Inc. Tech High Transportation Co., Point WEB Co Holding TWM

RITIES HELD RITIES

Ltd. Ltd. Ltd.

(A)

Ltd. Ltd. Ltd. Investing Company (the “Corporation”) (the Co., Co., Co., Technology Co., DECEMBER 31, 2009 DECEMBER Dollars) U.S. or Dollars Taiwan New of (In Thousands TAIWAN MOBILE CO., LTD. CO., MOBILE TAIWAN MARKETABLE SECU Co., Mobile Taiwan Technology Media Wealth Technology Media Tai Fu Media Wealth Global Technology Media Fu Sin Co., Cellular Taiwan

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

Note (Continued)

- - - -

2,982 3,346 10,950 93,063 250,914 587,341 283,339 917,139 581,407 (Note 5) (Note 3) (Note 3) (Note 5) (Note 6) (Note 3) (Note 3) (Note 5) (Note 3,603,385 8,123,641 8,289,757 1,853,557

35,211,780 20,965,635 13,901,109 27,902,369 28,472,793 (Note 1)

Market Value Value Market $ US$ $

5.86 6.67 1.24 3.50 3.47 0.84 98.50 29.53 96.66 99.99 92.38 12.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 Ownership Percentage of Percentage

er 31, 2009 er 31, 3,872 9,757 3,346 10,950 46,074 93,063 253,732 500,000 546,514 187,042 Decemb 1,763,621 8,123,641 8,28 2,111,821 3,141,644 2,058,304 1,203,928 2,120,829

35,211,780 21,092,818 13,901,109 27,902,369 28,472,793

$ US$ $ Carrying Value Carrying

100 400 400 , 1,200 2 6,248 1,300 1,000 17,905 10,000 50,000 33,940 65,818 51,733 21,890 222,774 230,526 132,849 170,441 225,531 456,295 2,100,000 (Thousands) Shares/Units

current current current - - -

- - - - t t non non non

- - -

------49 - le financial assets le financial sale financial assets sale financial assets sale financial sa

- - - for for for - - - Financial Statement Account Statement Financial current current current current - - - - term investments investments term investments term investments term investments term investments term investments term investments term investments term investments term investments term investments term investments term investments term investments term investments term ------ng non non non non Long Long Long Long Available Long Long Long cost at carried assets Financial cos amortized at measured Bonds Available Long Long Long Lo Long Long Long Long cost at carried assets Financial cost at carried assets Financial Available

- - - - Corporation the Investing the Investing ubstance s Relationship with Relationship Company (B is(B A’s) Company Subsidiary Subsidiary Subsidiary Subsidiary The Subsidiary Subsidiary Subsidiary Corporation The Subsidiary in party Related Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Corporation The

179

Ltd.

Ltd. Chap. 8 Financial Report Ltd.

Ltd. Ltd. Ltd. Ltd.

hnologies Co., hnologies Ltd. Ltd.

(the “Corporation”) (the “Corporation”) (the “Corporation”) (the

Co., Co.,

Ltd. Co., Co., Ltd.

Ltd. (B)

Ltd. Ltd. Ltd.

Ltd.

foComm Technology Co., Co., Technology foComm

view Cable TV Cable view

Marketable Securities Invested Securities Marketable

Unlisted Convertible Preferred Stock Stock Preferred Convertible Unlisted Series A Ltd. Ltd. aiwan Digital Communication Co., Co., Communication Digital aiwan Co., Network Fixed Taiwan T Co., TCC Investment Stock (Beijing) Communications TWM Stock Co., Mobile Taiwan Co., Broadcasting WinTV Co., TFN Media Co., Development & Investment TCCI Taipei Broadband Great stock Preferred Corporation Speed Rail High Taiwan Stock Co., Mobile Taiwan Stock TV Co., Jialeh Cable Yeong TV Corporation Cable Mangrove TV Co., Cable Phoenix TV Co., Cable Union Global Stock Co., Investment TFN Union LIMITED TFN HK Tec & Teleservices Taiwan Corporation Speed Rail High Taiwan In Century New Stock Co., Mobile Taiwan

Ltd. Ltd.

(A)

Investing Company Development Co., Co., Development Ltd. Ltd. Co., Holding TWM Co., TCC Investment & Investment TCCI Co., TFN Media Co., Network Fixed Taiwan Co., Investment TFN Union WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

Note (Concluded)

1,409 1,403 20,023

(Note 1) Market Value Value Market US$ US$

100.00 100.00 100.00 Ownership Percentage of Percentage

1,409 1,403 ember 31, 2009 31, ember 20,023 Dec

carrying carrying cost of $52,195,059 thousand on TCC shall be reduced by 1)

US$ US$ s Carrying Value Carrying ’

of $7,529 thousand. of $7,529 gain 1,300 2,000 ns 180 the Corporation (Thousands) Shares/Units

Chap. 8 Financial Report

ethod luding luding $11,420,417 thousand unrealized gain from financial assets investment, 3) adding back $475,907 thousand

- equity m equity method equity method

- - - recognition of upstream transactio of upstream recognition 50

- book, book, 2) exc

s ’

excluding Financial Statement Account Statement Financial term investments investments term investments term investments term - - - TCC) are classified as treasury shares. Therefore, the the Corporation Long Long Long shares, and 4) and 4) shares,

s ’ owned owned by -

the Investing the Investing the Corporation Relationship with Relationship Company (B is(B A’s) Company Subsidiary Subsidiary Subsidiary

ies

Ltd.

Ltd. (B) Marketable Securities Invested Securities Marketable

Ltd. Stock Co., T Holdings TT & Co., Basketball Super Taiwan Stock Technolog & Teleservices Taifu Xiamen shares shares held by TCCI, TID and TUI (all are subsidiaries 100% cognized in 2004 reduced the value to zero. to value the reduced in 2004 cognized

’

Ltd. Ltd.

(A) Based on the investee’s net worth as shown in its audited financial statements if market value was not available. not was value if market statements financial audited its in as shown worth net investee’s the on Based Impairment loss re loss Impairment available. not was worth net investee’s the report date, auditors’ independent the 20, 2010, January of As The Corporation downward downward adjusting $31,889,100 thousand, the carrying value of total treasury shares on 70.47% shares are held under trustee accounts. trustee under held are shares 70.47% Based on the closing price on December 31, 2009 31, on December price closing the on Based income tax expenses resulted from TFN and TFNI’s disposal gain from from disposal gain TFNI’s TFN and from resulted expenses tax income

Investing Company Technologies Co., Co., Technologies & Teleservices Taiwan Co., Holdings TT&T 1: Note 2: Note 3: Note 4: Note 6: Note

5: Note WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

- -

(Note 4) TABLE 4

8,289,757 28,472,793 Amount

- -

Ending Balance 456,295 132,849 (Note 4) (Thousands) Shares/Units Shares/Units

)

- - 1

1,45 ( (Note 2) (Note 3)

Disposal Gain (Loss) on Gain US$

- - 5,771 5,552,137 18,616,561

$ US$ Carrying Value

- - Disposal

4,320 6,629,149 22,769,109

Amount

$ US$

- -

1,080 456,295 132,849 (Thousands) Shares/Units Shares/Units gnized as deferred gnized credits. as nothis or transaction. gain on was loss There

s recognized as deferred credits. s recognized as nothis or transaction. gain on was loss There - - - 9

6,629,14 22,769,109

Amount

- - -

Acquisition 456,295 132,849

- (Thousands) 51 Shares/Units Shares/Units -

on assets. financial

IN CAPITAL CAPITAL - IN - -

or loss

2,052

22,221,555 17,318,833

Amount

alance $ US$

- -

revaluation gain 1,080 Beginning B 456,295 355,623 unrealized (Thousands) Shares/Units Shares/Units

Nature of of Nature

Relationship 181 Subsidiary Subsidiary Parent Parent thousand (including unrealized gain of financial instruments) from due instruments) TFNI financial to of gain from merger. unrealized (including thousand

party

- Chap. 8 Financial Report

13,901,109 TING TO AT LEAST $100 MILLION OR 20% OF PAID OF THE AT LEAST TO $100MILLION 20% OR TING $

Investment Co.,Investment Ltd. Development & Ltd. Co., Co., Network Ltd. Ltd. Co., Counter and UnionTFN Investment TCCI Taiwan Fixed Investment TFN

- - - - - sale sale sale sale sale shares shares

- - - - - iwan Mobile shares. reco was $4,152,548 shares, thousand, of price original between disposal the cost and the difference The for for for for for - - - - -

current current current current Mobile its Taiwan Mobileits Taiwan shares. wa $1,077,012 shares, thousand, of price original between disposal the cost and the difference The - - - -

Account Financial Financial Statement Statement financial assets assets financial non assets financial non assets financial non assets financial non assets financial current Available Available Available Available Available aiwan AND SUBSIDIARIES AND

Ltd.

LTD. and Issuer

Marketable Securities Type Type Securities Marketable Stock Ltd. Co., Mobile Taiwan Stock Ltd. Co., Mobile Taiwan Stock Ltd. Co., Mobile Taiwan Stock Ltd. Co., Mobile Taiwan ADS Hurray!Holding Co.,

TFN resolved to inject capital into TUI with its with Ta resolved to into TFN TUI inject capital The amount of beginning and ending fund balance that belongs to marketable securities included securities marketable to the belongs balance that fund amount ending and The beginning of TFNI resolved to inject capital into TID with resolved with to intoTFNI injectTID capital T thousand 222,774 the assumed TCCI ENDED DECEMBERENDED 31, 2009

Ltd.

, ,

Network Co., Network Ltd. Co., Investment Co. Ltd. Ltd. Co., Development Ltd. Co.,

Note 2: TAIWAN MOBILETAIWAN CO., DISPOSED AMOUN OR MARKETABLEACQUIRED SECURITIES Company Name Taiwan Fixed Investment TFN Union TFN TCCI & Investment Holding TWM Note 1: (In Thousands of New of Thousands Dollars) (In Taiwan YEAR Note 3: Note 4:

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

TABLE

Note

(Note 1) .

) ) ) ) ) ) ) 6 5 85 15 15 27 13 23 11 (21 (82 (82 (84 (79 (89 (Note 3) (Note 5) (Note r Receivable r

% % to Total 48,836 thousand 48,836

) ) ) ) ) ) ) ) ) 65,804 11,240 53,205 97,917 45,862 (65,790 (11,240 (35,916 (45,862 (53,205 (97,917 368,183 294,399 115,122 (301,974 (367,857 (115,122

Ending Balance Notes/Accounts Payable o Payable Notes/Accounts

------(Note 6) (Note 6) (Note 6) (Note 6) (Note 6) (Note 6) (Note 6) (Note 6) (Note 6)

Payment Terms Payment Others

------(Note 6) (Note 6) (Note 6) (Note 6) (Note 6) (Note 6) (Note 6) (Note 6) (Note 6) Unit Price Unit

182 Different from with Terms Transactions

Chap. 8 Financial Report

on contract thousand after deducting accounts payable and accrued custodial receipts/payments totaled$3 custodial accrued receipts/payments and payable deducting accounts thousand after

erms Payment Terms Payment terms terms terms terms terms terms t terms terms terms terms terms terms terms terms terms terms Based onBased contract onBased contract onBased contract onBased contract onBased contract onBased contract onBased contract onBased contract onBased contract onBased contract onBased contract onBased contract onBased contract onBased contract onBased contract onBased contract

19,347

) ) ) ) ) ) ) ) (4 (9 (7 32 59 58 60 59 63 (85 (15 (15 (19 (16

- (Note 2) (Note 4) (Note 4)

% % to Total IN CAPITAL CAPITAL - IN 52 -

) ) ) ) ) ) ) )

unts receivable should$ be unts receivable Transaction Details Transaction 859,159 156,205 143,665 182,643 212,096 388,009 459,667 (859,350 (156,205 (459,667 (212,096 (388,009 (182,643 2,276,319 1,390,303 2,273,452 Amount ( (1,464,178

$ 20% PAID 20% OF THE

The net acco

l leasing l leasing

copyright fee fee fee fee copyright copyright copyright copyright Purchase/Sale Sale Purchase Purchase Sale Sale Sale Purchase Purchase Channe Channel leasing Channel leasing Channel leasing Royalty of Royalty of Royalty of Royalty of Royalty of

(B is A’s)

substance Nature of Relationship of Nature Subsidiary Subsidiary parent Ultimate Parent parent Ultimate Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary in Related party Parent Parent Parent Parent

TV Co., Ltd. Co., TV

. (B)

o.,Ltd.

Related Party Related ia Co., Ltd. view Cable TV Co.,view Ltd.

Ka Ltd. Ka

- Co., Ltd. Ltd. Co., Ltd. Co.,

Ltd. Co., Network Fixed Taiwan Teleservices Technologies & Taiwan CorporationThe Ltd. Co., Network Fixed Taiwan CorporationThe Teleservices Technologies & Taiwan Phoenix Cable TV Ltd. Co., Ltd. Union Cable TV Co., Yeong Jialeh Cable Global Dai Media C TFN Media Co.,TFN Ltd. Media Co.,TFN Ltd. Med TFN

thousand accounts receivable amount was expressed on a gross basis in accord with sales amount. sales basis expressed inwith on amount accord gross a was receivable thousand accounts

(A)

368,183

Company Name The $ expenses operating Included costs and operating Included accounts payable and expenses accrued Included payable accounts Recognized as operating as Recognized expenses. expenses. accrued as Recognized transactions. on of Nokind comparables such

view Cable TV Co.,view Ltd. “Corporation”) Ltd. Co., TAIWAN MOBILE CO., LTD. AND SUBSIDIARIES MOBILETAIWAN CO., LTD. AND MILLION OR AT LEAST FROM TO $100 PURCHASE PARTIES AMOUNTING SALETOTAL RELATED TO OR (the Ltd. Co., Mobile Taiwan Teleservices Technologies & Taiwan Ltd. Co., Network Fixed Taiwan Media Co.,TFN Ltd. Cable TV Corporation Mangrove Global Ltd. Union Cable TV Co., Yeong Jialeh Cable TV Ltd. Co., Phoenix Cable TV Ltd. Co., Note 1: Note 2: (In Thousands of New of Thousands Dollars) (In Taiwan YEAR ENDED DECEMBER ENDED YEAR 31, 2009 Note 3: Note 6: Note 4: Note 5: WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

------

TABLE bts De

Allowance for Badfor Allowance

------41 14 167 8,989 240,632 148,488 240,584 Subsequent Period Subsequent Amount Received in Received Amount

------

Action Taken

Overdue ------

Amount

.00 5.92 6.06 5.37 5.57 6.11 Rate 11.81 11.07 13.33 13.37 11 14.13 Turnover Turnover

116 2,859 5,767 1,933 3,020 53,418 65,804 11,240

368,183 294,399 268,588 134,306 115,567 307,000 680,139 700,055 200,036 360,127 2,003,836 3,500,000 4,679,014 2,274,467 8,055,329

IN CAPITAL IN CAPITAL -

- 53 Ending Balance Ending - unts receivable unts receivable Accounts receivables Other receivables Other receivables Other receivables Other receivables Other receivable Accounts Acco receivable Accounts receivables Other receivables Other receivable Accounts receivable Accounts receivable Accounts receivables Other receivable Accounts receivables Other receivable Accounts receivables Other receivable Accounts receivables Other receivable Accounts receivables Other

LION OR 20% OF THE PAID OF THE 20% OR LION (B is(B A’s) iary

Nature of Relationship of Nature Subsidiary Subsid Subsidiary Subsidiary Subsidiary parent Ultimate Parent parent Ultimate Parent Subsidiary Subsidiary in substance party Related Parent Parent Parent Parent

Ltd. Ltd. Ltd.

