6-K

1934 Act Registration No. 1-31731

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 OF

THE SECURITIES EXCHANGE ACT OF 1934

Dated March 26, 2013

Chunghwa Telecom Co., Ltd.

(Translation of Registrant’s Name into English)

21-3 Hsinyi Road Sec. 1,

Taipei, Taiwan, 100 R.O.C.

(Address of Principal Executive Office)

(Indicate by check mark whether the registrant files or will file annual reports under cover of form 20-F or Form 40-F.)

Form 20-F  x             Form 40-F  ¨

(Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)

Yes  ¨             No  x

(If “Yes” is marked, indicated below the file number assigned to the registrant in connection with Rule 12g3-2(b): Not applicable)

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant Chunghwa Telecom Co., Ltd. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: 2013/03/26

Chunghwa Telecom Co., Ltd.
By:	/s/ Shu Yeh
Name:	Shu Yeh
Title:	Senior Executive Vice President CFO

2

Exhibit

Exhibit	Description
1	Financial Statements for the Years Ended December 31, 2012 and 2011 and Independent Auditors’ Report (Parent Company Only)
2	Consolidated Financial Statements for the Years Ended December 31, 2012 and 2011 and Independent Auditors’ Report

3

EX-1

Exhibit 1

Chunghwa Telecom Co., Ltd.

Financial Statements for the

Years Ended December 31, 2012 and 2011 and

Independent Auditors’ Report

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Stockholders

Chunghwa Telecom Co., Ltd.

We have audited the accompanying balance sheets of Chunghwa Telecom Co., Ltd. as of December 31, 2012 and 2011, and the related statements of income, changes in stockholders’ equity and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the Rules Governing the Audit of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Those rules and standards required that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to first paragraph present fairly, in all material respects, the financial position of the Company as of December 31, 2012 and 2011, and the results of its operations and its cash flows for the years then ended in conformity with the Securities and Exchange Act, the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, requirements of the Business Accounting Law and Guidelines Governing Business Accounting relevant to financial accounting standards, and accounting principles generally accepted in the Republic of China.

We have also audited the consolidated financial statements of the Company and its subsidiaries as of and for the years ended December 31, 2012 and 2011, and have expressed an unqualified opinion on those consolidated financial statements.

March 26, 2013

Notice to Readers

The accompanying financial statements are intended only to present the financial position, results 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 audit such financial statements are those generally accepted and applied in the Republic of China.

For the convenience of readers, the auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language auditors’ report and financial statements shall prevail.

- 1 -

CHUNGHWA TELECOM CO., LTD.

BALANCE SHEETS

DECEMBER 31, 2012 AND 2011

(Amounts in Thousands of New Taiwan Dollars, Except Par Value Data)

	2012				2011
	Amount		%		Amount		%
ASSETS
CURRENT ASSETS
Cash and cash equivalents (Notes 2 and 4)	$	48,319,111		11	$	61,283,240		14
Financial assets at fair value through profit or loss (Notes 2 and 5)		2,702		—		6,094		—
Available-for-sale financial assets (Notes 2 and 6)		2,190,392		1		1,974,606		1
Held-to-maturity financial assets (Notes 2 and 7)		4,250,146		1		1,201,301		—
Trade notes and accounts receivable, net of allowance for doubtful accounts of $779,611 thousand in 2012 and $2,398,470 thousand in 2011 (Notes 2 and 8)		22,789,253		5		20,526,988		5
Receivables from related parties (Note 23)		1,668,584		—		867,782		—
Other monetary assets (Note 9)		1,996,341		1		1,913,684		1
Inventories, net (Notes 2 and 10)		1,905,698		1		1,451,778		—
Deferred income tax assets (Notes 2 and 20)		79,758		—		51,846		—
Other current assets (Notes 11 and 23)		5,970,232		1		4,342,301		1
Total current assets		89,172,217		21		93,619,620		22
LONG-TERM INVESTMENTS
Investments accounted for using equity method (Notes 2 and 12)		11,210,921		3		12,756,948		3
Financial assets carried at cost (Notes 2 and 13)		2,242,665		—		2,244,593		1
Available-for-sale financial assets (Notes 2 and 6)		3,163,465		1		—		—
Held-to-maturity financial assets (Notes 2 and 7)		11,796,144		3		13,494,891		3
Other monetary assets (Notes 14 and 24)		1,000,000		—		1,000,000		—
Total long-term investments		29,413,195		7		29,496,432		7
PROPERTY, PLANT AND EQUIPMENT (Notes 2, 15 and 23)
Cost
Land		101,463,788		24		101,386,926		23
Land improvements		1,579,607		—		1,552,549		—
Buildings		66,109,355		15		65,954,833		15
Computer equipment		14,928,409		3		14,435,797		3
Telecommunications equipment		667,483,018		156		653,730,240		151
Transportation equipment		3,311,548		1		2,524,245		1
Miscellaneous equipment		6,878,831		2		6,584,655		2
Total cost		861,754,556		201		846,169,245		195
Revaluation increment on land		5,762,184		1		5,762,535		2
		867,516,740		202		851,931,780		197
Less: Accumulated depreciation		585,913,870		137		568,061,502		131
Less: Accumulated impairment		1,506,820		—		—		—
		280,096,050		65		283,870,278		66
Construction in progress and advances related to acquisition of equipment		17,751,259		4		13,459,107		3
Property, plant and equipment, net		297,847,309		69		297,329,385		69
INTANGIBLE ASSETS (Note 2)
3G concession		4,491,653		1		5,240,262		1
Others		977,456		—		722,749		—
Total intangible assets		5,469,109		1		5,963,011		1
OTHER ASSETS
Idle assets (Notes 2 and 15)		874,581		—		878,896		—
Refundable deposits		1,954,737		1		1,656,096		—
Deferred income tax assets (Notes 2 and 20)		325,328		—		254,934		—
Others (Note 23)		4,127,140		1		4,099,496		1
Total other assets		7,281,786		2		6,889,422		1
TOTAL	$	429,183,616		100	$	433,297,870		100

	2012					2011
	Amount			%		Amount			%
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Financial liabilities at fair value through profit or loss (Notes 2 and 5)	$	1,935			—	$	3,665			—
Trade notes and accounts payable		10,512,771			2		11,425,662			3
Payables to related parties (Note 23)		3,780,563			1		3,456,719			1
Income tax payable (Notes 2 and 20)		3,096,706			1		3,336,087			1
Accrued expenses (Note 16)		16,607,732			4		17,165,393			4
Other current liabilities (Note 17)		18,995,912			4		19,242,436			4
Total current liabilities		52,995,619			12		54,629,962			13
DEFERRED INCOME		2,666,053			1		2,577,462			—
RESERVE FOR LAND VALUE INCREMENTAL TAX (Note 15)		94,986			—		94,986			—
OTHER LIABILITIES
Accrued pension liabilities (Notes 2 and 22)		2,518,879			1		1,437,136			1
Customers’ deposits (Note 23)		4,910,221			1		4,967,605			1
Deferred credits—profit on intercompany transactions (Note 23)		149,067			—		539,243			—
Others		406,397			—		320,450			—
Total other liabilities		7,984,564			2		7,264,434			2
Total liabilities		63,741,222			15		64,566,844			15
STOCKHOLDERS’ EQUITY (Notes 2, 6, 15 and 18)
Common stock - $10 par value;
Authorized: 12,000,000 thousand shares
Issued: 7,757,447 thousand shares		77,574,465			18		77,574,465			18
Additional paid-in capital
Capital surplus		169,496,289			40		169,496,289			39
Donated capital		13,170			—		13,170			—
Equity in additional paid-in capital reported by equity-method investees		34,599			—		26,830			—
Total additional paid-in capital		169,544,058			40		169,536,289			39
Retained earnings
Legal reserve		70,828,983			16		66,122,145			15
Special reserve		2,675,894			1		2,675,894			1
Unappropriated earnings		39,904,102			9		47,068,830			11
Total retained earnings		113,408,979			26		115,866,869			27
Other adjustments
Cumulative translation adjustments		(96,929	)		—		(38,918	)		—
Unrecognized net loss of pension		(1,006,518	)		—		(38,106	)		—
Unrealized gain on financial instruments		257,990			—		67,674			—
Unrealized revaluation increment		5,760,349			1		5,762,753			1
Total other adjustments		4,914,892			1		5,753,403			1
Total stockholders’ equity		365,442,394			85		368,731,026			85
TOTAL	$	429,183,616			100	$	433,297,870			100

The accompanying notes are an integral part of the financial statements.

- 2 -

CHUNGHWA TELECOM CO., LTD.

STATEMENTS OF INCOME

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011

(Amounts in Thousands of New Taiwan Dollars, Except Earnings Per Share Data)

	2012				2011
	Amount		%		Amount		%
NET REVENUES (Note 23)	$	190,950,795		100	$	192,462,104		100
OPERATING COSTS (Note 23)		109,293,971		57		106,887,392		55
GROSS PROFIT		81,656,824		43		85,574,712		45
OPERATING EXPENSES (Note 23)
Marketing		28,604,241		15		27,472,129		14
General and administrative		3,366,979		2		3,449,054		2
Research and development		3,585,239		2		3,413,032		2
Total operating expenses		35,556,459		19		34,334,215		18
INCOME FROM OPERATIONS		46,100,365		24		51,240,497		27
NON-OPERATING INCOME AND GAINS
Equity in earnings of equity method investees, net (Note 12)		1,532,183		1		2,097,064		1
Interest income		707,771		1		655,080		—
Gain on disposal of property, plant and equipment, net		222,714		—		1,207,582		1
Gain on disposal of financial instruments, net		79,713		—		—		—
Foreign exchange gain, net		36,995		—		63,033		—
Dividend income		7,217		—		15,378		—
Others		296,617		—		312,433		—
Total non-operating income and gains		2,883,210		2		4,350,570		2
NON-OPERATING EXPENSES AND LOSSES
Impairment loss (Notes 13 and 15)		1,566,054		1		98,500		—
Valuation loss on financial instruments, net		1,662		—		31,849		—
Interest expense		230		—		222		—
Loss on disposal of financial instruments, net		—		—		56,016		—
Others		40,706		—		25,842		—
Total non-operating expenses and losses		1,608,652		1		212,429		—
INCOME BEFORE INCOME TAX		47,374,923		25		55,378,638		29
INCOME TAX EXPENSE (Notes 2 and 20)		7,470,949		4		8,310,263		5
NET INCOME	$	39,903,974		21	$	47,068,375		24

(Continued)

- 3 -

CHUNGHWA TELECOM CO., LTD.

STATEMENTS OF INCOME

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011

(Amounts in Thousands of New Taiwan Dollars, Except Earnings Per Share Data)

	2012				2011
	Income Before Income Tax		Net Income		Income Before Income Tax		Net Income
EARNINGS PER SHARE (Note 21)
Basic earnings per share	$	6.11	$	5.14	$	7.11	$	6.04
Diluted earnings per share	$	6.09	$	5.13	$	7.09	$	6.03

The accompanying notes are an integral part of the financial statements. (Concluded)

- 4 -

CHUNGHWA TELECOM CO., LTD.

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011

(Amounts in Thousands of New Taiwan Dollars)

														Other Adjustments
	Common Stock						Retained Earnings							Cumulative Translation Adjustments			Unrecognized Net Loss of Pension			Unrealized Gain (Loss) on Financial Instruments			Unrealized Revaluation Increment			Total Stockholders’ Equity
	Shares (Thousands)		Amount		Additional Paid-in Capital		Legal Reserve		Special Reserve		Unappropriated Earnings
BALANCE, JANUARY 1, 2011		7,757,447	$	77,574,465	$	169,515,102	$	61,361,255	$	2,675,894	$	47,615,807		$	(102,885	)	$	(40,182	)	$	176,048		$	5,803,238		$	364,578,742
Transfer of unrealized revaluation increment to income upon disposal of revalued assets		—		—		—		—		—		—			—			—			—			(40,485	)		(40,485	)
Appropriation of 2010 earnings
Legal reserve		—		—		—		4,760,890		—		(4,760,890	)		—			—			—			—			—
Cash dividends—NT$5.52 per share		—		—		—		—		—		(42,854,462	)		—			—			—			—			(42,854,462	)
Net income in 2011		—		—		—		—		—		47,068,375			—			—			—			—			47,068,375
Unrealized loss on financial instruments held by investees		—		—		—		—		—		—			—			—			(204,555	)		—			(204,555	)
Equity adjustments in investees		—		—		21,187		—		—		—			—			—			—			—			21,187
Cumulative translation adjustment for foreign-currency investments held by investees		—		—		—		—		—		—			63,967			—			—			—			63,967
Defined benefit pension plan adjustments of investees		—		—		—		—		—		—			—			2,076			—			—			2,076
Unrealized gain on financial instruments		—		—		—		—		—		—			—			—			96,181			—			96,181
BALANCE, DECEMBER 31, 2011		7,757,447		77,574,465		169,536,289		66,122,145		2,675,894		47,068,830			(38,918	)		(38,106	)		67,674			5,762,753			368,731,026
Transfer of unrealized revaluation increment to income upon disposal of revalued assets		—		—		—		—		—		—			—			—			—			(350	)		(350	)
Decrease in unrealized revaluation increment on property, plant and equipment due to property impairment		—		—		—		—		—		—			—			—			—			(2,054	)		(2,054	)
Appropriation of 2011 earnings
Legal reserve		—		—		—		4,706,838		—		(4,706,838	)		—			—			—			—			—
Cash dividends—NT$5.46 per share		—		—		—		—		—		(42,361,864	)		—			—			—			—			(42,361,864	)
Net income in 2012		—		—		—		—		—		39,903,974			—			—			—			—			39,903,974
Unrealized gain on financial instruments held by investees		—		—		—		—		—		—			—			—			19,353			—			19,353
Equity adjustments in investees		—		—		7,769		—		—		—			—			—			—			—			7,769
Cumulative translation adjustment for foreign-currency investments held by investees		—		—		—		—		—		—			(58,011	)		—			—			—			(58,011	)
Defined benefit pension plan adjustments of investees		—		—		—		—		—		—			—			(21,028	)		—			—			(21,028	)
Defined benefit pension plan adjustments		—		—		—		—		—		—			—			(947,384	)		—			—			(947,384	)
Unrealized gain on financial instruments		—		—		—		—		—		—			—			—			170,963			—			170,963
BALANCE, DECEMBER 31, 2012		7,757,447	$	77,574,465	$	169,544,058	$	70,828,983	$	2,675,894	$	39,904,102		$	(96,929	)	$	(1,006,518	)	$	257,990		$	5,760,349		$	365,442,394

The accompanying notes are an integral part of the financial statements.

- 5 -

CHUNGHWA TELECOM CO., LTD.

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011

(Amounts in Thousands of New Taiwan Dollars)

	2012			2011
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	39,903,974		$	47,068,375
Provision for (reversal of) doubtful accounts		(1,459,039	)		109,292
Depreciation and amortization		32,095,191			31,914,060
Amortization of premium of financial assets		64,179			60,047
Loss (gain) on disposal of financial instruments, net		(79,713	)		56,016
Valuation loss on financial instruments, net		1,662			31,849
Gain on disposal of property, plant and equipment, net		(222,714	)		(1,207,582	)
Loss arising from natural calamities		7,442			985
Impairment loss		1,566,054			98,500
Equity in earnings of equity method investees, net		(1,532,183	)		(2,097,064	)
Dividends received from equity investees		2,348,693			532,857
Deferred income taxes		(98,306	)		145,108
Changes in operating assets and liabilities:
Decrease (increase) in:
Financial assets held for trading		73,711			(52,997	)
Trade notes and accounts receivable		(780,600	)		(7,677,485	)
Receivables from related parties		(800,802	)		(401,360	)
Other monetary assets		(100,041	)		170,419
Inventories		(453,920	)		(331,754	)
Other current assets		(2,363,505	)		(279,830	)
Increase (decrease) in:
Trade notes and accounts payable		(177,318	)		2,302,505
Payables to related parties		384,400			1,052,073
Income tax payable		(239,381	)		(1,075,454	)
Accrued expenses		(557,661	)		(98,177	)
Other current liabilities		(887,546	)		1,829,477
Deferred income		88,591			(11,448	)
Accrued pension liabilities		134,359			154,114
Net cash provided by operating activities		66,915,527			72,292,526
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of available-for-sale financial assets		(3,864,812	)		(3,113,994	)
Proceeds from disposal of available-for-sale financial assets		662,527			2,263,889
Acquisition of held-to-maturity financial assets		(3,865,173	)		(6,543,575	)
Proceeds from disposal of held-to-maturity financial assets		2,450,896			2,159,034
Acquisition of financial assets carried at cost		(35,322	)		(45,239	)
Capital reduction of financial assets carried at cost		31,250			7,500
Acquisition of investments accounted for using equity method		(365,900	)		(1,060,192	)
Proceeds from capital reduction of investments accounted for using equity method		1,043,500			815,827
Acquisition of property, plant and equipment		(32,374,650	)		(26,484,469	)
Proceeds from disposal of property, plant and equipment		32,187			648,629

(Continued)

- 6 -

CHUNGHWA TELECOM CO., LTD.

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011

(Amounts in Thousands of New Taiwan Dollars)

	2012			2011
Increase in intangible assets	$	(588,106	)	$	(538,599	)
Increase in other assets		(796,924	)		(736,345	)
Net cash used in investing activities		(37,670,527	)		(32,627,534	)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in customers’ deposits		66,788			(887,839	)
Increase in other liabilities		85,947			53,641
Cash dividends paid		(42,361,864	)		(42,854,462	)
Capital reduction		—			(19,393,617	)
Net cash used in financing activities		(42,209,129	)		(63,082,277	)
NET DECREASE IN CASH AND CASH EQUIVALENTS		(12,964,129	)		(23,417,285	)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR		61,283,240			84,700,525
CASH AND CASH EQUIVALENTS, END OF YEAR	$	48,319,111		$	61,283,240
SUPPLEMENTAL INFORMATION
Interest paid	$	7,066		$	222
Income tax paid	$	7,808,636		$	9,240,609
CASH AND NON-CASH INVESTING ACTIVITIES
Increase in property, plant and equipment	$	32,830,944		$	27,846,188
Payables to suppliers		(456,294	)		(1,361,719	)
	$	32,374,650		$	26,484,469

(Concluded)

The accompanying notes are an integral part of the financial statements.

- 7 -

CHUNGHWA TELECOM CO., LTD.

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011

(Amounts in Thousands of New Taiwan Dollars, Unless Stated Otherwise)

1. GENERAL

Chunghwa Telecom Co., Ltd. (the “Company” or “Chunghwa”) was incorporated on July 1, 1996 in the Republic of China (“ROC”) pursuant to the Article 30 of the Telecommunications Act. Chunghwa is a company limited by shares and, prior to August 2000, was wholly owned by the Ministry of Transportation and Communications (“MOTC”). Prior to July 1, 1996, the current operations of Chunghwa were carried out under the Directorate General of Telecommunications (“DGT”). The DGT was established by the MOTC in June 1943 to take primary responsibility in the development of telecommunications infrastructure and to formulate policies related to telecommunications. On July 1, 1996, the telecom operations of the DGT were spun-off as Chunghwa which continues to carry out the business and the DGT continues to be the industry regulator.

As the dominate telecommunications service provider of fixed-line and Global System for Mobile Communications (“GSM”) in the ROC, Chunghwa is subject to additional regulations imposed by ROC.

Effective August 12, 2005, the MOTC had completed the process of privatizing Chunghwa by reducing the government ownership to below 50% in various stages. In July 2000, Chunghwa received approval from the Securities and Futures Commission (the “SFC”) for a domestic initial public offering and its common shares were listed and traded on the Taiwan Stock Exchange (the “TSE”) on October 27, 2000. Certain of Chunghwa’s common shares had been sold, in connection with the foregoing privatization plan, in domestic public offerings at various dates from August 2000 to July 2003. Certain of Chunghwa’s common shares had also been sold in an international offering of securities in the form of American Depository Shares (“ADS”) on July 17, 2003 and were listed and traded on the New York Stock Exchange (the “NYSE”). The MOTC sold common shares of Chunghwa by auction in the ROC on August 9, 2005 and completed the second international offering on August 10, 2005. Upon completion of the share transfers associated with these offerings on August 12, 2005, the MOTC owned less than 50% of the outstanding shares of Chunghwa and completed the privatization plan.

As of December 31, 2012 and 2011, the Company had 24,351 and 24,664 employees, respectively.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The financial statements were prepared in conformity with the Securities and Exchange Act, the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, requirements of the Business Accounting Law, Guidelines Governing Business Accounting relevant to financial accounting standards, and accounting principles generally accepted in the ROC (“ROC GAAP”). The significant accounting policies are summarized as follows:

Foreign-currency Transactions

Foreign-currency transactions other than derivative contracts are recorded in New Taiwan dollars at the rates of exchange in effect when the transactions occur. Exchange gains or losses derived from foreign-currency transactions or monetary assets and liabilities denominated in foreign currencies are recognized in earnings. At the balance sheet date, monetary assets and liabilities denominated in foreign currencies are revalued at prevailing exchange rates with the resulting gains or losses recognized in earnings.

- 8 -

At the balance sheet date, foreign-currency nonmonetary assets (such as equity instruments) and liabilities that are measured at fair value are revalued using prevailing exchange rates. When a gain or loss on a nonmonetary item is recognized in stockholders’ equity, any exchange component of that gain or loss shall be recognized in stockholders’ equity. Conversely, when a gain or loss on a non-monetary item is recognized in earnings, any exchange component of that gain or loss shall be recognized in earnings.

Foreign-currency nonmonetary assets and liabilities that are carried at cost continue to be stated at exchange rates at trade dates.

The financial statements of foreign equity investees and consolidated subsidiaries are translated into New Taiwan dollars at the following exchange rates. Assets and liabilities—spot rates at year-end; stockholders’ equity—historical rates, income and expenses—average rates during the year.

The resulting translation adjustments of financial statements shall be recorded as cumulative translation adjustments, a separate component of stockholders’ equity.

Accounting Estimates

Under above guidelines, laws and principles, certain estimates and assumptions have been used for the allowance for doubtful accounts, allowance for loss on inventories, depreciation of property, plant and equipment, impairment of assets, bonuses to employees, directors and supervisors, pension cost, income tax, etc. Actual results may differ from these estimates.

Classification of Current and Noncurrent Assets and Liabilities

Current assets include cash and cash equivalents, and those assets held primarily for trading purposes or to be realized, sold or consumed within one year from the balance sheet date. All other assets are classified as noncurrent. Current liabilities are obligations incurred for trading purposes or to be settled within one year from the balance sheet date. All other liabilities are classified as noncurrent.

Cash Equivalents

Cash equivalents are commercial paper and treasury bills purchased with maturities of three months or less from the date of acquisition. The carrying amount approximates fair value.

Financial Assets and Liabilities at Fair Value Through Profit or Loss

Financial instruments classified as financial assets or financial liabilities at fair value through profit or loss (“FVTPL”) include financial assets or financial liabilities held for trading and are designated as at FVTPL on initial recognition. The Company recognizes a financial asset or a financial liability when the Company becomes a party to the contractual provisions of the financial instrument. A financial asset is derecognized when the Company losses control of its contractual rights over the financial asset. A financial liability is derecognized when the obligation specified in the relevant contract is discharged, cancelled or expired.

