Half Year 2026 Taiwan Mobile Co Ltd Earnings Call

August 14, 2026

Speaker #1: Good afternoon, ladies and gentlemen. Welcome to the Taiwan Mobile Conference Call. Our chairperson today is Mr. Jamie Lin. Mr. Lin, please begin your call, and I'll be standing by for the question and answer session.

Operator: Good afternoon, ladies and gentlemen. Welcome to the Taiwan Mobile conference call. Our chairperson today is Mr. Jamie Lin. Mr. Lin, please begin your call, and I will be standing by for the question and answer session. Thank you.

Speaker #1: Thank you.

Speaker #2: Thank you, operator. Good afternoon, everyone. Welcome to Taiwan Mobile's second quarter 2026 results conference call. We are reporting a record quarter in revenue and profitability outperformance.

Jamie Lin: Thank you, operator. Good afternoon, everyone. Welcome to Taiwan Mobile Q2 2026 results conference call. We are reporting a record quarter in revenue and profitability outperformance. Before I share more details, please refer to our safe harbor notice on this page. Now let us start with our business overview. Please turn to page 4 for Q2 highlights. In Q2, our three-tier flywheel demonstrated remarkable momentum. Our core growth engines, namely Telco Plus, and Telco Plus Tech, all delivered robust YoY top-line growth, reinforcing our position as the market leader as an AI-powered ICT company, or an AICT company, as we call it. On the profitability front, Q2 proved to be the landmark quarter as we continue to embark on our golden decade journey. Consolidated EBITDA and EBIT rose by 9% and 18% YoY, respectively, with EBIT reaching a two-decade high and showcasing powerful operating leverage.

Speaker #2: But before I share more details, please refer to our safe harbor notice on this page. Now, let's start with our business overview. Please turn to page 4 for Q2 highlights.

Speaker #2: So, in Q2, our three-tier flywheel demonstrated remarkable momentum. Our core growth engine core growth engines namely telco, telco plus, and telco plus tech, all delivered robust YOI top-line growth.

Speaker #2: Reinforcing our position as the market leader as an AI-powered ICT company, or an AICT company as we call it. On the profitability front, Q2 proved to be a landmark quarter as we continue to embark on our golden decade journey.

Speaker #2: Consolidated EBITDA and EBIT rose by 9% and 18% year over year, respectively, with EBIT reaching a two-decade high and showcasing powerful operating leverage. Coupled with significantly enhanced non-operating performance, lending comps surged by 38% year over year, with EPS reaching $1.49.

Jamie Lin: Coupled with significantly enhanced non-operating performance, net income surged by 38% YoY, with EPS reaching TWD 1.49, delivering the highest EPS in the sector for three quarters in a row. This standout profitability was underpinned by our proactive integration of AI to drive operational efficiencies, optimized subsidy and commission structures, as well as disciplined CapEx management, which led to a lower D&A expenses. George Chang, our CFO, will explain our structural cost optimization in more detail later. Now let us take a closer look at our Telco core business on the next page. Telco core includes our mobile and home businesses. The sustainable growth foundation strategy continues to yield excellent results, reflected in our record low post-paid churn rate of 0.5%, a nine-basis point improvement over the same period last year, and the 3% YoY increase in smartphone ARPU to TWD 689 in Q2.

Speaker #2: Delivering the highest EPS in the sector for three quarters in a row, this standout profitability was underpinned by our proactive integration of AI to drive operational efficiencies, as well as optimized subsidy and commission structures.

Speaker #2: As well as disciplined CapEx management, which led to lower D&A expenses. George, our CFO, will explain our structural cost optimization in more detail later.

Speaker #2: Now, let's take a closer look at our telco core business on the next page. The telco core includes our mobile and home businesses. The sustainable growth foundation strategy continues to yield excellent results.

Speaker #2: This is reflected in our record-low postpaid churn rate of 0.5%, a 9-basis-point improvement over the same period last year. Additionally, there was a 3% year-over-year increase in smartphone ARPU to $689 in Q2.

Speaker #2: As a result, our Q2 mobile service revenue grew by 3% year-over-year, hitting an all-time high. 5G penetration came in at 45%, up 3 percentage points year-over-year, leaving us ample runway to upsell going forward.

Jamie Lin: As a result, our Q2 mobile service revenue grew by 3% YoY, hitting an all-time high. 5G penetration came in at 45%, up 3 percentage points YoY, leaving us ample runway to upsell going forward. For contract renewals, we delivered a 6% overall monthly tariff uplift, driven by a 46% bump up in 4G to 5G upgrades. As a result, 5G revenue grew by 8% YoY, lifting its contribution to mobile service revenue to 69%. This commercial success is firmly backed by our leading network quality. In Opensignal's H1 2026 report, Taiwan Mobile ranks number one across six key categories, taking sole ownership of the top spot and placed in the global top three in both network reliability and consistent quality, while leading in video and voice app experiences. Our unique bundles serve as a strong moat, consistently driving upselling and customer loyalty.

Speaker #2: For contract renewals, we delivered a 6% overall monthly tariff uplift, driven by a 46% bump-up in 4G to 5G upgrades. As a result, 5G revenue grew by 8% year-over-year, lifting its contribution to mobile service revenue to 69%.

Speaker #2: This commercial success is firmly backed by our leading network quality in Open Signal's H1 2026 report. Taiwan Mobile ranks number one across six key categories, taking sole ownership of the top spot and placing in the global top three in both network reliability and consistent quality.

Speaker #2: While leading in video and voice app experiences, our unique bundles serve as a strong moat, consistently driving upselling and customer loyalty. In Q2, we introduced a new high-value multi-platform OTT bundle that combines mobile data with a two-year subscription to Netflix, Prime Video, HBO Max, and our own My Video.

Jamie Lin: In Q2, we introduced a new high-value multi-platform OTT bundle that combines mobile data with a two-year subscription to Netflix, Prime Video, Max, and our own MyVideo. Similar to our existing double play and OTT bundles, the vast majority of subscribers opted for TWD 999 or higher rate plans, driving sustained subscriber and ARPU expansion. Moving to the home business segment, our broadband business recorded a solid 5% YoY growth in Q2. Including double-play users, broadband users, and speeds of 300 megabits or higher surged by 22% YoY, greatly outperforming the incumbent player. Next, let's turn to page six for our growth engine number two. In the Telco Plus segment, we continue to unleash the potential of our gift as service model, providing integrated AI CT solutions for enterprise, AI data center, and cybersecurity services to our enterprise clients, including high-potential SMEs.

Speaker #2: Similar to our existing Double Plan OP bundles, the vast majority of subscribers opted for NT$9,990 or higher rate plans, driving sustained subscriber and ARPU expansion.