Ltd.

183

Ltd. Ltd. Ltd. Ltd.

td. Ltd. Ltd. Ltd. Ltd. L Ltd. (B) Chap. 8 Financial Report

Related Party Related vestment Co., Co., vestment Co., Network Fixed Taiwan Co., TFN Media Co., Cellular Taiwan Co., TFN Media TCC In Corporation The Co., Network Fixed Taiwan Corporation The Co., Cellular Taiwan TV Co., Cable Phoenix TV Co., Jialeh Cable Yeong Co., Broadcasting WinTV Co., TFN Media Co., TFN Media Co., TFN Media Co., TFN Media

AND SUBSIDIARIES Ltd.

Ltd. Ltd.

Ltd.

(the “Corporation”) (the

Ltd.

Co., Co., Ltd. (A) Ltd.

Ltd. Ltd. Company Name Company view Cable TV Cable view DECEMBER 31, 2009 DECEMBER Dollars) Taiwan New of (In Thousands TAIWAN MOBILE CO., LTD. CO., MOBILE TAIWAN $100 MIL LEAST TO AT AMOUNTING PARTIES RELATED FROM RECEIVABLES Co., Mobile Taiwan Co., Cellular Taiwan Co., Technologies & Teleservices Taiwan Co., Network Fixed Taiwan Co., TFN Media TV Co., Cable Phoenix TV Co., Cable Union Global TV Co., Jialeh Cable Yeong

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

Note excluding TABLE

) ) A NA NA NA NA N NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA (37,526 (33,120 shares, shares, and 4) 3,115,006

’ s

Investment Investment $

Income (Loss) Income

) ) ) ) ) ) ) ) )

22 45 14 40 (56 (56 457 (231 (145 (131 2,465 5,386 1,396 ( 42,400 72,961 47,872 42,400 57,320 (75,203 (33,120 (32,871 166,870 502,577 160,341 166,870 131,110

2,648,823 2,195,548 1,012,976 the Corporation Investee

Net Income Income Net (Loss) of the of (Loss) $ US$ US$ US$ US$

968 780 8,415 3,872 3,346 1,409 1,403

86,982 89,199 10,950 93,063 20,023 211,974 192,6 191,178 140,858 131,937 253,732 546,514 (Note 1) rrying

Value 9,353,920 1,763,621 8,123,641 2,111,821 3,141,644 2,058,304 1,203,928 35,211,780 21,092,818 27,902,369 Ca

, 2009 $ US$ US$ US$ US$

0 0 .00 .00 .00 .00 .00 .00 .00 .00 .00 .00 .00 .00 .00 .00 .00 .00 .00 .00 .00 .00 .00 6.694 3.34 December 31 49.9 98.5 29.53 96.66 99.99 92.38 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 Ownership Percentage of of Percentage

- - 40 100 100 400 400 share 8,400 3,749 2,272 1,200 2,100 6,248 1,300 1,000 1,300 2,000

Balance as of Balance 30,000 24,950 27,200 27,000 13,500 17,905 33,9 65,818 51,733 1 230,526 170,441 (Note 2) 2,100,000 Shares (Thousands)

- - -

1,000 5,005 5,816 1,300 1,300 84,000 82,882 10,800 12,000 10,000 20,000 249,500 272,000 270,000 135,000 133,358 252,141 397,703 841,413

2008 2,001,700 2,035,714 1,616,824 2,294,967 1,904,440 41,058,330 40,000,000

184 $ US$ US$ US$ US$ December 31,

, ,

ing cost of $52,195,059 thousand on TCC shall be reduced by 1) downward adjusting $31,889,100 thousand, the carrying the carrying thousand, $31,889,100 adjusting 1) by downward be on reduced shall TCC thousand ing of $52,195,059 cost 1,700 1,000 4,936 5,816 1,300 1,300 84,000 90,099 10,800 12,000 10,000 20,000 Chap. 8 Financial Report 249,500 272,000 270,000 135,000 133,358 179,047 397,703 841,413 Investment Amount Investment

2009 carry 2,035,714 6,629,149 1,616,824 2,294,967 1,904,440

37,558,330 21,000,000 20,451,000 22,769,109

’ s $ US$ US$ US$ US$ December 31

the Corporation

- t, 3) back adding thousand $475,907 tax expenses income resulted TFN andfrom TFNI’s disposal gain from 54

ovider ervice

e TV service provider TV service e Main Businesses and Products Main Businesses international simple resales) international simple design provider service ( Telecom engineering and IT service Rental Estate andReal Sale Investment Investment Investment Investment Investment Investment provider Cable TV service provider Cable TV service Investment providerFixed line service Telecom engineering and IT service Investment and Mobiledevelopment application pr program TV added Cable broadbandvalue and Investment provider Cable TV service provider Cable TV service Cabl provider Cable TV service provider Cable TV service Investment provider service Telecommunications and ISR service Call center Investment Basketball team management s Call center

Location Taiwan

Taipei, Taiwan Taipei, Taiwan Taipei, Taiwan Taipei, Taiwan Taipei County, Taiwan Taipei, Taiwan Taipei, Taiwan Taipei, Taiwan Taipei County, Taiwan Taiwan Kaohsiung County, VirginBritish Islands Taipei, Taiwan Taipei, Taipei, Taiwan Beijing, China Taipei, Taiwan Taipei, Taiwan Taipei, Taiwan Taipei County, Taiwan Taipei County, Taiwan Taiwan Kaohsiung County, Taiwan Yilan County, Taipei County, Taiwan Taipei, Taiwan Hong Kong Taipei, Taiwan Samoa Taipei, Taiwan ChinaXiamen,

owned - owned by TCC) are classified as treasury shares. Therefore, Ltd.

Ltd.

Ltd. Ltd. Ltd.

Ltd.

Ltd. Ltd. Ltd.

Ltd.

Ltd. Ltd. Ltd.

Ltd. Ltd. Ltd. Ltd.

Ltd. Ltd.

Co., Co., Co., Ltd.

Ltd. Ltd. Ltd.

Investee Development Co.,Development

Ltd. Ltd. book, 2) excluding $11,420,417 thousand unrealized gain from financial assets investmen assets financial from gain unrealized thousand $11,420,417 excluding 2) book,

’ s Cable TV

ble TV Co.,

view Cable TV view view of $7,529 thousand. $7,529 of

ccounts. ipei New ipeiHorizons New Co., gain Cellular Co.,Taiwan Ta Co., Media Technology Wealth Co., Fu Tai Media Technology Co., Media Technology Wealth Global Co., Technology Media Leh Jia Fu Co., MediaFu Technology Sin Co.,Forest Technology Global Media Global Phoenix Ca Holding Co.TWM Co., Network Fixed Taiwan Communication Digital Taiwan Co., Investment Co., TCC Communications TWM (Beijing) Broadcasting WinTV Co., Media Co.,TFN Investment & TCCI Yeong Jialeh Cable TV Co., Cable TV Corporation Mangrove Phoenix Cable TV Co., Union Cable TV Co., Global UnionCo.,TFN Investment HK LIMITED TFN Co., Teleservices Technologies & Taiwan HoldingsTT&T Co., Taiwan Super Basketball Co., & Teleservices Technologies Taifu Xiamen AND SUBSIDIARIES AND

the Corporation the

Ltd. LTD.

, 2009

Ltd. Ltd. Ltd. shares shares held by TCCI, TID and TUI (all are subsidiaries 100%

Ltd. ’ s

(the

Ltd. Ltd. Ltd.

Ltd. Ltd. Investor

Ltd. DECEMBER31 70.47% shares are held under trustee a under 70.47%held trustee are shares recognition of upstream transactions upstream recognition of value value of total shares treasury on The The Corporation

Ltd. “Corporation”)

Note 2:

(In Thousands of New Taiwan Dollars U.S.New of Thousands Dollars) or Dollars (In Taiwan YEAR ENDED ENDED YEAR TAIWAN MOBILETAIWAN CO., THE OF SIGNIFICANT INFLUENCE INFORMATION INVESTEES ON COMPANY OTHER WHICH AND EXERCISES NAMES, LOCATIONS, Co., Mobile Taiwan Co., Media Technology Wealth Co., Fu Tai Media Technology Co., Media Technology Wealth Global Co., MediaFu Technology Sin Cellular Co.,Taiwan Holding Co.TWM Investment Co., TCC Media Co.,TFN Co., Network Fixed Taiwan Co., Teleservices Technologies & Taiwan HoldingsTT&T Co., Note 1: WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

- -

TABLE 2009 Inward Inward

Accumulated Accumulated December 31, 31, December Remittance of of Remittance Earnings as of as of Earnings $

) )

1,403 3,872 45,230 124,826 as of 2009

rying Value Value rying December 31, 31, December US$ US$ Car (NT$ (NT$

) ) 40 22 709

1,290 (Loss)

(Note 3) US$ US$ (NT$ (NT$ Investment Gain Gain Investment

’s

Investment indirect indirect the by investment Corporation subsidiary indirect the by investment Corporation’s subsidiary % Ownership of Ownership % Direct or Indirect Indirect or Direct of 100% ownership of 100% ownership

) )

1,300 4,872

41,909 157,064 2009

Outflow of 1, 2009. Taiwan as of Taiwan Accumulated Accumulated December 31, 31, December US$ US$ (NT$ (NT$ Investment from from Investment

- -

Inflow

) -

255 8,221 NT$4.7213 as of December 3 December as of NT$4.7213 55 - = Investment Flows Investment , subsidiaries of the Corporation. of , subsidiaries Ltd.

Outflow

$ US$ (NT$

) )

1,300 4,617

41,909 NT$32.238, RMB1 NT$32.238, 148,843

93,063 Outflow of Taiwan as of Taiwan Accumulated Accumulated US$ US$ January 1, 2009 1, January (NT$ (NT$ (Note 2) Investment from from Investment 52,195,059 and Taiwan Cellular Co., Co., Cellular Taiwan and

Ltd.

Ltd. Commission, MOEA Commission, rd Ltd. n the n the Authorized by Investment Investment by Authorized Upper Limit on Investment Limit Upper

185

Investment Type Type Investment Chap. 8 Financial Report

Companies in Mainland Mainland in Companies a third through China the by place subsidiary, Corporation’s & Teleservices Taiwan Co., Technologies Mainland in Companies a thi through China the by place subsidiary, Corporation’s Co., Cellular Taiwan

) )

i investment Indirect the in investment Indirect

) ) 0,861

1,909

tal 4

1,300 3,000 MOEA (Note 2) 41,909 96,714 US$1,300 US$5,300 (NT$ (NT$17 in Capi

US$ US$ Paid AND SUBSIDIARIES (NT$ (NT$ Total Amount of Total Amount by Investment Commission, Commission, by Investment

Investment Amounts Authorized Authorized Amounts Investment

and

made by Taiwan Teleservices & Technologies Co., Co., Technologies & Teleservices Taiwan by made s

) and Products and ) development design

Main Businesses Businesses Main service center Call application Mobile 064 909

$1,300 Ltd.

US US$4,872 (NT$4 Ltd. (NT$157, The indirect investment indirect The Calculation was based on audited financial statements. financial on audited based was Calculation The above amounts were translated into New Taiwan dollars at the exchange rate of US$1 rate exchange the at dollars Taiwan New into translated were amounts above The December 31, 2009 31, December

Mainland China as of as of China Mainland Investee Accumulated Investment in Investment Accumulated Teleservices & & Teleservices Technologies Communications (Beijing) Company Name Company 2: Note (In Thousands of New Taiwan Dollars or U.S. Dollars) U.S. or Dollars Taiwan New of (In Thousands 3: Note YEAR ENDED DECEMBER 31, 2009 DECEMBER ENDED YEAR TAIWAN MOBILE CO., LTD. CO., MOBILE TAIWAN CHINA IN MAINLAND INVESTMENT Taifu Xiamen TWM 1: Note

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

TABLE % % (Continued) ------4 2 Percentage of Percentage or Total Assets or Total Consolidated Total Total Consolidated Operating Revenues Revenues Operating

Transaction Terms Transaction terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based

9 6 6 46 17 39 51 11 28 21 14 34

212 275 476 361 297 175 893 693 779 4,300 5,508 1,253 1,720 2,638 1,851 Transaction Details Transaction 19,347 45,065 53,418 65,790 83,059 265,004 176,836 3,500,000 2,003,836 Amount

186 Account ivables expenses ts payable ts receivables r current liabilities current r vance receipts vance Chap. 8 Financial Report receivable Accounts receivable Accounts receivable Accounts receivable Accounts receivable Accounts receivable Accounts receivable Accounts receivables Other receivables Other receivables Other rece Other receivables Other receivables Other Other Prepayments Prepayments Accoun expenses Accrued expenses Accrued Accrued expenses Accrued payables Other payables Other payables Other payables Other payables Other payables Other payables Other Ad receipts Advance liabilities current Other Othe liabilities current Other liabilities current Other liabilities current Other liabilities current Other

1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 (Note) Nature of of Nature

- Relationship 56 -

Ltd. Ltd. Ltd.

Ltd.

Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. ation

Ltd. Ltd. Ltd. Ltd.