Financial instruments at FVTPL are initially measured at fair value. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognized as expenses as incurred. Financial assets or financial liabilities at FVTPL are remeasured at fair value, subsequently with changes in fair value recognized in earnings. Cash dividends received subsequently (including those received in the period of investment) are recognized as income. On derecognition of a financial asset or a financial liability, the difference between its carrying amount and the sum of the consideration received and receivable or consideration paid and payable is recognized in earnings. A regular way purchases or sales of financial assets are accounted for using trade date accounting.

- 9 -

Derivatives that do not meet the criteria for hedge accounting are classified as financial assets or financial liabilities held for trading. When the fair value is positive, the derivative is recognized as a financial asset; when the fair value is negative, the derivative is recognized as a financial liability.

Fair values of financial assets and financial liabilities at the balance sheet date are determined as follows: Swap contracts are estimated by valuation techniques.

Available-for-sale Financial Assets

Available-for-sale financial assets are initially recognized at fair value plus transaction costs that are directly attributable to the acquisition. Changes in fair value from subsequent remeasurement are reported as a separate component of stockholders’ equity. The corresponding accumulated gains or losses are recognized in earnings when the financial asset is derecognized from the balance sheet. A regular way purchase or sale of financial assets is accounted for using trade date accounting.

The recognition and derecognition of available-for-sale financial assets are the same with those of financial assets at FVTPL.

Fair values are determined as follows: Listed stocks—at closing prices at the balance sheet date; open-end mutual funds—at net asset values at the balance sheet date; bonds—quoted at prices provided by the Taiwan GreTai Securities Market; and financial assets and financial liabilities without quoted prices in an active market—at values determined using valuation techniques.

Cash dividends are recognized in earnings on the ex-dividend date, except for the dividends declared before acquisition are treated as a reduction of investment cost. Stock dividends are recorded as an increase in the number of shares and do not affect investment income. The total number of shares subsequent to the increase of stock dividends is used to recalculate cost per share.

An impairment loss is recognized when there is objective evidence that the financial asset is impaired. If, in a subsequent period, the amount of the impairment loss decreases, for equity securities, the previously recognized impairment loss is reversed to the extent to the decrease and recorded as an adjustment to stockholders’ equity; for debt securities, the amount of the decrease is recognized in earnings, provided that the decrease is clearly attributable to an event which occurred after the impairment loss was recognized.

Held-to-maturity Financial Assets

Held-to-maturity financial assets are carried at amortized cost using the effective interest method. Those financial assets are initially recognized at fair value plus transaction costs that are directly attributable to the acquisition. Gains and losses are recognized at the time of derecognition, impairment or amortization. A regular way purchase or sale of financial assets is accounted for using trade date accounting.

If there is objective evidence which indicates that a financial asset is impaired, a loss is recognized. If, in a subsequent period, the amount of the impairment loss decreases and the decrease is clearly attributable to an event which occurred after the impairment loss was recognized, the previously recognized impairment loss is reversed to the extent of the decrease. The reversal may not result in a carrying amount that exceeds the amortized cost that would have been determined as if no impairment loss had been recognized.

Financial Assets Carried at Cost

Investments in equity instruments with no quoted prices in an active market and with fair values that cannot be reliably measured, such as non-publicly traded stocks and stocks traded in the Emerging Stock Market, are measured at their original cost. The accounting treatment for dividends on financial assets carried at cost is the same with that for dividends on available-for-sale financial assets. An impairment loss is recognized when there is objective evidence that the asset is impaired. A reversal of this impairment loss is disallowed.

- 10 -

Impairment of Accounts Receivable

Accounts receivable are assessed for impairment at the end of each reporting period and considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the accounts receivable, the estimated future cash flows of the asset have been affected.

The amount of the impairment loss recognized is the difference between the asset carrying amount and the present value of estimated future cash flows, after taking into account the related collateral and guarantees, discounted at the receivable’s original effective interest rate.

The carrying amount of the accounts receivable is reduced through the use of an allowance account.

Inventories

Inventories including merchandise and work-in-process are stated at the lower of cost (weighted-average cost) or net realizable value item by item, except for those that may be appropriate to group items of similar or related inventories. Net realizable value is the estimated selling price of inventories less all estimated costs of completion and costs necessary to make the sale. The calculation of the cost of inventory is derived using the weighted average method.

Investments Accounted for Using Equity Method

Investments in companies in which the Company exercises significant influence over the operating and financial policy decisions are accounted for by the equity method. Under the equity method, the investment is initially stated at cost and subsequently adjusted for its proportionate share in the net earnings of the investee companies. Any cash dividends received are recognized as a reduction in the carrying value of the investments.

Gains or losses on sales from the Company to equity method investees wherein the Company exercises significant influence over these equity investees are deferred in proportion to the Company’s ownership percentage in the investees until such gains or losses are realized through transactions with third parties. Gains or losses on sales from equity method investees to Chunghwa are deferred in proportion to the Chunghwa’s ownership percentages in the investees until they are realized through transactions with third parties.

When the Company subscribes for additional investees shares at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment in the investee differs from the amount of the Company’s share of the investee’s equity. The Company records such a difference as an adjustment to long-term investments with the corresponding amount charged or credited to additional paid-in capital to the extent available, with the balance charged to retained earnings.

Property, Plant and Equipment

Property, plant and equipment are stated at cost plus a revaluation increment, if any, less accumulated depreciation and accumulated impairment loss. The interest costs that are directly attributable to the acquisition, construction of a qualifying asset are capitalized as property, plant and equipment. Major renewals and betterments are capitalized, while maintenance and repairs are expensed as incurred.

When an indication of impairment is identified, any excess of the carrying amount of an asset over its recoverable amount is recognized as a loss. If the recoverable amount increases in a subsequent period, the amount previously recognized as impairment would be reversed and recognized as a gain. However, the adjusted amount may not exceed the carrying amount that would have been determined, net of depreciation, as if no impairment loss had been recognized.

- 11 -

An impairment loss on a revalued asset is charged to “unrealized revaluation increment” under equity to the extent available, with the balance is recognized as a loss in earnings. If the recoverable amount increases in a subsequent period, the amount previously recognized as impairment loss could be reversed and recognized as a gain, with the remaining credited to “unrealized revaluation increment”.

Depreciation expense is computed using the straight-line method over the following estimated service lives: land improvements—2 to 30 years; buildings—5 to 60 years; computer equipment—2 to 10 years; telecommunications equipment—2 to 15 years; transportation equipment—3 to 10 years; and miscellaneous equipment—2 to 12 years.

Upon sale or disposal of property, plant and equipment, the related cost, accumulated depreciation, accumulated impairment losses and any unrealized revaluation increment are deducted from the corresponding accounts, and any gain or loss is recorded as non-operating gains or losses in the period of sale or disposal.

Intangible Assets

Intangible assets mainly include 3G Concession, computer software and patents.

The 3G Concession is valid through December 31, 2018. The 3G Concession is amortized on a straight-line basis from the date operations commence through the date the license expires. Computer software costs and patents are amortized using the straight-line method over the estimated useful lives of 2-20 years.

When an indication of impairment is identified for intangible assets, any excess of the carrying amount of an asset over its recoverable amount is recognized as a loss. If the recoverable amount increases in a subsequent period, the amount previously recognized as impairment would be reversed and recognized as a gain. However, the adjusted amount may not exceed the carrying amount that would have been determined, as if no impairment loss had been recognized.

Idle Assets

Idle assets are carried at the lower of recoverable amount or carrying amount.

Pension Costs

Pension cost under a defined benefit plan is determined by actuarial valuations. Contributions made under a defined contribution plan are recognized as pension cost during the year in which employees render services.

Income Tax

The Company applies inter-period allocations for its income tax, whereby deferred income tax assets and liabilities are recognized for the tax effects of temporary differences and unused tax credits. Valuation allowances are provided to the extent, if any, that it is more likely than not that deferred income tax assets will not be realized. A deferred tax asset or liability is classified as current or noncurrent in accordance with the classification of its related asset or liability. However, if a deferred tax asset or liability does not relate to an asset or liability in the financial statements, then it is classified as either current or noncurrent based on the expected length of time before it is realized or settled.

Any tax credits arising from, research and development are recognized using the flow-through method.

Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

- 12 -

Income taxes (10%) on undistributed earnings is recorded in the year of stockholders approval which is the year subsequent to the year the earnings are generated.

Revenue Recognition

Revenues are recognized when they are realized or realizable and earned. Revenues are realized or realizable and earned when the Company has persuasive evidence of an arrangement, the goods have been delivered or the services have been rendered to the customer, the sales price is fixed or determinable and collectibility is reasonably assured.

Revenue is measured at the fair value of the consideration received or receivable and represents amounts agreed between the Company and the customers for goods sold in the normal course of business, net of sales discounts and volume rebates. For trade receivables due within one year from the balance sheet date, as the nominal value of the consideration to be received approximates its fair value and transactions are frequent, fair value of the consideration is not determined by discounting all future receipts using an imputed rate of interest.

Usage revenues from fixed-line services (including local, domestic long distance and international long distance), cellular services, Internet and data services, and interconnection and call transfer fees from other telecommunications companies and carriers are billed in arrears and are recognized based upon seconds or minutes of traffic processed when the services are provided in accordance with contract terms.

Other revenues are recognized as follows: (a) one-time subscriber connection fees (on fixed-line services) are deferred and recognized over the average expected customer service periods, (b) monthly fees (on fixed-line, mobile, Internet and data services) are accrued every month, and (c) prepaid services (fixed-line, mobile, Internet and data services) are recognized as income based upon actual usage by customers or when the right to use those services expires.

Where the Company enters into transactions which involve both the provision of air time bundled with products such as 3G data card and handset, total consideration received from handsets in these arrangements are allocated and measured using units of accounting within the arrangement based on relative fair values limited to the amount that is not contingent upon the delivery of other items or services.

Where the Company sells products to third party cellular phone stores the Company records the direct sale of the products, typically handsets, as gross revenue when the Company is the primary obligor in the arrangement and when title is passed and the products are accepted by the stores.

Expense Recognition

The costs of providing services are recognized as incurred.

3. EFFECT OF CHANGES IN ACCOUNTING PRINCIPLE

The Company adopted the newly-revised Statements of Financial Accounting Standards No. 34, “Financial Instruments,” (“SFAS No. 34”) beginning from January 1, 2011. When an enterprise adopts the revised provisions, the initial recognition of loans and receivables shall be accounted for under SFAS No. 34.

- 13 -

4. CASH AND CASH EQUIVALENTS

	December 31
	2012		2011
Cash
Cash on hand	$	123,272	$	83,922
Bank deposits		4,027,827		2,224,474
Negotiable certificate of deposit, annual yield rate—ranging from 0.83%-0.96% and 0.80%-1.05% for 2012 and 2011, respectively		26,550,000		41,450,000
		30,701,099		43,758,396
Cash equivalents
Commercial paper, annual yield rate—0.74% and 0.70% for 2012 and 2011, respectively		17,618,012		17,225,365
Treasury bills, annual yield rate—0.70%		—		299,479
		17,618,012		17,524,844
	$	48,319,111	$	61,283,240

As of December 31, 2012 and 2011, foreign deposits in bank were as following:

	December 31
	2012		2011
United States of America—New York (US$1,002 thousand and US$2,467 thousand for 2012 and 2011, respectively)	$	29,090	$	74,693

5. FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS

	December 31
	2012		2011
Derivatives—financial assets
Currency swap contracts	$	2,702	$	6,094
Derivatives—financial liabilities
Currency swap contracts	$	1,935	$	3,665

Chunghwa entered into currency swap contracts to reduce its exposure to foreign currency risk and variability in operating results due to fluctuations in exchange rates. However, these derivatives did not meet the criteria for hedge accounting and were classified as financial assets or financial liabilities held for trading.

Outstanding currency swap contracts as of December 31, 2012 and 2011 were as follows:

	Currency		Maturity Period		Contract Amount (In Thousands)
December 31, 2012
Currency swap contracts		USD/NTD		2013.01-03		USD34,000/NTD991,188
		USD/NTD		2013.01-03		USD32,000/NTD929,280
December 31, 2011
Currency swap contracts		USD/NTD		2012.01-03		USD43,000/NTD1,306,834
		USD/NTD		2012.01-02		USD19,000/NTD571,280

- 14 -

Net gain (loss) arising from financial assets and liabilities at fair value through profit or loss for the years ended December 31, 2012 and 2011 were $72,049 thousand (including realized settlement gain of $73,711 thousand and valuation loss of $1,662 thousand) and ($84,847) thousand (including realized settlement loss of $52,998 thousand and valuation loss of $31,849 thousand), respectively.

6. AVAILABLE-FOR-SALE FINANCIAL ASSETS

	December 31
	2012		2011
Domestic listed stocks	$	3,163,465	$	—
Open-end mutual funds		2,190,392		1,974,606
		5,353,857		1,974,606
Less: Current portion		2,190,392		1,974,606
	$	3,163,465	$	—

The board of directors resolved to acquire 263,622 thousand common shares of China Airline Ltd. (“CAL”) at $11.73 per share for the three months ended March 31, 2012. Chunghwa expected to hold it as long-term investment and classified it as available-for-sale financial assets—noncurrent. CAL engages mainly in air transportation services.

Movements of unrealized gain (loss) on available-for-sale financial assets were as follows:

	Year Ended December 31
	2012			2011
Balance, beginning of year	$	75,639		$	(20,542	)
Recognized in stockholders’ equity		176,965			94,003
Transferred to profit or loss		(6,002	)		2,178
Balance, end of year	$	246,602		$	75,639

7. HELD-TO-MATURITY FINANCIAL ASSETS

	December 31
	2012		2011
Corporate bonds, nominal interest rate ranging from 1.15%-2.90% and 1.20%-2.98% for 2012 and 2011, respectively; effective interest rate ranging from 1.00%-2.89% and 0.83%-2.89% for 2012 and 2011, respectively	$	14,791,151	$	13,790,447
Bank debentures, nominal interest rate ranging from 1.25%-1.60% and 1.37%-1.60% for 2012 and 2011, respectively; effective interest rate ranging from 1.15%-1.40% and 1.25%-1.40% for 2012 and 2011, respectively		1,255,139		905,745
		16,046,290		14,696,192
Less: Current portion		4,250,146		1,201,301
	$	11,796,144	$	13,494,891

- 15 -

8. ALLOWANCE FOR DOUBTFUL ACCOUNTS

	Year Ended December 31
	2012			2011
Balance, beginning of year	$	2,398,470		$	2,528,044
Provision for (reversal of) doubtful accounts		(1,481,665	)		98,680
Accounts receivable written off		(137,194	)		(228,254	)
Balance, end of year	$	779,611		$	2,398,470

Chunghwa evaluated the results of procedures implemented to enhance the collection of account receivable as well as the experience of decreases in uncollected receivables, and decided to refine the allowance calculation policy which led to the reversal of allowance for doubtful accounts for the year ended December 31, 2012.

9. OTHER MONETARY ASSETS — CURRENT

	December 31
	2012		2011
Accrued custodial receipts from other carriers	$	187,736	$	104,785
Accrued custodial receipts of Multimedia on Demand (MOD) service		182,455		119,295
Other		1,626,150		1,689,604
	$	1,996,341	$	1,913,684

10. INVENTORIES

	December 31
	2012		2011
Work in process	$	816,835	$	808,957
Merchandise		1,088,863		642,821
	$	1,905,698	$	1,451,778

The operating costs related to inventories were $12,146,343 thousand (including the valuation loss on inventories of $31,903 thousand) and $10,852,608 thousand (including the valuation loss on inventories of $175,913 thousand) for the years ended December 31, 2012 and 2011, respectively.

11. OTHER CURRENT ASSETS

	December 31
	2012		2011
Spare parts	$	4,046,050	$	2,305,655
Prepaid rents		890,404		933,796
Prepaid expenses		827,799		734,461
Miscellaneous		205,979		368,389
	$	5,970,232	$	4,342,301

- 16 -

12. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

	December 31
	2012				2011
	Carrying Value		% of Owner- ship		Carrying Value		% of Owner- ship
Listed
Senao International Co., Ltd. (“SENAO”)	$	1,623,305		28	$	1,542,361		28
Non-listed
Light Era Development Co., Ltd. (“LED”)		3,785,310		100		4,222,858		100
Donghwa Telecom Co., Ltd. (“DHT”)		1,168,032		100		891,526		100
Chunghwa Telecom Singapore Pte., Ltd. (“CHTS”)		746,122		100		659,128		100
Chunghwa System Integration Co., Ltd. (“CHSI”)		707,250		100		708,745		100
Chunghwa Investment Co., Ltd. (“CHI”)		614,217		89		1,742,779		89
CHIEF Telecom Inc. (“CHIEF”)		591,706		69		574,283		69
International Integrated System, Inc. (“IISI”)		277,592		33		257,371		33
Viettel-CHT Co., Ltd. (“Viettel-CHT”)		265,052		30		255,121		30
Huada Digital Corporation (“HDD”)		241,309		50		250,689		50
Taiwan International Standard Electronics Co., Ltd. (“TISE”)		224,099		40		608,933		40
Chunghwa International Yellow Pages Co., Ltd. (“CIYP”)		188,738		100		194,344		100
Prime Asia Investments Group Ltd. (B.V.I.) (“Prime Asia”)		155,357		100		187,755		100
Skysoft Co., Ltd. (“SKYSOFT”)		127,686		30		113,304		30
Spring House Entertainment Inc. (“SHE”)		125,929		56		101,142		56
Chunghwa Telecom Global, Inc. (“CHTG”)		96,614		100		86,433		100
KingWaytek Technology Co., Ltd. (“KWT”)		77,449		33		75,369		33
Chunghwa Telecom Vietnam Co., Ltd. (“CHTV”)		55,448		100		37,564		100
Smartfun Digital Co., Ltd. (“SFD”)		44,549		65		60,125		65
So-net Entertainment Taiwan Co., Ltd. (“So-net”)		31,152		30		34,545		30
Chunghwa Telecom Japan Co., Ltd. (“CHTJ”)		25,689		100		22,439		100
Dian Zuan Integrating Marketing Co., Ltd. (“DZIM”)		20,902		33		109,783		40
Chunghwa Sochamp Technology Inc. (“CHST”)		17,414		51		20,351		51
New Prospect Investments Holdings Ltd. (B.V.I.) (“New Prospect”)		—		100		—		100
		9,587,616				11,214,587
	$	11,210,921			$	12,756,948

Chunghwa increased its investment in DHT for $360,216 thousand and $313,299 thousand in November 2011 and August 2012. DHT engages mainly in international telecommunications, IP fictitious internet and internet transfer services.

Chunghwa Telecom Singapore Pte., Ltd. reduced its capital by $815,827 thousand in March 2011. The reduction amount was received by Chunghwa.

- 17 -

CHI reduced its capital by $1,100,000 thousand in August 2012. Chunghwa received $979,000 thousand from capital reduction.

InfoExplorer Co., Ltd. (“IFE”) issued new shares as the consideration to merge with International Integrated System Inc. and e-ToYou International, Inc. on April 1, 2011. After the merger, IFE became the surviving entity and was renamed as International Integrated System, Inc. (IISI). International Integrated System, Inc. and e-ToYou International, Inc. were dissolved. As a result of the additional shares being issued by IFE in connection with this transaction, Chunghwa’s ownership interest in IISI decreased from 49% to 33% after the merger, and following the stockholders’ meeting of IISI on June 24, 2011, Chunghwa lost control of the board of directors.

Chunghwa invested in HDD in September 2011 at $250,000 thousand cash to acquire 50% of its shares and the rest of 50% ownership interest was held by HTC Corporation (“HTC”). After the stockholders’ meeting of HDD held on March 2, 2012, Chunghwa and HTC each obtained half of director seats. Thus, neither entities obtained control over HDD. HDD engages mainly in providing software service.

Chunghwa increased its investment in Prime Asia by $177,176 thousand, $28,913 thousand and $8,931 thousand in March 2011, December 2011, and November 2012, respectively. Prime Asia is operating as an investment company.

Chunghwa, President Chain Store Corporation and EasyCard Corporation established a joint venture, DZIM, in May 2011. Chunghwa invested $114,640 thousand in cash and held 40% ownership of DZIM in May 2011. Chunghwa invested $14,360 thousand in May 2012, and the ownership interest decreased from 40% to 33% after the capital increase of DZIM. DZIM reduced its capital by $193,490 thousand in December 2012. Chunghwa received $64,500 thousand from capital reduction. DZIM engages mainly in information technology service and general advertisement service.

Chunghwa and United Daily News established a joint venture, SFD, in August 2011. Chunghwa invested $65,000 thousand cash and hold a 65% ownership of SFD. SFD mainly engages in sales of software.

Chunghwa established Chunghwa Telecom Vietnam Co., Ltd. (“CHTV”) in May 2011 by investing $43,847 thousand cash and further increased its investment for $29,310 thousand cash in October 2012. CHTV engages mainly in providing information and communications technology, and intelligent energy network service.

Chunghwa invested in CHST for $20,400 thousand in June 2011. The ownership of CHST is 51%. CHST mainly engages in license plate recognition system.

Chunghwa established New Prospect Investments Holdings Ltd. (B.V.I.) (“New Prospect”) in March 2006, but not on operation stage yet. The holding company is operating as investment company and Chunghwa has 100% ownership right in an amount of US$1 in the holding company as of December 31, 2012.

Chunghwa established 100% owned subsidiary of Honghwa Human Resources Co., Ltd. (“HHR”) by prepaying $180,000 thousand in January 2013. HHR engages mainly in providing human resources service.

Market value of the listed investment accounted for using equity method calculated at its closing prices as of December 31, 2012 and 2011 was $6,825,627 thousand and $6,660,549 thousand, respectively.

- 18 -

The details of equity in earnings and losses of equity method investees were as follows:

	Year Ended December 31
	2012		2011
Light Era Development Co., Ltd. (“LED”)	$	664,064	$	1,251,383
Senao International Co., Ltd. (“SENAO”)		410,617		389,424
Taiwan International Standard Electronics Co., Ltd. (“TISE”)		301,024		158,205
CHIEF Telecom Inc. (“CHIEF”)		113,354		106,974
Others		43,124		191,078
	$	1,532,183	$	2,097,064

The equity in earnings and losses for the years ended December 31, 2012 and 2011 were based on the audited financial statements.

All accounts of Chunghwa’s subsidiaries were included in Chunghwa’s consolidated financial statements.

13. FINANCIAL ASSETS CARRIED AT COST

	December 31
	2012				2011
	Carrying Value		% of Owner- ship		Carrying Value		% of Owner- ship
Non-listed
Taipei Financial Center Corp. (“TFC”)	$	1,789,530		12	$	1,789,530		12
Industrial Bank of Taiwan II Venture Capital Co., Ltd. (“IBT II”)		180,000		17		200,000		17
Innovation Works Development Fund, L.P. (“IWDF”)		108,476		4		73,154		4
Global Mobile Corp. (“GMC”)		77,018		3		77,018		8
iD Branding Ventures (“iDBV”)		56,250		8		67,500		8
Innovation Works Limited (“IW”)		31,391		2		31,391		2
CQi Energy Infocom Inc. (“CQi”)		—		18		6,000		18
RPTI International (“RPTI”)		—		10		—		10
Essence Technology Solution, Inc. (“ETS”)		—		7		—		7
	$	2,242,665			$	2,244,593

IBT II completed a capital reduction in June 2012. The Company has received $20,000 thousand from the capital reduction.

Chunghwa made additional investment in IWDF for $35,119 thousand and $35,322 thousand in October 2011 and June 2012, respectively. IWDF invests mainly in start-up companies of E-commerce, mobile internet and cloud computing, etc.

iDBV reduced its capital for $7,500 thousand and $11,250 thousand in December 2011 and October 2012. The amounts from the aforementioned capital reductions were received by Chunghwa.