Speaker #2: Moving to the home business segment, our broadband business recorded a solid 5% year-over-year growth in Q2. Including double play users, broadband users with speeds of 300 megabits or higher surged by 22% year-over-year.

Speaker #2: Greatly outperforming the incumbent player. Next, let's turn to page 6 for our growth engine number two. In the telco plus segment, we continue to unleash the potential of our gift as service model, providing integrated AICD solutions for enterprise AI data center and cybersecurity services to our enterprise clients, including high-potential SMEs.

Speaker #2: Growth in this segment has been stellar, with revenue surging 19% year-over-year in Q2. This performance was driven by key government XI projects and steady contributions from our AI data center. Notably, our data center revenue soared 89% year-over-year in Q2, while our AIDC AICT for enterprise business also expanded significantly.

Jamie Lin: Growth in this segment has been stellar, with revenue surging 19% YoY in Q2. This performance was driven by key government SI projects, steady contributions from our AI data center. Notably, our data center revenue soared 89% YoY in Q2, while our AICT for enterprise business also expanded significantly. As enterprises accelerate their AI-led transformations, Taiwan Mobile is uniquely positioned as the premier partner of choice, backed by our robust infrastructure and telecom-grade reliability. This provides a powerful long-term tailwind to our telecom service revenue. Next, let's turn to our new Telco Plus and tech businesses. Our third growth engine, telco plus tech businesses, delivered a 4% revenue growth in Q2 while our new telco plus tech businesses, which excludes Momo, grew by a robust 18%, driven by strong execution across three key businesses.

Speaker #2: As enterprises accelerate their AI-led transformations, Taiwan Mobile is uniquely positioned as the premier partner of choice, backed by our robust infrastructure and telecom-grade reliability.

Speaker #2: This provides a powerful long-term tailwind to our telecom service revenue. Next, let's turn to our new Telco Plus and tech businesses—so, our third growth engine: Telco Plus tech businesses.

Speaker #2: We delivered 4% revenue growth in Q2, while our new Telco plus Tech businesses—which excludes MOMO—grew by a robust 18%, driven by strong execution across three key businesses.

Speaker #2: First, our direct carrier billing business, or Daka Fusui Zhangshou in Mandarin, continued to expand steadily as we broadened our service offerings to drive recurring usage.

Jamie Lin: First, our direct carrier billing business, or 大哥付水帳收 in Mandarin, continued to expand steadily as we broaden our service offerings to drive recurring usage. Leveraging proprietary AI algorithms for precision targeting and risk management, we are seeing accelerated adoption of carrier-based payment across our user base. Second, our e-commerce services for brands, or 品牌店 in Mandarin, grew exponentially with revenue more than doubling YoY. This was driven by strong sales performance from key anchor brand clients such as Royal Canin and Philips, alongside the addition of a new channel partner in Q2. Furthermore, the upcoming launch of Japan's iconic lifestyle brand, 3COINS, across key channels, especially Momo, will help fuel our top-line momentum as we head into the second half of the year.

Speaker #2: Leveraging proprietary AI algorithms for precision targeting and risk management, we are seeing accelerated adoption of carrier-based payment across our user base. Second, our e-commerce service for services for brands, or 品牌电商 in Mandarin, grew exponentially, with revenue more than doubling year-over-year.

Speaker #2: This was driven by strong sales performance from key anchor brand clients such as Royal Canin and Philips, alongside the addition of a new channel partner in Q2.

Speaker #2: Furthermore, the upcoming launch of Japan’s iconic lifestyle brand, Three Coins, across key channels—especially MOMO—will help fuel our top-line momentum as we head into the second half of the year.

Speaker #2: Third, our proprietary OTT brand, MyVideo, delivered solid top-line revenue growth through both platform subscriptions and content investments, boosted by the strong box office performance of several key titles.

Jamie Lin: Third, our proprietary OTT brand, MyVideo, delivered solid top-line revenue growth through both platform subscriptions and content investments, boosted by the strong box office performance of several key titles. Finally, let's take a look at Momo. Momo's GMV growth accelerated to 7% YoY in Q2. Since March, Momo has delivered four consecutive months of YoY revenue growth, driving a 4% YoY revenue increase in Q2. Taoyuan saw a modest YoY expansion while EBITDA margin maintained resilience despite market competition. Combined with reduced D&A expenses, Momo's operating income grew by 3% YoY in Q2. On the cash front, its negative cash conversion cycle provided a powerful working capital tailwind, driving an even more pronounced increase in operating cash flow. The key growth initiatives, Mo Shop Plus and Retail Media Network, or RMN in short, continued to expand rapidly.

Speaker #2: Finally, let's take a look at MOMO. MOMO's GMV growth accelerated to 7% year over year in Q2. Since March, MOMO has delivered four consecutive months of year-over-year revenue growth, driving a 4% year-over-year revenue increase in Q2.

Speaker #2: Take rate saw solid, modest year-over-year expansion, while EBITDA margin remained resilient despite market competition. Combined with reduced CNA expenses, MOMO's operating income grew by 3% year-over-year in Q2.

Speaker #2: On the cash front, its negative cash conversion cycle provided a powerful working capital tailwind, driving an even more pronounced increase in operating cash flow.

Speaker #2: The key growth initiatives, MoShop Plus and Retail Media Network—RMN for short—continued to expand rapidly. Our 3P marketplace, MoShop Plus, now features over 3.7 million SKUs and more than 10,000 selected merchants, delivering double-digit year-over-year GMV growth in the first half.

Jamie Lin: Our 3P marketplace, Mo Shop Plus, now features over 3.7 million SKUs and more than 10,000 selected merchants, delivering double-digit YoY GMV growth in H1. Simultaneously, the RMN initiative gained further traction, with merchant penetration reaching approximately 50% as of quarter end, and revenue surging by double digits YoY. With that overview of our strategic progresses, I'll now turn the floor over to our CFO, George Chang, for a detailed look at our financials.

Speaker #2: Simultaneously, the RMN initiative gained further traction, with merchant penetration reaching approximately 50% as of quarter end, and revenue surging by double digits year over year.

Speaker #2: With that overview of our strategic progress, I'll now turn the floor over to our CFO, George Chan, for a detailed look at our financials.

Speaker #3: Thanks, Jamie. Good afternoon. Let's begin with our performance by business segment. In Q2 2026, our telecom revenue delivered a solid 4% year-over-year growth, with the fixed line business contributing about half of this revenue expansion.