Ltd. Ltd. Ltd. Counterparty Ltd. Ltd. Ltd. Ltd. Ltd. Ltd.

rk Co., Co., rk Ltd. Ltd.

able TV Co., TV Co., able Co., Network Fixed Taiwan Co., TFN Media TV Co., Cable Union TV Co., Jialeh Cable Yeong TV Corporation Cable Mangrove TV Co., Cable Phoenix TV Co., Cable Globalview Co., Technology Media Wealth Co., Cellular Taiwan Co., Network Fixed Taiwan Co., Broadcasting WinTV Co., TFN Media Co., Investment TFN Union Co., Development & Investment TCCI Co., Network Fixed Taiwan TV Corporation Cable Mangrove Co., Technologies & Teleservices Taiwan Co., Cellular Taiwan Co., Basketball Super Taiwan Co., Network Fixed Taiwan Co., Technologies & Teleservices Taiwan (Beijing) Communications TWM Netwo Fixed Taiwan TV Co., Cable Union TV Co., Jialeh Cable Yeong TV Corpor Cable Mangrove TV Co., Cable Phoenix TV Co., Cable Globalview Co., Network Fixed Taiwan Co., TCC Investment Co., Network Fixed Taiwan TV Co., Cable Union TV Co., Jialeh Cable Yeong TV Corporation Cable Mangrove C Phoenix TV Co., Cable Globalview

AND SUBSIDIARIES

9 , 200

Ltd. Company Name Company Co., Mobile Taiwan

0 Number (In Thousands of New Taiwan Dollars) Taiwan New of (In Thousands YEAR ENDED DECEMBER 31 TAIWAN MOBILE CO., L TD. CO., MOBILE TAIWAN BUSINESS RELATIONSHIP AND SIGNIFICANT INTERCOMPANY TRANSACTIONS

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

% % % (Continued) ------3 2 1 Percentage of Percentage or Total Assets or Total Consolidated Total Total Consolidated Operating Revenues Revenues Operating

r terms

Transaction Terms Transaction terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based regula on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based action Details action ) ) ) ) ) ) ) 6 6 (3 69 34 34 34 34 37 34 34 34 34 34 34 14

(10 (23 (29 (11 830 642 605 101 803 438 449 971 171 371 173 (549 (497 1,105 3,157 2,893 3,221 Trans 34,304 91,612 40,132 10,784 16,869 860,420 119,447 2,276,319 1,404,455 Amount

evenues Account revenues l income erating revenues erating deposits Guarantee Op revenues Operating revenues Operating r Operating revenues Operating revenues Operating Operating revenues Operating costs Operating costs Operating costs Operating expenses Operating expenses Operating expenses Operating expenses Operating expenses Operating expenses Operating expenses Operating expenses Operating expenses Operating expenses Operating expenses Operating income Interest income Interest income Interest income Interest income Rental income Rental income Rental income Rental income Rental income Rental income Rental income Rental income Rental income Rental income Rental income Rental income Rental Renta income Rental income Rental income Rental revenue Miscellaneous expenses Interest

1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 (Note) Nature of of Nature

- Relationship 57 -

Ltd. Ltd. Ltd.

s Co.,

Ltd.

Ltd. Ltd. Ltd. Ltd. Ltd.

Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd.

Ltd. Ltd. Ltd. Ltd.

Ltd. Ltd. Ltd. Ltd. Counterparty Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd.

rk Co., Co., rk

Ltd. Ltd. Ltd. Ltd. 187 l Forest Media Technology Co., Co., Technology Media Forest l u Media Technology Co., Technology Media u an Super Basketball Co., Co., Basketball an Super Chap. 8 Financial Report eong Jialeh Cable TV Co., TV Co., Jialeh Cable eong Co., Network Fixed Taiwan Co., Network Fixed Taiwan Co., TFN Media TV Co., Cable Union TV Co., Shin Ho Cable TV Co., Jialeh Cable Yeong TV Corporation Cable Mangrove TV Co., Cable Phoenix TV Co., Cable Globalview Co., Network Fixed Taiwan Technologie & Teleservices Taiwan TV Co., Cable Phoenix Co., Basketball Super Taiwan Netwo Fixed Taiwan Co., Technologies & Teleservices Taiwan Co., TFN Investment Co., Broadcasting WinTV Co., TFN Media TV Co., Cable Union Y TV Corporation Cable Mangrove TV Co., Cable Phoenix TV Co., Cable Globalview Co., Technology Media Wealth Co., Technology Media Tai Fu Co., Cellular Taiwan Co., TFN Media Co., Technology Media Wealth Tai F Co., Technology Media Jia Leh Fu Co., Technology Media Fu Sin Globa Co., Cellular Taiwan Co., Communications Digital Taiwan Taiw Co., Network Fixed Taiwan Co., Technologies & Teleservices Taiwan Co., TFN Investment Inc. Range & Reach Co., Broadcasting WinTV Co., TFN Media Co., Investment TFN Union Co., Development & Investment TCCI Co., TCC Investment Co., Network Fixed Taiwan Co., Network Fixed Taiwan

Company Name Company

Number

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

(Continued) ------Percentage of Percentage or Total Assets or Total Consolidated Total Total Consolidated Operating Revenues Revenues Operating

ried depend ried depend aried depend aried depend

he agreements he Transaction Terms Transaction n the agreements n the on the agreements on the agreements on the o agreements on the agreements on the agreements on the agreements on the agreements on the agreements on the agreements on the agreements on the on t agreements on the agreements on the agreements on the agreements on the agreements on the agreements on the agreements on the varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment va terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment v terms Payment varied depend terms Payment

65 34 69 69 65 34 37 69 34 37 34 34 37

4,000 4,000 Transaction Details Transaction 45,065 45,000 45,000 40,132 Amount

188 Account r receivables r Chap. 8 Financial Report Othe expenses Accrued payables Other expenses Operating income Interest expenses Interest receivables Other expenses Accrued payables Other expenses Operating income Interest expenses Interest expenses Interest payables Other expenses Operating expenses Interest expenses Operating expenses Operating expenses Operating

1 2 2 2 1 2 1 2 2 2 1 2 2 2 1 2 2 2 2 (Note) Nature of of Nature

- Relationship 58 -

Ltd. Ltd.

Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd.

Ltd.

Counterparty Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. echnology Co., echnology Co., Technology Media Tai Fu Co., Mobile Taiwan Co., Mobile Taiwan Co., Mobile Taiwan Co., Technology Media Tai Fu Co., Mobile Taiwan Co., Technology Media Wealth Global T Media Wealth Co., Technology Media Wealth Co., Mobile Taiwan Co., Technology Media Wealth Global Co., Mobile Taiwan Co., Technology Media Wealth Co., Technology Media Tai Fu TV Co., Cable Globalview Co., Technology Media Tai Fu Co., Mobile Taiwan Co., Mobile Taiwan Co., Mobile Taiwan

Ltd. Ltd.

Ltd.

Ltd. Ltd. Ltd. Company Name Company Co., Technology Media Wealth Co., Technology Media Tai Fu Co., Technology Media Wealth Global Co., Technology Media Jia Leh Fu Co., Technology Media Fu Sin Co., Technology Media Forest Global

1 2 3 4 5 6 Number

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

% % % % % % (Continued) ------5 3 9 4 9 2 Percentage of Percentage or Total Assets or Total Consolidated Total Total Consolidated Operating Revenues Revenues Operating

erms ular terms ular

regular terms regular terms regular Transaction Terms Transaction d on regular terms regular d on ased on regular terms regular ased on terms regular on Based terms regular on Based terms regular on Based reg on Based terms regular on Based terms regular on Based Base terms regular on Based terms regular on Based on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based B terms regular on Based terms regular on Based t regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based

8 3 34 95 95 95 39 10 62 99

275 100 100 100 371 265 599 211 152 830 113 212 506 4,467 2,883 8,660 1,523 Transaction Details Transaction 15,329 15,056 16,667 12,581 19,021 12,195 53,744 11,240 12,805 66,972 257,097 267,490 4,679,014 2,274,467 8,040,000 3,500,000 8,055,329 1,464,178 Amount

Account vables eceivable receivable

nts receivable nts term borrowing term - receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other Short expenses Accrued payables Other expenses Operating income Interest income Interest revenue Miscellaneous revenue Miscellaneous revenue Miscellaneous expenses Interest expenses Interest receivable Notes Accou receivable Accounts receivable Accounts r Accounts receivable Accounts receivable Accounts Accounts receivable Accounts receivables Other recei Other receivables Other receivables Other Prepayments deposits Refundable payable Accounts payable Accounts expenses Accrued expenses Accrued expenses Accrued expenses Accrued expenses Accrued payables Other receipts Advance revenues Operating revenues Operating revenues Operating revenues Operating

2 1 1 1 1 1 1 1 2 2 1 1 1 1 1 2 1 2 2 3 3 3 3 3 3 3 2 2 3 3 2 2 2 3 2 3 1 1 3 3 2 2 3 3 3 tionship (Note) Nature of of Nature

- Rela 59 -

Ltd. Ltd. Ltd.

Ltd. Ltd. Ltd. Ltd.

Ltd. Ltd. Counterparty Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd.

Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. d. Ltd. Ltd. Ltd. Ltd. Ltd. Lt rvices & Technologies Co., Technologies & rvices

le Co., le Co., 189

Chap. 8 Financial Report Co., Mobile Taiwan Co., Holdings TT&T &Technologies Teleservices Taifu Xiamen (Beijing) Communications TWM Co., TFN Media Co., TCC Investment Co., Network Fixed Taiwan Co., Network Fixed Taiwan Co., Mobile Taiwan Co., Mobile Taiwan Co., TFN Media Co., TCC Investment Co., Holdings TT&T &Technologies Teleservices Taifu Xiamen (Beijing) Communications TWM Co., Mobile Taiwan Co., Network Fixed Taiwan Co., Mobile Taiwan Co., Mobile Taiwan Co., Broadcasting WinTV Co., TFN Media TV Co., Cable Union TV Co., Jialeh Cable Yeong TV Corporation Cable Mangrove TV Co., Cable Phoenix TV Co., Cable Globalview Co., Mobile Taiwan Co., Cellular Taiwan TV Co., Cable Union TV Co., Cable Globalview Co., Mobile Taiwan Co., Mobile Taiwan Co., Mobile Taiwan Co., TFN Media Co., Mobile Taiwan (Beijing) Communications TWM TFNHK Telese Taiwan TV Co., Cable Phoenix Co., TFN Media Mobi Taiwan Co., Mobile Taiwan Co., Broadcasting WinTV Co., TFN Media TV Co., Cable Union

Ltd.

Ltd. Company Name Company Co., Cellular Taiwan Co., Network Fixed Taiwan

7 8 Number

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

% % (Continued) ------3 3 Percentage of Percentage or Total Assets or Total Consolidated Total Total Consolidated Operating Revenues Revenues Operating

terms

regular terms regular

n regular terms regular n on regular terms regular on

Transaction Terms Transaction on the agreements on the terms regular on Based Based terms regular on Based terms regular on Based o Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based regular on Based varied depend terms Payment terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based

2 6 6 51 20 91 31 34 34 14 50 50 50 50 28

650 800 426 362 352 1,833 5,282 1,298 1,949 2,883 5,720 1,268 3,221 4,467 1,984 4,467 Transaction Details Transaction unt 29,292 24,390 16,869 16,667 11,162 21,305 19,781 117,457 156,273 2,273,45 2,270,000 Amo

190 Account term borrowing term - ating costs ating expenses ating Chap. 8 Financial Report revenues Operating revenues Operating revenues Operating revenues Operating costs Operating costs Operating costs Operating costs Operating costs Operating costs Operating costs Operating Oper costs Operating expenses Operating Oper expenses Operating expenses Operating income Interest income Interest income Interest income Rental income Rental income Rental revenue Miscellaneous revenue Miscellaneous expense Miscellaneous expenses Operating Prepayments Short expenses Accrued expenses Operating income Interest expenses Interest expenses Accrued expenses Operating receivable Notes receivable Accounts receivable Accounts receivable Accounts receivable Accounts expenses Accrued

3 3 3 3 2 1 1 3 3 3 3 3 3 2 3 1 3 2 2 3 2 3 3 2 3 2 2 2 2 2 2 1 2 2 2 3 3 3 3 3 2 (Note) Nature of of Nature

- Relationship 60 -

Ltd.

Ltd. Ltd. Ltd

Ltd. Ltd. Ltd. Ltd.

Ltd. Ltd. d. Counterparty Ltd. Ltd. Ltd. Ltd. Ltd. Ltd.

Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Lt Ltd. Ltd. Ltd. Ltd. Ltd.

Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd.

TV Co., Jialeh Cable Yeong TV Corporation Cable Mangrove TV Co., Cable Phoenix TV Co., Cable Globalview Co., Mobile Taiwan TFNHK Inc. Range & Reach Co., TFN Media TV Co., Cable Union TV Co., Jialeh Cable Yeong TV Corporation Cable Mangrove TV Co., Cable Phoenix TV Co., Cable Globalview Co., Mobile Taiwan (Beijing) Communications TWM Co., Technologies & Teleservices Taiwan Co., TFN Media Co., Mobile Taiwan Co., Cellular Taiwan Co., TFN Media Co., Mobile Taiwan TV Co., Cable Union TV Co., Cable Globalview Co., Mobile Taiwan Co., TFN Media Co., Mobile Taiwan Co., Mobile Taiwan Co., Mobile Taiwan Co., Cellular Taiwan Co., Cellular Taiwan Co., Mobile Taiwan Co., TFN Media Co., Cellular Taiwan Co., Mobile Taiwan Co., Mobile Taiwan Co., TFN Media Co., TFN Media TV Co., Jialeh Cable Yeong TV Corporation Cable Mangrove TV Co., Cable Globalview Co., Mobile Taiwan

Ltd. Ltd.

Ltd.

Ltd. Company Name Company Co., Communications Digital Taiwan Co., TCC Investment Co., Development & Investment TCCI Co., Broadcasting WinTV

9 10 11 12 Number

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

(Continued) ------Percentage of Percentage or Total Assets or Total Consolidated Total Total Consolidated Operating Revenues Revenues Operating

epend epend

terms terms

reements nt terms varied depend varied depend nt terms Transaction Terms Transaction on the agreements on the agreements on the agreements on the agreements on the agreements on the agreements on the agreements on the based and agreements on the on regular agreements on the agreements on the varied depend terms yment agreements on the agreements on the agreements on the agreements on the ag on the agreements on the agreements on the agreements on the terms regular on Based varied depend terms Payment regular on Based terms regular on Based terms regular on Based terms regular on Based varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied d terms Payment varied depend terms Payment varied depend terms Payment terms regular on Based terms regular on Based terms regular on Based varied depend terms Payment varied depend terms Payment Pa varied depend terms Payment Payme varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment

) (9 48 48 48 48 82

300 335 300 300 231 121 425 752 770 116 1,348 5,808 Transaction Details Transaction 56,566 14,263 25,000 67,651 52,737 307,116 115,567 134,306 Amount

Account revenues expenses Accrued payables Other receipts Advance receipts Advance receipts Advance receipts Advance revenues Operating revenues Operating Operating revenues Operating revenues Operating revenues Operating revenues Operating costs Operating costs Operating expenses Operating expenses Operating expenses Operating expenses Interest receivable Accounts receivable Accounts receivable Accounts receivable Accounts receivable Accounts receivable Accounts receivable Accounts

3 3 3 3 3 3 3 3 3 3 3 3 2 2 3 3 2 3 3 3 3 1 1 1 1 1 (Note) Nature of of Nature

- Relationship 61 -

Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd.