Chunghwa made additional investment in IW for $10,120 thousand in January 2011. IW invests mainly in start-up companies and mentors such companies in the E-commerce, mobile internet and cloud computing fields, etc.

- 19 -

After evaluating the financial assets carried at cost, Chunghwa determined the investment in GMC, CQi and RPTI were impaired and recognized an impairment loss of $50,000 thousand, $14,000 thousand and $34,500 thousand in 2011, respectively.

After evaluating the financial assets carried at cost, Chunghwa determined the investment in CQi was impaired and recognized an impairment loss of $6,000 thousand in 2012.

The above investments do not have a quoted market price in an active market and the fair values cannot be reliably measured; therefore, these investments are carried at original cost.

14. OTHER MONETARY ASSETS - NONCURRENT

	December 31
	2012		2011
Piping Fund	$	1,000,000	$	1,000,000

As part of the government’s effort to upgrade the existing telecommunications infrastructure, Chunghwa and other public utility companies were required by the ROC government to contribute $1,000,000 thousand to a Piping Fund administered by the Taipei City Government. This fund was used to finance various telecommunications infrastructure projects.

15. PROPERTY, PLANT AND EQUIPMENT

	December 31
	2012		2011
Cost
Land	$	101,463,788	$	101,386,926
Land improvements		1,579,607		1,552,549
Buildings		66,109,355		65,954,833
Computer equipment		14,928,409		14,435,797
Telecommunications equipment		667,483,018		653,730,240
Transportation equipment		3,311,548		2,524,245
Miscellaneous equipment		6,878,831		6,584,655
Total cost		861,754,556		846,169,245
Revaluation increment on land		5,762,184		5,762,535
		867,516,740		851,931,780
Accumulated depreciation
Land improvements		1,092,703		1,040,885
Buildings		20,654,817		19,533,607
Computer equipment		11,051,088		10,619,313
Telecommunications equipment		546,514,782		530,368,705
Transportation equipment		1,268,224		1,252,360
Miscellaneous equipment		5,332,256		5,246,632
		585,913,870		568,061,502
Accumulated impairment		1,506,820		—
Construction in progress and advances related to acquisition of equipment		17,751,259		13,459,107
Property, plant and equipment, net	$	297,847,309	$	297,329,385

- 20 -

Pursuant to the related regulation, Chunghwa revalued its land owned as of April 30, 2000 based on the publicly announced value as of July 1, 1999. These revaluations which were approved by the Ministry of Auditing resulted in increases in the carrying values of property, plant and equipment of $5,986,074 thousand, liabilities for land value incremental tax of $211,182 thousand, and stockholder’s equity—other adjustments of $5,774,892 thousand.

The amendment to the Land Tax Act, relating to the article to permanently lower land value incremental tax, went effective from February 1, 2005. In accordance with the lowered tax rates, Chunghwa recomputed its land value incremental tax, and reclassified the reserve for land value incremental tax of $116,196 thousand to stockholders’ equity—other adjustments. As of December 31, 2011, the unrealized revaluation increment was decreased to $5,760,349 thousand by disposal of the revalued assets and recognition of impairment loss.

Chunghwa determined that partial land and telecommunication equipments were impaired and recognized an impairment loss of $1,504,766 thousand for the year ended December 31, 2012. Due to the impairment, the unrealized revaluation increment was decreased by $2,054 thousand. Idle asset and other asset—other were recognized impairment losses of $34,894 thousand and $20,394 thousand, respectively.

Depreciation on property, plant and equipment for the years ended December 31, 2012 and 2011 amounted to $30,738,787 thousand and $30,610,803 thousand, respectively. No interest expense was capitalized for the years ended December 31, 2012 and 2011.

16. ACCRUED EXPENSES

	December 31
	2012		2011
Accrued salary and compensation	$	9,051,769	$	9,762,480
Accrued franchise fees		2,164,220		2,246,265
Accrued employees’ bonuses and remuneration to directors and supervisors		1,570,566		2,084,632
Accrued maintenance fees		988,240		898,016
Other accrued expenses		2,832,937		2,174,000
	$	16,607,732	$	17,165,393

17. OTHER CURRENT LIABILITIES

	December 31
	2012		2011
Advances receipts	$	9,603,502	$	10,538,171
Payables to contractors		2,379,833		1,834,254
Payables to equipment suppliers		1,883,303		1,854,051
Amounts collected for others		1,295,802		1,187,743
Refundable customers’ deposits		1,219,355		1,095,183
Others		2,614,117		2,733,034
	$	18,995,912	$	19,242,436

- 21 -

18. STOCKHOLDERS’ EQUITY

Under Chunghwa’s Articles of Incorporation, Chunghwa’s authorized capital is $120,000,000 thousand which is divided into 12,000,000 thousand common shares (at $10 par value per share), among which 7,757,447 thousand shares are issued and outstanding as of December 31, 2012.

For the purpose of privatizing Chunghwa, the MOTC sold 1,109,750 thousand common shares of Chunghwa in an international offering of securities in the form of American Depositary Shares (“ADS”) amounting to 110,975 thousand units (one ADS represents ten common shares) on the New York Stock Exchange on July 17, 2003. Afterwards, the MOTC sold 1,350,682 thousand common shares in the form of ADS amounting to 135,068 thousand units on August 10, 2005. Subsequently, the MOTC and Taiwan Mobile Co., Ltd. sold 505,389 thousand and 58,959 thousand common shares of Chunghwa, respectively, in the form of ADS totally amounting to 56,435 thousand units on September 29, 2006. The MOTC and Taiwan Mobile Co., Ltd. have sold 3,024,780 thousand common shares in the form of ADS amounting to 302,478 thousand units. As of December 31, 2012, the outstanding ADSs representing 309,211 thousand common shares, which equaled approximately 30,921 thousand units and represented 3.99% of Chunghwa’s total outstanding common shares.

The ADS holders generally have the same rights and obligations as other common stockholders, subject to the provision of relevant laws. The exercise of such rights and obligations shall comply with the related regulations and deposit agreement, which stipulate, among other things, that ADS holders can, through deposit agents:

a. Exercise their voting rights,

b. Sell their ADSs, and

c. Receive dividends declared and subscribe to the issuance of new shares.

Under the ROC Company Law, additional paid-in capital may only be utilized to offset deficits. However, the additional paid-in capital from shares issued in excess of par and donations may be capitalized, which however is limited to a certain percentage of Chunghwa’s paid-in capital. However, where a company undergoes an organizational change (such as a merger, acquisition, or reorganization) that results in the capitalization of undistributed earnings after the organizational change, the above restriction does not apply. Under the revised Company Law issued on January 4, 2012, the aforementioned additional paid-in capital also may be distributed in cash. The additional paid-in capital from long-term investments may not be used for any purpose.

In addition, before distributing a dividend or making any other distribution to stockholders, Chunghwa must pay all outstanding taxes, recover any past losses and set aside a legal reserve equal to 10% of its net income, and depending on its business needs or requirements, may also set aside or reverse special reserves. In accordance with the Articles of Incorporation, no less than 50% of the remaining earnings comprising remaining balance of net income, if any, plus cumulative undistributed earnings shall be distributed in the following order: (a) from 2% to 5% of distributable earnings shall be distributed to employees as employee bonus; (b) no more than 0.2% of distributable earnings shall be distributed to board of directors and supervisors as remuneration; and (c) cash dividends to be distributed shall not be less than 50% of the total amount of dividends to be distributed. If cash dividend to be distributed is less than $0.10 per share, such cash dividend shall be distributed in the form of common shares.

For the years ended December 31, 2012 and 2011, the accrual amounts for bonuses to employees and remuneration to directors and supervisors were accrued based on past experiences and probable amount to be paid in accordance with Chunghwa’s Articles of Incorporation and Implementation Guidance for the Employee’s Bonus Distribution of Chunghwa Telecom Co., Ltd.

- 22 -

If the initial accrual amounts of the aforementioned bonus are significantly different from the amounts proposed by the board of directors, the difference is charged to the earnings of the year making the initial estimate. Otherwise, the difference between initial accrual amount and the amount resolved in the shareholders’ meeting is charged to the earnings of the following year as a result of change in accounting estimate.

Under the ROC Company Law, the appropriation for legal reserve shall be made until the accumulated reserve equals the aggregate par value of the outstanding capital stock of Chunghwa. This reserve can only be used to offset a deficit, or under the revised Company Law issued on January 4, 2012, when the legal reserve has exceeded 25% of the Company’s paid-in capital, the excess may be transferred to capital or distributed in cash.

The appropriations and distributions of the 2011 and 2010 earnings of Chunghwa have been approved by the stockholders on June 22, 2012 and June 24, 2011 as follows:

	Appropriation of Earnings				Dividends Per Share
	For Fiscal Year 2011		For Fiscal Year 2010		For Fiscal Year 2011		For Fiscal Year 2010
Legal reserve	$	4,706,838	$	4,760,890
Cash dividends		42,361,864		42,854,462	$	5.46	$	5.52

The amounts for bonuses to employees and remuneration to directors and supervisors approved in the stockholders’ meeting on June 22, 2011, were $2,040,090 thousand and $44,446 thousand, respectively. There was no difference between the initial accrual amounts and the amounts resolved in stockholders’ meeting of the aforementioned bonuses to employees and the remuneration to directors and supervisors.

The amounts for bonuses to employees and remuneration to directors and supervisors approved in the stockholders’ meeting on June 24, 2011, were $2,144,074 thousand and $45,044 thousand, respectively. There was no difference between the initial accrual amounts and the amounts resolved in stockholders’ meeting of the aforementioned bonuses to employees and the remuneration to directors and supervisors.

The appropriation and distribution of 2012 earnings of Chunghwa has not been resolved by the board of directors as the report date. Information on the appropriation of Chunghwa’s earnings, employees bonuses and remuneration to directors and supervisors resolved by the board of directors and approved by the stockholders is available at the Market Observation Post System website.

The stockholders, at the stockholders’ meeting held on June 18, 2010, resolved to reduce the amount of $19,393,617 thousand in capital of Chunghwa by a cash distribution to its stockholders. The abovementioned 2010 capital reduction proposal was effectively approved by FSC. The board of directors of Chunghwa was authorized to designate the record date of capital reduction as of October 26, 2010. Subsequently, the stock transfer record date of capital reduction was designated as January 15, 2011. The amount due to stockholders for capital reduction was $19,393,617 thousand and such cash payment to stockholders was made in January 2011.

- 23 -

19. COMPENSATION, DEPRECIATION AND AMORTIZATION EXPENSES

	Year Ended December 31, 2012
	Operating Costs		Operating Expenses		Total
Compensation expense
Salaries	$	12,528,782	$	8,873,040	$	21,401,822
Insurance		1,194,419		865,595		2,060,014
Pension	$	1,786,779	$	1,206,898	$	2,993,677
Other compensation		8,553,857		5,947,608		14,501,465
	$	24,063,837	$	16,893,141	$	40,956,978
Depreciation expense	$	28,868,547	$	1,870,240	$	30,738,787
Amortization expense	$	1,202,980	$	152,841	$	1,355,821
						(Concluded	)
	Year Ended December 31, 2011
	Operating Costs		Operating Expenses		Total
Compensation expense
Salaries	$	12,151,863	$	8,622,719	$	20,774,582
Insurance		1,041,203		746,781		1,787,984
Pension		1,710,046		1,163,277		2,873,323
Other compensation		9,443,816		6,565,281		16,009,097
	$	24,346,928	$	17,098,058	$	41,444,986
Depreciation expense	$	28,921,464	$	1,689,339	$	30,610,803
Amortization expense	$	1,171,397	$	131,585	$	1,302,982

20. INCOME TAX

a. A reconciliation between income tax expense computed by applying the statutory income tax rate to income before income tax and income tax payable is as follows:

	Year Ended December 31
	2012			2011
Income tax expense computed at statutory income tax rate	$	8,053,737		$	9,414,368
Add (deduct) tax effects of:
Permanent differences		(62,689	)		(543,776	)
Temporary differences		(75,566	)		(122,783	)
10% undistributed earning tax		—			45
Investment tax credits		(396,166	)		(641,932	)
Income tax payable	$	7,519,316		$	8,105,922

The balance of income tax payable as of December 31, 2012 and 2011 was shown net of prepaid income tax.

- 24 -

b. Income tax expense consisted of the following:

	Year Ended December 31
	2012			2011
Income tax payable	$	7,519,316		$	8,105,922
Foreign income tax		24,304			27,372
Income tax—deferred		(98,306	)		145,108
Adjustments of prior years’ income tax		25,635			31,861
Income tax	$	7,470,949		$	8,310,263

c. Net deferred income tax assets (liabilities) consisted of the following:

	December 31
	2012			2011
Current
Unrealized accrued expense	$	32,578		$	25,786
Estimated warranty liabilities		19,081			—
Unrealized foreign exchange (loss) gain		18,110			(12,659	)
Valuation loss on inventory		10,119			39,132
Valuation gain on financial instruments, net		(130	)		(413	)
Provision for doubtful accounts		—			176,844
		79,758			228,690
Valuation allowance		—			(176,844	)
Net deferred income tax assets—current	$	79,758		$	51,486
Noncurrent
Accrued pension cost	$	267,154		$	244,313
Impairment loss		58,174			10,514
Abandonment of equipment not approved by National Tax Administration		—			107
Net deferred income tax assets—noncurrent	$	325,328		$	254,934

d. The related information under the Integrated Income Tax System is as follows:

	December 31
	2012		2011
Balance of Imputation Credit Account (“ICA”)	$	4,459,457	$	4,899,036

The actual creditable ratios distribution of Chunghwa’s 2012 and 2011 for earnings were 19.05% and 17.63%, respectively. The imputation credit allocated to stockholders is based on its balance as of the date of dividend distribution. The estimated ratio may change when the actual distribution of imputation credit is made.

e. Undistributed earnings information

All Chunghwa’s earnings generated prior to June 30, 1998 have been appropriated.

Income tax returns through the year ended December 31, 2007 have been examined by the ROC tax authorities.

- 25 -

21. EARNINGS PER SHARE

EPS was calculated as follows:

	Amount (Numerator)						Weighted- average Number of Common Shares		Earnings Per Share (Dollars)
	Income Before Income Tax			Net Income			Outstanding (Thousand) (Denominator)		Income Before Income Tax		Net Income
Year ended December 31, 2012
Basic EPS:
Income attributable to stockholders	$	47,374,923		$	39,903,974			7,757,447	$	6.11	$	5.14
Effect of dilutive potential common stock
SENAO’s stock options		(4,005	)		(4,005	)		—
Employee bonus		—			—			19,791
Diluted EPS
Income attributable to stockholders (including effect of dilutive potential common stock)	$	47,370,918		$	39,899,969			7,777,238	$	6.09	$	5.13
Year ended December 31, 2011
Basic EPS:
Income attributable to stockholders	$	55,378,638		$	47,068,375			7,789,326	$	7.11	$	6.04
Effect of dilutive potential common stock
SENAO’s stock options		(8,928	)		(8,928	)		—
Employee bonus		—			—			21,279
Diluted EPS
Income attributable to stockholders (including effect of dilutive potential common stock)	$	55,369,710		$	47,059,447			7,810,605	$	7.09	$	6.03

According to the Interpretation 97-169 issued by ARDF in May 2008, Chunghwa presumed that the employees bonuses to be paid will be settled in shares and takes those shares into consideration when calculating the weighted average number of outstanding shares used in the calculation of diluted EPS if the shares have a dilutive effect for the years ended December 31, 2012 and 2011. The number of shares is calculated by dividing the amount of bonuses by the closing price of the Chunghwa’s shares of the balance sheet date. The dilutive effect of the shares needs to be considered until the stockholders resolve the number of shares to be distributed to employees in their meeting in the following year.

The diluted earnings per share for the years ended December 31, 2012 and 2011 were due to the effect of potential common stock of stock options by SENAO.

22. PENSION PLAN

Chunghwa completed privatization plans on August 12, 2005. Chunghwa is required to pay all accrued pension obligations including service clearance payment, lump sum payment under civil service plan, additional separation payments, etc. upon the completion of the privatization in accordance with the Statute Governing Privatization of Stated-owned Enterprises. After paying all pension obligations for privatization, the plan assets of Chunghwa should be transferred to the Fund for Privatization of Government-owned Enterprises (the “Privatization Fund”) under the Executive Yuan. On August 7, 2006, Chunghwa transferred the remaining balance of fund to the Privatization Fund. However, according to the instructions of MOTC, Chunghwa is requested to pay all accrued pension obligations including service clearance payment, lump sum payment under civil service plan, additional separation payments, etc. upon the completion of the privatization.

- 26 -

The pension plan under the Labor Pension Act of ROC (the “LPA”) is considered as a defined contribution plan. Based on the LPA, Chunghwa makes monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages.

Chunghwa’s pension plan is considered as a defined benefit plan under the Labor Standards Law that provide benefits based on an employee’s length of service and average six-month salary prior to retirement. Chunghwa contributes an amount no more than 15% of salaries paid each month to their respective pension funds (the Funds), which are administered by the Labor Pension Fund Supervisory Committee (the Committee) and deposited in the names of the Committees in the Bank of Taiwan.

The Company used December 31 as the measurement date for their pension plans.

Pension costs of Chunghwa were $3,069,753 thousand ($2,895,771 thousand subject to defined benefit plan and $173,982 thousand subject to defined contribution plan) and $2,954,112 thousand ($2,803,589 thousand subject to defined benefit plan and $150,523 thousand subject to defined contribution plan) for the years ended December 31, 2012 and 2011, respectively.

Pension information of the defined benefit plan was summarized as follows:

a. Components of net periodic pension cost

	Year Ended December 31
	2012			2011
Service cost	$	2,834,621		$	2,759,070
Interest cost		317,817			261,522
Expected return on plan assets		(252,645	)		(212,981	)
Amortization of unrecognized loss		(4,022	)		(4,022	)
	$	2,895,771		$	2,803,589

b. Reconciliation between the fund status and accrued pension cost is summarized as follows:

	December 31
	2012			2011
Benefit obligation
Vested benefit obligation	$	(15,807,582	)	$	(12,527,833	)
Non-vested benefit obligation		(4,068,647	)		(4,234,319	)
Accumulated benefit obligation		(19,876,229	)		(16,762,152	)
Additional benefit obligation		(1,981,949	)		(1,724,407	)
Projected benefit obligation		(21,858,178	)		(18,486,559	)
Fair values of plan assets		17,357,350			15,593,472
Funded status		(4,500,828	)		(2,893,087	)
Unrecognized prior service cost effect		(33,655	)		(37,677	)
Amortization of unrecognized net loss (gain)		2,962,988			1,493,628
Adjustment of accrued pension cost		(947,384	)		—
Accrued pension liabilities	$	(2,518,879	)	$	(1,437,136	)

- 27 -

	December 31
	2012			2011
c. Vested benefit	$	18,440,277		$	16,164,494
d. Actuarial assumptions
Discount rate used in determining present value		1.60	%		1.75	%
Rate of compensation increase		1.00	%		1.00	%
Rate of return on plan assets		1.60	%		1.50	%

e. Contributions and payments of the Fund

	Year Ended December 31
	2012		2011
Contributions	$	2,628,441	$	2,593,658
Payments	$	1,159,518	$	321,925

23. TRANSACTIONS WITH RELATED PARTIES

The ROC Government, one of Chunghwa’s customers held significant equity interest in Chunghwa. Chunghwa provides fixed-line services, wireless services, Internet and data and other services to the various departments and institutions of the ROC Government and other state-owned enterprises in the normal course of business and at arm’s-length prices. The information on service revenues from government bodies and related organizations have not been provided because details of the type of transactions were not summarized by Chunghwa. Chunghwa believes that all costs of doing business are reflected in the financial statements.

a. Chunghwa engages in business transactions with the following related parties:

Company	Relationship
Senao International Co., Ltd. (“SENAO”)	Subsidiary
Light Era Development Co., Ltd. (“LED”)	Subsidiary
Chunghwa Telecom Singapore Pte., Ltd. (“CHTS”)	Subsidiary
CHIEF Telecom, Inc. (“CHIEF”)	Subsidiary
Chunghwa Telecom Japan Co., Ltd. (“CHTJ”)	Subsidiary
Chunghwa International Yellow Pages Co., Ltd. (“CIYP”)	Subsidiary
Chunghwa System Integration Co., Ltd. (“CHSI”)	Subsidiary
Spring House Entertainment Inc. (“SHE”)	Subsidiary
Chunghwa Telecom Global, Inc. (“CHTG”)	Subsidiary
Donghwa Telecom Co., Ltd. (“DHT”)	Subsidiary
New Prospect Investments Holdings Ltd. (B.V.I.) (“New Prospect”)	Subsidiary
Prime Asia Investments Group Ltd. (B.V.I.) (“Prime Asia”)	Subsidiary
Chunghwa Investment Co., Ltd. (“CHI”)	Subsidiary
Chunghwa Telecom Vietnam Co., Ltd. (“CHTV”)	Subsidiary
Chunghwa Sochamp Technology Inc. (“CHST”)	Subsidiary
Smartfun Digital Co., Ltd. (“SFD”)	Subsidiary

(Continued)

- 28 -

Company	Relationship
Chunghwa Investment Holding Co., Ltd. (“CIHC”)	Subsidiary of CHI
Chunghwa Precision Test Tech. Co., Ltd. (“CHPT”)	Subsidiary of CHI
Unigate Telecom Inc. (“Unigate”)	Subsidiary of CHIEF
Chief International Corp. (“CIC”)	Subsidiary of CHIEF
Concord Technology Co., Ltd. (“Concord”)	Subsidiary of CHSI
Glory Network System Service (Shanghai) Co., Ltd. (“Glory”)	Subsidiary of Concord
Senao International (Samoa) Holding Ltd. (SIS)	Subsidiary of SENAO
Senao International HK Limited (SIHK)	Subsidiary of SIS
CHI One Investment Co., Ltd. (“COI”)	Subsidiary of CIHC
Yao Yong Real Property Co., Ltd. (“YYRP”)	Subsidiary of LED
Chunghwa Precision Test Tech. USA Corporation (“CHPT (US)”)	Subsidiary of CHPT
Chunghwa Hsingta Company Ltd. (“CHC”)	Subsidiary of Prime Asia
Jiangsu Zhenhua Information Technology Company, LLC. (“JZIT”)	Subsidiary of CHC
Chunghwa Telecom (China) Co., Ltd. (“CTC”)	Subsidiary of CHC
Hua-Xiong Information Technology Co., Ltd. (“HXIT”)	Subsidiary of CHC
Senao Trading (Fujian) Co., Ltd. (“STF”)	Subsidiary of SENAO
Senao International Trading (Shanghai) Co., Ltd. (“SITS”)	Subsidiary of SENAO
Senao International Trading (Jiangsu) Co., Ltd. (“SITJ”)	Subsidiary of SENAO
Senao International Trading (Shanghai) Co., Ltd. (“SEITS”)	Subsidiary of SENAO
Ceylon Innovation Co., Ltd. (“CEI”)	Subsidiary of SHE
Taiwan International Standard Electronics Co., Ltd. (“TISE”)	Equity-method investee
Huada Digital Corporation (“HDD”)	Equity-method investee
So-net Entertainment Taiwan Co., Ltd. (“So-net”)	Equity-method investee
Skysoft Co., Ltd. (“SKYSOFT”)	Equity-method investee
KingWaytek Technology Co., Ltd. (“KWT”)	Equity-method investee
Dian Zuan Integrating Marketing Co., Ltd. (“DZIM”)	Equity-method investee
Viettel-CHT Co., Ltd. (“Viettel-CHT”)	Equity-method investee
International Integrated System, Inc. (“IISI”)	Equity-method investee, which was a subsidiary of Chunghwa before Chunghwa lost control over IISI on June 24, 2011
Senao Networks, Inc. (“SNI”)	Equity-method investee of SENAO
Xiamen Sertec Business Technology Co., Ltd. (“Sertec”)	Equity-method investee of COI
ST-2 Satellite Ventures Pte., Ltd. (“STS”)	Equity-method investee of CHTS
Chunghwa Telecom Foundation (“CTF”)	A nonprofit organization of which the funds donated by Chunghwa exceeds one third of its total funds