George Chang: Thanks, Jamie Lin. Good afternoon. Let's begin with our performance by business segment. In Q2 2026, our telecom revenue delivered a solid 4% YoY growth, with fixed-line business contributing about half of this revenue expansion. Telecom EBIT rose by 25% YoY, representing 77% of our consolidated EBITDA. This massive margin expansion highlights our operating leverage driven by strong growth across all three engines and prudent cost disciplines in customer acquisition and retention. Accompanied by a gradual revenue recovery over the past two quarters, Momo's EBITDA has stabilized YoY, while its EBIT grew 3% YoY thanks to a decline in D&A as Momo strategically reduced its reliance on third-party logistics facilities and enhanced fulfillment efficiency. Accounting for our equity stake, Momo contributed roughly 6% to Taiwan Mobile's net income in the second quarter. Finally, CATV EBIT dipped YoY, but this was mainly due to a high base in the pay TV business.

Speaker #3: Telecom EBIT rose by 25% year-over-year, representing 77% of our consolidated EBITDA. This massive margin expansion highlights our operating leverage, driven by strong growth across all three engines and prudent cost disciplines in customer acquisition and retention.

Speaker #3: Accompanied by a gradual revenue recovery over the past two quarters, MOMO's EBITDA has stabilized year over year, while its EBIT grew 3% year over year, thanks to a decline in D&A.

Speaker #3: As MOMO strategically reduced its reliance on third-party logistics facilities, it achieved enhanced fulfillment efficiency. Accounting for our equity stake, MOMO contributed roughly 6% to Taiwan Mobile's net income in the second quarter.

Speaker #3: Finally, CATV EBIT dipped year-over-year, but this was mainly due to a high base in the pay TV business. Broadband profitability remained robust, with double-digit year-over-year growth.

George Chang: Broadband profitability remained robust with double-digit YoY growth. To further elaborate on the power for operating leverage in our telecom business, as you can see on page 11, telecom revenue grew by 4% in the second quarter, but telecom EBIT grew by 25% YoY, expanding at more than six times at the rate of the revenue growth. Within this YoY EBIT growth, more than half stemmed from AI-driven structural efficiency gains in subscriber acquisition and retention costs. As mobile CapEx continue to trend down, lower telecom D&A expenses contributed another 16% to the EBIT increase. Let's go to the results summary. Consolidated revenue rose by 4% YoY as telecom, Momo, and cable TV all delivered revenue growth for the two quarters in a row. Operating income went up by 18% YoY, setting a new quarterly high in over two decades.

Speaker #3: To further elaborate on the powerful operating leverage in our telecom business, as you can see on page 11, telecom revenue grew by 4% in the second quarter, but telecom EBIT grew by 25% year-over-year.

Speaker #3: Expanding at more than six times the rate of revenue growth. Within this year-over-year EBIT growth, more than half stemmed from AI-driven structural efficiency gains in subscriber acquisition and retention costs.

Speaker #3: As mobile capex continued to trend down, lower telecom D&A expenses contributed another 16% to the EBIT increase. Let's go to the results summary. Consolidated revenue rose by 4% year-over-year, as telecom, momo, and cable TV all delivered revenue growth for two quarters in a row.

Speaker #3: Operating income went up by 18% year over year, setting a new quarterly high in over two decades. On the non-operating front, expenses dropped significantly year over year, mainly driven by lower financing costs.

George Chang: On the non-operating front, expenses dropped significantly YoY, mainly driven by lower financing costs, higher equity method income led by Systex, mark-to-market gains on our investment holdings, and favorable base effects from Q2 2025 asset write-offs and FX translation losses. As a result, Q2 2026 net income surged 38% YoY to a 20-year high. For the H1 2026, EPS reached NTD 2.86, the highest among our peers. Let's move on to balance sheet. We continue to improve our asset efficiency and balance sheet strength. Within current assets, accounts receivable and contract assets grew 11% YoY, in line with top-line expansion across all business. In non-current assets, PP&E declined as capital additions stayed below depreciation with 5G rollout and network consolidation CapEx now behind us.

Speaker #3: Higher equity method income led by Systex, mark-to-market gains on our investment holdings, and favorable base effects from the second quarter of ’25, asset write-offs, and FX translation losses.

Speaker #3: As a result, 2Q26 net income surged 38% year-over-year to a 20-year high. For the first half of 2026, EPS reached NT$2.86, the highest among our peers.

Speaker #3: Let's move on to the balance sheet. We continue to drive improvement in our asset efficiency and balance sheet strength. Within current assets, accounts receivable and contract assets grew 11% year-over-year, in line with top-line expansion across all businesses.

Speaker #3: In non-current assets, PP&E declined as capital additions stayed below depreciation, with 5G roll-out and network consolidation capex now behind us. On the liability and equity side, our disciplined capital management and steady cash flow generation allowed us to reduce growth debt by $8.5 billion quarter-on-quarter and $10.9 billion year-over-year.

George Chang: On the liability and equity side, our disciplined capital management and steady cash flow generation allowed us to reduce gross debt by NTD 8.5 billion quarter on quarter and NTD 10.9 billion year over year. During this quarter, we also successfully monetized a portion of our treasury shares, adding about NTD 4 billion to both our cash balances as well as total shareholders' equity. Notably, at the end of Q2, our legal reserve balance has reached a statutory threshold of our paid-in capital. As a result, we are no longer required to set aside earnings for legal reserve, and that will give us greater flexibility for future profit distribution. Finally, driven by ongoing debt reduction and earnings growth, our net debt to EBITDA ratio dropped to 1.33x, while ROE expanded to 19%, underscoring our sharp focus and sustained capital efficiency. Lastly, let's look at the cash flow.

Speaker #3: During this quarter, we also successfully monetized a portion of our treasury shares, adding about $4 billion to both our cash balances as well as total shareholders' equity.

Speaker #3: Notably, at the end of the second quarter, our legal reserve balance has reached the statutory threshold of our paid-in capital. As a result, we are no longer required to set aside earnings for legal reserve.

Speaker #3: And that will give us greater flexibility for future profit distribution. Finally, driven by ongoing debt reduction and earnings growth, our net debt-to-EBITDA ratio dropped to 1.33 times, while ROE expanded to 19%.

Speaker #3: Underscoring our sharp focus and sustained capital efficiency. Lastly, let's look at the cash flow. Moving to cash flow and capital allocation, in the second quarter, we delivered robust operating cash flow growth year-over-year, driven by expanding telecom EBITDA and favorable working capital dynamics at momo.

George Chang: Moving to cash flow and capital allocation. In Q2, we delivered robust operating cash flow growth YoY, driven by expanding telecom EBITDA and favorable working capital dynamics at Momo. Investing cash flow decreased both sequentially and YoY. The drop reflects a high comparison base from our strategic media investment, Q1. While the YoY decline was primarily driven by reduced CapEx in mobile and Momo. Backed by strong cash flow generation, we accelerated debt repayment during the quarter, well exceeding both Q1 and prior year levels. Consequently, Q2 pre-IFRS 16 free cash flow surged to NTD 7.45 billion, delivering an annualized free cash flow yield of 8.4%, further strengthening our foundation for sustainable shareholder returns. Let me turn the presentation back to Jamie for event update and key message.