Ltd. Ltd. Ltd. Ltd.

Ltd. Ltd. Counterparty Co., Co., Ltd. Ltd.

Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. 191 Chap. 8 Financial Report Co., Network Fixed Taiwan Co., TFN Media Co., TFN Media TV Co., Jialeh Cable Yeong TV Corporation Cable Mangrove TV Co., Cable Globalview Co., TFN Media TV Co., Cable Union TV Co., Jialeh Cable Yeong TV Corporation Cable Mangrove TV Co., Cable Phoenix TV Co., Cable Globalview Co., Mobile Taiwan Co., Mobile Taiwan Co., Network Fixed Taiwan Co., Network Fixed Taiwan Co., Mobile Taiwan Co., TFN Media Co., TFN Media Co., Network Fixed Taiwan Co., Broadcasting WinTV TV Co., Cable Union TV Co., Jialeh Cable Yeong TV Corporation Cable Mangrove TV Co., Cable Phoenix TV Cable Globalview

Ltd. Company Name Company Co., TFN Media

13 Number

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

tal

% % % % (Continued) ------2 5 1 1 Percentage of Percentage or Total Assets or Total Consolidated To Consolidated Operating Revenues Revenues Operating

aried depend aried depend s varied depend s varied depend

terms varied depend varied depend terms the agreements and based based and agreements the Transaction Terms Transaction

on the agreements on the agreements on the agreements on the agreements on the based and agreements on the terms on regular on terms on regular based and agreements on the terms on regular based and agreements on the terms on regular based and agreements on the terms on regular based and agreements on the terms on regular agreements on the agreements on the agreements on the agreements on the agreements on the agreements on the agreements on the agreements on the varied depend terms Payment terms regular on Based terms regular on Based terms regular on Based varied depend terms Payment terms regular on Based varied depend terms Payment Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment term Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment v terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment

1 50 16 50

770 9,014 3,882 5,822 3,187 1,874 2,998 1,986 Transaction Details Transaction 14,836 12,204 24,390 307,000 700,000 360,000 680,000 200,000 2,000,000 4,670,000 Amount

192 Account revenues Chap. 8 Financial Report receivables Other Prepayments Prepayments assets current Other Notes payable expenses Accrued expenses Accrued expenses Accrued expenses Accrued expenses Accrued expenses Accrued expenses Accrued expenses Accrued expenses Accrued payables Other payables Other payables Other payables Other payables Other payables Other Operating revenues Operating

3 3 3 1 3 3 2 3 2 1 1 1 1 1 2 2 1 1 1 1 3 3 (Note) Nature of of Nature

- Relationship 62 -

Ltd. Ltd. Ltd. Ltd. Ltd. Ltd.

Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd.

Ltd. Ltd. Counterparty Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. ing Co., Co., ing enix Cable TV Co., TV Co., Cable enix Co., Broadcasting WinTV Co., Network Fixed Taiwan Broadcast WinTV TV Co., Jialeh Cable Yeong Co., Broadcasting WinTV Co., Broadcasting WinTV Co., Cellular Taiwan Co., Network Fixed Taiwan Co., Mobile Taiwan TV Co., Cable Union TV Co., Jialeh Cable Yeong TV Corporation Cable Mangrove TV Co., Cable Phoenix TV Co., Cable Globalview Co., Mobile Taiwan Co., Cellular Taiwan TV Co., Cable Union TV Co., Jialeh Cable Yeong Pho TV Co., Cable Globalview Co., Network Fixed Taiwan Co., Broadcasting WinTV

Company Name Company

Number

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

% % (Continued) ------1 1 Percentage of Percentage or Total Assets or Total Consolidated Total Total Consolidated Operating Revenues Revenues Operating d

rms

aried depend aried depend ements and based based and ements

erms varied depend varied depend erms Transaction Terms Transaction on the agreements on the agreements on the agreements on the agreements on the agreements on the agreements on the agreements on the agreements on the agreements on the agreements on the agreements on the agreements on the agre on the terms on regular based and agreements on the terms on regular based and agreements on the terms on regular based and agreements on the terms on regular based and agreements on the terms on regular based and agreements on the terms on regular varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment v terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment te regular on Based terms regular on Based terms regular on Based varied depen terms Payment varied depend terms Payment t Payment varied depend terms Payment nsaction Details nsaction 48 64

299 1,350 3,489 2,522 2,765 1,538 Tra 17,096 56,518 36,809 51,155 18,242 59,237 21,968 64,707 11,384 231,708 426,306 502,181 200,971 Amount

evenues Account revenues Operating revenues Operating revenues Operating r Operating revenues Operating costs Operating costs Operating costs Operating costs Operating costs Operating costs Operating costs Operating costs Operating costs Operating expenses Operating expenses Operating expenses Operating expenses Operating expenses Operating expenses Operating expenses Operating

1 1 1 1 1 3 1 1 1 1 1 1 2 3 3 3 1 2 1 1 1 (Note) Nature of of Nature

- Relationship 63 -

Ltd. Ltd. Ltd. Ltd. Ltd.

Ltd. Ltd. Ltd. Ltd.

Ltd. Ltd. Ltd. Ltd. Counterparty Ltd. Ltd. Ltd. Ltd. Ltd. Cable TV Co., TV Co., Cable 193 h Cable TV Co., TV Co., h Cable Chap. 8 Financial Report TV Co., Cable Union Jialeh Yeong TV Corporation Cable Mangrove TV Co., Cable Phoenix TV Co., Cable Globalview Co., Broadcasting WinTV TV Co., Cable Union TV Co., Shin Ho Cable Jiale Yeong TV Corporation Cable Mangrove TV Co., Cable Phoenix TV Co., Cable Globalview Co., Mobile Taiwan Co., Network Fixed Taiwan Co., Network Fixed Taiwan Co., Broadcasting WinTV TV Co., Shin Ho Cable Co., Mobile Taiwan TV Co., Cable Union TV Co., Jialeh Cable Yeong TV Corporation Cable Mangrove

Company Name Company

Number

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

% (Continued) ------1 Percentage of Percentage or Total Assets or Total Consolidated Total Total Consolidated Operating Revenues Revenues Operating

ed depend ed depend

reements terms varied depend varied depend terms agreements and based based and agreements

Transaction Terms Transaction on the terms on regular based and agreements on the terms on regular agreements on the agreements on the agreements on the ag on the agreements on the agreements on the agreements on the agreements on the agreements on the agreements on the agreements on the agreements on the agreements on the agreements on the based and agreements on the terms on regular agreements on the agreements on the varied depend terms Payment varied depend terms Payment vari terms Payment terms regular on Based terms regular on Based varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment

1 20 18

3,461 1,064 1,348 2,893 3,593 3,198 2,269 8,599 4,714 1,984 1,345 5,767 Transaction Details Transaction 15,056 11,162 43,524 10,210 53,205 700,055 Amount

194 Account payable

Chap. 8 Financial Report nterestexpenses expenses Operating expenses Operating income Interest revenue Miscellaneous revenue Miscellaneous expenses Interest expenses Interest expenses Interest expenses Interest expenses Interest I expenses Interest expenses Interest expenses Interest expenses Interest expenses Interest receivable Accounts receivable Accounts receivables Other Accounts expenses Accrued

re of re of

1 1 3 2 3 2 2 3 2 1 1 1 1 1 1 2 2 2 2 2 2 (Note) Natu

- Relationship 64 -

Ltd. Ltd. Ltd.

Ltd. Ltd. Ltd. Counterparty Ltd. Ltd. Ltd. Ltd.

Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. dia Co., dia TV Co., Cable Phoenix TV Co., Cable Globalview Co., Broadcasting WinTV Co., Mobile Taiwan Co., Network Fixed Taiwan Co., Mobile Taiwan Co., Cellular Taiwan Co., Network Fixed Taiwan Co., TFN Investment TV Co., Cable Union TV Co., Shin Ho Cable TV Co., Jialeh Cable Yeong TV Corporation Cable Mangrove TV Co., Cable Phoenix TV Co., Cable Globalview Co., TCC Investment Co., Mobile Taiwan TFN Me Co., TFN Media Co., TFN Media Co., Mobile Taiwan

Ltd. Company Name Company TV Co., Cable Union

14 Number

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

(Continued) ------Percentage of Percentage or Total Assets or Total Consolidated Total Total Consolidated Operating Revenues Revenues Operating

pend pend

rms

s varied depend depend varied depend varied

Transaction Terms Transaction Details

on the agreements and based based and agreements on the term on regular agreements on the varied depend terms yment agreements on the agreements on the agreements on the agreements on the agreements on the agreements on the based and agreements on the terms on regular based and agreements on the terms on regular agreements on the agreements on the agreements on the based and agreements on the terms on regular agreements on the agreements on the agreements on the varied depend terms Payment varied depend terms Payment terms regular on Based Pa varied depend terms Payment terms regular on Based varied depend terms Payment varied depend terms Payment varied de terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment terms regular on Based varied depend terms Payment varied depend terms Payment varied depend terms Payment te regular on Based terms regular on Based varied depend terms Payment terms Payment terms regular on Based terms regular on Based terms Payment

50 40 22 61 16 40

113 258 299 414 300 320 826 1,298 1,286 3,494 3,020 Transaction 14,446 38,505 19,611 10,210 97,917 212,096 360,127 Amount

Account expenses Accrued payables Other revenues Operating revenues Operating revenues Operating costs Operating costs Operating costs Operating costs Operating expenses Operating expenses Operating expenses Operating income Interest revenue Miscellaneous receivable Accounts receivable Accounts receivables Other Prepayments assets current Other payable Accounts payable Accounts expenses Accrued expenses Accrued expenses Accrued

3 2 3 3 2 2 3 3 2 2 2 3 2 2 2 2 2 3 2 3 2 3 2 2 (Note) Nature of of Nature

- Relationship 65 -

d. Ltd. Ltd. Ltd. Lt Ltd. Ltd. Ltd. Ltd. Ltd.

Counterparty

Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. 195 Chap. 8 Financial Report Co., Network Fixed Taiwan Co., TFN Media TV Co., Jialeh Cable Yeong Co., Network Fixed Taiwan Co., TFN Media Co., Mobile Taiwan Co., Network Fixed Taiwan Co., Broadcasting WinTV Co., TFN Media Co., TFN Media Co., Mobile Taiwan Co., Network Fixed Taiwan Co., TFN Media Co., TFN Media Co., Mobile Taiwan Co., TFN Media Co., TFN Media Co., Broadcasting WinTV Co., TFN Media Co., Network Fixed Taiwan Co., TFN Media Co., Network Fixed Taiwan Co., TFN Media Co., Mobile Taiwan

Ltd. Company Name Company TV Co., Jialeh Cable Yeong

15 Number

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

% (Continued) ------1 Percentage of Percentage or Total Assets or Total Consolidated Total Total Consolidated Operating Revenues Revenues Operating

ms varied depend varied depend ms

Transaction Terms Transaction d on regular terms regular d on on the agreements on the agreements on the agreements on the agreements on the agreements on the agreements on the based and agreements on the terms on regular based and agreements on the terms on regular agreements on the agreements on the agreements on the agreements on the agreements on the terms regular on Based varied depend terms Payment terms regular on Based terms regular on Based terms regular on Based terms regular on Based varied depend terms Payment varied depend terms Payment terms regular on Based terms regular on Based terms regular on Based Base terms regular on Based terms regular on Based ter Payment varied depend terms Payment terms regular on Based varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment terms regular on Based varied depend terms Payment varied depend terms Payment terms regular on Based terms regular on Based varied depend terms Payment varied depend terms Payment terms regular on Based

50 35 87 50

655 739 362 386 300 913 739 256 439 391 120 517 132 1,955 1,155 1,955 1,476 3,198 1,284 1,021 1,786 Transaction Details Transaction 17,650 52,635 38,297 388,009 Amount

196 Account expenses

Chap. 8 Financial Report payables Other payables Other revenues Operating revenues Operating revenues Operating revenues Operating revenues Operating revenues Operating costs Operating costs Operating costs Operating costs Operating costs Operating costs Operating costs Operating costs Operating expenses Operating Operating expenses Operating expenses Operating income Interest revenue Miscellaneous receivable Accounts receivable Accounts receivables Other Prepayments payable Accounts payable Accounts expenses Accrued

3 2 3 3 3 3 3 2 2 3 3 3 3 3 3 2 3 2 2 3 2 2 2 2 2 3 3 2 3 (Note) Nature of of Nature

- Relationship 66 -

Ltd. Ltd. Ltd. Ltd. Ltd.

Ltd. Ltd. Ltd. Ltd. Ltd. Ltd.

Ltd. Ltd. Counterparty Ltd. Ltd.

Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Broadcasting Co., Co., Broadcasting

Media Co., Media

angrove Cable TV Corporation Cable angrove WinTV Co., TFN Media TV Co., Cable Union M TV Co., Cable Phoenix TV Co., Cable Globalview Co., Network Fixed Taiwan Co., TFN Media Co., Mobile Taiwan Co., Broadcasting WinTV TV Co., Cable Union TV Corporation Cable Mangrove TV Co., Cable Phoenix TV Co., Cable Globalview Co., Network Fixed Taiwan Co., TFN Media Co., Broadcasting WinTV Co., TFN Media Co., Mobile Taiwan Co., Network Fixed Taiwan Co., TFN Media Co., TFN Media Co., Mobile Taiwan Co., TFN Media TFN Co., Broadcasting WinTV Co., Network Fixed Taiwan Co., TFN Media Co., Network Fixed Taiwan

Company Name Company TV Corporation Cable Mangrove

16 Number

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

% (Continued) ------1 Percentage of Percentage or Total Assets or Total Consolidated Total Total Consolidated Operating Revenues Revenues Operating

epend epend

and based based and

eements

t terms varied depend varied depend t terms Transaction Terms Transaction on the agreements on the agreements on the agr on the agreements on the agreements on the agreements on the agreements on the agreements on the based and agreements on the terms on regular agreements on the agreements on the agreements on the agreements on the based and agreements on the terms on regular agreements on the agreements on the agreements on the terms on regular agreements on the agreements on the varied depend terms Payment terms regular on Based varied depend terms Payment varied depend terms Payment varied depend terms Payment terms regular on Based Paymen varied depend terms Payment varied depend terms Payment terms regular on Based varied depend terms Payment varied d terms Payment varied depend terms Payment terms regular on Based varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment terms regular on Based varied depend terms Payment

9 22 50 51 53

220 517 387 184 113 580 321 5,291 1,369 2,269 1,137 3,506 2,859 1,949 Transaction Details Transaction 18,643 14,263 16,579 19,184 680,139 115,1 Amount

Account ating revenues ating ccounts receivable ccounts expenses Accrued payables Other payables Other revenues Operating revenues Operating costs Operating costs Operating costs Operating costs Operating expenses Operating expenses Operating expenses Operating income Interest revenue Miscellaneous receivable Accounts receivable Accounts A receivables Other payable Accounts expenses Accrued expenses Accrued payables Other revenues Operating Oper

2 3 2 3 2 2 3 3 2 3 2 2 2 2 2 3 2 2 2 2 3 2 3 3 (Note) Nature of of Nature

- Relationship 67 -

Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd.