(Concluded)

- 29 -

b. Significant transactions with the above related parties are summarized as follows:

	December 31
	2012				2011
	Amount		%		Amount		%
1) Receivables
Trade notes, accounts receivable and other receivables
SENAO	$	1,443,395		87	$	726,051		84
DHT		39,865		2		32,472		4
So-net		38,023		2		11,263		1
CHST		35,238		2		—		—
CHIEF		27,952		2		30,852		4
CHSI		27,915		2		13,377		1
CHTG		15,249		1		19,817		2
CIYP		13,897		1		13,982		2
Others		27,050		1		19,968		2
	$	1,668,584		100	$	867,782		100
2) Payables
Trade notes payable, accounts payable and accrued expenses
SENAO	$	1,305,378		35	$	1,222,386		35
TISE		594,340		16		519,612		15
CHSI		525,183		14		704,538		20
CHST		173,206		5		1,840		—
IISI		112,161		3		120,165		3
DHT		81,964		2		78,845		2
CHTG		69,735		2		74,240		2
CHIEF		60,209		2		46,849		1
CIYP		55,296		1		21,323		1
SKYSOFT		32,951		—		10,041		—
STS		19,041		—		82,437		3
LED		16,996		—		249		—
Others		34,088		1		20,913		1
		3,080,548		81		2,903,438		83
Payables to contractors
CHSI		26,650		1		—		—
Amounts collected for others
SENAO		474,581		13		366,211		11
CIYP		98,591		3		104,363		3
SHE		46,251		1		31,867		1
So-net		32,388		1		20,383		1
SKYSOFT		16,215		—		9,618		—
LED		1,869		—		17,070		1
Others		3,470		—		3,769		—
		673,365		18		553,281		17
	$	3,780,563		100	$	3,456,719		100

- 30 -

	December 31
	2012				2011
	Amount		%		Amount		%
3) Customers’ deposits
CHSI	$	64,465		2	$	21,474		1
CHTG		14,257		—		14,846		—
Others		4,249		—		3,680		—
	$	82,971		2	$	40,000		1
	Year Ended December 31
	2012				2011
	Amount		%		Amount		%
4) Revenues
SENAO	$	713,394		1	$	831,109		1
So-net		336,470		—		289,335		—
CHIEF		260,808		—		272,276		—
DHT		123,151		—		112,821		—
CHTG		55,425		—		96,404		—
CHTS		48,395		—		45,163		—
SKYSOFT		39,360		—		41,156		—
CHTJ		31,803		—		38,544		—
SHE		27,938		—		10,775		—
CIYP		23,025		—		15,570		—
LED		10,904		—		107,343		—
CHSI		8,853		—		10,141		—
Others		24,636		—		15,030		—
	$	1,704,162		1	$	1,885,667		1
5) Operating costs and expenses
SENAO	$	9,832,009		7	$	7,385,083		5
CHSI		803,102		1		499,937		1
TISE		572,878		1		493,875		1
STS		405,680		—		167,651		—
CHIEF		334,152		—		307,458		—
IISI		274,008		—		175,660		—
CHTG		270,069		—		243,584		—
DHT		109,516		—		106,327		—
SKYSOFT		108,182		—		49,146		—
CHST		94,212		—		1,249		—
CIYP		70,209		—		45,732		—
CHTJ		66,220		—		65,501		—
CHTS		50,182		—		36,479		—
CTF		47,250		—		49,553		—
KWT		35,503		—		44,516		—
SHE		32,292		—		36,641		—
Others		20,569		—		17,296		—
	$	13,126,033		9	$	9,725,688		7

- 31 -

	Year Ended December 31
	2012				2011
	Amount		%		Amount		%
6) Acquisition of property, plant and equipment
CHSI	$	1,161,098		4	$	1,209,201		5
TISE		731,498		2		1,332,495		5
DHT		188,697		1		—		—
SENAO		25,779		—		15,223		—
CHTG		23,815		—		49,418		—
CHIEF		17,333		—		—		—
SKYSOFT		14,238		—		14,238		—
LED		10,571		—		—		—
IISI		—		—		151,644		1
CHTS		—		—		53,588		—
Others		1,192		—		37,590		—
	$	2,174,221		7	$	2,863,397		11

Chunghwa has entered into a contract with ST-2 Satellite Ventures Pte., Ltd. on March 12, 2010 to lease capacity on the ST-2 satellite. This lease term is 15 years which will start from the commercial operation of ST-2 satellite and the total contract value is approximately $6,000,000 thousand (SG$260,723 thousand), which included a prepayment of $3,067,711 thousand, and the rest of amount will be paid annually when ST-2 satellite starts its commercial operation. ST-2 satellite was launched in May 2011, and began its commercial operation in August 2011. The total rental expense for the year ended December 31, 2012 was $204,514 thousand, which consisted of a reduction of the prepayment of $201,166 thousand and an additional accrual of $405,680 thousand. The prepayment was $2,777,983 thousand (classified as other current assets $204,514 thousand, and other assets—others $2,573,469 thousand) as of December 31, 2012.

Chunghwa has leased property to LED since April 2010. The lease term is 15 years and the rent is charged monthly. Based on the agreement of both parties, the lease contract was terminated on April 1, 2011.

Chunghwa sold the land with a carrying value of $936,016 thousand to LED at the price of $2,421,932 thousand in 2008. However, since the gain on disposal of land amounting to $1,485,916 thousand is unrealized, the gain was recognized as deferred credit—profit on intercompany transactions. Gain on disposal of land $390,176 thousand and $900,764 thousand were recognized in 2012 and 2011, respectively. The unrealized gain on disposal of land amounted to $149,067 thousand (classified as deferred credit—profit on intercompany transactions) as of December 31, 2012.

Chunghwa sold the land with a carrying value of $378,927 thousand to LED at price of $207,030 thousand in 2008 and resulted in a disposal loss amounting to $171,897 thousand. Chunghwa recognized realized loss on disposal of land in December 31, 2012.

The transaction terms with the related parties were determined in accordance with mutual agreements when there were no similar transactions with third parties. Other transactions with related parties were not significantly different from those with third parties.

- 32 -

c. The compensation of directors, supervisors and managements is showed as follows:

	Year Ended December 31
	2012		2011
Salaries	$	44,832	$	45,736
Compensations		35,996		38,841
Bonus		46,220		51,712
	$	127,048	$	136,289

24. SIGNIFICANT COMMITMENTS AND CONTINGENCIES

As of December 31, 2012, in addition to those disclosed in other notes, Chunghwa’s remaining commitments under non-cancelable contracts with various parties were as follows:

a. Acquisition of land and buildings of $30,921 thousand.

b. Acquisition of telecommunications equipment of $26,941,474 thousand.

c. Contract to print billing, envelopes and marketing gifts of $17,798 thousand.

d. Chunghwa also has non-cancelable operating leases covering certain buildings, computers, computer peripheral equipment and operating system software under contracts that expire in various years. Future lease payments were as follows:

	Rental Amount
2013	$	2,146,756
2014		1,455,328
2015		1,254,086
2016		897,986
2017 and thereafter		625,307

e. A commitment to contribute $2,000,000 thousand to a Piping Fund administered by the Taipei City Government, of which $1,000,000 thousand was contributed by Chunghwa on August 15, 1996 (classified as long-term investment—other monetary assets). If the fund is not sufficient, Chunghwa will contribute the remaining $1,000,000 thousand upon notification from the Taipei City Government. Based on Chunghwa’s understanding of the Piping Fund terms, if the project is considered to be no longer necessary by the ROC government, Chunghwa will receive back its proportionate share of the net equity of the Piping Fund upon its dissolution. Chunghwa does not know when its contribution to the Piping Fund will be returned; therefore, Chunghwa did not discount the face amount of its contribution on the Piping Fund.

- 33 -

25. FAIR VALUE OF FINANCIAL INSTRUMENTS

a. Carrying amounts and fair value of financial instruments were as follows:

	December 31
	2012				2011
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets
Cash and cash equivalents	$	48,319,111	$	48,319,111	$	61,283,240	$	61,283,240
Financial assets at fair value through profit or loss		2,702		2,702		6,094		6,094
Available-for-sale financial assets—current		2,190,392		2,190,392		1,974,606		1,974,606
Held-to-maturity financial assets—current		4,250,146		4,250,146		1,201,301		1,201,301
Trade notes and accounts receivable, net		22,789,253		22,789,253		20,526,988		20,526,988
Receivables from related parties		1,668,584		1,668,584		867,782		867,782
Other current monetary assets		1,996,341		1,996,341		1,913,684		1,913,684
Financial assets carried at cost		2,242,665		—		2,244,593		—
Available-for-sale financial assets—noncurrent		3,163,465		3,163,465		—		—
Held-to-maturity financial assets—noncurrent		11,796,144		11,796,144		13,494,891		13,494,891
Other noncurrent monetary assets		1,000,000		1,000,000		1,000,000		1,000,000
Refundable deposits		1,954,737		1,954,737		1,656,096		1,656,096
Liabilities
Financial liabilities at fair value through profit or loss		1,935		1,935		3,665		3,665
Trade notes and accounts payable		10,512,771		10,512,771		11,425,662		11,425,662
Payables to related parties		3,780,563		3,780,563		3,456,719		3,456,719
Accrued expenses		16,607,732		16,607,732		17,165,393		17,165,393
Payables to contractors (included in “other current liabilities”)		2,379,833		2,379,833		1,834,254		1,834,254
Payables to equipment suppliers (included in “other current liabilities”)		1,883,303		1,883,303		1,854,051		1,854,051
Amounts collected for others (included in “other current liabilities”)		1,295,802		1,295,802		1,187,743		1,187,743
Refundable customers’ deposits (included in “other current liabilities”)		1,219,355		1,219,355		1,095,183		1,095,183
Customers’ deposits		4,910,221		4,910,221		4,967,605		4,967,605

b. Methods and assumptions used in the estimation of fair values of financial instruments:

1) The fair values of certain financial instruments recognized in the balance sheet generally correspond to the market prices of the financial assets. Because of the short maturities of these instruments, the carrying value represents a reasonable basis to estimate fair values. This method does not apply to the financial instruments discussed in Notes 2 and 3 below.

2) If the financial instruments have quoted market prices in an active market, the quoted market prices are viewed as fair values. If the market prices of the available-for-sale financial assets are not readily available, valuation techniques are used incorporating estimates and assumptions that are consistent with prevailing market conditions.

3) Financial assets carried at cost are investments in nonlisted shares, which have no quoted prices in an active market and entail an unreasonably high cost to obtain verifiable fair values. Therefore, no fair value is presented.

- 34 -

c. Fair values of financial assets and liabilities using quoted market prices or valuation techniques were as follows:

	Amount Based on Quoted Market Price				Amount Determined  Using Valuation Techniques
	December 31				December 31
	2012		2011		2012		2011
Assets
Financial assets at fair value through profit or loss	$	—	$	—	$	2,702	$	6,094
Available-for-sale financial assets		5,353,857		1,974,606		—		—
Liabilities
Financial liabilities at fair value through profit or loss		—		—		1,935		3,665

d. Information about financial risks

1) Market risk

The foreign exchange rate fluctuations would result in Chunghwa’s foreign-currency-dominated assets and liabilities, outstanding currency swap contracts exposed to rate risk.

The financial instruments categorized as available-for-sale financial assets are mainly listed stocks and open-end mutual funds. Therefore, the market risk is the fluctuations of market price. In order to manage this risk, Chunghwa would assess the risk before investing; therefore, no material market risk is anticipated.

2) Credit risk

Credit risk represents the potential loss that would be incurred by the Company if the counter-parties or third-parties breach contracts. Financial instruments with positive fair values at the balance sheet date are evaluated for credit risk. The counter-parties or third-parties of the aforementioned financial instruments are reputable financial institutions and corporations. Management does not expect the Company’s exposure to default by those parties to be material.

The Company held a variety of financial instruments, the maximum credit exposed amount is the same as their carrying amounts.

3) Liquidation risk

Chunghwa has sufficient operating capital to meet cash needs upon settlement of derivative financial instruments. Therefore, the liquidation risk is low.

The financial instruments of the Company categorized as available-for-sale financial assets are publicly-traded, easily converted to cash. Therefore, no material liquidation risk is anticipated. The financial instruments categorized as financial assets carried at cost are investments that do not have a quoted market price in an active market. Therefore, material liquidation risk is anticipated.

4) Cash flow interest rate risk

Chunghwa engages in investments in fixed-interest-rate debt securities. Therefore, cash flows from such securities are not expected to fluctuate significantly due to changes in market interest rates.

- 35 -

According to the regulations of Securities and Futures Bureau, Chunghwa should disclose the derivative transactions of Chunghwa’s investees, SENAO and CHI, which was as follows:

a. Holding period and contract amounts

SENAO and CHI entered into forward exchange contracts and index future contracts to reduce the exposure to foreign currency risk and price risk. The financial risk management objective of SENAO and CHI are to minimize risks due to market risk.

The outstanding forward exchange contracts of SENAO as of December 31, 2012 and 2011 were as follows:

	Currency		Maturity Date		Contract Amount (In Thousands)
December 31, 2012
Forward exchange contracts—buy		NTD/USD		2013.01		NTD154,304/USD5,310
December 31, 2011
Forward exchange contracts—buy		NTD/USD		2012.01		NTD59,638/USD1,967

There was no outstanding index future contracts of CHI as of December 31, 2012.

Outstanding index future contracts as of December 31, 2011 was as follows:

	Maturity Period		Units		Contract Amount (In Thousands)
December 31, 2011
TAIFEX futures
TX		2012.01		2	NT$	2,952
TX		2012.02		4		5,558
TX		2012.03		37		51,614
TE		2012.03		19		11,370
TF		2012.01		8		6,401
TF		2012.02		5		3,877
TF		2012.03		15		11,658

Net gain (loss) of SANEO arising from derivative financial products for the years ended December 31, 2012 and 2011 were $(3,464) thousand and $12,043 thousand, respectively.

Net gain (loss) of CHI arising from derivative financial products for the years ended December 31, 2012 and 2011 were $(12,961) thousand and $6,406 thousand, respectively.

b. Market risk

The foreign exchange rate fluctuations would result in SENAO’s foreign-currency-dominated assets and liabilities and open forward exchange contracts exposed to rate risk.

The fluctuations of market price would result in CHI’s index future contracts exposed to price risk.

- 36 -

c. Credit risk

Credit risk represents the potential loss that would be incurred by SENAO and CHI if the counter-parties or third-parties breached contracts. Financial instruments with positive fair values at the balance sheet date are evaluated for credit risk. The counter-parties or third-parties to the aforementioned financial instruments are reputable financial institutions. Management does not expect SENAO’s and CHI’s exposure to default by those parties to be material. The largest amount of exposure to default by those parties of the financial instruments of SENAO and CHI is the same as carrying value.

d. Liquidation risk

SENAO and CHI have sufficient operating capital to meet cash needs upon settlement of derivative financial instruments. Therefore, the liquidation risk is low.

26. ADDITIONAL DISCLOSURES

Following are the additional disclosures required by the SFB for Chunghwa and its investees:

a. Financings provided: None.

b. Endorsements/guarantees provided: Please see Table 1.

c. Marketable securities held: Please see Table 2.

d. Marketable securities acquired and disposed of at costs or prices at least $100 million or 20% of the paid-in capital: Please see Table 3.

e. Acquisition of individual real estate at costs of at least $100 million or 20% of the paid-in capital: Please see Table 4.

f. Disposal of individual real estate at prices of at least $100 million or 20% of the paid-in capital: None.

g. Total purchase from or sale to related parties amounting to at least $100 million or 20% of the paid-in capital: Please see Table 5.

h. Receivables from related parties amounting to $100 million or 20% of the paid-in capital: Please see Table 6.

i. Names, locations, and other information of investees on which the Company exercises significant influence: Please see Table 7.

j. Financial transactions: Please see Notes 5 and 25.

k. Investment in Mainland China: Please see Table 8.

27. SEGMENT FINANCIAL INFORMATION

a. Segment information: Please see Table 9.

b. Products and service revenues from external customer information: Please see Table 10.

- 37 -

c. Geographic information

The users of Chunghwa’s services are mainly from Taiwan, ROC. The revenues it derived outside Taiwan are mainly revenues from international long distance telephone and leased line services. The geographic information for revenues is as follows:

	Year Ended December 31
	2012		2011
Taiwan, ROC	$	185,004,523	$	187,554,728
Overseas		5,946,272		4,907,376
	$	190,950,795	$	192,462,104

The Company does not have material non-current assets in foreign operations for the year ended December 31, 2012.

d. Major customers’ information

For the years ended December 31, 2012 and 2011, the Company did not have any single customer whose net revenue exceeded 10% of the total net revenues.

28. OTHERS

The significant information of foreign-currency financial assets and liabilities as below:

	December 31
	2012						2011
	Foreign Currencies		Exchange Rate		New Taiwan Dollars		Foreign Currencies		Exchange Rate		New Taiwan Dollars
Financial assets
Monetary items
Cash
USD	$	3,812		29.04	$	110,703	$	5,963		30.28	$	180,557
Available-for-sale financial assets
USD		75,427		29.04		2,190,392		65,222		30.28		1,974,606
Accounts receivable
USD		135,251		29.04		3,927,684		161,682		30.28		4,894,927
Investments accounted for using equity method
USD		3,327		29.04		96,614		2,854		30.28		86,433
HKD		311,725		3.75		1,168,032		228,596		3.90		891,526
SGD		31,402		23.76		746,122		28,277		23.31		659,128
JPY		76,364		0.34		25,689		57,536		0.39		22,439
VND		237,407,407		0.00135		320,500		210,564,304		0.00139		292,685
RMB		33,338		4.66		155,357		39,088		4.81		187,755
Financial liabilities
Monetary items
Accounts payable
USD		114,377		29.04		3,321,498		114,654		30.28		3,471,726
EUR		34,058		38.49		1,310,892		28,037		39.18		1,098,504
SGD		871		23.76		20,703		3,579		23.31		83,416

- 38 -

29. PRE-DISCLOSURE FOR ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS

Under Rule No. 0990004943 issued by the Financial Supervisory Commission (FSC) on February 2, 2010, the Company pre-disclosed the information on the adoption of International Financial Reporting Standards (IFRSs) and assessed the material differences between the existing accounting policies and the accounting policies to be adopted under IFRSs in the consolidated financial statements as of and for the years ended December 31, 2012.

- 39 -

TABLE 1

CHUNGHWA TELECOM CO., LTD.

ENDORSEMENTS/GUARANTEES PROVIDED

FOR THE YEAR ENDED DECEMBER 31, 2012

(In Thousands of New Taiwan Dollars, Unless Specified Otherwise)

No.

Endorsement/Guarantee Provider

Guaranteed Party

Limits on Endorsement/ Guarantee Amount Provided to Each Guaranteed Party

Maximum Balance for the Year

Ending Balance

Amount of Endorsement/ Guarantee Collateralized by Properties

Ratio of Accumulated Endorsement/ Guarantee to Net Equity Per Latest Financial Statements

Maximum Endorsement/ Guarantee  Amount Allowable

Name

Nature of Relationship (Note 2)

0

Chunghwa Telecom Co., Ltd.

Donghwa Telecom Co., Ltd.

b

$3,654,424 (Note 3)

$

1,031,923

$315,680 (Note 4)

$

—

0.09

%

$14,617,696 (Note 6)

25

Yao Yong Real Property Co., Ltd.

Light Era Development Co., Ltd.

d

3,665,887 (Note 7)

2,150,000

1,650,000 (Note 5)

1,650,000 (Note 5

)

0.5

%

3,665,887 (Note 7)

Note 1:  Significant transactions between the Company and its subsidiaries or among subsidiaries are numbered as follows:

a. “0” for the Company.

b. Subsidiaries are numbered from “1”.

Note 2:  Relationships between the endorsement/guarantee provider and the guaranteed party:

a. Trading partner.

b. Majority owned subsidiary.

c. The Company and subsidiary owns over 50% ownership of the investee company.

d. A subsidiary jointly owned by the Company and the Company’s directly-owned subsidiary.

e. Guaranteed by the Company according to the construction contract.

f. An investee company. The guarantees were provided based on the Company’s proportionate share in the investee company.

Note 3:  The maximum amount of endorsement or guarantee is up to 1% of the total stockholders’ equity of the latest financial statements of the Company.

Note 4:  The actual amount used by guaranteed party is $315,680 thousand.

Note 5:  The actual amount used by guaranteed party is $1,650,000 thousand.

Note 6:  The maximum amount of endorsement or guarantee is up to 4% of the total stockholders’ equity of the latest financial statements of the Company.

Note 7:  The maximum amount of endorsement or guarantee is up to 200% of the asset value of the latest financial statements of Yao Yong Real Property Co., Ltd.

- 40 -

TABLE 2

CHUNGHWA TELECOM CO., LTD.