Speaker #3: Investing cash flow decreased both sequentially and year-over-year. The quarter-on-quarter drop reflects a high comparison base from our strategic media investment in Q1, while the year-over-year decline was primarily driven by reduced capex in mobile and MOMO.

Speaker #3: Backed by strong cash flow generation, we accelerated debt repayment during the quarter, well exceeding both Q1 and prior year levels. Consequently, second quarter pre-IFRS 16 free cash flow surged to $7.45 billion, delivering an annualized free cash flow yield of 8.4%.

Speaker #3: Further strengthening our foundation for sustainable shareholder returns. Let me turn the presentation back to Jamie for the event update and key messages.

Speaker #2: All right. Thank you, George. So let's turn to page 16 for our 2026 guidance update. Our strong performance in the first half, as you can see, driven by greater operating leverage from AI-led structural cost savings, gives us high confidence heading into the second half of the year.

Jamie Lin: All right. Thank you, George. Let's turn to page 16 for our 2026 guidance update. Our strong performance in the H1, as you can see, driven by greater operating leverage from AI-led structural cost savings, gives us high confidence heading into the H2 of the year. As a result, we are raising our full year 2026 profit guidance. We are maintaining our revenue growth target to 5% to 7%, while upgrading our outlook for full year telecom operating profit growth from 4% to 6% to 13% to 15%, and consolidated operating profit from 1% to 2% YoY to 7% to 9% YoY. Please note that this guidance is presented on the standalone basis and does not incorporate any financial or operational impact from the proposed tender offer of Systex. Alongside our raised guidance, let's also look at our recent achievements in ESG and corporate recognition.

Speaker #2: As a result, we are raising our four-year 2026 profit guidance. We're maintaining our revenue growth target of 5 to 7%, while upgrading our outlook for four-year telecom operating profit growth to from 4 to 6% to 13 to 15%.

Speaker #2: And consolidated operating profit from 1% to 2% year-over-year to 7% to 9% year-over-year. Please note that this guidance is presented on a standalone basis and does not incorporate any financial or operational impact from the proposed tender offer of Systex.

Speaker #2: Alongside our raised guidance, let's also look at our recent achievements in ESG and corporate recognition. So on the next page, I'm very proud to share that Taiwan Mobile has once again achieved top honors in XTEL's All Asia Executive Survey.

Jamie Lin: On the next page, I am very proud to share that Taiwan Mobile has once again achieved top honors in Institutional Investor's All Asia Exec Team survey. For the fourth consecutive year, we have been named a Most Honored company in the overall Asia regions, remaining the only Taiwanese telco to consistently hold this distinction. Furthermore, in the rest of Asia region, we secured number one overall ranking for the fifth year in a row with our CEO, CFO, IR team, board, and ESG all placing in the top three brackets in their respective categories. On behalf of our leadership team and our board, I thank you for your trust, your continued partnership, and your recognition of our team's pursuit of strategic excellence and commitment to world-class execution with strong corporate governance. Speaking of which, we ranked in the top 5% of Taiwan corporate governance evaluation for the 12th consecutive year.

Speaker #2: For the fourth consecutive year, we have been named a Most Honored Company in the overall Asia region, remaining the only Taiwanese telco to consistently hold this distinction.

Speaker #2: Furthermore, in the rest of the Asia region, we secured the number one overall ranking for the fifth year in a row, with our CEO, CFO, IR team, board, and ESG all placing in the top three brackets in their respective categories.

Speaker #2: On behalf of our leadership team and our board, I thank you for your trust, your continued partnership, and your recognition of our team's pursuit of strategic excellence and commitment to world-class execution with strong corporate governance.

Speaker #2: Speaking of which, we ranked in the top 5% of Taiwan corporate governance evaluation for the 12th consecutive year. One of the only seven one of only seven companies in Taiwan to achieve this track record.

Jamie Lin: One of only seven companies in Taiwan to achieve this track record. On the environmental leadership, we earned the highest A rating in CDP Supplier Engagement assessment for the fifth straight year, alongside continued inclusion in the DJSI World Index and FTSE4Good TIP Taiwan ESG Index. On the technology front, our next-generation non-terrestrial network solutions won the GOA award in the inaugural Satellite Digital Application Innovation Competition organized by the Ministry of Digital Affairs. Furthermore, our in-house developed AI solution, Botex AI, or AI 聽大個 in Mandarin, received the Taiwan AI Award and Silver Award for Product Innovation at the AI TAIWAN Future Commerce Expo. This highlights our leadership as one of the few telecom operators in the world to successfully achieve the productization of in-house AI capabilities. Next, to conclude our Q2 presentation, here is the key message we would like for you to take away with.

Speaker #2: On environmental leadership, we earned the highest A rating in the CDP Supplier Engagement Assessment for the fifth straight year, alongside continued inclusion in the DJSI World Index and FTSE4Good TIP Taiwan ESG Index.

Speaker #2: On the technology front, our next-generation non-territorial network solutions won the GO Award in the inaugural Satellite Digital Application Innovation Competition, organized by the Ministry of Digital Affairs.

Speaker #2: Furthermore, our in-house developed AI solution, Vortex AI, or AI Ting Shih Da Ge in Mandarin, received the Taiwan AI Award and the Silver Award for Product Innovation at the Taiwan AI Future Commerce Expo.

Speaker #2: This highlights our leadership as one of the few telecom operators in the world to successfully achieve the productization of in-house AI capabilities. Next, to conclude our Q2 presentation, here's the key message we would like for you to take away with.

Speaker #2: First, regarding our key growth drivers, we are driving sustained momentum across our mature core telecom operations and momo business, while expanding rapidly in our Telco Plus and new Telco Plus Tech businesses.

Jamie Lin: First, regarding our key growth drivers, we are driving sustained momentum across our mature core telecom operations and Momo business while expanding rapidly in our Telco Plus and new Telco Plus tech businesses. Second, on capturing alpha in the agentic era, we are pioneering AI-driven structural cost reductions and productizing the platforms we have built, which in turn accelerates growth of our enterprise business. Finally, for our future outlook, we are fully confident in our ability to meet our updated four-year financial guidelines, and we remain firmly committed to maximizing long-term structural increase in shareholder returns, thereby delivering a golden decade. To further accelerate this next phase of growth, we have also taken a major step forward on the M&A front.

Speaker #2: Second, on capturing Alpha in the agentic era, we are pioneering AI-driven structural cost reductions and productizing the platforms we have built, which in turn accelerates growth of our enterprise business.

Speaker #2: Finally, for our future outlook, we are fully confident in our ability to meet our updated four-year financial guidelines. We remain firmly committed to maximizing the long-term, structural increase in shareholder returns.