Counterparty

Ltd. Ltd. Ltd. Ltd. Ltd. g Co., Co., g Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. 197 Fixed Network Co., Co., Network Fixed Chap. 8 Financial Report Co., Mobile Taiwan Broadcastin WinTV Co., TFN Media Co., Network Fixed Taiwan Co., TFN Media Co., Mobile Taiwan Co., Network Fixed Taiwan Co., Broadcasting WinTV Co., TFN Media Taiwan Co., TFN Media Co., Mobile Taiwan Co., TFN Media Co., TFN Media Co., Mobile Taiwan Co., Network Fixed Taiwan Co., TFN Media Co., TFN Media Co., TFN Media Co., Mobile Taiwan Co., Network Fixed Taiwan Co., TFN Media TV Co., Jialeh Cable Yeong Co., Network Fixed Taiwan

Ltd. Company Name Company le TV Co., TV Co., le Cab Phoenix

17 Number

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

ues

% (Continued) ------1 Percentage of Percentage or Total Assets or Total Consolidated Total Total Consolidated Operating Reven Operating

reements rms varied depend varied depend rms ular terms ular the agreements the Transaction Terms Transaction

on the agreements on the agreements on the agreements on the ag on the agreements on the based and agreements on the terms on regular based and agreements on the terms on regular agreements on the agreements on the agreements on the agreements on the based and agreements on the on reg on agreements on the agreements on the agreements on the agreements on the agreements on the varied depend terms Payment terms regular on Based varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment terms regular on Based te Payment varied depend terms Payment varied depend terms Payment terms regular on Based terms regular on Based varied depend terms Payment varied depend terms Payment terms regular on Based terms regular on Based varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment

50 18 30 50 11

490 300 644 171 163 352 3,703 1,579 8,599 1,653 1,059 1,933 6,876 Transaction Details Transaction 61,044 42,514 45,862 22,465 459,667 200,036 Amount

198 osts Account ntal income ntal Chap. 8 Financial Report revenues Operating costs Operating c Operating costs Operating costs Operating expenses Operating expenses Operating expenses Operating income Interest Re revenue Miscellaneous receivable Accounts receivable Accounts receivables Other Prepayments assets current Other payable Accounts payable Accounts expenses Accrued expenses Accrued expenses Accrued payables Other revenues Operating revenues Operating

2 2 3 3 2 2 2 3 2 2 2 2 2 2 3 3 3 2 3 3 2 2 3 2 (Note) Nature of of Nature

- Relationship 68 -

td. Ltd. Ltd. Ltd. Ltd. L Ltd. Ltd. Ltd.

Counterparty

Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. xed Network Co., Co., xed Network Co., TFN Media Co., Mobile Taiwan Co., Network Fixed Taiwan Co., Broadcasting WinTV Co., TFN Media Co., TFN Media Co., Mobile Taiwan Fi Taiwan Co., TFN Media Co., Mobile Taiwan Co., TFN Media Co., Mobile Taiwan Co., TFN Media Co., TFN Media Co., Broadcasting WinTV Co., TFN Media Co., Network Fixed Taiwan Co., TFN Media Co., Network Fixed Taiwan Co., Broadcasting WinTV Co., Mobile Taiwan Co., TFN Media Co., Network Fixed Taiwan Co., TFN Media

Ltd. Company Name Company TV Co., Cable Globalview

18 Number

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

% (Continued) ------1 Percentage of Percentage or Total Assets or Total Consolidated Total Total Consolidated Operating Revenues Revenues Operating end end

lar terms lar

on regular terms regular on

the agreements and based based and agreements the Transaction Terms Transaction sed on regular terms regular sed on on the agreements on the agreements on the on terms on regular agreements on the based and agreements on the terms on regular agreements on the agreements on the agreements on the based and agreements on the terms on regular agreements on the terms regular on Based varied depend terms Payment varied depend terms Payment varied depend terms Payment terms regular on Based varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment terms regular on Based varied dep terms Payment terms regular on Based varied depend terms Payment varied depend terms Payment terms regular on Based Based terms regular on Based terms regular on Based Ba terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based regu on Based terms regular on Based terms regular on Based

) 34 57 45 64

(68 254 300 713 117 206 567 100 102 4,714 1,350 3,593 5,507 2,901 2,974 7,812 2,007 Transaction Details Transaction 18,327 65,804 11,240 52,126 34,448 182,643 859,350 156,205 Amount

Account ting costs ting l income terestincome costs Operating Opera costs Operating costs Operating expenses Operating expenses Operating expenses Operating income Interest Renta revenue Miscellaneous revenues Operating costs Operating expenses Operating In revenue Miscellaneous receivable Accounts receivable Accounts expenses Accrued revenues Operating expenses Operating receivable Accounts receivable Accounts expenses Accrued revenues Operating revenues Operating expenses Operating expenses Operating expenses Operating income Rental

te)

2 3 2 3 3 2 2 2 3 2 2 2 2 2 2 2 3 2 3 2 2 2 1 2 2 1 1 2 2 (No Nature of of Nature

- Relationship 69 -

Ltd.

Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd.

Counterparty td. Ltd. Ltd. Ltd. Ltd.

Ltd. L Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. 199 Fixed Network Co., Co., Network Fixed Co., Network Fixed Chap. 8 Financial Report Co., Mobile Taiwan Co., Broadcasting WinTV Co., TFN Media Co., Network Fixed Taiwan Co., Network Fixed Taiwan Co., TFN Media Co., Mobile Taiwan Co., TFN Media Co., Technology Media Wealth Global Co., TFN Media Co., TFN Media Co., Mobile Taiwan Co., Mobile Taiwan Co., TFN Media Co., TFN Media Co., Mobile Taiwan Co., Network Fixed Taiwan Co., Cellular Taiwan Co., Network Fixed Taiwan Co., Cellular Taiwan Co., Mobile Taiwan Taiwan Co., Holdings TT&T Co., Mobile Taiwan Taiwan Co., Holdings TT&T &Technologies Teleservices Taifu Xiamen Co., Network Fixed Taiwan Co., Mobile Taiwan

Ltd.

Ltd. Company Name Company

TV Co., Shin Ho Cable (Beijing) Communications TWM Co., Technologies & Teleservices Taiwan

19 20 21 Number

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

------(Concluded) Percentage of Percentage or Total Assets or Total Consolidated Total Total Consolidated Operating Revenues Revenues Operating

erms

Transaction Terms Transaction t regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based

1 6 6 34 36 34

100 103 100 103 426 170 4,300 7,799 5,192 5,192 8,312 3,157 Transaction Details Transaction 34,304 52,767 33,953 33,944 33,919 28,414 43,524 Amount

200 Account expenses expenses

Chap. 8 Financial Report receivable Accounts revenues Operating costs Operating expenses Operating receivable Accounts payable Accounts Accrued revenues Operating expenses Operating expenses Operating receivable Accounts Accrued revenues Operating revenues Operating expenses Operating receivable Accounts revenues Operating expenses Accrued expenses Operating expenses Operating income Interest revenue Miscellaneous revenues Operating expenses Operating revenue Miscellaneous

2 2 2 2 2 1 2 2 2 1 2 2 2 2 2 2 2 2 2 2 1 2 2 2 2 (Note) Nature of of Nature

- Relationshi 70 -

Ltd. Ltd. Ltd. Ltd. Ltd.

Ltd. Ltd. Ltd. Ltd. &Technologies &Technologies

Counterparty td. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd.

Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. L Ltd. Ltd. Ltd. Fixed Network Co., Co., Network Fixed Co., Mobile Taiwan Co., Mobile Taiwan Co., Mobile Taiwan Co., Mobile Taiwan Co., Technologies & Teleservices Taiwan &Technologies Teleservices Taifu Xiamen Co., Cellular Taiwan Co., Technologies & Teleservices Taiwan Co., Cellular Taiwan Teleservices Taifu Xiamen Co., Holdings TT&T Co., Cellular Taiwan Co., Holdings TT&T Co., Technologies & Teleservices Taiwan Co., Cellular Taiwan Co., Network Fixed Taiwan Co., Network Fixed Taiwan Co., Mobile Taiwan Co., Mobile Taiwan Co., Mobile Taiwan Co., TFN Media Co., Mobile Taiwan Taiwan Co., Mobile Taiwan Co., Network Fixed Taiwan

Ltd.

Ltd. Technologies Technologies

Ltd.

Company Name Company Between subsidiaries. Between Parent to subsidiary. to Parent to parent. Subsidiary

Co., Basketball Super Taiwan Holdings TT&T & Teleservices Taifu Xiamen LIMITED TFN HK Co., Investment TFN Union Co., TFN Investment Inc. Range & Reach

3. 1. 2.

22 23 24 25 26 27 28 Number

Note: WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

TABLE (Continued) ------2% 1% Percentage of Percentage or Total Assets or Total Consolidated Total Total Consolidated Operating Revenues Revenues Operating

erms gular terms gular terms gular

egular terms egular terms egular Transaction Terms Transaction terms regular on Based terms regular on Based r on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based r on Based terms regular on Based terms regular on Based t regular on Based terms regular on Based terms regular on Based re on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based re on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based

0 1 2 8 1 5 6 22 59 62 19 19 35 17 91 51

685 238 460 152 301 81 134 875 289 181 332 2,299 4,094 9,206 Transaction Details Transaction 46,733 20,00 79,715 99,249 214,172 197,416 358,142 2,008,079 1,300,000 Amount

ses

Account term borrowing term - er payables er her current liabilities current her receivable Accounts receivable Accounts receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other Prepayments Short payable Accounts payable Accounts expenses Accrued expenses Accrued expenses Accrued expenses Accrued expen Accrued payables Other payables Other Oth payables Other payables Other payables Other payables Other payables Other payables Other receipts Advance liabilities current Other Ot liabilities current Other liabilities current Other liabilities current Other liabilities current Other

1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 (Note) Nature of of Nature

- Relationship 71 -

Ltd.

Ltd. Ltd. Ltd. Ltd.

Ltd.

Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd.

Ltd. Ltd. ., Ltd.

Ltd. Ltd. Ltd. Ltd. Ltd. Counterparty Ltd. Ltd. Ltd. Ltd.

Ltd. Ltd. 201

wan Fixed Network Co., Co., Network Fixed wan Chap. 8 Financial Report Tai Co., Basketball Super Taiwan Co., Technology Media Tai Fu Co., Network Fixed Taiwan Co., Technologies & Teleservices Taiwan Co., TFN Media TV Co., Cable Union TV Co., Shin Ho Cable TV Co., Jialeh Cable Yeong TV Corporation Cable Mangrove TV Co., Cable Phoenix TV Co., Cable Globalview Co., Network Fixed Taiwan Co., Network Fixed Taiwan Co., Network Fixed Taiwan Co., Technologies & Teleservices Taiwan Co., Cellular Taiwan Co., Basketball Super Taiwan Co., Network Fixed Taiwan Co., Technologies & Teleservices Taiwan Co., TFN Media (Beijing) Communications Times Hurray! Co., Network Fixed Taiwan Co., Broadcasting WinTV TV Co., Cable Union TV Co., Shin Ho Cable TV Co., Jialeh Cable Yeong TV Corporation Cable Mangrove TV Co., Cable Phoenix TV Co., Cable Globalview Co., Network Fixed Taiwan Co., Network Fixed Taiwan Co., Services Network Telecommunication Taiwan TV Co., Cable Union TV Co., Shin Ho Cable TV Co Jialeh Cable Yeong TV Corporation Cable Mangrove

AND SUBSIDIARIES

Ltd. Company Name Company Dollars) Taiwan New of ds Co., Mobile Taiwan

0 Number YEAR ENDED DECEMBER 31, 200 (In Thousan TAIWAN MOBILE CO., LTD. CO., MOBILE TAIWAN BUSINESS RELATIONSHIP AND SIGNIFICANT INTERCOMPANY TRANSACTIONS

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

(Continued) ------1% 2% 1% 1% Percentage of Percentage or Total Assets or Total Consolidated Total Total Consolidated Operating Revenues Revenues Operating

ms rms erms terms lar terms lar

s on regular terms regular on terms regular on terms regular on

Transaction Terms Transaction d on regular terms regular d on ed on regular terms regular ed on terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based ter regular on Based terms regular on Based terms regular on Based te regular on Based terms regular on Based terms regular on Based t regular on Based terms regular on Based terms regular on Based regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based Bas terms regular on Based terms regular on Based Based terms regular on Based terms regular on Based Base terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based Based terms regular on Based terms regular on Based Based terms regular on Based terms regular on Based regu on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based

) ) ) ) ) ) ) 1 9 (3 92 34 23 34 34 40 40 34 34 34 34 34 34 34

(30 (86 (10 (66 (23 257 120 830 171 778 517 172 443 368 447 345 259 200 1,115 Transaction Detail Transaction (1,028 32,000 82,037 50,869 10,793 459,338 257,989 982,644 601,107 310,881 2,087,756 Amount

liabilities

202 sts Account income

Chap. 8 Financial Report liabilities current Other current Other deposits Guarantee revenues Operating revenues Operating revenues Operating revenues Operating revenues Operating revenues Operating revenues Operating revenues Operating revenues Operating revenues Operating revenues Operating revenues Operating revenues Operating costs Operating costs Operating co Operating costs Operating costs Operating expenses Operating expenses Operating expenses Operating expenses Operating expenses Operating expenses Operating expenses Operating expenses Operating expenses Operating expenses Operating expenses Operating expenses Operating income Interest income Interest income Rental income Rental income Rental income Rental income Rental income Rental income Rental income Rental income Rental Rental income Rental income Rental

1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 (Note) Nature of of Nature

- Relationship 72 -

Ltd. Ltd. Ltd. Ltd. Ltd.