MARKETABLE SECURITIES HELD

FOR THE YEAR ENDED DECEMBER 31, 2012

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	December 31, 2012										Note
					Shares (Thousands/ Thousand Units)		Carrying Value (Note 5)			Percentage of Ownership		Market Value or Net Asset Value
0	Chunghwa Telecom Co., Ltd.	Stocks
		Senao International Co., Ltd.	Subsidiary	Investments accounted for using equity method		71,773	$	1,623,305			28	$	6,825,627		Note 4
		Light Era Development Co., Ltd.	Subsidiary	Investments accounted for using equity method		300,000		3,785,310			100		3,790,828		Note 1
		Donghwa Telecom Co., Ltd.	Subsidiary	Investments accounted for using equity method		305,090		1,168,032			100		1,168,032		Note 1
		Chunghwa Telecom Singapore Pte., Ltd.	Subsidiary	Investments accounted for using equity method		26,383		746,122			100		746,122		Note 1
		Chunghwa System Integration Co., Ltd.	Subsidiary	Investments accounted for using equity method		60,000		707,250			100		690,341		Note 1
		Chunghwa Investment Co., Ltd.	Subsidiary	Investments accounted for using equity method		80,100		614,217			89		672,509		Note 1
		CHIEF Telecom Inc.	Subsidiary	Investments accounted for using equity method		37,942		591,706			69		534,053		Note 1
		International Integrated System, Inc.	Equity-method investee	Investments accounted for using equity method		22,498		277,592			33		253,259		Note 1
		Viettel-CHT Co., Ltd.	Equity-method investee	Investments accounted for using equity method		—		265,052			30		265,052		Note 1
		Huada Digital Corporation	Equity-method investee	Investments accounted for using equity method		25,000		241,309			50		241,309		Note 1
		Taiwan International Standard Electronics Co., Ltd.	Equity-method investee	Investments accounted for using equity method		1,760		224,099			40		523,348		Note 1
		Chunghwa International Yellow Pages Co., Ltd.	Subsidiary	Investments accounted for using equity method		15,000		188,738			100		188,738		Note 1
		Prime Asia Investments Group Ltd. (B.V.I.)	Subsidiary	Investments accounted for using equity method		7,270		155,357			100		155,479		Note 1
		Skysoft Co., Ltd.	Equity-method investee	Investments accounted for using equity method		4,438		127,686			30		91,144		Note 1
		Spring House Entertainment Tech. Inc.	Subsidiary	Investments accounted for using equity method		7,015		125,929			56		112,642		Note 1
		Chunghwa Telecom Global, Inc.	Subsidiary	Investments accounted for using equity method		6,000		96,614			100		109,643		Note 1
		Kingwaytek Technology Co., Ltd.	Equity-method investee	Investments accounted for using equity method		2,214		77,449			33		43,691		Note 1
		Chunghwa Telecom Vietnam Co., Ltd.	Subsidiary	Investments accounted for using equity method		—		55,448			100		55,448		Note 1
		Smartfun Digital Co., Ltd.	Subsidiary	Investments accounted for using equity method		6,500		44,549			65		44,657		Note 1
		So-net Entertainment Taiwan Co., Ltd.	Equity-method investee	Investments accounted for using equity method		3,429		31,152			30		13,670		Note 1
		Chunghwa Telecom Japan Co., Ltd.	Subsidiary	Investments accounted for using equity method		1		25,689			100		25,689		Note 1
		Dian Zuan Integrating Marketing Co., Ltd.	Equity-method investee	Investments accounted for using equity method		6,450		20,902			33		20,902		Note 1
		Chunghwa Sochamp Technology Inc.	Subsidiary	Investments accounted for using equity method		2,040		17,414			51		21,076		Note 1
		New Prospect Investments Holdings Ltd. (B.V.I.)	Subsidiary	Investments accounted for using equity method		—	(US$	—   1 dollar	)		100	(US$	—   1 dollar	)	Note 8
		Taipei Financial Center Corp.	—	Financial assets carried at cost—noncurrent		172,927		1,789,530			12		1,679,386		Note 2
		Industrial Bank of Taiwan II Venture Capital Co., Ltd. (IBT II)	—	Financial assets carried at cost—noncurrent		18,000		180,000			17		164,111		Note 2
		Innovation Works Development Fund, L.P.	—	Financial assets carried at cost—noncurrent		—		108,476			4		105,242		Note 2
		Global Mobile Corp.	—	Financial assets carried at cost—noncurrent		7,617		77,018			3		48,555		Note 2
		iD Branding Ventures	—	Financial assets carried at cost—noncurrent		5,625		56,250			8		49,067		Note 2
		Innovation Works Limited	—	Financial assets carried at cost—noncurrent		1,000		31,391			2		36,403		Note 2
		CQi Energy Infocom Inc.	—	Financial assets carried at cost—noncurrent		2,000		—			18		—		Note 2
		RPTI Intergroup International Ltd.	—	Financial assets carried at cost—noncurrent		4,765		—			10		—		Note 2
		Essence Technology Solution, Inc.	—	Financial assets carried at cost—noncurrent		200		—			7		450		Note 2

(Continued)

- 41 -

No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	December 31, 2012								Note
					Shares (Thousands/ Thousand Units)		Carrying Value (Note 5)		Percentage of Ownership		Market Value or Net Asset Value
		Beneficiary certificates (mutual fund)
		PIMCO GIS Total Return Bond Fund—H Institutional Class (Acc)	—	Available-for-sale financial assets		770	$	534,453		—	$	581,193	Note 3
		PIMCO Global Investment Grade Credit—Ins H Acc	—	Available-for-sale financial assets		1,071		456,118		—		507,266	Note 3
		PIMCO GIS Diversified Bond Fund—H Institutional Class (Acc)	—	Available-for-sale financial assets		984		347,452		—		406,507	Note 3
		Fidelity Funds—US Dollar Bond Fund Y-ACC-USD	—	Available-for-sale financial assets		778		297,283		—		302,047	Note 3
		Janus Flexible Income Bond Fund	—	Available-for-sale financial assets		671		230,472		—		245,103	Note 3
		Eastpring Investments—US Corporation Bond Fund	—	Available-for-sale financial assets		433		149,190		—		148,276	Note 3
		Stocks
		China Airlines Ltd.	—	Available-for-sale financial assets—noncurrent		263,622		3,092,287		5		3,163,465	Note 4
		Bond
		Taiwan Power Co. 2nd Unsecured Bond-EB Issue in 2005	—	Held-to-maturity financial assets		—		305,673		—		305,673	Note 6
		Taiwan Power Co. 2nd Unsecured Bond-EB Issue in 2005	—	Held-to-maturity financial assets		—		203,455		—		203,455	Note 6
		Chinese Petroleum Corporation 1st Unsecured Corporate Bond-B Issue in 2006	—	Held-to-maturity financial assets		—		151,457		—		151,457	Note 6
		Chinese Petroleum Corporation 1st Unsecured Corporate Bond-B Issue in 2006	—	Held-to-maturity financial assets		—		201,943		—		201,943	Note 6
		Chinese Petroleum Corporation 1st Unsecured Corporate Bond-C Issue in 2006	—	Held-to-maturity financial assets		—		103,417		—		103,417	Note 6
		Chinese Petroleum Corporation 1st Unsecured Corporate Bond-C Issue in 2006	—	Held-to-maturity financial assets		—		206,970		—		206,970	Note 6
		Taiwan Power Co. 2nd Unsecured Corporate Bond-C Issue in 2006	—	Held-to-maturity financial assets		—		208,143		—		208,143	Note 6
		Taiwan Power Co. 3rd Unsecured Corporate Bond-C Issue in 2006	—	Held-to-maturity financial assets		—		209,091		—		209,091	Note 6
		Chinese Petroleum Corporation 1st Unsecured Corporate Bond-A Issue in 2008	—	Held-to-maturity financial assets		—		100,953		—		100,953	Note 6
		China Steel Corporation 1st Unsecured Corporate Bonds Issue in 2008	—	Held-to-maturity financial assets		—		50,512		—		50,512	Note 6
		China Steel Corporation 2nd Unsecured Corporate Bonds-A Issue in 2008	—	Held-to-maturity financial assets		—		50,005		—		50,005	Note 6
		China Steel Corporation 2nd Unsecured Corporate Bonds-A Issue in 2008	—	Held-to-maturity financial assets		—		50,502		—		50,502	Note 6
		China Steel Corporation 2nd Unsecured Corporate Bonds-B Issue in 2008	—	Held-to-maturity financial assets		—		204,379		—		204,379	Note 6
		China Steel Corporation 2nd Unsecured Corporate Bonds-B Issue in 2008	—	Held-to-maturity financial assets		—		307,722		—		307,722	Note 6
		Taiwan Power Co. 2nd Unsecured Corporate Bonds-B Issue in 2008	—	Held-to-maturity financial assets		—		151,002		—		151,002	Note 6
		Taiwan Power Co. 3rd Unsecured Corporate Bond-B Issue in 2008	—	Held-to-maturity financial assets		—		25,179		—		25,179	Note 6

(Continued)

- 42 -

No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	December 31, 2012								Note
					Shares (Thousands/ Thousand Units)		Carrying Value (Note 5)		Percentage of Ownership		Market Value or Net Asset Value
		Taiwan Power Co. 4th Unsecured Corporate Bond-B Issue in 2008	—	Held-to-maturity financial assets		—	$	202,005		—	$	202,005	Note 6
		Taiwan Power Co. 7th Unsecured Corporate Bond-A Issue in 2008	—	Held-to-maturity financial assets		—		151,636		—		151,636	Note 6
		NAN YA Company 2nd Unsecured Corporate Bonds Issue in 2008	—	Held-to-maturity financial assets		—		200,990		—		200,990	Note 6
		NAN YA Company 3rd Unsecured Corporate Bonds Issue in 2008	—	Held-to-maturity financial assets		—		100,654		—		100,654	Note 6
		China Development Financial Holding Corporation 1st Unsecured Corporate Bonds-A Issue in 2008	—	Held-to-maturity financial assets		—		100,496		—		100,496	Note 6
		Formosa Petrochemical Corporation 1st Unsecured Corporate Bonds Issue in 2008	—	Held-to-maturity financial assets		—		49,985		—		49,985	Note 6
		Formosa Petrochemical Corporation 2nd Unsecured Corporate Bonds Issue in 2008	—	Held-to-maturity financial assets		—		50,335		—		50,335	Note 6
		Formosa Petrochemical Corporation 2nd Unsecured Corporate Bonds Issue in 2008	—	Held-to-maturity financial assets		—		201,740		—		201,740	Note 6
		Formosa Petrochemical Corporation 3rd Unsecured Corporate Bonds Issue in 2008	—	Held-to-maturity financial assets		—		24,991		—		24,991	Note 6
		Formosa Petrochemical Corporation 3rd Unsecured Corporate Bonds Issue in 2008	—	Held-to-maturity financial assets		—		101,100		—		101,100	Note 6
		Chinese Petroleum Corporation 1st Unsecured Corporate Bonds-A Issue in 2009	—	Held-to-maturity financial assets		—		200,415		—		200,415	Note 6
		FCFC 1st Unsecured Corporate Bonds Issue in 2009	—	Held-to-maturity financial assets		—		250,789		—		250,789	Note 6
		Taiwan Power Co. 1st Secured Corporate Bond-A Issue in 2009	—	Held-to-maturity financial assets		—		200,434		—		200,434	Note 6
		Taiwan Power Co. 1st Secured Corporate Bond-A Issue in 2009	—	Held-to-maturity financial assets		—		40,198		—		40,198	Note 6
		Taiwan Power Co. 2nd Secured Corporate Bond-B Issue in 2009	—	Held-to-maturity financial assets		—		100,170		—		100,170	Note 6
		Taiwan Power Company 4th Secured Corporate Bond-B Issue in 2009	—	Held-to-maturity financial assets		—		349,472		—		349,472	Note 6
		Taiwan Power Company 5th Secured Corporate Bond-B Issue in 2009	—	Held-to-maturity financial assets		—		100,324		—		100,324	Note 6
		NAN YA Company 1st Unsecured Corporate Bond-A Issue in 2009	—	Held-to-maturity financial assets		—		99,978		—		99,978	Note 6
		NAN YA Company 1st Unsecured Corporate Bond-A Issue in 2009	—	Held-to-maturity financial assets		—		201,009		—		201,009	Note 6
		NAN YA Company 1st Unsecured Corporate Bond-A Issue in 2009	—	Held-to-maturity financial assets		—		301,415		—		301,415	Note 6
		NAN YA Company 3rd Unsecured Corporate Bond-A Issue in 2009	—	Held-to-maturity financial assets		—		200,275		—		200,275	Note 6
		NAN YA Company 3rd Unsecured Corporate Bond-A Issue in 2009	—	Held-to-maturity financial assets		—		50,157		—		50,157	Note 6
		NAN YA Company 4th Unsecured Corporate Bond-A Issue in 2009	—	Held-to-maturity financial assets		—		199,846		—		199,846	Note 6

(Continued)

- 43 -

No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	December 31, 2012								Note
					Shares (Thousands/ Thousand Units)		Carrying Value (Note 5)		Percentage of Ownership		Market Value or Net Asset Value
		NAN YA Company 4th Unsecured Corporate Bond-A Issue in 2009	—	Held-to-maturity financial assets		—	$	301,462		—	$	301,462	Note 6
		MLPC 1st Unsecured Corporate Bond Issue in 2008	—	Held-to-maturity financial assets		—		99,965		—		99,965	Note 6
		MLPC 1st Unsecured Corporate Bond Issue in 2008	—	Held-to-maturity financial assets		—		99,965		—		99,965	Note 6
		MLPC 1st Unsecured Corporate Bond Issue in 2009	—	Held-to-maturity financial assets		—		301,780		—		301,780	Note 6
		Formosa Petrochemical Corporation 1st Unsecured Corporate Bonds Issue in 2008	—	Held-to-maturity financial assets		—		200,188		—		200,188	Note 6
		Formosa Petrochemical Corporation 1st Unsecured Corporate Bonds Issue in 2008	—	Held-to-maturity financial assets		—		200,673		—		200,673	Note 6
		Formosa Petrochemical Corporation 1st Unsecured Corporate Bonds Issue in 2008	—	Held-to-maturity financial assets		—		301,389		—		301,389	Note 6
		Hon Hai Precision Industry Co., Ltd. First Debenture Issuing of 2009	—	Held-to-maturity financial assets		—		175,911		—		175,911	Note 6
		Hon Hai Precision Industry Co., Ltd. First Debenture Issuing of 2009	—	Held-to-maturity financial assets		—		100,458		—		100,458	Note 6
		Hon Hai Precision Industry Co., Ltd. First Debenture Issuing of 2009	—	Held-to-maturity financial assets		—		100,546		—		100,546	Note 6
		FCFC 2nd Unsecured Corporate Bonds Issue in 2010	—	Held-to-maturity financial assets		—		200,686		—		200,686	Note 6
		FCFC 2nd Unsecured Corporate Bonds Issue in 2010	—	Held-to-maturity financial assets		—		100,241		—		100,241	Note 6
		TaipeiFubon Bank 5th Financial Debenturees-A Issue in 2010	—	Held-to-maturity financial assets		—		302,444		—		302,444	Note 6
		TaipeiFubon Bank 5th Financial Debenturees-A Issue in 2010	—	Held-to-maturity financial assets		—		201,160		—		201,160	Note 6
		TaipeiFubon Bank 5th Financial Debenturees-A Issue in 2010	—	Held-to-maturity financial assets		—		100,463		—		100,463	Note 6
		Formosa Petrochemical Corporation 1st Unsecured Corporate Bonds Issue in 2010	—	Held-to-maturity financial assets		—		301,704		—		301,704	Note 6
		Formosa Petrochemical Corporation 1st Unsecured Corporate Bonds Issue in 2010	—	Held-to-maturity financial assets		—		100,287		—		100,287	Note 6
		Taiwan Power Company 2nd Secured Corporate Bond-A Issue in 2010	—	Held-to-maturity financial assets		—		100,148		—		100,148	Note 6
		Taiwan Power Co 3rd Secured Corporate Bond-A Issue in 2010	—	Held-to-maturity financial assets		—		200,964		—		200,964	Note 6
		Taiwan Power Co. 4th Secured Corporate Bond-A Issue in 2010	—	Held-to-maturity financial assets		—		199,912		—		199,912	Note 6
		Taiwan Power Co. 4th Secured Corporate Bond-A Issue in 2010	—	Held-to-maturity financial assets		—		99,956		—		99,956	Note 6
		Taiwan Power Co. 4th Secured Corporate Bond-A Issue in 2010	—	Held-to-maturity financial assets		—		300,433		—		300,433	Note 6
		Mega Securities Co., Ltd. 1st Unsecured Corporate Bond Issue in 2009	—	Held-to-maturity financial assets		—		300,000		—		300,000	Note 6
		NAN YA Company 2nd Unsecured Corporate Bonds Issue in 2010	—	Held-to-maturity financial assets		—		50,327		—		50,327	Note 6

(Continued)

- 44 -

No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	December 31, 2012								Note
					Shares (Thousands/ Thousand Units)		Carrying Value (Note 5)		Percentage of Ownership		Market Value or Net Asset Value
		China Development Holding Corporation 1st Unsecured Corporate Bond-A Issue in 2009	—	Held-to-maturity financial assets		—	$	201,904		—	$	201,904	Note 6
		Formosa Petrochemical Corporation 3rd Unsecured Corporate Bonds Issue in 2010	—	Held-to-maturity financial assets		—		299,752		—		299,752	Note 6
		Yuanta FHC 1st Unsecured Corporate Bonds-A Issue in 2011	—	Held-to-maturity financial assets		—		300,000		—		300,000	Note 6
		China Steel Corporation 1st Unsecured Corporate Bonds Issue in 2011	—	Held-to-maturity financial assets		—		100,352		—		100,352	Note 6
		China Steel Corporation 1st Unsecured Corporate Bonds Issue in 2011	—	Held-to-maturity financial assets		—		302,024		—		302,024	Note 6
		FCFC 1st Unsecured Corporate Bonds Issue in 2011	—	Held-to-maturity financial assets		—		299,564		—		299,564	Note 6
		TSMC 1st Unsecured Corporate Bond-A Issue in 2011	—	Held-to-maturity financial assets		—		299,777		—		299,777	Note 6
		TSMC 1st Unsecured Corporate Bond-A Issue in 2011	—	Held-to-maturity financial assets		—		100,726		—		100,726	Note 6
		Fubon Financial Holding Co., Ltd. 1st Unsecured Corporate Bond issued in 2011	—	Held-to-maturity financial assets		—		301,689		—		301,689	Note 6
		Fubon Financial Holding Co., Ltd. 1st Unsecured Corporate Bond issued in 2011	—	Held-to-maturity financial assets		—		100,525		—		100,525	Note 6
		HSBC Bank (Taiwan) Limited 1st Financial Debenture-C Issue in 2011	—	Held-to-maturity financial assets		—		201,072		—		201,072	Note 6
		HSBC Bank (Taiwan) Limited 1st Financial Debenture-D Issue in 2011	—	Held-to-maturity financial assets		—		300,000		—		300,000	Note 6
		Formosa Petrochemical Corporation 1st Unsecured Corporate Bonds Issue in 2011	—	Held-to-maturity financial assets		—		149,792		—		149,792	Note 6
		Formosa Petrochemical Corporation 3rd Unsecured Corporate Bonds Issue in 2011	—	Held-to-maturity financial assets		—		199,697		—		199,697	Note 6
		Chinese Petroleum Corporation 2nd Unsecured Corporate Bond-A Issue in 2012	—	Held-to-maturity financial assets		—		199,815		—		199,815	Note 6
		Taiwan Power Co. 1st Unsecured Corporate Bond-A Issue in 2012	—	Held-to-maturity financial assets		—		99,915		—		99,915	Note 6
		Taiwan Power Co. 1st Unsecured Corporate Bond-A Issue in 2012	—	Held-to-maturity financial assets		—		39,966		—		39,966	Note 6
		Taiwan Power Co. 1st Unsecured Corporate Bond-2A Issue in 2012	—	Held-to-maturity financial assets		—		99,912		—		99,912	Note 6
		TSMC 1st Unsecured Corporate Bond-A Issue in 2012	—	Held-to-maturity financial assets		—		99,922		—		99,922	Note 6
		TSMC 1st Unsecured Corporate Bond-A Issue in 2012	—	Held-to-maturity financial assets		—		199,843		—		199,843	Note 6
		TSMC 1st Unsecured Corporate Bond-A Issue in 2012	—	Held-to-maturity financial assets		—		200,312		—		200,312	Note 6
		TSMC 2nd Unsecured Corporate Bond-A Issue in 2012	—	Held-to-maturity financial assets		—		199,819		—		199,819	Note 6
		TSMC 3rd Unsecured Corporate Bond-A Issue in 2012	—	Held-to-maturity financial assets		—		199,814		—		199,814	Note 6
		KGI Securities Co., Ltd. 1st Unsecured Corporate Bonds in 2012	—	Held-to-maturity financial assets		—		300,000		—		300,000	Note 6

(Continued)

- 45 -

No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	December 31, 2012										Note
					Shares (Thousands/ Thousand Units)		Carrying Value (Note 5)			Percentage of Ownership		Market Value or Net Asset Value
		Fubon Financial Holding Co., Ltd. 1st Unsecured Corporate Bond-A Issue in 2012	—	Held-to-maturity financial assets		—	$	300,000			—	$	300,000		Note 6
		China Development Holding Corporation 1st Unsecured Corporate Bond-A Issue in 2012	—	Held-to-maturity financial assets		—		150,059			—		150,059		Note 6
		China Development Holding Corporation 1st Unsecured Corporate Bond-A Issue in 2012	—	Held-to-maturity financial assets		—		100,080			—		100,080		Note 6
		China Development Holding Corporation 1st Unsecured Corporate Bond-A Issue in 2012	—	Held-to-maturity financial assets		—		100,080			—		100,080		Note 6
		Eximbank 19-2nd Unsecured Financial Debentures	—	Held-to-maturity financial assets		—		150,000			—		150,000		Note 6
1	Senao International Co., Ltd.	Stocks
		Senao Networks, Inc.	Equity-method investee	Investments accounted for using equity method		16,824		412,666			40		412,666		Note 1
		Senao International (Samoa) Holding Ltd.	Subsidiary	Investments accounted for using equity method		33,475	(US$	544,489 18,688	)		100	(US$	545,062 18,708	)	Note 1
		N.T.U. Innovation Incubation Corporation	—	Financial assets carried at cost		1,200		12,000			9		12,000		Note 2
2	CHIEF Telecom Inc.	Stocks
		Unigate Telecom Inc.	Subsidiary	Investments accounted for using equity method		200		1,669			100		1,669		Note 1
		Chief International Corp.	Subsidiary	Investments accounted for using equity method		200	(US$	14,234 490	)		100	(US$	14,234 490	)	Note 1
		3 Link Information Service Co., Ltd.	—	Financial assets carried at cost		374		3,450			10		6,734		Note 2
		21Vianet Group. Inc.	—	Available-for-sale financial assets		208	(US$	9,661 333	)		—	(US$	9,661 333	)	Note 4
3	Chunghwa System Integration Co., Ltd.	Stocks
		Concord Technology Co., Ltd.	Subsidiary	Investments accounted for using equity method		1,500	(RMB	19,041 4,124	)		100	(RMB	19,041 4,124	)	Note 1
7	Spring House Entertainment Tech. Inc.	Stocks
		Ceylon Innovation Co., Ltd.	Subsidiary	Investments accounted for using equity method		100		913			100		913		Note 1
8	Light Era Development Co., Ltd.	Stocks
		Yao Yong Real Property Co., Ltd.	Subsidiary	Investments accounted for using equity method		83,290		2,719,688			100		1,826,292		Note 1
9	Chunghwa Telecom Singapore Pte., Ltd.	Stocks
		ST-2 Satellite Ventures Pte., Ltd.	Equity-method investee	Investments accounted for using equity method		18,102	(SG$	541,672 22,798	)		38	(SG$	541,672 22,798	)	Note 1
14	Chunghwa Investment Co., Ltd.	Stocks
		Chunghwa Precision Test Tech. Co., Ltd.	Subsidiary	Investments accounted for using equity method		10,317		138,060			53		138,060		Note 1
		Chunghwa Investment Holding Co., Ltd. (CIHC)	Subsidiary	Investments accounted for using equity method		1,432	(US$	18,835 649	)		100	(US$	18,835 649	)	Note 1
		PandaMonium Company Ltd.	Equity-method investee	Investments accounted for using equity method		602		—			43		—		Note 1
		CHIEF Telecom Inc.	Equity-method investee	Investments accounted for using equity method		2,000		28,181			4		28,181		Note 1
		Senao International Co., Ltd.	Equity-method investee	Investments accounted for using equity method		1,001		47,016			—		95,195		Note 4
		Tatung Technology Inc.	—	Financial assets carried at cost		4,571		73,964			11		73,180		Note 2

(Continued)