Speaker #2: Thereby delivering a golden decade. To further accelerate this next phase of growth, we have also taken a major step forward on the M&A front.

Speaker #2: So on page 19, as you've seen in our material information announcement from August 12th, we are launching a tender offer through our wholly owned subsidiary, TCC, or Taixing Dianxun in Mandarin, to acquire up to a 58% stake.

Jamie Lin: On page 19, as you have seen in our material information announcement from 12 August, we are launching a tender offer through our wholly owned subsidiary, Taiwan Cellular Corporation, or 泰信電訊 in Mandarin, to acquire up to 58% additional stake in Systex on top of the 11.86% we have already owned since September of 2024. Here is a summary of our deal terms and timeline. As shown on the slide, the offer features a 50/50 cash and stock split with the cash portion fully supported by Taiwan Cellular Corporation's own capital and group borrowings. The transaction is subject to Taiwan Fair Trade Commission approval, with the tender period running from 18 August through 6 October. All detailed figures are on the screen for your reference.

Speaker #2: Additional stake in Systex. On top of the 11.86% we have already owned since September 2024, here’s a summary of our deal terms and timeline.

Speaker #2: As shown on the slide, the offer features a 50/50 cash and stock split, with the cash portion fully supported by TCC's own capital and group borrowings.

Speaker #2: The transaction is subject to Taiwan Fair Trade Commission approval, with the tender period running from August 18 through October 6. All detailed figures are on the screen for your reference.

Speaker #2: But more importantly, let me walk you through the three major synergies of this transaction on the next page, which will allow us to double our enterprise ICD market share and drive bottom-line growth.

Jamie Lin: But more importantly, let me walk you through the 3 major synergies of this transaction on the next page, which will allow us to double our enterprise AICT market share and drive bottom-line growth. First, cross-selling and broadened market reach. By combining Taiwan Mobile's CT leadership with Systex IT capabilities, we are aligning our software R&D and sales force across cloud, network, software, hardware, and cybersecurity. With nearly 4,500 software engineers and 1,000 sales professionals across 2 broad groups, we will offer comprehensive one-stop AI and ICT solutions, unlocking massive cross-selling opportunities across enterprise and government markets. Financially, as Systex is a profitable business, recognizing investment returns alongside these synergies will be immediately accretive to our EPS in year 1. Second, AI.

Speaker #2: First, cross-selling and broadened market reach. By combining Taiwan Mobile's CT leadership with Systex IT capabilities, we are aligning our software R&D and Salesforce across cloud, network, software, hardware, and cybersecurity.

Speaker #2: With nearly 4,500 software engineers and 1,000 sales professionals across two groups, we will offer comprehensive, one-stop AI and ICT solutions, unlocking massive cross-selling opportunities across enterprise and government markets.

Speaker #2: Financially, as Systex is a profitable business, recognizing investment returns alongside its synergies will be immediately accretive to our EPS in year one. Second, AI.

Speaker #2: To fully capitalize on the enterprise AI transition, we are matching our AIDC infrastructure. Already at 25 megawatts and growing, with Systex AI for IA industry solutions.

Jamie Lin: To fully capitalize on the enterprise AI transition, we are matching our AI DC infrastructure, already at 25 megawatt and growing, with Systex AI for IA industry solutions. This synergy ensures seamless AI application deployment for enterprises powered by our high-performance AI DC and high-speed network assets. Third, regional opportunities. Taiwan Mobile and Systex share highly overlapping regional development strategies in Asia, with both companies already expanding into Japan and Greater Southeast Asia. Through this deep strategic alliance, we will join forces to accelerate our expansions in these regional markets and capture larger international opportunities. In summary, this strategic investment bridges IT and CT, paving the way for sustainable growth and enhanced long-term shareholder value. Finally, on the next page, here's a pro forma net income contribution analysis under different ownership scenarios for your information. With that, let's open the floor up for questions.

Speaker #2: This synergy ensures seamless AI application deployment for enterprises, powered by our high-performance AIDC and high-speed network assets. Third, regional opportunities: Taiwan Mobile and Systex share highly overlapping regional development strategies in Asia.

Speaker #2: With both companies already expanding into Japan and Greater Southeast Asia, through this deep strategic alliance, we will join forces to accelerate our expansions in these regional markets and capture larger international opportunities.

Speaker #2: So, in summary, this strategic investment bridges IT and CT, paving the way for sustainable growth and enhanced long-term shareholder value. Finally, on the next page, here's a pro forma net income contribution analysis under different ownership scenarios for your information.

Speaker #2: With that, let's open the floor for questions. If you're participating online, you're more than welcome to send your questions via the online chat box.

Jamie Lin: If you're participating online, you're more than welcome to send your questions via the online chat box. We will begin by addressing the telephone line inquiries before we move on to the web. Operator, please go ahead.

Speaker #2: We will begin by addressing the telephone line inquiries before we move on to the web. So, operator, please go ahead.

Speaker #1: Thank you, Mr. Lin. Ladies and gentlemen, we will now go to questions. If you would like to register for a question, please press star one on your telephone keypad.

Operator: Thank you, Mr. Lin. Ladies and gentlemen, we will now open for questions. If you'd like to register for a question, please press star 1 on your telephone keypad. Thank you. Our first question comes from Sigrid Chiu with J.P. Morgan. Please go ahead. Thank you.

Speaker #1: Thank you. And our first question comes from Sigrid Chiu with JP Morgan. Please go ahead. Thank you.

Speaker #3: Hi, thank you very much. And thank you, Jamie and George, for the presentation, and congratulations on a very strong set of results for the second quarter.

Sigrid Chiu: Hi. Thank you very much. Thank you, Jamie and George, for the presentation, and congratulations for a very strong set of results for Q2. I do have a long list of a question. Would you prefer for me to ask all of them at once or take it one by one?

Sigrid Qiu: Hi. Thank you very much. Thank you, Jamie and George, for the presentation, and congratulations for a very strong set of results for Q2. I do have a long list of a question. Would you prefer for me to ask all of them at once or take it one by one?

Speaker #3: I do have a long list of questions. Would you prefer for me to ask all of them at once, or take them one by one?

Speaker #2: Hey, Sigrid, just take it one by one. It'll be easier. Thank you.

Jamie Lin: Hey, Sigrid. Let's take it one by one. It will be easier. Thank you.

Speaker #3: Okay, sure. Thank you. So, my first question is on the Systex acquisition. You mentioned that after the acquisition, you would double your enterprise ICD market share.

Sigrid Chiu: Okay. Sure. Thank you. My first question is on Systex acquisition. You mentioned that after the acquisition, you will double your enterprise ICT market share. Can I just check what is your current ICT market share?

Sigrid Qiu: Okay. Sure. Thank you. My first question is on Systex acquisition. You mentioned that after the acquisition, you will double your enterprise ICT market share. Can I just check what is your current ICT market share?