Ltd. Ltd. Ltd.

Ltd.

echnologies Co., echnologies

Ltd. Ltd.

Ltd.

Ltd. Ltd. Ltd.

Ltd. Ltd. Ltd. Ltd. Ltd. ., Ltd. Ltd. Ltd. Ltd.

Ltd. Ltd. Ltd. Ltd. Ltd.

Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Counterparty Ltd. Ltd. Ltd.

Ltd. Ltd. Ltd. TV Co., Cable Phoenix TV Co., Cable Globalview Co., Network Fixed Taiwan Inc. Telecommunications TransAsia Co Basketball Super Taiwan Co., Network Fixed Taiwan Co., Services Network Telecommunication Taiwan Co., Technologies & Teleservices Taiwan Co., TFN Media TV Co., Cable Union TV Co., Shin Ho Cable TV Co., Jialeh Cable Yeong TV Corporation Cable Mangrove TV Co., Cable North Coast TV Co., Cable Phoenix TV Co., Cable Globalview Inc. Telecommunications TransAsia Co., Technologies & Teleservices Taiwan former The Co., Network Fixed Taiwan Co., Technologies & Teleservices Taiwan TV Co., Cable Phoenix T & Teleservices Taiwan former The Co., Technologies & Teleservices Taiwan Co., Basketball Super Taiwan Co., Network Fixed Taiwan Co., Broadcasting WinTV Co., TFN Media TV Co., Cable Union TV Co., Shin Ho Cable TV Co., Jialeh Cable Yeong TV Corporation Cable Mangrove TV Co., Cable Phoenix TV Co., Cable Globalview Co., Technology Media Tai Fu Co., TFN Media Inc. Telecommunications TransAsia Co., Technology Media Wealth Co., Technology Media Tai Fu Co., Technology Media Jia Leh Fu Co., Technology Media Fu Sin Co., Cellular Taiwan Co., Broadcasting Tai Digital Yi Co., Communications Digital Taiwan Co., Technologies & Teleservices Taiwan former The Co., Agency Insurance Life TT&T Co., Agency Insurance Property & Casualty TT&T Co., Basketball Super Taiwan

Company Name Company

Number

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

(Continued) ------1% 2% Percentage of Percentage or Total Assets or Total Consolidated Total Total Consolidated Operating Revenues Revenues Operating

r terms r terms ar terms ar lar terms lar

Transaction Terms Transaction regu on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based regula on Based terms regular on Based terms regular on Based regul on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based regula on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based

5 2 31 31 31 23 34 34 40 40 34 34 95

329 192 268 460 100 296 2,075 1,572 3,813 1,244 2,199 1,244 8,079 7,947 Transaction Details Transaction 70,390 10,640 15,205 29,632 21,543 15,205 50,869 21,178 257,796 459,338 251,010 2,000,000 Amount

me xpenses Account ther receivables ther income Rental income Rental income Rental income Rental income Rental income Rental revenue Miscellaneous revenue Miscellaneous expenses Interest expenses Interest expense Miscellaneous revenues Operating revenues Operating costs Operating costs Operating costs Operating expenses Operating expenses Operating income Interest income Interest income Rental income Rental revenue Miscellaneous expenses Operating expenses Accrued payables Other e Operating expenses Interest expenses Operating expenses Operating expenses Operating receivables Other receivables Other O receivables Other expenses Operating inco Interest income Interest revenue Miscellaneous

1 1 1 1 1 1 1 1 1 1 1 2 3 2 3 3 2 3 2 3 2 3 2 2 2 2 2 2 2 2 1 2 1 3 1 2 1 1 1 (Note) Nature of of Nature

- Relationship 73 -

Ltd. Ltd.

Ltd. Ltd. Ltd.

Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd.

Co., Co., Co.,

Counterparty Ltd. Ltd. Ltd.

Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd.

Ltd. Ltd. Ltd. Ltd. 203 Chap. 8 Financial Report Co., Network Fixed Taiwan Co., Services Network Telecommunication Taiwan Co., Technologies & Teleservices Taiwan Co., TFN Investment Inc. Range & Reach Co., TFN Media Co., Network Fixed Taiwan Co., TFN Media Inc. Telecommunications TransAsia Co., Network Fixed Taiwan Inc. Telecommunications TransAsia Co., Mobile Taiwan Network Fixed Taiwan Co., Mobile Taiwan Co., Technologies & Teleservices Taiwan former The Co., Network Fixed Taiwan Co., Mobile Taiwan Co., Network Fixed Taiwan Co., Mobile Taiwan Co., Cellular Taiwan Co., Mobile Taiwan Network Fixed Taiwan Co., Mobile Taiwan Co., Mobile Taiwan Co., Mobile Taiwan Co., Mobile Taiwan Co., Mobile Taiwan Co., Mobile Taiwan Co., Mobile Taiwan Co., Mobile Taiwan TV Co., Cable Globalview Co., Mobile Taiwan (Beijing) Communications Times Hurray! Co., Technologies & Teleservices Taiwan Co., TFN Media Co., Mobile Taiwan Co., Network Fixed Taiwan Co., TFN Media Co., Holdings TT&T

Ltd.

Ltd. Ltd. Ltd. ame

Ltd. Company N Company Inc. Telecommunications TransAsia Co., Technology Media Wealth Co., Technology Media Tai Fu Co., Technology Media Jia Leh Fu Co., Technology Media Fu Sin Co., Technology Media Wealth Global Co., Cellular Taiwan

1 2 3 4 5 6 7 Number

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

(Continued) ------1% Percentage of Percentage or Total Assets or Total Consolidated Total Total Consolidated Operating Revenues Revenues Operating

lar terms lar ular terms ular

Transaction Terms Transaction sed on regular terms regular sed on ased on regular terms regular ased on terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based regu on Based terms regular on Based terms regular on Based B terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based Ba terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based reg on Based terms regular on Based

2 2 95 95 34 34 34 34 34 94 93 14

863 243 109 103 2,199 8,338 1,338 1,268 3,742 8,559 4,606 9,035 Transaction Details Transaction 20,648 37,686 20,000 32,000 10,723 38,645 21,257 10,136 600,942 227,065 Amount

204 Account Chap. 8 Financial Report revenue Miscellaneous revenue Miscellaneous expenses Interest expenses Operating expenses Operating revenues Operating revenues Operating revenues Operating expenses Operating expenses Operating expenses Operating expenses Operating income Rental expenses Operating expenses Operating receivables Other revenues Operating expenses Operating receivable Accounts payable Accounts revenues Operating revenues Operating expenses Operating receivable Accounts revenues Operating revenues Operating expenses Operating receivable Accounts expenses Accrued expenses Operating receivable Accounts receivable Accounts receivable Accounts receivable Accounts

1 1 3 2 2 2 3 3 2 1 1 3 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 1 1 1 (Note) lationship Nature of of Nature

- Re 74 -

Ltd. Ltd.

Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. ologies Co., ologies

Ltd. Ltd.

Ltd.

Counterparty Ltd. Ltd. Ltd. Ltd. Ltd.

Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd.

Ltd. le Co., le Co., ile Co., ile Co.,

wan Mobile Co., Co., Mobile wan Technologies & Teleservices Taifu Xiamen (Beijing) Communications Times Hurray! Inc. Telecommunications TransAsia Mobi Taiwan Co., Mobile Taiwan Tai Inc. Telecommunications TransAsia Co., Network Fixed Taiwan Co., Mobile Taiwan Co., Holdings TT&T Technologies & Teleservices Taifu Xiamen Co., Network Fixed Taiwan Co., Mobile Taiwan Co., Mobile Taiwan Co., Mobile Taiwan Mob Taiwan Co., Mobile Taiwan Co., Mobile Taiwan Co., Technologies & Teleservices Taiwan Co., Technologies & Teleservices Taiwan Techn & Teleservices Taiwan former The Co., Technologies & Teleservices Taiwan Co., Cellular Taiwan Co., Technologies & Teleservices Taiwan Co., Technologies & Teleservices Taiwan former The Co., Technologies & Teleservices Taiwan Co., Cellular Taiwan Co., Mobile Taiwan Co., Cellular Taiwan Co., Cellular Taiwan Co., Mobile Taiwan TFNHK Co., Broadcasting WinTV Co., TFN Media

Ltd. Ltd.

ng) Ltd.

Ltd.

Ltd. Ltd.

Ltd. Company Name Company s Co.,

Ltd.

Co., Co., Ltd. Co., Broadcasting Tai Digital Yi Co., Communications Digital Taiwan Technologies & Teleservices Taiwan former The Co., Agency Insurance Life TT&T Co., Agency Insurance Property & Casualty TT&T Co., Basketball Super Taiwan Holding TT&T Technologies & Teleservices Taifu Xiamen (Beiji Communications Times Hurray! Co., Network Fixed Taiwan

8 9 10 11 12 13 14 15 16 17 Number

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

Total

(Continued) ------2% 1% 1% 2% Percentage of Percentage or Total Assets or Total Consolidated Consolidated Operating Revenues Revenues Operating

ms ar terms ar gular terms gular

egular terms egular on regular terms regular on Transaction Terms Transaction terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based ter regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based regul on Based terms regular on Based terms regular on Based re on Based terms regular on Based terms regular on Based r on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based Based terms regular on Based

) ) 8 3 1 61 96 97 18 62 36 22

(13 193 466 183 830 226 237 243 600 356 730 900 374 (354 1,148 3,125 3,095 5,314 4,215 1,268 1,615 2,647 5,201 6,828 Transaction Details Transaction 44,921 16,986 21,901 24,925 53,498 29,932 10,935 40,088 1,518,862 1,052,674 1,040,440 2,080,134 Amount

assets

Account receivables ccounts receivable ccounts receivable Accounts receivable Accounts A receivable Accounts receivable Accounts Other receivables Other receivables Other receivables Other receivables Other Prepayments current Other deposits Refundable payable Accounts payable Accounts payable Accounts payable Accounts payable Accounts payable Accounts expenses Accrued expenses Accrued expenses Accrued expenses Accrued receipts Advance liabilities Other revenues Operating revenues Operating revenues Operating revenues Operating revenues Operating revenues Operating revenues Operating revenues Operating revenues Operating revenues Operating revenues Operating revenues Operating revenues Operating revenues Operating costs Operating costs Operating costs Operating costs Operating costs Operating costs Operating costs Operating

1 1 1 1 1 2 1 1 1 1 2 2 2 2 1 1 1 1 1 2 1 1 1 2 1 2 3 3 1 1 1 1 1 1 1 1 1 1 1 2 3 1 1 1 1 1 (Note) Nature of of Nature

- Relationship 75 -

Ltd. Ltd. Ltd.

logies Co., logies Ltd. Ltd. Ltd. Ltd.

Ltd. Ltd.

Ltd. Ltd. Ltd. Ltd. Ltd. Ltd.

Ltd. Ltd. Ltd. Counterparty Ltd. Ltd. Ltd.

, Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd.

TV Co., TV Co.,

Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. 205

& Range Inc. Range & wan Telecommunication Network Services Co., Co., Services Network Telecommunication wan Chap. 8 Financial Report TV Co., Cable Union TV Co., Jialeh Cable Yeong TV Corporation Cable Mangrove TV Co., Cable Phoenix TV Co., Cable Globalview Co., Mobile Taiwan Co., Technologies & Teleservices Taiwan Co., TFN Media TV Co. Cable Union TV Co., Cable Globalview Co., Mobile Taiwan Co., Mobile Taiwan Co., Mobile Taiwan Co., Mobile Taiwan TFNHK Inc. Range & Reach Co., TFN Media TV Co., Cable Phoenix Cable Globalview Co., Mobile Taiwan Co., Technologies & Teleservices Taiwan Reach Co., TFN Media Co., Mobile Taiwan Co., TFN Media Co., Mobile Taiwan Inc. Telecommunications TransAsia Techno & Teleservices Taiwan former The Co., Services Network Telecommunication Taiwan Co., Technologies & Teleservices Taiwan Inc. Range & Reach Co., Broadcasting WinTV Co., TFN Media TV Co., Cable Union TV Co., Jialeh Cable Yeong TV Corporation Cable Mangrove TV Co., Cable North Coast TV Co., Cable Phoenix TV Co., Cable Globalview Co., Mobile Taiwan Inc. Telecommunications TransAsia TFNHK Tai Co., Technologies & Teleservices Taiwan Inc. Range & Reach Co., TFN Media

Company Name Company

Number

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

d Total Total d

(Continued) ------Percentage of Percentage or Total Assets or Total Consolidate Operating Revenues Revenues Operating

rms

Transaction Terms Transaction d on regular terms regular d on terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based Base terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based te regular on Based

) ) ) 3 48 61 33 22 22 67

(12 703 657 763 134 130 141 374 134 685 296 (815 3,960 5,491 3,813 8,732 4,480 7,645 7,947 1,573 3,022 6,364 1,036 1,148 Transaction Details Transaction (2,435 71,171 20,655 17,745 17,033 24,977 79,733 16,986 10,823 184,080 310,885 187,086 Amount

206 revenue s Account ing costs ing Chap. 8 Financial Report costs Operating costs Operating Operat costs Operating expenses Operating expenses Operating expenses Operating expenses Operating expenses Operating expenses Operating income Interest income Interest income Interest income Rental income Rental income Rental income Rental income Rental income Rental revenue Miscellaneous Miscellaneou revenue Miscellaneous expenses Interest expense Miscellaneous receivable Accounts revenues Operating revenues Operating revenues Operating revenues Operating revenues Operating costs Operating costs Operating expenses Operating expenses Operating receivable Accounts receivable Accounts expenses Accrued expenses Accrued expenses Accrued expenses Accrued expenses Accrued revenues Operating revenues Operating

1 1 1 1 2 3 1 1 1 1 2 1 1 2 1 1 1 1 1 2 1 1 1 2 2 2 2 3 3 3 2 2 2 2 2 2 2 2 2 2 2 2 2 (Note) Nature of of Nature

- Relationship 76 -

Ltd. Ltd.

es Co., es

Ltd. Ltd. Ltd.

Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd.

Ltd. Ltd. Ltd.

Ltd. Ltd.

Ltd. Counterparty Ltd. Ltd. Ltd. Ltd. Ltd. Ltd.

Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd.

es & Technologies Co., Technologies es & Ltd. Ltd. Ltd. Ltd. ellular Co., Co., ellular Mobile Co., Co., Mobile

TV Co., Cable Union TV Co., Jialeh Cable Yeong TV Co., Cable Phoenix TV Co., Cable Globalview Co., Mobile Taiwan Technologi & Teleservices Taiwan former The Co., Services Network Telecommunication Taiwan Co., Technologies & Teleservices Taiwan Inc. Range & Reach Co., TFN Media Co., Mobile Taiwan Co., TFN Investment Co., TFN Media Co., Mobile Taiwan Teleservic Taiwan Co., Broadcasting WinTV Co., TFN Media TV Co., Cable Union TV Co., Cable Globalview Co., Mobile Taiwan Co., Broadcasting WinTV Co., TFN Media Co., Cellular Taiwan Co., Mobile Taiwan Co., Network Fixed Taiwan Co., Network Fixed Taiwan Co., Network Fixed Taiwan Inc. Range & Reach TV Corporation Cable Mangrove TV Co., Cable Globalview Co., Mobile Taiwan Co., Network Fixed Taiwan Co., Mobile Taiwan Co., Network Fixed Taiwan Taiwan Co., Network Fixed Taiwan Co., Mobile Taiwan C Taiwan Co., Holdings TT&T Technologies & Teleservices Taifu Xiamen Co., Network Fixed Taiwan Co., Mobile Taiwan Co., Network Fixed Taiwan

Ltd.

unication Network Services Co., Co., Services Network unication Company Name Company

Ltd. TFNHK Telecomm Taiwan Co., Technologies & Teleservices Taiwan

18 19 20 Number

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

(Continued) ------4% Percentage of Percentage or Total Assets or Total Consolidated Total Total Consolidated Operating Revenues Revenues Operating

erms gular terms gular

egular terms egular on regular terms regular on Transaction Terms Transaction on the agreements on the agreements on the agreements on the agreements on the agreements on the agreements on the terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based r on Based terms regular on Based terms regular on Based re on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based t regular on Based varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment Based terms regular on Based terms regular on Based terms regular on Based

) 4 1 1 3 (2 33 31 35

669 355 599 159 300 300 300 300 300 577 121 191 2,575 4,830 7,823 8,732 5,352 1,036 4,215 2,604 Transaction Details Transaction 22,480 82,705 11,031 60,050 92,509 45,363 120,232 3,923,679 Amount

Account g expenses g Operatin expenses Operating expenses Operating expenses Operating income Rental receivables Other expenses Operating income Interest expenses Interest receivable Accounts revenues Operating revenues Operating costs Operating costs Operating expenses Operating expenses Operating receivables Other revenues Operating revenues Operating revenues Operating revenues Operating revenues Operating costs Operating costs Operating expenses Operating revenue Miscellaneous receivable Accounts receivable Accounts receivable Accounts receivable Accounts receivable Accounts receivable Accounts receivables Other receivables Other receivables Other Prepayments

2 1 1 2 2 1 2 1 2 2 2 3 2 3 2 2 2 3 3 3 3 3 2 2 2 2 2 1 1 1 1 1 2 2 1 2 (Note) Nature of of Nature

- Relationship 77 -

Ltd. Ltd.

Ltd.

Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd.

Ltd. Ltd.

Ltd. Lt Counterparty Ltd. Ltd. Ltd. k Co., Co., k Ltd.

Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd.

ile Co., ile Co., 207 Chap. 8 Financial Report Co., Mobile Taiwan Co., Holdings TT&T Technologies & Teleservices Taifu Xiamen Networ Fixed Taiwan Co., Mobile Taiwan Co., TFN Media Co., Mobile Taiwan Co., TFN Media Co., Network Fixed Taiwan Co., Network Fixed Taiwan Co., Network Fixed Taiwan Co., Services Network Telecommunication Taiwan Co., Network Fixed Taiwan Co., Services Network Telecommunication Taiwan Mob Taiwan Co., Network Fixed Taiwan Co., Mobile Taiwan TV Co., Cable Union TV Co., Jialeh Cable Yeong TV Corporation Cable Mangrove TV Co., Cable Phoenix TV Co., Cable Globalview Co., Mobile Taiwan Co., Network Fixed Taiwan Co., Network Fixed Taiwan Co., Network Fixed Taiwan Co., Network Fixed Taiwan TV Co., Cable Union TV Co., Jialeh Cable Yeong TV Corporation Cable Mangrove TV Co., Cable Phoenix TV Co., Cable Globalview Co., Mobile Taiwan Co., Network Fixed Taiwan TV Co., Cable Union Co., Network Fixed Taiwan

Ltd.

Ltd. Company Name Company Co., TFN Investment Inc. Range & Reach Co., Broadcasting WinTV Co., TFN Media

21 22 23 24 Number

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

(Continued) ------1% Percentage of Percentage or Total Assets or Total Consolidated Total Total Consolidated Operating Revenues Revenues Operating

d depend d depend ed depend ed depend

ements

terms varied depend varied depend terms Transaction Terms Transaction on the agreements on the agreements on the agreements on the agreements on the agreements on the agreements on the agreements on the based and agreements on the terms on regular based and agreements on the terms on regular based and agreements on the terms on regular based and agreements on the terms on regular based and agreements on the terms on regular based and agreements on the terms on regular based and agreements on the terms on regular agreements on the agreements on the agre on the agreements on the agreements on the varied depend terms Payment varied depend terms Payment vari terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment terms regular on Based varie terms Payment varied depend terms Payment Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment

0 25

365 744 657 724 1,268 1,745 2,172 3,635 1,475 2,299 5,138 2,280 2,755 1,01 2,559 Transaction Details Transaction 10,122 23,679 250,000 1,050,000 Amount

208 Account expenses

r intangible assets intangible r Chap. 8 Financial Report Othe payable Accounts payable Accounts payable Accounts payable Accounts payable Accounts payable Accounts expenses Accrued expenses Accrued Accrued expenses Accrued expenses Accrued expenses Accrued expenses Accrued expenses Accrued expenses Accrued expenses Accrued expenses Accrued payables Other payables Other

2 1 1 1 1 1 1 2 2 1 1 1 1 1 1 2 2 2 2 2 (Note) Nature of of Nature

- Relationship 78 -

Ltd. Ltd. Ltd. Ltd. Ltd. Ltd.

Ltd. Ltd.

Ltd. Ltd. Ltd. Ltd. Counterparty Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. ix Cable TV Co., TV Co., Cable ix Co., Network Fixed Taiwan TV Co., Cable Union TV Co., Shin Ho Cable TV Co., Jialeh Cable Yeong TV Corporation Cable Mangrove Phoen TV Co., Cable Globalview Co., Mobile Taiwan Co., Network Fixed Taiwan TV Co., Cable Union TV Co., Shin Ho Cable TV Co., Jialeh Cable Yeong TV Corporation Cable Mangrove TV Co., Cable Phoenix TV Co., Cable Globalview Co., Cellular Taiwan Co., Network Fixed Taiwan Co., TFN Investment Co., Cellular Taiwan Co., Network Fixed Taiwan

Company Name Company

Number

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

(Continued) ------4% 1% 1% 2% 1% Percentage of Percentage or Total Assets or Total Consolidated Total Total Consolidated Operating Revenues Revenues Operating

varied depend depend varied

ements

the agreements the Transaction Terms Transaction

on the agreements on the based and agreements on the terms on regular on based and agreements on the terms on regular agre on the agreements on the agreements on the agreements on the agreements on the agreements on the agreements on the agreements on the agreements on the agreements on the agreements on the agreements on the agreements on the agreements on the based and agreements on the terms on regular agreements on the agreements on the terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment terms regular on Based varied depend terms Payment varied depend terms Payment varied depend terms Payment

292 3,299 1,459 4,762 7,630 4,172 Transaction Details Transaction 40,088 15,380 58,432 46,026 540,001 207,700 130,001 138,000 500,000 350,000 217,336 363,041 476,829 189,683 3,900,000 2,000,000 Amount

enues Account payables Other payables Other payables Other payables Other payables Other payables Other payables Other receipts Advance liabilities Other liabilities Other revenues Operating revenues Operating revenues Operating revenues Operating revenues Operating revenues Operating rev Operating revenues Operating costs Operating costs Operating costs Operating costs Operating

2 1 1 1 1 1 1 3 1 1 2 1 1 1 1 1 1 1 2 2 1 1 (Note) Nature of of Nature

- Relationship 79 -

Ltd.

Co., Co., Ltd. Ltd. Ltd. Ltd.

Ltd. Ltd. Ltd. Ltd.

Ltd. Ltd. Ltd. Ltd. Ltd. Counterparty Ltd. Ltd. Ltd. Ltd. Ltd. e TV Co., TV Co., e

able TV Corporation able 209 Chap. 8 Financial Report Co., TFN Investment TV Co., Cable Union TV Co., Shin Ho Cable TV Co., Jialeh Cable Yeong TV Corporation Cable Mangrove TV Co., Cable Phoenix TV Co., Cable Globalview Technology Media Jia Leh Fu TV Corporation Cable Mangrove TV Co., Cable Globalview Co., Network Fixed Taiwan TV Co., Cable Union TV Co., Shin Ho Cable TV Co., Jialeh Cable Yeong C Mangrove TV Co., Cable North Coast TV Co., Cable Phoenix TV Co., Cable Globalview Co., Mobile Taiwan Co., Network Fixed Taiwan TV Co., Cable Union Shin Ho Cabl

Name

Company

Number

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

(Continued) ------Percentage of Percentage or Total Assets or Total Consolidated Tot Consolidated Operating Revenues Revenues Operating

rms varied depend varied depend rms greements Transaction Terms Transaction on the agreements on the a on the agreements on the agreements on the agreements on the based and agreements on the terms on regular agreements on the agreements on the agreements on the agreements on the agreements on the agreements on the agreements on the agreements on the agreements on the agreements on the agreements on the agreements on the agreements on the agreements on the agreements on the varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment terms regular on Based varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment te Payment terms regular on Based terms regular on Based varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment

5 1 68

551 478 838 164 2,819 3,342 2,353 1,098 3,699 5,318 1,722 1,82 Transaction Details Transaction 44,320 12,162 66,119 21,793 12,454 10,775 21,091 17,745 82,636 12,296 Amount

210 Account expenses

Chap. 8 Financial Report costs Operating costs Operating costs Operating costs Operating costs Operating expenses Operating Operating expenses Operating expenses Operating expenses Operating expenses Operating expenses Operating expenses Operating expenses Operating revenue Miscellaneous revenue Miscellaneous expenses Interest expenses Interest expenses Interest expenses Interest expenses Interest expenses Interest expenses Interest expenses Interest

1 1 1 1 1 2 2 1 1 1 1 1 1 1 2 2 2 2 2 2 1 1 1 1 (Note) Nature of of Nature

- Relationship 80 -

. . Ltd. Ltd. Ltd. Ltd. Ltd. Ltd.

Ltd. Ltd Ltd Ltd.

Ltd. Ltd. Ltd. Ltd. Counterparty , Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. TV Co., Jialeh Cable Yeong TV Corporation Cable Mangrove TV Co., Cable North Coast TV Co., Cable Phoenix TV Co., Cable Globalview Co., Mobile Taiwan Co., Network Fixed Taiwan TV Co., Cable Union TV Co., Shin Ho Cable TV Co., Jialeh Cable Yeong TV Corporation Cable Mangrove TV Co., Cable North Coast TV Co., Cable Phoenix TV Co., Cable Globalview Co., Mobile Taiwan Co., Network Fixed Taiwan Co., Mobile Taiwan Co., Cellular Taiwan Co., Network Fixed Taiwan Co., TFN Investment TV Co., Cable Union TV Co. Shin Ho Cable TV Co., Jialeh Cable Yeong TV Corporation Cable Mangrove

Company Name Company

Number

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

(Continued) ------1% Percentage of Percentage or Total Assets or Total Consolidated Total Total Consolidated Operating Revenues Revenues Operating

epend epend

ts and based based ts and

agreements

Transaction Terms Transaction on the agreements on the agreements on the agreements on the agreements on the agreements on the agreemen on the terms on regular agreements on the agreements on the agreements on the agreements on the on the agreements on the agreements on the agreements on the based and agreements on the terms on regular varied depend terms Payment varied depend terms Payment varied depend terms Payment terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment terms regular on Based varied depend terms Payment terms regular on Based terms regular on Based varied depend terms Payment varied depend terms Payment varied depend terms Payment terms regular on Based terms regular on Based varied d terms Payment varied depend terms Payment varied depend terms Payment terms regular on Based varied depend terms Payment

7 4 1 6 37 19 10 30 17 72 30 29 74

392 703 283 358 300 246 3,258 6,589 7,948 6,830 Transaction Details Transaction 49,410 10,640 48,870 540,042 197,640 Amount

enses Account expenses Interest expenses Interest expenses Interest expense Miscellaneous expense Miscellaneous expense Miscellaneous expense Miscellaneous expense Miscellaneous expense Miscellaneous expense Miscellaneous receivabl Accounts receivable Accounts receivables Other payable Accounts payable Accounts exp Accrued expenses Accrued expenses Accrued payables Other revenues Operating revenues Operating revenues Operating costs Operating costs Operating costs Operating costs Operating costs Operating expenses Operating

1 1 1 1 1 1 1 1 1 1 2 2 2 2 3 2 2 2 2 2 2 3 2 2 3 2 3 2 (Note) Nature of of Nature

- Relationship 81 -

d. Ltd. Ltd. Ltd. Ltd.

Ltd. Ltd. Lt Ltd. Ltd. oration

Ltd. Ltd. Ltd. Counterparty Ltd.

Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. 211 Jialeh Cable TV Co., TV Co., Jialeh Cable Chap. 8 Financial Report TV Co., Cable North Coast TV Co., Cable Phoenix TV Co., Cable Globalview TV Co., Cable Union TV Co., Shin Ho Cable Yeong TV Corporation Cable Mangrove TV Co., Cable North Coast TV Co., Cable Phoenix TV Co., Cable Globalview Co., Mobile Taiwan Co., TFN Media Co., TFN Media Co., TFN Media TV Corporation Cable Mangrove Co., Mobile Taiwan Co., Network Fixed Taiwan Co., TFN Media Co., TFN Media Co., Network Fixed Taiwan Co., TFN Media TV Corporation Cable Mangrove Co., Mobile Taiwan Co., Network Fixed Taiwan Co., Broadcasting WinTV Co., TFN Media TV Corp Cable Mangrove Co., Mobile Taiwan

Ltd. Company Name Company TV Co., Cable Union

25 Number

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

(Continued) ------Percentage of Percentage or Total Assets or Total Consolidated Total Total Consolidated Operating Revenues Revenues Operating

nd based nd based depend

lar terms lar Transaction Terms Transaction on the agreements a agreements on the terms on regular agreements on the agreements on the based and agreements on the terms on regular agreements on the based and agreements on the terms on regular agreements on the agreements on the agreements on the based and agreements on the on regu agreements on the agreements on the agreements on the based and agreements on the terms on regular agreements on the based and agreements on the terms on regular agreements on the varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment terms regular on Based terms regular on Based terms regular on Based varied depend terms Payment varied depend terms Payment varied depend terms Payment terms regular on Based varied depend terms Payment varied terms Payment varied depend terms Payment terms regular on Based varied depend terms Payment varied depend terms Payment

3 26 25 19 22

534 390 416 416 161 485 1,771 4,172 4,762 5,318 1,443 4,429 Transaction Details Transaction 19,695 12,296 81,331 207,700 130,000 Amount

212 nses Account scellaneous revenue scellaneous Chap. 8 Financial Report expenses Operating expenses Operating income Interest Mi receivable Accounts receivable Accounts receivables Other expe Accrued revenues Operating revenues Operating costs Operating costs Operating expenses Operating expenses Operating income Interest revenu Miscellaneous receivable Accounts receivable Accounts receivables Other assets current Other payable Accounts payable Accounts

2 2 2 2 2 2 2 2 2 3 2 3 2 2 2 2 2 2 2 2 2 2 (Note) Nature of of Nature

- Relationshi 82 -

Ltd. Ltd.

Counterparty Ltd. Ltd. k Co., Co., k

Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Co., Co.,

o., Co., Network Fixed Taiwan Co., TFN Media Co., TFN Media Co., TFN Media Co., Mobile Taiwan C TFN Media Co., TFN Media Co., Mobile Taiwan Co., TFN Media TV Co., Cable Union Mobile Taiwan TV Co., Cable Union Co., Mobile Taiwan Co., TFN Media Co., TFN Media Co., TFN Media Co., Mobile Taiwan Co., TFN Media Co., TFN Media Co., TFN Media Networ Fixed Taiwan Co., TFN Media

Ltd.

Ltd. Company Name Company TV Co., Shin Ho Cable TV Co., Jialeh Cable Yeong

26 27 Number

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

(Continued) ------Percentage of Percentage or Total Assets or Total Consolidated Total Total Consolidated Operating Revenues Revenues Operating

ms varied depend varied depend ms

greements agreements

the agreements the Transaction Terms Transaction

on the agreements on the agreements on the agreements on the agreements on the a on the agreements on the based and agreements on the terms on regular based and agreements on the terms on regular agreements on the agreements on the agreements on the agreements on the based and agreements on the terms on regular on agreements on the agreements on the agreements on the ayment terms varied depend varied depend terms ayment varied depend terms Payment terms regular on Based varied depend terms Payment varied depend terms Payment varied depend terms Payment terms regular on Based terms regular on Based varied depend terms Payment varied depend terms Payment varied depend terms Payment terms regular on Based ter Payment varied depend terms Payment P varied depend terms Payment terms regular on Based varied depend terms Payment varied depend terms Payment terms regular on Based varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment terms regular on Based varied depend terms Payment

86 60 71 10 60

960 223 257 256 300 223 258 684 526 186 120 3, 1,722 1,304 3,299 2,604 Transaction Details Transaction 11,178 46,166 37,717 325,323 138,097 Amount

eivable Account expenses Accrued expenses Accrued payables Other revenues Operating revenues Operating revenues Operating costs Operating costs Operating costs Operating costs Operating costs Operating expenses Operating expenses Operating expenses Operating income Interest revenue Miscellaneous receivable Accounts receivable Accounts rec Accounts receivables Other assets intangible Other payable Accounts expenses Accrued expenses Accrued payables Other

2 2 2 2 2 3 2 2 3 2 3 2 2 2 2 2 2 2 3 2 2 2 2 2 2 (Note) Nature of of Nature

- Relationship 83 -

rty

td. Ltd. Ltd. Ltd. Ltd. Ltd. L Ltd.

Counterpa Ltd. Ltd. Ltd.

Ltd. Ltd. Ltd. Ltd. Ltd.

Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. 213 Chap. 8 Financial Report Co., Mobile Taiwan Co., Network Fixed Taiwan Co., TFN Media Co., Network Fixed Taiwan Co., TFN Media TV Co., Cable Union Co., Mobile Taiwan Co., Network Fixed Taiwan Co., Broadcasting WinTV Co., TFN Media TV Co., Cable Union Co., Mobile Taiwan Co., Network Fixed Taiwan Co., TFN Media Co., TFN Media Co., TFN Media Co., Mobile Taiwan Co., TFN Media TV Co., Cable Union Co., TFN Media Co., TFN Media Co., Network Fixed Taiwan Co., Mobile Taiwan Co., Network Fixed Taiwan Co., TFN Media

orporation Company Name Company TV C Cable Mangrove

28 Number

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

(Continued) ------1% Percentage of Percentage or Total Assets or Total Consolidated Total Total Consolidated Operating Revenues Revenues Operating

reements terms varied depend varied depend terms

he agreements he Transaction Terms Transaction on the agreements on the based and agreements on the terms on regular agreements on the agreements on the agreements on the agreements on the ag on the agreements on the agreements on the agreements on the agreements on the agreements on the based and agreements on the terms on regular on t ayment terms varied depend varied depend terms ayment varied depend terms Payment terms regular on Based terms regular on Based terms regular on Based varied depend terms Payment varied depend terms Payment terms regular on Based terms regular on Based terms regular on Based terms regular on Based terms regular on Based varied depend terms Payment P terms regular on Based terms regular on Based varied depend terms Payment terms regular on Based varied depend terms Payment terms regular on Based terms regular on Based varied depend terms Payment varied depend terms Payment terms regular on Based varied depend terms Payment varied depend terms Payment Payment varied depend terms Payment varied depend terms Payment

7 60 11 59 11 22 68 20 13 63 71

175 300 146 667 793 551 113 2,16 1,825 5,775 1,855 3,258 1,134 6,272 Transaction Details Transaction 12,478 15,380 500,118 108,422 Amount

ues

214 count Ac Chap. 8 Financial Report revenues Operating reven Operating revenues Operating costs Operating costs Operating costs Operating costs Operating costs Operating expenses Operating expenses Operating expenses Operating expenses Operating income Interest revenue Miscellaneous revenue Miscellaneous revenues Operating costs Operating costs Operating expenses Operating expenses Operating expenses Operating income Interest revenue Miscellaneous receivable Accounts receivable Accounts receivable Accounts receivables Other payable Accounts

2 3 3 2 2 3 3 3 2 2 3 2 2 2 3 2 2 2 2 2 2 2 2 2 2 2 2 2 (Note) Nature of of Nature

- Relationship 84 -

Ltd.

Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd.

Counterparty Ltd. Ltd. Ltd.

Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Media Co., Media

aiwan Telecommunication Network Services Co., Co., Services Network Telecommunication aiwan Co., TFN Media TV Co., Cable Union TV Co., Cable Globalview Co., Mobile Taiwan Co., Network Fixed Taiwan Co., Broadcasting WinTV TV Co., Cable Union TV Co., Cable Globalview Co., Mobile Taiwan Co., Network Fixed Taiwan T Co., TFN Media Co., TFN Media Co., TFN Media TV Co., Cable Union TFN Co., Mobile Taiwan Co., TFN Media Co., Mobile Taiwan Co., Network Fixed Taiwan Co., TFN Media Co., TFN Media Co., TFN Media Co., Mobile Taiwan Co., Network Fixed Taiwan Co., TFN Media Co., TFN Media Co., TFN Media

Ltd. Ltd. Company Name Company TV Co., Cable North Coast TV Co., Cable Phoenix

29 30 Number

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

(Continued) ------Percentage of Percentage or Total Assets or Total Consolidated Total Total Consolidated Operating Revenues Revenues Operating

s varied depend s varied depend

Transaction Terms Transaction on the agreements on the based and agreements on the terms on regular based and agreements on the terms on regular agreements on the agreements on the agreements on the agreements on the agreements on the based and agreements on the terms on regular agreements on the agreements on the agreements on the agreements on the agreements on the agreement on the based and agreements on the terms on regular agreements on the ayment terms varied depend varied depend terms ayment varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment term Payment terms regular on Based terms regular on Based P varied depend terms Payment varied depend terms Payment terms regular on Based varied depend terms Payment terms regular on Based varied depend terms Payment varied depend terms Payment varied depend terms Payment terms regular on Based varied depend terms Payment varied depend terms Payment varied depend terms Payment varied depend terms Payment terms regular on Based varied depend terms Payment

8 10 87 31

453 506 379 300 506 555 171 409 5,491 3,588 1,865 6,589 1,232 2,151 1,459 Transaction Details Transaction 11,8 68,616 43,143 433,687 350,040 Amount

Account expenses Accrued expenses Accrued payables Other revenues Operating revenues Operating revenues Operating costs Operating costs Operating costs Operating costs Operating costs Operating expenses Operating expens Operating expenses Operating income Interest income Rental revenue Miscellaneous receivable Accounts receivable Accounts receivable Accounts receivables Other assets current Other asset intangible Other

2 2 2 2 2 3 2 2 3 2 3 2 2 2 2 2 2 2 2 2 2 2 2 (Note) Nature of of Nature

- Relationship 85 -

Ltd. Ltd. Ltd. Ltd. Ltd. Ltd.

Counterparty Ltd. Ltd.

Ltd. Ltd. Ltd. Ltd. Ltd. ., Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. 215 Chap. 8 Financial Report nion Cable TV Co., TV Co., nion Cable Co., Mobile Taiwan Co., Network Fixed Taiwan Co., TFN Media Co., Network Fixed Taiwan Co., TFN Media TV Co., Cable Union Co., Mobile Taiwan Co., Network Fixed Taiwan Co., Broadcasting WinTV Co., TFN Media U Co., Mobile Taiwan Co., Network Fixed Taiwan Co., TFN Media Co., TFN Media Co Mobile Taiwan Co., TFN Media Co., Mobile Taiwan Co., Network Fixed Taiwan Co., TFN Media Co., TFN Media Co., TFN Media Co., TFN Media

Ltd. Company Name Company TV Co., Cable Globalview

31 Number

WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3

Assets

------(Concluded) Percentage of Percentage or Total or Total Consolidated Total Total Consolidated Operating Revenues Revenues Operating end end

lar terms lar

Transaction Terms Transaction on the agreements and based based and agreements on the terms on regular agreements on the agreements on the agreements on the agreements on the agreements on the agreements on the agreements on the agreements on the based and agreements on the terms on regular agreements on the agreements on the agreements on the varied depend terms Payment varied depend terms Payment varied depend terms Payment terms regular on Based varied depend terms Payment varied depend terms Payment varied depend terms Payment terms regular on Based terms regular on Based varied depend terms Payment varied depend terms Payment varied depend terms Payment regu on Based varied depend terms Payment terms regular on Based terms regular on Based varied depend terms Payment varied dep terms Payment varied depend terms Payment terms regular on Based

30 24 65 22 34

657 273 212 383 300 273 173 842 461 3,227 7,947 Transaction Details Transaction 42,136 22,187 21,138 168,545 Amount

216 Account Chap. 8 Financial Report payable Accounts payable Accounts expenses Accrued expenses Accrued payables Other revenues Operating revenues Operating revenues Operating costs Operating costs Operating costs Operating costs Operating costs Operating expenses Operating expenses Operating expenses Operating expenses Operating income Interest income Rental revenue Miscellaneous

2 2 2 2 2 2 2 3 2 2 3 2 3 2 2 3 2 2 2 2 (Note) Nature of of Nature

- Relationship 86 -

Ltd.

Network Services Co., Co., Services Network Ltd. Ltd. Ltd. Ltd. Ltd.

Ltd.

td. Counterparty L Ltd.

Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. asting Co., Co., asting iwan Mobile Co., Co., Mobile iwan Co., Network Fixed Taiwan Co., TFN Media Ta Co., Network Fixed Taiwan Co., TFN Media Co., Network Fixed Taiwan Co., TFN Media TV Co., Cable Union Co., Mobile Taiwan Co., Network Fixed Taiwan Broadc WinTV Co., TFN Media TV Co., Cable Union Co., Mobile Taiwan Co., Network Fixed Taiwan Telecommunication Taiwan Co., TFN Media Co., TFN Media Co., Technology Media Wealth Global Co., TFN Media

y. Company Name Company Between subsidiaries. Between Subsidiary to parent. Subsidiary Parent to subsidiar to Parent

3 . 2 . 1 .

Number

Note WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Ticker : 3045

Name Rosie Yu

Taiwan Mobile Title Vice President Spokesperson Telephone (02) 6635-1880

Email [email protected]

Name Josephine Juan

Title Director Deputy Spokesperson Telephone (02) 6636-6970

Email [email protected]

IR Contact Email [email protected] 2009 Annual Report

Name Fubon Securities Co., Ltd.

Address 2F, No. 17, Syuchang St., Jhongjheng Dist., Taipei Stock Transfer Agent Telephone (02) 2361-1300

Website www.fbs.com.tw Taiwan Mobile Official Website www.taiwanmobile.com Website Deloitte & Touche Peter Fan, CPA, and S. C. Huang, CPA

Address 12F, No. 156, Minsheng E. Rd., Sec. 3, Taipei Independent Auditor Telephone (02) 2545-9988

Website www.deloitte.com.tw

Listing of Foreign Securities None

Taiwan Mobile 2009 Annual Report WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3 Ticker : 3045

Name Rosie Yu

Taiwan Mobile Title Vice President Spokesperson Telephone (02) 6635-1880

Email [email protected]

Name Josephine Juan

Title Director Deputy Spokesperson Telephone (02) 6636-6970

Email [email protected]

IR Contact Email [email protected] 2009 Annual Report

Name Fubon Securities Co., Ltd.

Address 2F, No. 17, Syuchang St., Jhongjheng Dist., Taipei Stock Transfer Agent Telephone (02) 2361-1300

Website www.fbs.com.tw Taiwan Mobile Official Website www.taiwanmobile.com Website Deloitte & Touche Peter Fan, CPA, and S. C. Huang, CPA

Address 12F, No. 156, Minsheng E. Rd., Sec. 3, Taipei Independent Auditor Telephone (02) 2545-9988

Website www.deloitte.com.tw

Listing of Foreign Securities None

Taiwan Mobile 2009 Annual Report WorldReginfo - 1796f75a-1b8b-442a-a876-e99ac87e52b3