- 46 -

No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	December 31, 2012										Note
					Shares (Thousands/ Thousand Units)		Carrying Value (Note 5)			Percentage of Ownership		Market Value or Net Asset Value
		Digimax Inc.	—	Financial assets carried at cost		2,000	$	10,928			3	$	17,980		Note 2
		iD Branding Ventures	—	Financial assets carried at cost		1,875		18,750			3		16,350		Note 2
		Uni Display Inc.	—	Financial assets carried at cost		2,269		21,974			1		12,659		Note 2
		A2peak Power Co., Ltd.	—	Financial assets carried at cost		990		—			3		—		Note 2
		CoaTronics Inc.	—	Financial assets carried at cost		840		1,168			6		3,083		Note 2
		VisEra Technologies Company Ltd.	—	Financial assets carried at cost		649		29,371			—		12,889		Note 2
		Ultra Fine Optical Technology Co., Ltd.	—	Financial assets carried at cost		1,800		18,000			8		14,418		Note 2
		Procrystal Technology Co., Ltd.	—	Financial assets carried at cost		1,350		16,200			2		16,268		Note 2
		Tons Lightology Inc.	—	Financial assets carried at cost		1,113		66,150			4		34,080		Note 7
		Alder Optomechanical Corp.	—	Financial assets carried at cost		666		23,310			2		11,139		Note 2
		Aide Energy (Cayman) Holding Co., Ltd.	—	Financial assets carried at cost		800		2,550			1		6,149		Note 2
		Mediapro Technology Ltd.	—	Financial assets carried at cost		55		8,177			—		5,816		Note 2
		Fashion Guide Co., Ltd.	—	Financial assets carried at cost		200		2,000			2		638		Note 2
		PChome Store Inc.	—	Available-for-sale financial assets—noncurrent		325		14,073			2		32,500		Note 4
		Bond
		Hua Nan Financial Holdings Company 1st Unsecured Subordinate Corporate Bonds Issue in 2006	—	Available-for-sale financial assets		50,000		50,203			—		50,471		Note 9
18	Concord Technology Co., Ltd.	Stocks
		Glory Network System Service (Shanghai) Co., Ltd.	Subsidiary	Investments accounted for using equity method		1,500	(RMB	19,041 4,124	)		100	(RMB	19,041 4,124	)	Note 1
20	Chunghwa Precision Test Tech. Co., Ltd.	Stocks
		Chunghwa Precision Test Tech. USA Corporation	Subsidiary	Investments accounted for using equity method		400	(US$	10,513 362	)		100	(US$	10,513 362	)	Note 1
22	Senao International (Samoa) Holding Ltd.	Stocks
		Senao International HK Limited	Subsidiary	Investments accounted for using equity method		32,760	(US$	521,718 17,906	)		100	(US$	521,718 17,906	)	Note 1
		HopeTech Technologies Limited	Equity-method investee	Investments accounted for using equity method		5,240	(US$	22,315 766	)		45	(US$	22,315 766	)	Note 1
23	Senao International HK Limited	Stocks
		Senao Trading (Fujian) Co., Ltd.	Subsidiary	Investments accounted for using equity method		—	(US$	184,251 6,324	)		100	(US$	184,251 6,324	)	Note 1
		Senao International Trading (Shanghai) Co., Ltd.	Subsidiary	Investments accounted for using equity method		—	(US$	125,656 4,313	)		100	(US$	125,656 4,313	)	Note 1
		Senao International Trading (Shanghai) Co., Ltd.	Subsidiary	Investments accounted for using equity method		—	(US$	52,704 1,809	)		100	(US$	52,704 1,809	)	Notes 1 and 10
		Senao International Trading (Jiangsu) Co., Ltd.	Subsidiary	Investments accounted for using equity method		—	(US$	156,241 5,362	)		100	(US$	156,241 5,362	)	Note 1
24	Chunghwa Investment Holding Co., Ltd.	Stocks
		CHI One Investment Co., Limited	Subsidiary	Investments accounted for using equity method		6,520	(HK$	9,101 2,429	)		100	(HK$	9,101 2,429	)	Note 1

(Continued)

- 47 -

No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	December 31, 2012										Note
					Shares (Thousands/ Thousand Units)		Carrying Value (Note 5)			Percentage of Ownership		Market Value or Net Asset Value
26	CHI One Investment Co., Limited	Stocks
		Xiamen Sertec Business Technology Co., Ltd.	Equity-method investee	Investments accounted for using equity method		—	$ (RMB	8,634 1,853	)		49	$ (RMB	8,634 1,853	)	Note 1
27	Prime Asia Investments Group, Ltd. (B.V.I.)	Stocks
		Chunghwa Hsingta Company Ltd.	Subsidiary	Investments accounted for using equity method		—	(RMB	155,476 33,360	)		100	(RMB	155,476 33,360	)	Note 1
29	Chunghwa Hsingta Company Ltd.	Stocks
		Chunghwa Telecom (China) Co., Ltd.	Subsidiary	Investments accounted for using equity method		—	(RMB	122,628 26,315	)		100	(RMB	122,628 26,315	)	Note 1
		Jiangsu Zhenhua Information Technology Company, LLC	Subsidiary	Investments accounted for using equity method		—	(RMB	24,218 5,197	)		75	(RMB	24,218 5,197	)	Note 1
		Hua-Xiong Information Technology Co., Ltd.	Subsidiary	Investments accounted for using equity method		—	(RMB	8,630 1,852	)		51	(RMB	8,630 1,852	)	Note 1

Note 1:  The net asset values of investees were based on audited financial statements.

Note 2:  The net asset values of investees were based on unaudited financial statements.

Note 3:  The net asset values of beneficiary certificates (mutual fund) were based on the net asset values on December 31, 2012.

Note 4:  Market value was based on the closing price of December 31, 2012.

Note 5:  Showing at their original carrying amounts without adjustments for fair values, except for held-to-maturity financial assets.

Note 6:  The net asset values of investees were based on amortized cost.

Note 7:  Market value of emerging stock was based on the average trading price on December 31, 2012.

Note 8:  New Prospect Investments Holdings Ltd. (B.V.I.) was incorporated in March 2006, but not yet begun operation as of December 31, 2012.

Note 9:  The market value is determined by the hundred price of transaction market on December 31, 2012.

Note 10:  The English name is the same as the above entity; however, the Chinese names included in the respective Articles of Incorporations are different.

(Concluded)

- 48 -

TABLE 3

CHUNGHWA TELECOM CO., LTD.

MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL

YEAR ENDED DECEMBER 31, 2012

(Amounts in Thousands of New Taiwan Dollars)

No.	Company Name	Marketable Securities Type and Name	Financial Statement Account	Counter- party		Nature of Relationship	Beginning Balance					Acquisition					Disposal										Ending Balance
							Shares (Thousands/ Thousand Units)		Amount (Note 1)			Shares (Thousands/ Thousand Units)		Amount			Shares (Thousands/ Thousand Units)		Amount		Carrying Value (Note 1)			Gain (Loss) on Disposal			Shares (Thousands/ Thousand Units)		Amount (Note 1)
0	Chunghwa Telecom Co., Ltd.	Stocks
		Donghwa Telecom Co., Ltd.	Investments accounted for using equity method		—	Subsidiary		223,190	$	891,526 (Note 3	)		81,900	$ (HK$	313,299 81,900	)		—	$	—	$	—		$	—			305,090	$	1,168,032 (Note 3	)
		Chunghwa Investment Co., Ltd.	Investments accounted for using equity method		—	Subsidiary		178,000		1,742,779 (Note 3	)		—		—			97,900		979,000		979,000 (Note 4	)		—			80,100		614,217 (Note 3	)
		China Airlines Ltd.	Available-for-sale financial assets—noncurrent		—	—		—		—			263,622		3,092,287			—		—		—			—			263,622		3,092,287
		Beneficiary certificates (mutual fund)
		HSBC Glbl Emerging Markets Bol A Inc.	Available-for-sale financial assets		—	—		304		172,231			—		—			304		181,011		172,231			8,780			—		—
		Templeton Global Bond A (ACC)	Available-for-sale financial assets		—	—		418		307,114			—		—			418		308,560		307,114			1,446			—		—
		PIMCO Global Investment Grade Credit—Ins H Acc	Available-for-sale financial assets		—	—		751		307,245			320		148,873			—		—		—			—			1,071		456,118
		Fidelity Funds—US Dollar Bond Fund Y-ACC-USD	Available-for-sale financial assets		—	—		—		—			778		297,283			—		—		—			—			778		297,283
		HSBC Global Investment Funds—Global Emerging Markets Bond ID	Available-for-sale financial assets		—	—		—		—			273		177,180			273		172,956		177,180			(4,224	)		—		—
		Eastpring Investment—US Corporate Bond Fund	Available-for-sale financial assets		—	—		—		—			433		149,190			—		—		—			—			433		149,190
		Bonds
		NAN YA Company 2nd Unsecured Corporate Bonds Issue in 2008	Held-to-maturity financial assets		—	—		—		400,000 (Note 2	)		—		—			—		—		200,000 (Note 2	)		—			—		200,000 (Note 2	)
		NAN YA Company 3rd Unsecured Corporate Bonds Issue in 2008	Held-to-maturity financial assets		—	—		—		200,000 (Note 2	)		—		—			—		—		100,000 (Note 2	)		—			—		100,000 (Note 2	)
		TSMC 1st Unsecured Corporate Bond-C Issue in 2002	Held-to-maturity financial assets		—	—		—		300,000 (Note 2	)		—		—			—		—		300,000 (Note 2	)		—			—		—
		TSMC 1st Unsecured Corporate Bond-C Issue in 2002	Held-to-maturity financial assets		—	—		—		300,000 (Note 2	)		—		—			—		—		300,000 (Note 2	)		—			—		—
		TSMC 1st Unsecured Corporate Bond-A Issue in 2011	Held-to-maturity financial assets		—	—		—		300,000 (Note 2	)		—		100,000 (Note 2	)		—		—		—			—			—		400,000 (Note 2	)
		TSMC 1st Unsecured Corporate Bond-A Issue in 2012	Held-to-maturity financial assets		—	—		—		—			—		500,000 (Note 2	)		—		—		—			—			—		500,000 (Note 2	)
		TSMC 2nd Unsecured Corporate Bond-A Issue in 2012	Held-to-maturity financial assets		—	—		—		—			—		200,000 (Note 2	)		—		—		—			—			—		200,000 (Note 2	)
		TSMC 3rd Unsecured Corporate Bond-A Issue in 2012	Held-to-maturity financial assets		—	—		—		—			—		200,000 (Note 2	)		—		—		—			—			—		200,000 (Note 2	)
		Formosa Petrochemical Corporation 2nd Unsecured Corporate Bonds Issue in 2008	Held-to-maturity financial assets		—	—		—		500,000 (Note 2	)		—		—			—		—		250,000 (Note 2	)		—			—		250,000 (Note 2	)
		Formosa Petrochemical Corporation 3rd Unsecured Corporate Bonds Issue in 2008	Held-to-maturity financial assets		—	—		—		250,000 (Note 2	)		—		—			—		—		125,000 (Note 2	)		—			—		125,000 (Note 2	)

(Continued)

- 49 -

No.	Company Name	Marketable Securities Type and Name	Financial Statement Account	Counter- party		Nature of Relationship		Beginning Balance					Acquisition					Disposal									Ending Balance
								Shares (Thousands/ Thousand Units)		Amount (Note 1)			Shares (Thousands/ Thousand Units)		Amount			Shares (Thousands/ Thousand Units)		Amount		Carrying Value (Note 1)			Gain (Loss) on Disposal		Shares (Thousands/ Thousand Units)		Amount (Note 1)
		Chinese Petroleum Corporation 1st Unsecured Corporate Bonds-B Issue in 2006	Held-to-maturity financial assets		—		—		—	$	700,000 (Note 2	)		—	$	—			—	$	—	$	350,000 (Note 2	)	$	—		—	$	350,000 (Note 2	)
		Chinese Petroleum Corporation 1st Unsecured Corporate Bonds-C Issue in 2006	Held-to-maturity financial assets		—		—		—		100,000 (Note 2	)		—		200,000 (Note 2	)		—		—		—			—		—		300,000 (Note 2	)
		Chinese Petroleum Corporation 2st Unsecured Corporate Bonds-A Issue in 2012	Held-to-maturity financial assets		—		—		—		—			—		200,000 (Note 2	)		—		—		—			—		—		200,000 (Note 2	)
		China Steel Corporation 2nd Unsecured Corporate Bonds-A Issue in 2008	Held-to-maturity financial assets		—		—		—		200,000 (Note 2	)		—		—			—		—		100,000 (Note 2	)		—		—		100,000 (Note 2	)
		China Steel Corporation 1nd Unsecured Corporate Bonds-A Issue in 2011	Held-to-maturity financial assets		—		—		—		100,000 (Note 2	)		—		300,000 (Note 2	)		—		—		—			—		—		400,000 (Note 2	)
		Taiwan Power Co. 3rd Unsecured Corporate Bond-C Issue in 2006	Held-to-maturity financial assets		—		—		—		—			—		200,000 (Note 2	)		—		—		—			—		—		200,000 (Note 2	)
		Taiwan Power Co. 1st Unsecured Corporate Bond-A Issue in 2012	Held-to-maturity financial assets		—		—		—		—			—		140,000 (Note 2	)		—		—		—			—		—		140,000 (Note 2	)
		Taiwan Power Co. 2nd Unsecured Corporate Bond-A Issue in 2012	Held-to-maturity financial assets		—		—		—		—			—		100,000 (Note 2	)		—		—		—			—		—		100,000 (Note 2	)
		Yuanta Securities Co., Ltd. 1st Unsecured Corporate Bonds-B Issue in 2007	Held-to-maturity financial assets		—		—		—		200,000 (Note 2	)		—		—			—		—		200,000 (Note 2	)		—		—		—
		KGI Securities Co., Ltd. 1st Unsecured Corporate Bonds in 2011	Held-to-maturity financial assets		—		—		—		—			—		300,000 (Note 2	)		—		—		—			—		—		300,000 (Note 2	)
		China Development Holding Corporation 1st Unsecured Corporate Bonds Issue in 2007	Held-to-maturity financial assets		—		—		—		400,000 (Note 2	)		—		—			—		—		400,000 (Note 2	)		—		—		—
		China Development Holding Corporation 1st Unsecured Corporate Bonds-A Issue in 2011	Held-to-maturity financial assets		—		—		—		—			—		350,000 (Note 2	)		—		—		—			—		—		350,000 (Note 2	)
		Fubon Financial Holding Co., Ltd. 1st Unsecured Corporate Bonds Issue in 2011	Held-to-maturity financial assets		—		—		—		—			—		400,000 (Note 2	)		—		—		—			—		—		400,000 (Note 2	)
		Fubon Financial Holding Co., Ltd. 1st Unsecured Corporate Bonds-A Issue in 2012	Held-to-maturity financial assets		—		—		—		—			—		300,000 (Note 2	)		—		—		—			—		—		300,000 (Note 2	)
		HSBC Bank (Taiwan) Limited 1st Financial Debenture—C Issue in 2011	Held-to-maturity financial assets		—		—		—		—			—		200,000 (Note 2	)		—		—		—			—		—		200,000 (Note 2	)
		Eximoank 19-2nd Unsecured Financial Debenture	Held-to-maturity financial assets		—		—		—		—			—		150,000 (Note 2	)		—		—		—			—		—		150,000 (Note 2	)
1	Senao International Co., Ltd.	Stocks
		Senao International (Samoa) Holding Ltd.	Investments accounted for using equity method		—		Subsidiary		15,875	(US$	466,517 15,875	)		17,600	(US$	522,080 17,600	)		—		—		—			—		33,475	(US$	988,597 33,475 (Note 3	)  )
22	Senao International (Samoa) Holding Ltd.	Stocks
		Senao International HK Limited	Investments accounted for using equity method		—		Subsidiary		15,180	(US$	444,712 15,180	)		17,580	(US$	521,474 17,580	)		—		—		—			—		32,760	(US$	966,186 32,760 (Note 3	)  )

(Continued)

- 50 -

No.	Company Name	Marketable Securities Type and Name	Financial Statement Account	Counter- party		Nature of Relationship		Beginning Balance					Acquisition					Disposal								Ending Balance
								Shares (Thousands/ Thousand Units)		Amount (Note 1)			Shares (Thousands/ Thousand Units)		Amount			Shares (Thousands/ Thousand Units)		Amount		Carrying Value (Note 1)		Gain (Loss) on Disposal		Shares (Thousands/ Thousand Units)		Amount (Note 1)
23	Senao International HK Limited	Stocks
		Senao International Trading (Jiangsu) Co., Ltd.	Investments accounted for using equity method		—		Subsidiary		—	$ (US$	115,971 4,000	)		—	$ (US$	147,765 5,000	)		—	$	—	$	—	$	—		—	$ (US$	263,736 9,000 (Note 3	)  )
		Senao International Trading (Fujian) Co., Ltd.	Investments accounted for using equity method		—		Subsidiary		—	(US$	116,821 4,000	)		—	(US$	221,972 7,500	)		—		—		—		—		—	(US$	338,793 11,500 (Note 3	)  )
		Senao International Trading (Shanghai) Co., Ltd.	Investments accounted for using equity method		—		Subsidiary		—	(US$	148,413 5,000	)		—	(US$	149,313 5,000	)		—		—		—		—		—	(US$	297,726 10,000 (Note 3	)  )

Note 1: Showing at their original carrying amounts without adjustments for fair values.

Note 2: Stated at its nominal amounts.

Note 3: The ending balance includes equity in earnings or losses of equity method investees and cumulative transaction adjustments.

Note 4: The amount decrease was because of capital reduction.

(Concluded)

- 51 -

TABLE 4

CHUNGHWA TELECOM CO., LTD.

ACQUISITION OF REAL ESTATE AMOUNTING AT COST OF AT LEAST NT$100 MILLION OR 20%

OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2012

(Amounts in Thousands of New Taiwan Dollars)

Company Name

Type of Property

Transactions Date

Transaction Amount

Payment Term

Counter- party

Nature of Relationship

Prior Transaction made by Related Counter-party

Price Reference

Purpose of Acquisition

Other Terms

Owner

Relationship

Transfer Date

Amount

Light Era Development Co., Ltd.

Land

2012.10.04

$1,977,932

Paid

5 people (Mr. Shen, etc.)

None

—

—

—

$—

In accordance with land appraisal report and mutual agreement

Investment and development

None

- 52 -

TABLE 5

CHUNGHWA TELECOM CO., LTD.

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL

YEAR ENDED DECEMBER 31, 2012

(Amounts in Thousands of New Taiwan Dollars)

No.	Company Name	Related Party	Nature of Relationship	Transaction Details							Abnormal Transaction (Note 3)				Notes/Accounts Payable or Receivable
				Purchase/ Sale	Amount (Note 1)		% to Total		Payment Terms		Units Price		Payment Terms		Ending Balance (Note 2)			% to Total
0	Chunghwa Telecom Co., Ltd.	Senao International Co., Ltd.	Subsidiary	Purchase	$	9,832,009		7		30-90 days	$	—		—	$	(1,305,378	)		(9	)
				Sales		713,394		1		30 days		—		—		534,789			6
		Chunghwa System Integration Co., Ltd.	Subsidiary	Purchase		803,102		1		30 days		—		—		(525,183	)		(4	)
		CHIEF Telecom Inc.	Subsidiary	Purchase		334,152		—		30 days		—		—		(60,209	)		—
				Sales		260,808		—		60 days		—		—		27,952			—
		Taiwan International Standard Electronics Co., Ltd.	Equity-method investee	Purchase		572,878		—		30-90 days		—		—		(594,340	)		(4	)
		Chunghwa Telecom Global Inc.	Subsidiary	Purchase		270,069		—		90 days		—		—		(69,735	)		—
		Skysoft Co., Ltd.	Equity-method investee	Purchase		108,182		—		30 days		—		—		(32,951	)		—
		So-net Entertainment Taiwan	Equity-method investee	Sales		336,470		—		60 days		—		—		20,606			—
		Donghwa Telecom Co., Ltd.	Subsidiary	Purchase		109,516		—		30 days		—		—		(81,964	)		(1	)
				Sales		123,151		—		30 days		—		—		39,865			—
		InforExplorer Co., Ltd.	Equity-method investee	Purchase		274,008		—		90 days		—		—		(112,161	)		(1	)
		ST-Satellite Ventures Pte. Ltd.	Equity-method investee	Purchase		405,680		—		30 days		—		—		(19,041	)		—
1	Senao International Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company	Purchase		639,532		2		30 days		—		—		(531,018	)		(21	)
				Sales		9,865,446		28		30-90 days		—		—		1,327,409			55
2	CHIEF Telecom Inc.	Chunghwa Telecom Co., Ltd.	Parent company	Purchase		260,379		26		60 days		—		—		(27,324	)		(34	)
				Sales		334,152		24		30 days		—		—		62,392			40
3	Chunghwa System Integration Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company	Sales		2,517,203		90		30 days		—		—		549,584			90
5	Chunghwa Telecom Global Inc.	Chunghwa Telecom Co., Ltd.	Parent company	Sales		270,069		57		90 days		—		—		69,735			82
6	Dongwa Telecom Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company	Purchase		123,151		31		30 days		—		—		(39,865	)		49
				Sales		109,516		24		30 days		—		—		81,964			83

(Continued)

- 53 -

Note 1: The differences were because Chunghwa Telecom Co., Ltd. and subsidiaries classified the amount as inventories, property, plant and equipment, intangible assets, and operating expenses.

Note 2: Notes and accounts receivable did not include the amount as amounts collected for others and other receivables.

Note 3: Transaction terms with the related parties were determined in accordance with mutual agreements when there were no similar transactions with third parties. Other transactions with related parties were not significantly different from those with third parties.

(Concluded)

- 54 -

TABLE 6

CHUNGHWA TELECOM CO., LTD.

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20%

OF THE PAID-IN CAPITAL

DECEMBER 31, 2012

(Amounts in Thousands of New Taiwan Dollars)

No.	Company Name	Related Party	Nature of Relationship	Ending Balance		Turnover Rate (Note 1)		Overdue				Amounts Received in Subsequent Period		Allowance for Bad Debts
								Amounts		Action Taken
0	Chunghwa Telecom Co., Ltd.	Senao International Co., Ltd.	Subsidiary	$	1,443,395		12.44	$	—		—	$	1,443,395	$	—
1	Senao International Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company		1,779,706		7.64		—		—		1,558,720		—
3	Chunghwa System Integration Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company		549,584		4.27		—		—		536,890		—
4	Chunghwa International Yellow Pages Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company		153,887		7.40		—		—		136,247		—

Note 1: Payments and receipts collected for others are excluded from the accounts receivable for calculating the turnover rate.

- 55 -

TABLE 7

CHUNGHWA TELECOM CO., LTD.