Speaker #3: Can I just check, what's your current ICD market share?

Speaker #2: So, the combined market share between the two groups would be around 7%. And we're aiming to double that number in the next five to six years.

Jamie Lin: The combined market share between the two groups will be at around 7%, and we are shooting to double that number in the next 5 to 6 years.

Speaker #3: Understood. And for the AIDC opportunity that you mentioned on the synergies slide, will we look to expand more on AIDC revenue opportunities beyond the ones that we have at the moment?

Sigrid Chiu: Understand. For the AI DC opportunity that you mentioned on the synergies slide, will we look to expand more on AI DC revenue opportunities beyond the ones that we have at the moment? I understand that is with the GMI Cloud. If we are going to do that, what is the capital needed to expand that part of the business?

Sigrid Qiu: Understand. For the AI DC opportunity that you mentioned on the synergies slide, will we look to expand more on AI DC revenue opportunities beyond the ones that we have at the moment? I understand that is with the GMI Cloud. If we are going to do that, what is the capital needed to expand that part of the business?

Speaker #3: I understand that is with GMI Cloud. If we're going to do that, what is the capital needed to expand that part of the business?

Speaker #2: Yes, we are proactively talking to many partners in terms of securing AIDC compute capabilities. As you may know, right now the bottleneck for enterprises to deploy AI applications is securing enough data center computing power.

Jamie Lin: Yes, we are proactively talking to many partners in terms of securing AIDC compute capabilities. As you may know, right now the bottleneck for enterprises to deploy AI applications is in securing enough data center computing power. Our pipeline of AIDCs that will come online in the next 12 to 24 months will allow Systex to be much more aggressive in securing AI applications business across their customer base. Our strategy here is working with infrastructure developers so that it is more of an asset-light model for us.

Speaker #2: And so, our pipeline of AIDCs that will come online in the next 12 to 24 months will allow Systex to be much more aggressive in securing AI applications business across their customer base.

Speaker #2: And our strategy here is working with infrastructure developers so that it’s more of an SLI model for us.

Speaker #3: Got it. Understood. My next question is on group CAPEX. I noticed that group CAPEX has been coming down. Could you please remind us what the main component of our CAPEX is at the moment?

Sigrid Chiu: Got it. Understand. My next question is on group CapEx. I noticed that group CapEx has been coming down. Would you just remind us what is the main component of our CapEx at the moment? To follow up, our peers are spending more CapEx on network upgrade. Do you see that we have similar needs at Taiwan Mobile side? Maybe you can just give us a sense of how we are going to plan CapEx going forward. That would be great.

Sigrid Qiu: Got it. Understand. My next question is on group CapEx. I noticed that group CapEx has been coming down. Would you just remind us what is the main component of our CapEx at the moment? To follow up, our peers are spending more CapEx on network upgrade. Do you see that we have similar needs at Taiwan Mobile side? Maybe you can just give us a sense of how we are going to plan CapEx going forward. That would be great.

Speaker #3: And to follow up, our peers are spending more CAPEX on network upgrades. Do you see that we have similar needs on the Taiwan Mobile side?

Speaker #3: And maybe you can just give us a sense of how we're going to plan capex going forward. That would be great.

Speaker #2: So, like we said during the presentation, I think the 5G rollout is behind us. And so, going forward, yes, we will use AI-driven strategies to spend CAPEX in a wise way to make our network perform better.

Jamie Lin: Like we said during the presentation, I think 5G rollout is behind us. Going forward, yes, we will use AI-driven strategies to spend CapEx in a wise way to make our network perform better. But we do not foresee this to be a huge capital demand going forward.

Speaker #2: But we don't imagine, we don't foresee this to be a huge capital demand going forward.

Speaker #3: Understand. And my last question.

Sigrid Chiu: Understand.

Sigrid Qiu: Understand.

Jamie Lin: As far as on the cons.

George Chang: As far as on the cons.

Sigrid Chiu: My last question.

Sigrid Qiu: My last question.

Speaker #2: Sorry, Sigrid. I was going to say that, on a consolidated basis, the majority was still telecom-driven in the first half. Momo was probably less than 10%.

Jamie Lin: Oh, sorry.

George Chang: Oh, sorry.

Sigrid Chiu: Oh, sorry.

Sigrid Qiu: Oh, sorry.

Jamie Lin: Stacy, I was going to say that as far as on a consolidated basis, the majority was still telecom-driven in H1. Momo was probably less than 10%, or around 10%.

George Chang: Stacy, I was going to say that as far as on a consolidated basis, the majority was still telecom-driven in H1. Momo was probably less than 10%, or around 10%.

Speaker #2: Or around 10%. That's fine.

Sigrid Chiu: Okay, great. Thank you. Got it. My last question is on guidance. I am looking at the updated guidance of consolidated operating profit of growing at 7% to 9% YoY. Our H1 growth rate is well exceeding the upgraded guidance. May I understand, are we baking in some form of conservatism for the H2, or I just want to understand why the guidance is much lower than the H1 growth rate.

Sigrid Qiu: Okay, great. Thank you. Got it. My last question is on guidance. I am looking at the updated guidance of consolidated operating profit of growing at 7% to 9% YoY. Our H1 growth rate is well exceeding the upgraded guidance. May I understand, are we baking in some form of conservatism for the H2, or I just want to understand why the guidance is much lower than the H1 growth rate.

Speaker #3: Got it. So, my last question is on guidance. I'm looking at the updated guidance for consolidated operating profit, which is expected to grow 7% to 9% year on year.

Speaker #3: Now, our first half growth rate is well exceeding the upgraded guidance. So may I understand, are we baking in some form of conservatism for the second half, or—I just want to understand why the guidance is much lower than the first half growth rate?

Speaker #2: Yes, I think you were pretty accurate in anticipating our stance. We didn't want to give guidance that we don't have 100% confidence in achieving.

Jamie Lin: Yes, I think you were pretty accurate in anticipating our stance. We did not want to give guidance that we do not have 100% confidence in achieving.

Speaker #3: Can I just follow up on what's the reason for the conservatism?

Sigrid Chiu: Can I just follow up on what is the reason for the conservatism?

Sigrid Qiu: Can I just follow up on what is the reason for the conservatism?

Speaker #2: Well, I mean, if you look at the second half, let's not forget that there's usually a seasonal factor from an airport launch, for instance. So whether that will have any impact on the retention acquisition cost is a little bit less certain versus the first half.

Jamie Lin: Well, if you look at the H2, let's not forget that it's usually the seasonal factor from an Apple launch, for instance. So whether that will have any impact on the retention acquisition cost is a little bit less certain versus the H1. But as we explained earlier, if you look at the operating leverage, try to break it down. The D&A was actually a big portion, and you can pretty much assume that that's going to be sustained in the H2 at least. So yes, to simply answer your question, I would say that the guidance implied for the H2 definitely is on the conservative side.