NAMES, LOCATIONS, AND OTHER INFORMATION OF INVESTEES IN WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE

FOR THE YEAR ENDED DECEMBER 31, 2012

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

No.	Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount						Balance as of December 31, 2012							Net Income (Loss) of the Investee			Recognized  Gain (Loss) (Notes 1 and 2)			Note
					December 31, 2012			December 31, 2011			Shares (Thousands)		Percentage of Ownership (%)		Carrying Value
0	Chunghwa Telecom Co., Ltd.	Senao International Co., Ltd.	Taiwan	Selling and maintaining mobile phones and its peripheral products	$	1,065,813		$	1,065,813			71,773		28	$	1,623,305		$	1,492,099		$	410,617		Subsidiary
		Light Era Development Co., Ltd.	Taiwan	Housing, office building development, rent and sale services		3,000,000			3,000,000			300,000		100		3,785,310			667,951			664,064		Subsidiary
		Donghwa Telecom Co., Ltd.	Hong Kong	International telecommunications IP fictitious internet and internet transfer services		1,195,518			882,219			305,090		100		1,168,032			4,007			4,007		Subsidiary
		Chunghwa Telecom Singapore Pte., Ltd.	Singapore	Telecommunication wholesale, internet transfer services international data and long distance call wholesales to carriers		574,112			574,112			26,383		100		746,122			73,988			73,988		Subsidiary
		Chunghwa System Integration Co., Ltd.	Taiwan	Providing communication and information aggregative services		838,506			838,506			60,000		100		707,250			61,507			46,084		Subsidiary
		Chunghwa Investment Co., Ltd.	Taiwan	Telecommunications, telecommunications value-added services and other related professional investment		759,709			1,738,709			80,100		89		614,217			(165,530	)		(148,528	)	Subsidiary
		CHIEF Telecom Inc.	Taiwan	Internet communication and internet data center (“IDC”) service		482,165			482,165			37,942		69		591,706			161,291			113,354		Subsidiary
		InfoExplorer Co., Ltd.	Taiwan	IT solution provider, IT application consultation, system integration and package solution		283,500			283,500			22,498		33		277,592			48,242			20,605		Equity-method investee
		Viettel-CHT Co., Ltd.	Vietnam	IDC services		288,327			288,327			—		30		265,052			64,217			19,274		Equity-method investee
		Huada Digital Corporation	Taiwan	Providing software service		250,000			250,000			25,000		50		241,309			(18,761	)		(9,380	)	Equity-method investee
		Taiwan International Standard Electronics Co., Ltd.	Taiwan	Manufacturing, selling, designing, and maintaining of telecommunications systems and equipment		164,000			164,000			1,760		40		224,099			775,038			301,024		Equity-method investee
		Chunghwa International Yellow Pages Co., Ltd.	Taiwan	Yellow pages sales and advertisement services		150,000			150,000			15,000		100		188,738			29,151			29,151		Subsidiary
		Prime Asia Investments Group Ltd. (B.V.I.)	British Virgin Islands	Investment		215,020			206,089			7,270		100		155,357			(35,832	)		(35,813	)	Subsidiary
		Skysoft Co., Ltd.	Taiwan	Providing of music on-line, software, electronic information, and advertisement services		67,025			67,025			4,438		30		127,686			139,988			41,031		Equity-method investee
		Spring House Entertainment Tech. Inc.	Taiwan	Network services, producing digital entertainment contents and broadband visual sound terrace development		62,209			62,209			7,015		56		125,929			69,532			39,922		Subsidiary
		Chunghwa Telecom Global, Inc.	United States	International data and internet services and long distance call wholesales to carriers		70,429			70,429			6,000		100		96,614			12,257			14,510		Subsidiary
		KingWay Technology Co., Ltd.	Taiwan	Publishing books, data processing and software services		71,770			71,770			2,214		33		77,449			54,879			12,300		Equity-method investee
		Chunghwa Telecom Vietnam Co., Ltd.	Vietnam	Information and communications technology, international circuit, and intelligent energy network service		73,157			43,847			—		100		55,448			(9,287	)		(9,287	)	Subsidiary
		Smartfun Digital Co., Ltd.	Taiwan	Software retail		65,000			65,000			6,500		65		44,549			(23,870	)		(15,576	)	Subsidiary
		So-net Entertainment Taiwan	Taiwan	Online service and sale of computer hardware		60,008			60,008			3,429		30		31,152			(11,517	)		(3,393	)	Equity-method investee
		Chunghwa Telecom Japan Co., Ltd.	Japan	Telecom business, information process and information provide service, development and sale of software and consulting services in telecommunication		17,291			17,291			1		100		25,689			7,020			7,020		Subsidiary
		Dian Zuan Integrating Marketing Co., Ltd.	Taiwan	Information technology service and general advertisement service		64,500			114,640			6,450		33		20,902			(118,646	)		(39,854	)	Equity-method investee
		Chunghwa Sochamp Technology Inc.	Taiwan	License plate recognition system		20,400			20,400			2,040		51		17,414			1,107			(2,937	)	Subsidiary
		New Prospect Investments Holdings Ltd. (B.V.I.)	British Virgin Islands	Investment		—   (Note 3	)		—   (Note 3	)		—		100		—   (Note 3	)		—			—   (Note 3	)	Subsidiary
1	Senao International Co., Ltd.	Senao Networks, Inc.	Taiwan	Telecommunication facilities manufactures and sales.		206,190			206,190			16,824		40		412,666			293,650			118,946		Equity-method investee
		Senao International (Samoa) Holding Ltd.	Samoa Islands	International investment.	(US$	988,597 33,475	)	(US$	466,517 15,875	)		33,475		100	(US$	544,489 18,688	)	(US$	(280,990 (9,494	)  ))	(US$	(281,022 (9,495	)  ))	Subsidiary

(Continued)

- 56 -

No.	Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount						Balance as of December 31, 2012							Net Income (Loss) of the Investee			Recognized Gain (Loss) (Notes 1 and 2)			Note
					December 31, 2012			December 31, 2011			Shares (Thousands)		Percentage of Ownership (%)		Carrying Value
2	CHIEF Telecom Inc.	Unigate Telecom Inc.	Taiwan	Telecommunication and internet service.	$	2,000		$	2,000			200		100	$	1,669		$	(135	)	$	(135	)	Subsidiary
		Chief International Corp.	Samoa Islands	Network communication and engine room hiring	(US$	6,068 200	)	(US$	6,068 200	)		200		100	(US$	14,234 490	)	(US$	4,521 153	)	(US$	4,521 153	)	Subsidiary
3	Chunghwa System Integrated Co., Ltd.	Concord Technology Co., Ltd.	Brunei	Providing advanced business solutions to telecommunications	(US$	47,321 1,500	)	(US$	31,973 1,010	)		1,500		100	(RMB	19,041 4,124	)	(RMB	(1,799) (384	))	(RMB	(1,799) (384	))	Subsidiary
7	Spring House Entertainment Tech. Inc.	Ceylon Innovation Co., Ltd.	Taiwan	International trading, general advertisement and book publishment service		1,000			1,000			100		100		913			(41	)		(41	)	Subsidiary
8	Light Era Development Co., Ltd.	Yao Yong Real Property Co., Ltd.	Taiwan	Real estate leasing business		2,793,667			2,793,667			83,290		100		2,719,688			51,958			35,718		Subsidiary
9	Chunghwa Telecom Singapore Pte., Ltd.	ST-2 Satellite Ventures Pte., Ltd.	Singapore	Operation of ST-2 telecommunication satellite	(SG$	409,061 18,102	)	(SG$	409,061 18,102	)		18,102		38	(SG$	541,672 22,798	)	(SG$	184,427 7,792	)	(SG$	70,324 2,971	)	Equity-method investee
14	Chunghwa Investment Co., Ltd.	Chunghwa Precision Test Tech Co., Ltd.	Taiwan	Semiconductor testing components and printed circuit board industry production and marketing of electronic products		91,875			91,875			10,317		53		138,060			39,940			21,306		Subsidiary
		Chunghwa Investment Holding Co., Ltd.	Brunei	General investment	(US$	46,035 1,432	)	(US$	34,483 1,043	)		1,432		100	(US$	18,835 649	)	(US$	(3,530 (119	)  ))	(US$	(3,530 (119	)  ))	Subsidiary
		Panda Monium Company Ltd.	Cayman	The production of animation	(US$	20,000 602	)	(US$	20,000 602	)		602		43		—			—			—		Equity-method investee
		CHIEF Telecom Inc.	Taiwan	Telecommunication and internet service		20,000			20,000			2,000		4		28,181			161,291			6,272		Equity-method investee
		Senao International Co., Ltd.	Taiwan	Selling and maintaining mobile phones and its peripheral products		49,731			49,731			1,001		—		47,016			1,493,099			2,895		Equity-method investee
18	Concord Technology Co., Ltd.	Glory Network System Service (Shanghai) Co., Ltd.	China	Providing advanced business solutions to telecommunications	(US$	47,321 1,500	)	(US$	31,973 1,010	)		1,500		100	(RMB	19,041 4,124	)	(RMB	(1,799 (384	)  ))	(RMB	(1,799 (384	)  ))	Subsidiary
20	Chunghwa Precision Test Tech. Co., Ltd.	Chunghwa Precision Test Tech. USA Corporation	United States	Semiconductor testing components and printed circuit board industry production and marketing of electronic products	(US$	12,504 400	)	(US$	12,504 400	)		400		100	(US$	10,513 362	)	(US$	2,552 86	)	(US$	2,552 86	)	Subsidiary
22	Senao International (Samoa) Holding Ltd.	Senao International HK Limited.	Hong Kong	International investment.	(US$	966,186 32,760	)	(US$	444,712 15,180	)		32,760		100	(US$	521,718 17,906	)	(US$	(282,550) (9,547))		(US$	(282,550 (9,547	)  ))	Subsidiary
		HopeTech Technologies Limited	Hong Kong	Information technology and telecommunication products sales.	(US$	21,177 675	)	(US$	21,177 675	)		5,240		45	(US$	22,315 766	)	(US$	3,556 120	)	(US$	1,600 54	)	Equity-method investee
24	Chunghwa Investment Holding Co., Ltd.	CHI One Investment Co., Limited	Hong Kong	General investment	(HK$	26,035 6,520	)	(HK$	14,483 3,924	)		6,520		100	(HK$	9,101 2,429	)	(HK$	(3,499 918	)  ))	(HK$	(3,499 918	)  ))	Subsidiary
26	CHI One Investment Co., Limited	Xiamen Sertec Business Technology Co., Ltd.	China	Customer Services and platform rental activities	(RMB	25,414 5,390	)	(RMB	13,862 2,963	)		—		49	(RMB	8,634 1,853	)	(RMB	(7,092 (1,514	)  ))	(RMB	(3,475 (742	)  ))	Equity-method investee
23	Senao International HK Limited	Senao Trading (Fujian) Co., Ltd.	China	Information technology services and sale of communication products	(US$	338,793 11,500	)	(US$	116,821 4,000	)		—		100	(US$	184,251 6,324	)	(US$	(109,697 (3,706	)  ))	(US$	(109,697 (3,706	)  ))	Subsidiary
		Senao International Trading (Shanghai) Co., Ltd.	China	Information technology services and sale of communication products	(US$	297,726 10,000	)	(US$	148,413 5,000	)		—		100	(US$	125,656 4,313	)	(US$	(100,209 (3,386	)  ))	(US$	(100,209 (3,386	)  ))	Subsidiary
		Senao International Trading (Shanghai) Co., Ltd.	China	Information technology services and sale of communication products	(US$	57,860 2,000	)	(US$	57,860 2,000	)		—		100	(US$	52,704 1,809	)	(US$	(5,127 (173	)  ))	(US$	(5,127 (173	)  ))	Subsidiary (Note 4)
		Senao International Trading (Jiangsu) Co., Ltd.	China	Information technology services and sale of communication products	(US$	263,736 9,000	)	(US$	115,971 4,000	)		—		100	(US$	156,241 5,362	)	(US$	(67,454 (2,279	)  ))	(US$	(67,454 (2,279	)  ))	Subsidiary
27	Prime Asia Investments Group, Ltd. (B.V.I.)	Chunghwa Hsingta Co., Ltd.	Hong Kong	Investment		215,019 (RMB 47,373	)	(RMB	206,089 45,448	)		—		100	(RMB	155,476 33,364	)	(RMB	(35,835 (7,649	)  ))	(RMB	(35,835 (7,649	)  ))	Subsidiary
29	Chunghwa Hsingta Company Ltd.	Chunghwa Telecom (China) Co., Ltd.	China	Planning and design of energy conservation and software and hardware system services, and integration of information system	(RMB	177,176 39,376	)	(RMB	177,176 39,376	)		—		100	(RMB	122,628 26,315	)	(RMB	(31,394) (6,701	))	(RMB	(31,394 (6,701	)  ))	Subsidiary
		Jiangsu Zhenhua Information Technology Company, LLC	China	Intelligent energy conserving and intelligent building services	(RMB	28,912 6,072	)		—			—		75	(RMB	24,218 5,197	)	(RMB	(5,463) (1,166	))	(RMB	(4,097 (875	)  ))	Subsidiary
		Hua-Xiong Information Technology Co., Ltd.	China	Intelligent system and energy saving system services	(RMB	8,931 1,925	)		—			—		51	(RMB	8,630 1,852	)	(RMB	(665) (142	))	(RMB	(34 (73	2)  ))	Subsidiary

(Continued)

- 57 -

Note 1: The equity in net income (loss) of investees was based on audited financial statements.

Note 2: The equity in net income (loss) of investees includes amortization of differences between the investment cost and net value and elimination of unrealized transactions.

Note 3: New Prospect Investments Holdings Ltd. (B.V.I.) was incorporated in March 2006, but has not yet begun operation as of December 31, 2012.

Note 4: The English name is the same as the above entity; however, the Chinese names included in the respective Articles of Incorporations are different.

(Concluded)

- 58 -

TABLE 8

CHUNGHWA TELECOM CO., LTD.

INVESTMENT IN MAINLAND CHINA

FOR THE YEAR ENDED DECEMBER 31, 2012

(Amounts in Thousands of New Taiwan Dollars, in Thousands of U.S. Dollars)

Investee	Main Businesses and Products	Total Amount  of Paid-in Capital		Investment Type	Accumulated Outflow of Investment from Taiwan as of January 1, 2012		Investment Flows				Accumulated Outflow of Investment from Taiwan as of December 31, 2012		% Ownership of Direct or Indirect Investment		Investment Gain  (Loss) (Note 2)			Carrying Value as  of December 31, 2012		Accumulated Inward Remittance of Earnings as of December  31, 2012
							Outflow		Inflow
Glory Network System Service (Shanghai) Co., Ltd.	Providing advanced business solutions to telecommunications	$	47,321	Note 1	$	31,973	$	15,348	$	—	$	47,321		100	$	(1,799	)	$	19,041	$	—
Xiamen Sertec Business Technology Co., Ltd.	Customer services and platform rental activities		51,552	Note 1		13,862		11,552		—		25,414		49		(3,475	)		8,634		—
Senao Trading (Fujian) Co., Ltd.	Information technology services and sale of communication products		338,793	Note 1		116,821		221,972		—		338,793		100		(109,697	)		184,251		—
Senao International Trading (Shanghai) Co., Ltd.	Information technology services and sale of communication products		297,726	Note 1		148,413		149,313		—		297,726		100		(100,209	)		125,656		—
Senao International Trading (Shanghai) Co., Ltd. (Note 7)	Information technology services and sale of communication products		57,860	Note 1		57,860		—		—		57,860		100		(5,127	)		52,704		—
Senao International Trading (Jiangsu) Co., Ltd.	Information technology services and sale of communication products		263,736	Note 1		115,971		147,765		—		263,736		100		(67,454	)		156,241		—
Chunghwa Telecom (China) Co., Ltd.	Energy conserving and providing installation, design and maintenance services		177,176	Note 1		177,176		—		—		177,176		100		(31,394	)		122,628		—
Jiangsu Zhenghua Information Technology Company, LLC	Intelligent energy serving and intelligent building services		38,549	Note 1		28,912		—		—		28,912		75		(4,099	)		24,218		—
Hua-Xiong Information Technology Co., Ltd.	Intelligent system and energy saving system services		17,511	Note 1		—		8,931		—		8,931		51		(342	)		8,630		—

(Continued)

- 59 -

Accumulated Investment in Mainland China as of December 31, 2012			Investment Amounts Authorized by Investment Commission, MOEA			Upper Limit on  Investment Stipulated by Investment Commission, MOEA
$ (US$	47,321 1,500)		$ (US$	47,321 1,500	)	$	414,205 (Note 3	)
(US$	25,414 820)		(US$	79,882 2,500	)		526,247 (Note 4	)
(US$	958,115  32,500)		(US$	958,115 32,500	)		3,293,687 (Note 5	)
(US$	177,176 6,000	)	(US$	177,176 6,000	)		221,946,128 (Note 6	)
(US$	28,912 960	)	(US$	141,077 4,800	)		221,946,128 (Note 6	)
(US$	8,931 306)		(US$	44,653 1,530	)		221,946,128 (Note 6	)

Note 1:	Investments were through an holding company registered in a third region.
Note 2:	Recognition of investment gains (losses) was calculated based on the investee’s audited financial statements.
Note 3:	The amount was calculated based on the net assets value of Chunghwa System Integration Co., Ltd.
Note 4:	The amount was calculated based on the consolidated net assets value of Chunghwa Investment Co., Ltd.
Note 5:	The amount was calculated based on the consolidated net assets value of Senao International Co., Ltd.
Note 6:	The amount was calculated based on the consolidated net assets value of Chunghwa Telecom Co., Ltd.
Note 7:	The English name is the same as the above entity; however, the Chinese names included in the respective Articles of Incorporations are different.

(Concluded)

- 60 -

TABLE 9

CHUNGHWA TELECOM CO., LTD.

SEGMENT INFORMATION

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011

(Amount in Thousands of New Taiwan Dollars)

	Domestic Fixed Communications Business		Mobile Communications Business		Internet Business		International Fixed Communications Business		Others			Adjustment			Total
Year ended December 31, 2012
Revenues from external customers	$	75,716,720	$	76,328,304	$	23,770,027	$	14,872,244	$	263,500		$	—		$	190,950,795
Intersegment revenues (Note 2)		16,823,795		6,506,388		2,711,492		1,769,160		12,604			(27,823,439	)		—
Interest income		6,045		103		1,550		1,726		698,347			—			707,771
Other income		85,529		71,835		981		267,624		1,749,470			—			2,175,439
	$	92,632,089	$	82,906,630	$	26,484,050	$	16,910,754	$	2,723,921		$	(27,823,439	)	$	193,834,005
Interest expense	$	—	$	—	$	—	$	—	$	230		$	—		$	230
Depreciation and amortization	$	19,394,985	$	8,498,580	$	2,544,681	$	1,414,305	$	242,640		$	—		$	32,095,191
Other expense	$	1,312,035	$	272,606	$	3,138	$	2,883	$	17,177		$	—		$	1,607,839
Segment income before tax	$	15,023,200	$	24,175,749	$	8,385,937	$	1,282,023	$	(1,491,986	)	$	—		$	47,374,923
Total assets	$	229,403,028	$	59,860,808	$	22,928,126	$	21,970,962	$	95,020,692		$	—		$	429,183,616
Capital expenditures for segment assets	$	19,550,852	$	7,172,841	$	3,407,510	$	1,635,022	$	608,425		$	—		$	32,374,650
Year ended December 31, 2011
Revenues from external customers	$	79,596,975	$	73,670,839	$	23,907,744	$	15,048,946	$	237,600		$	—		$	192,462,104
Intersegment revenues (Note 2)		15,058,063		6,917,665		1,786,850		1,611,001		668			(25,374,247	)		—
Interest income		4,401		97		644		1,079		648,859			—			655,080
Other income		515,470		36,359		840		899,669		2,243,152			—			3,695,490
	$	95,174,909	$	80,624,960	$	25,696,078	$	17,560,695	$	3,130,279		$	(25,374,247	)	$	196,812,674
Interest expense	$	169	$	11	$	3	$	1	$	38		$	—		$	222
Depreciation and amortization	$	20,138,758	$	8,157,650	$	2,138,366	$	1,259,428	$	219,858		$	—		$	31,914,060
Other expense	$	14,863	$	4,710	$	979	$	2,321	$	189,059		$	—		$	211,932
Segment income before tax	$	18,481,679	$	26,248,914	$	9,404,326	$	2,018,612	$	(774,893	)	$	—		$	55,378,638
Total assets	$	227,866,308	$	58,024,956	$	19,137,318	$	22,848,593	$	105,420,695		$	—		$	433,297,870
Capital expenditures for segment assets	$	16,569,480	$	4,258,614	$	3,637,400	$	1,409,548	$	609,427		$	—		$	26,484,469

Note 1: The Company organizes its reporting segments based on types of organizational business. The five reporting segments are segregated as below: Domestic fixed communications business, mobile communications business, internet business, international fixed communications business and others.

• Domestic fixed communications business—the provision of local telephone services, domestic long distance telephone services, broadband access, and related services;

• Mobile communications business—the provision of mobile services, sales of mobile handsets and data cards, and related services;

• Internet business—the provision of HiNet services and related services;

• International fixed communications business—the provision of international long distance telephone services and related services;

• Others—the provision of non-Telecom Services, and the corporate related items not allocated to reportable segments.

Note 2: Represents intersegment revenues from goods and services.

- 61 -

TABLE 10

CHUNGHWA TELECOM CO., LTD.

PRODUCTS AND SERVICE REVENUES

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011

(Amount in Thousands of New Taiwan Dollars)

	Year Ended December 31
	2012		2011
Mobile services revenue	$	72,361,210	$	70,779,411
Local telephone services revenue		41,825,693		42,956,117
Leased line services revenue		25,682,456		27,036,649
Internet services revenue		20,492,587		21,152,593
International long distance telephone services revenue		11,700,591		12,214,117
Domestic long distance telephone services revenue		3,773,441		5,796,342
Others		15,114,817		12,526,875
	$	190,950,795	$	192,462,104

- 62 -

EX-2

Exhibit 2

Chunghwa Telecom Co., Ltd. and Subsidiaries

Consolidated Financial Statements for the

Years Ended December 31, 2012 and 2011 and

Independent Auditors’ Report

- 1 -

INDEPENDENT AUDITORS’ REPORT

To the Board of Directors and Stockholders of

Chunghwa Telecom Co., Ltd.

We have audited the accompanying consolidated balance sheet of Chunghwa Telecom Co., Ltd. and subsidiaries (“the Company”) as of December 31, 2012 and 2011, and the related consolidated statements of income, changes in stockholders’ equity, and cash flows then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the Rules Governing the Audit of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Those standards required that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the consolidated financial position of Chunghwa Telecom Co., Ltd. and subsidiaries as of December 31, 2012 and 2011, and the results of their operations and their cash flows for the years then ended in conformity with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, and accounting principles generally accepted in the Republic of China.

March 26, 2013

Notice to Readers

The accompanying consolidated financial statements are intended only to present the financial position, results 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 audit such consolidated financial statements are those generally accepted and applied in the Republic of China.

For the convenience of readers, the auditors’ report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language auditors’ report and consolidated financial statements shall prevail.