George Chang: Well, if you look at the H2, let's not forget that it's usually the seasonal factor from an Apple launch, for instance. So whether that will have any impact on the retention acquisition cost is a little bit less certain versus the H1. But as we explained earlier, if you look at the operating leverage, try to break it down. The D&A was actually a big portion, and you can pretty much assume that that's going to be sustained in the H2 at least. So yes, to simply answer your question, I would say that the guidance implied for the H2 definitely is on the conservative side.

Speaker #2: But as we explained earlier, if you look at the operating leverage and try to break it down, the D&A was actually a big portion. And you can pretty much assume that that's going to be sustained in the second half, at least.

Speaker #2: So yes, to simply answer your question, I would say that the guidance implied for the second half definitely is on the conservative side.

Speaker #3: Okay, thank you. I'll jump in the queue.

Sigrid Chiu: Okay, thank you. I'll jump back in the queue.

Sigrid Qiu: Okay, thank you. I'll jump back in the queue.

Speaker #2: Thank you so much.

Jamie Lin: Thank you so much.

Speaker #3: Thank you. The next question comes from Charlie Bai with HSBC. Please go ahead. Thank you.

Operator: Thank you. Our next question comes from Charlie Dai with HSBC. Please go ahead. Thank you.

Speaker #4: Thank you. Thank you for the opportunity to ask questions. Congratulations on the strong results. I have two follow-up questions regarding the proposed tender offer for Syntax.

Charlie Dai: Thank you. Thank you for the opportunity to ask questions. Congratulations on the strong results. I have two follow-up questions regarding the proposed tender offer for Systex. The first one, as you just mentioned, you are targeting to expand, to support the IT service market share from 7% to 14%. May I know what the action path to achieve that? Is that organic cross-sell? That is my first question.

Speaker #4: The first one, as you just mentioned, you are targeting to expand the IT service market share from 7% to 14%. Ma'am, what's the action path to achieve that?

Speaker #4: Is that organic cross-sell? That's my first question.

Speaker #2: Thank you. Thank you for the kind words. Yes, like we mentioned during our presentation, so the three main strategies are number one, cross-selling. Number two, AI-driven growth.

Jamie Lin: Thank you. Thank you for the kind words. Yes, like we mentioned during our presentation, the three main strategies are, number one, cross-selling, number two, AI-driven growth, and number three, regional expansion acceleration. We plan to execute those three strategies really diligently so that the combined group can be growing at a much faster pace after the tender offer success.

Speaker #2: And number three, regional expansion acceleration. So, we plan to execute those three strategies really diligently so that the combined group can grow at a much faster pace after the tender offer is assessed.

Speaker #4: Got you, thank you. And my next question is also a follow-up on the AIDC. After your merger, ma'am, what's your combined total current AIDC capacity, assuming you acquire SYNTEX?

Charlie Dai: Got you. Thank you. My next question, also a follow-up question on the AIDC after your merger. May I know what your combined total current AIDC capacity, assuming you acquire Systex, and how much is your future plan AIDC capacity? I know that your peer, Chunghwa Telecom, just announced a big AIDC kickoff recently. How do you see the competitive dynamics in Taiwan regarding AIDC market?

Speaker #4: And how much is your future planned AIDC capacity? And I know that your peer, Chunghwa Telecom, just announced a big AIDC kickoff recently.

Speaker #4: And how do you see the competitive dynamics in Taiwan regarding the AIDC market?

Speaker #5: I don't really know anything.

Speaker #2: All right. Thanks for the question. Right now, Syntax doesn't really own any sort of AI-grade DC properties. And for us, if you combine our more traditional DC and AIDC, we're standing at a little bit above 30 megawatts.

Jamie Lin: All right. Thanks for the question. Right now, Systex doesn't really own any sort of AI-grade DC properties. For us, if you combine our more traditional DC and AIDC, we are standing at a little bit above 30 megawatt, and we are looking to grow this portfolio quite proactively in the next 12 to 24 months. Like we expressed earlier, we will be growing this mostly through an asset-light model.

Speaker #2: And we are looking to grow this portfolio quite proactively in the next 12 to 24 months. And, like we expressed earlier—like we expressed earlier—we will be growing this mostly through an SLI model.

Speaker #4: Got you. So, can I assume that you will first secure clients and then kick off the projects? What's the dynamic? And, Ma'am, who are your anchor clients in your mind?

Charlie Dai: Got you. Can I consider that you will first secure clients and then kick off the projects? What's dynamic and manner? What are your anchor clients in your mind? Global CSPs or local Taiwan tech companies? Any color would be really appreciated.

Speaker #4: Global CSPs or local Taiwan tech companies? Any additional color would be really appreciated.

Speaker #2: Okay. So right now, we have a pipeline of projects that we're evaluating together with our developer partners—multiple developer partners in multiple locations, both in Taiwan and outside of Taiwan regionally.

Jamie Lin: Right now we have a pipeline of projects that we are evaluating together with our developer partners, multiple developer partners in multiple locations, both in Taiwan and outside of Taiwan regionally. In terms of customer base, right now we are receiving very strong demand from corporates and also neoclouds. We will be under indexing the three hyperscalers as the business model there is less attractive.

Speaker #2: In terms of customer base, right now we're receiving very strong demand from corporates and also NeoCloud. We will be under-indexing the three hyperscalers, as the business model there is less attractive.

Speaker #4: Got you. Got you. Thank you very much. Thank you.

Charlie Dai: Got you. Thank you very much.

Speaker #2: Thank you.

Jamie Lin: Thank you.

Charlie Dai: Thank you.

Operator: Thank you once again, ladies and gentlemen. If you would like to register for question, please press star one on your telephone keypad. Thank you. Once again, ladies and gentlemen, dial star one for questions.

Speaker #3: Thank you. Once again, ladies and gentlemen, if you would like to register for questions, please press star one on your telephone keypad. Thank you. Once again, ladies and gentlemen, that is star one for questions.

Speaker #2: Operator, if there are no more questions from the telephone line, we would like to move to the online chat box questions.

Jamie Lin: Operator, if there is no more questions from the telephone line, we would like to move to the online chat box question.

Speaker #3: Yes, absolutely. No questions. Thank you.

Operator: Yes, there are certainly no questions. Thank you.

Speaker #2: Okay, great. So thank you, Debbie Tan from Shin Kong Life Insurance. Your question is present. Could you share your strategic intent behind acquiring Syntax?

Jamie Lin: Okay, great. So, thank you, Debbie Tan from Shin Kong Life Insurance. Your question is, President Lin, could you share your strategic intent behind acquiring Systex? Beyond the profit contribution that can be recognized from the acquisition, are there any qualitative figures that have translated into actual profit that lift? So, Debbie, I understand that you asked this question before we gave the presentation on our thinking behind the tender offer. If I may, I would reiterate our three core synergy driver would be cross-selling, AI-driven enterprise business growth, and regional expansion opportunities. We see all three being major growth accelerator that the two groups can come together and execute and really grow our market share in the next 5, 6 years from 7% to 14%. We see a huge synergy to be generated as the two groups work together.

Speaker #2: Beyond the profit contribution that can be recognized from the acquisition, are there any qualitative factors that have translated into actual profit uplift? So, Debbie, I understand that you asked this question before we gave the presentation on our thinking behind the tender offer.

Speaker #2: And so I if I may, I will reiterate our three core synergy driver would be cross-selling, AI-driven business growth AI-driven enterprise business growth, and also regional expansion opportunities.

Speaker #2: And we see all three being major growth accelerators that the two groups can come together and execute, and really grow our market share in the next five to six years, from 7% to 14%.

Speaker #2: So, we see a huge synergy to be generated as the two groups work together. So, hope that answers your question. If you have additional questions, please do leave your follow-up questions in the chat box.

Jamie Lin: So hope that answers your question. If you have additional questions, please do leave your follow-up questions in the chat box. Next, I would like to address another question from Kirk Boodry from Bloomberg Intelligence. The question goes, "Hi. How often does it take to deploy data center capacity from contract signing to opening? Also, you mentioned neoclouds. What is the relationship you have companies like this?" All right. So, thank you, Kirk. We're taking an asset-light approach, so we're mainly working with newly built greenfields or brownfields that can be quickly deployed into AIDC, usually within 6 to 18 months. That's why I say that in our pipeline, we have multiple locations that we're looking to light up in the next 12 to 24 months.

Speaker #2: And next, I would like to address another question from Kirk Woodry from Bloomberg Intelligence. The question is: Hi, how long does it take to deploy data center capacity from contract signing to opening?

Speaker #2: Also, you mentioned NeoCloud. What is the relationship you have with companies like this? All right, so thank you, Kirk. We're taking an SLI approach.

Speaker #2: So we're mainly working with newly built greenfields or brownfields that can be quickly deployed into AIDC, usually within 6 to 18 months. And so that's why I say that in our pipeline, we have multiple locations that we're looking to light up in the next 12 to 24 months.

Speaker #2: And like we communicated before in our press releases, our TAIDC01—we're working with one of the NeoClouds called GMI, and we have a very close relationship with them.

Jamie Lin: Like we communicated before in our press releases, our TAIDC01, we're working with one of the neoclouds called GMI Cloud, and we have a very close relationship with them. We are actively engaged in discussions with a few other neoclouds. It's been a win-win partnership for us and GMI Cloud, and we like to replicate this type of partnership with both GMI Cloud and other neocloud providers. Hopefully that answers your question. Operator, we can check if there's more questions from telephone line.

Speaker #2: And we do have we are engaged actively engaged with actively engaged in discussions with a few other NeoClouds. And so it's been a win-win partnership for us and GMI, and we'd like to replicate this type of partnership with both GMI and other NeoCloud providers.

Speaker #2: So, hopefully, that answers your question. Operator, we can check if there are more questions from the telephone line.

Speaker #3: Sure. Once again, ladies and gentlemen, if you would like to register for questions, please press star-one on your telephone keypad. Thank you. And we have a follow-up question from Sigrid with JP Morgan.

Operator: Sure. Once again, ladies and gentlemen, if you'd like to register for question, please press star 1 on your telephone keypad. Thank you. We have a follow-up question from Sigrid with J.P. Morgan. Please go ahead. Thank you.

Speaker #3: Please go ahead. Thank you.

Speaker #5: Hi, thank you. Thank you for taking my question again. I just have a follow-up on the NeoCloud questions. You mentioned the hyperscaler and that the business model is less attractive compared to NeoCloud.

Sigrid Chiu: Hi. Thank you. Thank you for taking my question again. I just have a follow-up on the NeoCloud question. You mentioned hyperscaler and business model is a lot attractive as compared to NeoCloud. Could you elaborate more on what makes hyperscaler business model less attractive as compared to NeoCloud? Thank you.

Sigrid Qiu: Hi. Thank you. Thank you for taking my question again. I just have a follow-up on the NeoCloud question. You mentioned hyperscaler and business model is a lot attractive as compared to NeoCloud. Could you elaborate more on what makes hyperscaler business model less attractive as compared to NeoCloud? Thank you.

Speaker #5: Could you elaborate more on what makes the hyperscale business model less attractive compared to NeoCloud B? Thank you.

Speaker #2: All right, sure. So as you can observe from Nvidia's latest sort of reporting structural change, they're breaking—they're breaking out the NeoCloud business. They're—I'm sorry, they're breaking out public cloud business and other cloud business, right?

Jamie Lin: All right. Sure. As you can observe from NVIDIA's latest sort of reporting structural change, they are breaking out public cloud business and other cloud business, right? The reason why they are doing that is the three hyperscalers are getting so big, they have a lot of leverage against their suppliers. Doing business with them, at this point is not as attractive as if you were to do business with emerging players at NeoCloud and also corporate customers. Granted, with corporate customers, their per order demand is a bit less. So it will take us and Systex to work together to secure several orders in order to fill a data center. So that is also why we see the synergy as being win-win for both sides. Hopefully that answers your question, Sigrid.

Speaker #2: And the reason why they're doing that is NeoCloud. The three hyperscalers are getting so big they have a lot of leverage against their suppliers.

Speaker #2: So, doing business with them at this point is not as attractive as if you were to do business with emerging players at NeoCloud, and also with corporate customers.

Speaker #2: Granted, with corporate customers, their per order demand is a bit less. So you'll take us and Syntax to work together to secure several orders in order to fill a data center.

Speaker #2: So that's also why we see the synergy as being win-win for both sides. Hopefully that answers your questions, Sigrid.

Operator: Thank you. Once again, ladies and gentlemen, if you would like to register for question, please press star one on your telephone keypad. Thank you. Once again, ladies and gentlemen, that is star one for questions. This is Mei. There seems to be no further question at this point in time. Thank you.

Speaker #3: This is Mr. Lin. There seem to be no further questions at this point in time. Thank you.

Speaker #2: All right. Thank you, operator. I want to thank everyone again for your support, and we look forward to seeing you again at our next earnings call.

Jamie Lin: All right. Thank you, operator. I want to thank everyone again for your support, and we will look forward to seeing you again at our next earnings call. Bye now.

Speaker #2: Bye-bye now.

Operator: Thank you. Thank you for participation. This concludes our conference. Thank you. Goodbye.

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