- 2 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2012 AND 2011

(Amounts in Thousands of New Taiwan Dollars, Except Par Value Data)

	2012				2011
	Amount		%		Amount		%
ASSETS
CURRENT ASSETS
Cash and cash equivalents (Notes 2 and 4)	$	53,202,312		12	$	67,389,556		15
Financial assets at fair value through profit or loss (Notes 2 and 5)		2,994		—		45,750		—
Available-for-sale financial assets (Notes 2 and 6)		2,250,260		—		2,498,712		1
Held-to-maturity financial assets (Notes 2 and 7)		4,250,146		1		1,201,301		—
Trade notes and accounts receivable, net of allowance for doubtful accounts of $810,799 in 2012 and $2,423,012 in 2011 (Notes 2, 8 and 20)		24,354,817		6		22,396,071		5
Receivables from related parties (Note 27)		43,937		—		34,064		—
Other monetary assets (Note 9)		2,185,355		—		2,068,388		1
Inventories (Notes 2, 10, 20 and 29)		7,196,101		2		5,214,194		1
Deferred income taxes assets (Notes 2 and 24)		142,929		—		115,464		—
Restricted assets (Notes 20 and 28)		10,000		—		56,725		—
Other current assets (Notes 5, 10, 11, 20 and 27)		7,356,636		2		5,518,760		1
Total current assets		100,995,487		23		106,538,985		24
LONG-TERM INVESTMENTS
Investments accounted for using equity method (Notes 2 and 12)		2,249,955		—		2,563,636		1
Financial assets carried at cost (Notes 2 and 13)		2,550,211		1		2,760,225		1
Available-for-sale financial assets (Notes 2 and 6)		3,195,965		1		57,739		—
Held-to-maturity financial assets (Notes 2 and 7)		11,796,144		3		13,494,891		3
Other monetary assets (Notes 14 and 29)		1,000,000		—		1,000,000		—
Total long-term investment		20,792,275		5		19,876,491		5
PROPERTY, PLANT AND EQUIPMENT (Notes 2, 15, 27 and 28)
Cost
Land		103,890,828		24		103,813,966		24
Land improvements		1,579,607		—		1,552,549		—
Buildings		67,841,805		15		67,692,355		15
Computer equipment		15,379,113		4		14,951,351		3
Telecommunications equipment		669,082,702		152		655,287,093		148
Transportation equipment		3,315,452		1		2,526,674		1
Miscellaneous equipment		7,343,656		2		6,973,939		2
Total cost		868,433,163		198		852,797,927		193
Revaluation increment on land		5,762,184		1		5,762,535		1
		874,195,347		199		858,560,462		194
Less: Accumulated depreciation		587,719,988		134		569,636,996		129
Less: Accumulated impairment		1,508,335		—		—		—
		284,967,024		65		288,923,466		65
Construction in progress and advances related to acquisition of equipment		18,683,121		4		13,688,548		3
Property, plant and equipment, net		303,650,145		69		302,612,014		68
INTANGIBLE ASSETS (Notes 2 and 27)
3G concession		4,491,653		1		5,240,262		1
Goodwill		245,184		—		245,184		—
Others		1,075,872		—		844,807		—
Total intangible assets		5,812,709		1		6,330,253		1
OTHER ASSETS
Leased assets		389,521		—		400,453		—
Idle assets (Notes 2 and 15)		874,581		—		900,036		—
Refundable deposits		2,087,034		1		1,760,149		1
Deferred income taxes assets (Notes 2 and 24)		437,958		—		339,757		—
Restricted assets (Note 28)		—		—		8,093		—
Others (Note 26)		4,407,111		1		4,154,051		1
Total other assets		8,196,205		2		7,562,539		2
TOTAL	$	439,446,821		100	$	442,920,282		100

	2012					2011
	Amount			%		Amount			%
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Short-term loans (Note 16)	$	111,473			—	$	75,000			—
Financial liabilities at fair value through profit or loss (Notes 2 and 5)		1,959			—		3,987			—
Trade notes and accounts payable (Note 20)		13,513,437			3		14,264,769			3
Payables to related parties (Note 27)		837,330			—		788,147			—
Income tax payable (Notes 2 and 24)		3,320,329			1		3,538,742			1
Accrued expenses (Notes 17 and 20)		17,932,843			4		18,571,544			4
Current portion of long-term loans (Note 19)		8,372			—		701,887			—
Other current liabilities (Notes 10, 18 and 20)		21,058,229			5		21,336,732			5
Total current liabilities		56,783,972			13		59,280,808			13
NONCURRENT LIABILITIES
Long-term loans (Note 19)		2,050,000			—		1,058,372			—
Deferred income (Note 2)		2,666,053			1		2,577,463			1
Total noncurrent liabilities		4,716,053			1		3,635,835			1
RESERVE FOR LAND VALUE INCREMENTAL TAX (Note 15)		94,986			—		94,986			—
OTHER LIABILITIES
Accrued pension liabilities (Notes 2 and 26)		2,539,151			1		1,444,207			1
Customers’ deposits (Note 27)		4,911,010			1		5,013,981			1
Others		491,435			—		407,817			—
Total other liabilities		7,941,596			2		6,866,005			2
Total liabilities		69,536,607			16		69,877,634			16
EQUITY ATTRIBUTABLE TO STOCKHOLDERS OF THE PARENT (Notes 2, 6, 15 and 21)
Common stock—$10 par value;
Authorized: 12,000,000 thousand shares
Issued: 7,757,447 thousand shares		77,574,465			18		77,574,465			18
Additional paid-in capital
Capital surplus		169,496,289			38		169,496,289			38
Donated capital		13,170			—		13,170			—
Equity in additional paid-in capital reported by equity-method investees		34,599			—		26,830			—
Total additional paid-in capital		169,544,058			38		169,536,289			38
Retained earnings
Legal reserve		70,828,983			16		66,122,145			15
Special reserve		2,675,894			1		2,675,894			—
Unappropriated earnings		39,904,102			9		47,068,830			11
Total retained earnings		113,408,979			26		115,866,869			26
Other adjustments
Cumulative translation adjustments		(96,929	)		—		(38,918	)		—
Unrecognized net loss of pension		(1,006,518	)		—		(38,106	)		—
Unrealized gain on financial instruments		257,990			—		67,674			—
Unrealized revaluation increment		5,760,349			1		5,762,753			1
Total other adjustments		4,914,892			1		5,753,403			1
Total equity attributable to stockholders of the parent		365,442,394			83		368,731,026			83
MINORITY INTERESTS IN SUBSIDIARIES		4,467,820			1		4,311,622			1
Total stockholders’ equity		369,910,214			84		373,042,648			84
TOTAL	$	439,446,821			100	$	442,920,282			100

The accompanying notes are an integral part of the consolidated financial statements.

- 3 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011

(In Thousands of New Taiwan Dollars, Except Earnings Per Share Data)

	2012				2011
	Amount		%		Amount		%
NET REVENUES (Note 27)	$	220,130,888		100	$	217,493,067		100
OPERATING COSTS (Note 27)		141,177,220		64		131,531,201		61
GROSS PROFIT		78,953,668		36		85,961,866		39
OPERATING EXPENSES (Note 27)
Marketing		22,318,687		10		23,172,063		11
General and administrative		4,023,466		2		4,179,856		2
Research and development		3,698,110		2		3,525,230		1
Total operating expenses		30,040,263		14		30,877,149		14
INCOME FROM OPERATIONS		48,913,405		22		55,084,717		25
NON-OPERATING INCOME AND GAINS (Notes 12 and 27)
Interest income		741,937		1		681,855		1
Equity in earnings of equity method investees, net		528,970		—		364,004		—
Dividend income		20,606		—		34,021		—
Gain on disposal of financial instruments, net		111,864		—		19,986		—
Foreign exchange gain, net		33,852		—		80,883		—
Gain on disposal of property, plant and equipment, net		—		—		297,625		—
Others		420,003		—		401,990		—
Total non-operating income and gains		1,857,232		1		1,880,364		1
NON-OPERATING EXPENSES AND LOSSES (Notes 6, 13 and 15)
Impairment loss on assets		1,768,223		1		148,404		—
Interest expense		22,033		—		30,713		—
Valuation loss on financial instruments, net		1,394		—		37,068		—
Others		82,824		—		50,329		—
Total non-operating expenses and losses		1,874,474		1		266,514		—
INCOME BEFORE INCOME TAX		48,896,163		22		56,698,567		26
INCOME TAX EXPENSE (Notes 2 and 24)		7,858,421		3		8,603,371		4
CONSOLIDATED NET INCOME	$	41,037,742		19	$	48,095,196		22

(Continued)

- 4 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011

(In Thousands of New Taiwan Dollars, Except Earnings Per Share Data)

	2012				2011
	Amount		%		Amount		%
ATTRIBUTABLE TO
Stockholders of the parent	$	39,903,974		18	$	47,068,375		22
Minority interests		1,133,768		1		1,026,821		—
	$	41,037,742		19	$	48,095,196		22
	2012				2011
	Before Income Tax		After Income Tax		Before Income Tax		After Income Tax
EARNINGS PER SHARE (Note 25)
Basic earnings per share	$	6.11	$	5.14	$	7.11	$	6.04
Diluted earnings per share	$	6.09	$	5.13	$	7.09	$	6.03

The accompanying notes are an integral part of the consolidated financial statements. (Concluded)

- 5 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011

(In Thousands of New Taiwan Dollars)

														Other Adjustments
	Common Stock						Retained Earnings							Cumulative Translation Adjustments			Net Loss Not Recognized as Pension Cost			Unrealized Gain (Loss) on Financial Instruments			Unrealized Revaluation Increment			Minority Interests in Subsidiaries			Total Stockholders’ Equity
	Shares (Thousands)		Amount		Additional Paid-in Capital		Legal Reserve		Special Reserve		Unappropriated Earnings
BALANCE, JANUARY 1, 2011		7,757,447	$	77,574,465	$	169,515,102	$	61,361,255	$	2,675,894	$	47,615,807		$	(102,885	)	$	(40,182	)	$	176,048		$	5,803,238		$	4,024,372		$	368,603,114
Transfer of unrealized revaluation increment to income upon disposal of revalued assets		—		—		—		—		—		—			—			—			—			(40,485	)		—			(40,485	)
Appropriation of 2010 earnings
Legal reserve		—		—		—		4,760,890		—		(4,760,890	)		—			—			—			—			—			—
Cash dividend - NT$5.52 per share		—		—		—		—		—		(42,854,462	)		—			—			—			—			—			(42,854,462	)
Decrease in minority interests		—		—		—		—		—		—			—			—			—			—			(726,595	)		(726,595	)
Consolidated net income in 2011		—		—		—		—		—		47,068,375			—			—			—			—			1,026,821			48,095,196
Equity adjustments in investees		—		—		21,187		—		—		—			—			—			—			—			—			21,187
Cumulative translation adjustment for foreign-currency investments held by investees		—		—		—		—		—		—			63,967			—			—			—			18,221			82,188
Defined benefit pension plan adjustments of investees		—		—		—		—		—		—			—			2,076			—			—			(126	)		1,950
Unrealized loss on financial instruments		—		—		—		—		—		—			—			—			(108,374	)		—			(31,071	)		(139,445	)
BALANCE, DECEMBER 31, 2011		7,757,447		77,574,465		169,536,289		66,122,145		2,675,894		47,068,830			(38,918	)		(38,106	)		67,674			5,762,753			4,311,622			373,042,648
Transfer of unrealized revaluation increment to income upon disposal of revalued assets		—		—		—		—		—		—			—			—			—			(350	)		—			(350	)
Decrease in unrealized revaluation increment on property, plant and equipment due to property impairment		—		—		—		—		—		—			—			—			—			(2,054	)		—			(2,054	)
Appropriation of 2011 earnings
Legal reserve		—		—		—		4,706,838		—		(4,706,838	)		—			—			—			—			—			—
Cash dividend - NT$5.46 per share		—		—		—		—		—		(42,361,864	)		—			—			—			—			—			(42,361,864	)
Decrease in minority interests		—		—		—		—		—		—			—			—			—			—			(945,876	)		(945,876	)
Consolidated net income in 2012		—		—		—		—		—		39,903,974			—			—			—			—			1,133,768			41,037,742
Equity adjustments in investees		—		—		7,769		—		—		—			—			—			—			—			—			7,769
Cumulative translation adjustment for foreign-currency investments held by investees		—		—		—		—		—		—			(58,011	)		—			—			—			(8,732	)		(66,743	)
Defined benefit pension plan adjustments of investees		—		—		—		—		—		—			—			(21,028	)		—			—			(24,760	)		(45,788	)
Defined benefit pension plan adjustments		—		—		—		—		—		—			—			(947,384	)		—			—			—			(947,384	)
Unrealized gain on financial instruments		—		—		—		—		—		—			—			—			190,316			—			1,798			192,114
BALANCE, DECEMBER 31, 2012		7,757,447	$	77,574,465	$	169,544,058	$	70,828,983	$	2,675,894	$	39,904,102		$	(96,929	)	$	(1,006,518	)	$	257,990		$	5,760,349		$	4,467,820		$	369,910,214

The accompanying notes are an integral part of the consolidated financial statements.

- 6 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011

(Amounts in Thousands of New Taiwan Dollars)

	2012			2011
CASH FLOWS FROM OPERATING ACTIVITIES
Consolidated net income	$	41,037,742		$	48,095,196
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for (reversal of) doubtful accounts		(1,451,384	)		113,353
Depreciation and amortization		32,525,310			32,306,348
Amortization of premium or discount of financial assets		64,781			60,985
Loss (gain) on disposal of property, plant and equipment, net		1,895			(297,625	)
Gain on disposal of financial instruments, net		(111,864	)		(19,986	)
Valuation loss on financial instruments, net		1,394			37,068
Loss on disposal of leased assets, net		16			7
Equity in earnings of equity investees, net		(528,970	)		(364,004	)
Dividends received from equity investees		762,980			157,809
Loss arising from natural calamities		7,442			985
Impairment loss		1,768,223			148,404
Compensation cost of employee stock options		3,017			—
Deferred income taxes		(125,666	)		56,183
Changes in operating assets and liabilities:
Decrease (increase) in:
Financial assets held for trading		73,638			(52,742	)
Trade notes and accounts receivable		(482,980	)		(8,313,302	)
Receivables from related parties		344,784			143,485
Other monetary assets		(129,671	)		57,739
Inventories		(1,945,102	)		(665,056	)
Other current assets		(2,707,163	)		(1,046,473	)
Increase (decrease) in:
Trade notes and accounts payable		13,583			2,377,287
Payables to related parties		(338,082	)		649,442
Income tax payable		(217,835	)		(1,028,476	)
Accrued expenses		(627,334	)		196,136
Other current liabilities		(596,011	)		2,608,870
Deferred income		88,591			(13,687	)
Accrued pension liabilities		130,488			150,745
Net cash provided by operating activities		67,561,822			75,358,691
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of designated financial assets at fair value through profit or loss		(29,548	)		(113,012	)
Proceeds from disposal of designated financial assets at fair value through profit or loss		57,362			146,948
Acquisition of available-for-sale financial assets		(4,452,278	)		(4,325,193	)
Proceeds from disposal of available-for-sale financial assets		1,792,612			3,945,091
Acquisition of held-to-maturity financial assets		(3,865,173	)		(6,543,575	)
Proceeds from disposal of held-to-maturity financial assets		2,450,896			2,159,034

(Continued)

- 7 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011

(Amounts in Thousands of New Taiwan Dollars)

	2012			2011
Acquisition of financial assets carried at cost	$	(49,856	)	$	(235,998	)
Proceeds from disposal of financial assets carried at cost		31,162			66,130
Capital reduction of financial assets carried at cost		35,000			7,500
Liquidating dividend		1,802			5,779
Capital reduction of equity investees		64,500			6,852
Prepaid long-term investment		—			(84,058	)
Acquisition of investments accounted for using equity method		(25,912	)		(364,640	)
Acquisition of property, plant and equipment		(33,280,278	)		(26,876,436	)
Proceeds from disposal of property, plant and equipment		32,818			655,543
Increase in intangible assets		(591,627	)		(556,097	)
Decrease (increase) in restricted assets		(9,045	)		11,738
Increase in other assets		(1,035,643	)		(1,010,474	)
Net cash used in investing activities		(38,873,208	)		(33,104,868	)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in short-term loans		36,473			(40,000	)
Decrease in short-term bills payable		—			(229,896	)
Increase in long-term loans		400,000			—
Repayment of long-term loans		(101,887	)		(1,696,896	)
Increase (decrease) in customers’ deposits		62,582			(895,159	)
Increase in other liabilities		85,947			48,308
Cash dividends paid		(42,361,864	)		(42,854,462	)
Capital reduction		—			(19,393,617	)
Proceeds from exercise of employee stock options granted by subsidiary		43,660			93,984
Decrease in minority interests		(1,004,470	)		(769,783	)
Net cash used in financing activities		(42,839,559	)		(65,737,521	)
EFFECT OF EXCHANGE RATE CHANGES		(36,299	)		110,738
EFFECT OF CHANGE ON CONSOLIDATED SUBSIDIARIES		—			(112,706	)
NET DECREASE IN CASH AND CASH EQUIVALENTS		(14,187,244	)		(23,485,666	)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR		67,389,556			90,875,222
CASH AND CASH EQUIVALENTS, END OF YEAR	$	53,202,312		$	67,389,556
SUPPLEMENTAL INFORMATION
Interest paid (excluding capitalized interest expense)	$	28,759		$	40,636
Income tax paid	$	8,212,990		$	9,573,796
NON-CASH FINANCING ACTIVITIES
Current portion of long-term loans	$	8,372		$	701,887

(Continued)

- 8 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011

(Amounts in Thousands of New Taiwan Dollars)

	2012			2011
CASH AND NON-CASH INVESTING ACTIVITIES
Increase in property, plant and equipment	$	33,721,100		$	28,257,915
Decrease (increase) in payables to suppliers		(440,594	)		(1,354,232	)
Prepayments for equipment		(228	)		(27,247	)
	$	33,280,278		$	26,876,436

InfoExplorer Co., Ltd. (“IFE”) merged with International Integrated System, Inc. and e-ToYou International, Inc. on April 1, 2011. After the merger, IFE became the surviving entity and was renamed as International Integrated System, Inc. (“IISI”). International Integrated System, Inc. and e-ToYou International, Inc. were dissolved. As IFE issued new shares for the aforementioned share swap, the following table presents the allocation of acquisition costs of International Integrated System Inc. and e-ToYou International Inc. to assets acquired and liabilities assumed based on their fair values:

Cash and cash equivalents	$	46,592
Accounts receivables		199,592
Financial assets at fair value through profit and loss		38,073
Other current assets		17,822
Long-term investments		34,051
Property, plant, and equipment		4,996
Refundable deposits		43,553
Other assets		4,472
Accounts payables		(79,713	)
Other current liabilities		(25,145	)
Other liabilities		(38,480	)
Common stock issued by IFE	$	245,813

Chunghwa has lost control over International Integrated System Inc. (“IISI”) on June 24, 2011. The following table presents assets and liabilities of IISI based on their fair values:

Current assets (excluding cash)	$	591,925
Long-term investments		64,219
Property, plant, and equipment		59,891
Intangible assets		2,679
Other assets		130,173
Current liabilities		(276,356	)
Other liabilities		(102,917	)
Net assets		(628,912	)
Cash balance upon deconsolidation	$	(159,298	)

The accompanying notes are an integral part of the consolidated financial statements.

(Concluded)

- 9 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011

(Amounts in Thousands of New Taiwan Dollars, Unless Stated Otherwise)

1. GENERAL

Chunghwa Telecom Co., Ltd. (“Chunghwa”) was incorporated on July 1, 1996 in the Republic of China (“ROC”) pursuant to the Article 30 of the Telecommunications Act. Chunghwa is a company limited by shares and, prior to August 2000, was wholly owned by the Ministry of Transportation and Communications (“MOTC”). Prior to July 1, 1996, the current operations of Chunghwa were carried out under the Directorate General of Telecommunications (“DGT”). The DGT was established by the MOTC in June 1943 to take primary responsibility in the development of telecommunications infrastructure and to formulate policies related to telecommunications. On July 1, 1996, the telecom operations of the DGT were spun-off to as Chunghwa which continues to carry out the business and the DGT continues to be the industry regulator.

As the dominate telecommunications service provider of fixed-line and Global System for Mobile Communications (“GSM”) in the ROC, Chunghwa is subject to additional regulations imposed by ROC.

Effective August 12, 2005, the MOTC had completed the process of privatizing Chunghwa by reducing the government ownership to below 50% in various stages. In July 2000, Chunghwa received approval from the Securities and Futures Commission (the “SFC”) for a domestic initial public offering and its common shares were listed and traded on the Taiwan Stock Exchange (the “TSE”) on October 27, 2000. Certain of Chunghwa’s common shares had been sold, in connection with the foregoing privatization plan, in domestic public offerings at various dates from August 2000 to July 2003. Certain of Chunghwa’s common shares had also been sold in an international offering of securities in the form of American Depository Shares (“ADS”) on July 17, 2003 and were listed and traded on the New York Stock Exchange (the “NYSE”). The MOTC sold common shares of Chunghwa by auction in the ROC on August 9, 2005 and completed the second international offering on August 10, 2005. Upon completion of the share transfers associated with these offerings on August 12, 2005, the MOTC owned less than 50% of the outstanding shares of Chunghwa and completed the privatization plan.

Senao International Co., Ltd. (“SENAO”) was incorporated in 1979. SENAO has been listed on the Taiwan Stock Exchange under the number “2450” since May 2001. SENAO engages mainly in selling and maintaining mobile phones and its peripheral products. Chunghwa acquired 31.33% shares of SENAO on January 15, 2007 and has substantial control in SENAO by obtaining half of the seats of the board of directors of SENAO on April 12, 2007. At general annual stockholder meeting of SENAO in June 2010, Chunghwa continued to maintain control of a majority of the board of directors through the continued support of other shareholder. The Company’s equity ownership of SENAO decreased from 31.33% as of January 15, 2007 to 28.30% as of December 31, 2012 due to the exercise of options by employees that were previously granted before 2007.

Senao International (Samoa) Holding Ltd. (“SIS”) was established by SENAO in 2009. SIS engages mainly in international investment activities.

Senao International HK Limited (“SIHK”) was established by SIS in 2009. SIHK engages mainly in international investment activities.

Senao Trading (Fujian) Co., Ltd. (“STF”) was established by SIHK in 2011. STF engages mainly in sale of information and communication technology products.

Senao International Trading (Shanghai) Co., Ltd. (“SITS”) was established by SIHK in 2011. SITS engages mainly in sale of information and communication technology products.

- 10 -

Senao International Trading (Shanghai) Co., Ltd. (“SEITS”) was established by SIHK in 2011. SEITS engages mainly in provision of information and communication maintenance services.

The English name is the same as the above entity; however, the Chinese names included in the respective Articles of Incorporations are different.

Senao International Trading (Jiangsu) Co., Ltd. (“SITJ”) was established by SIHK in 2011. SITJ engages mainly in sale of information and communication technology services.

Chunghwa established Chunghwa International Yellow Pages Co., Ltd. (“CIYP”) in January 2007. CIYP engages mainly in yellow pages sales and advertisement services.

CHIEF Telecom Inc. (“CHIEF”) was incorporated in 1991. CHIEF engages mainly in Internet communication and Internet data center (“IDC”) services. Chunghwa acquired 70% shares of CHIEF on September 2006.

Unigate Telecom Inc. (“Unigate”) was established by CHIEF in 1999. Unigate engages mainly in telecommunication and information software services.

Chief International Corp. (“CIC”) was established by CHIEF in 2008. CIC engages mainly in Internet communication and Internet data center (“IDC”) services.

Chunghwa System Integration Co., Ltd. (“CHSI”) was incorporated in 2002. CHSI engages mainly in providing communication and information integration services. Chunghwa acquired 100% shares of CHSI in December 2007.

Concord Technology Co., Ltd. (“Concord”), a subsidiary of CHSI, was incorporated in 2006. Concord engages mainly in investment activities.

Glory Network System Service (Shanghai) Co., Ltd. (“GNSS (Shanghai)”), a subsidiary of Concord, was incorporated in 2006. GNSS (Shanghai) engages mainly in planning and designing of systems and communications and information integration services.

Chunghwa Telecom Global, Inc. (“CHTG”) was incorporated in 2004. CHTG engages mainly in international data and Internet services and long distance call wholesales to carriers. Chunghwa acquired 100% shares of CHTG in December 2007.

Donghwa Telecom Co., Ltd. (“DHT”) was incorporated in 2004. DHT engages mainly in international telecommunications, IP fictitious Internet and Internet transfer services. Chunghwa acquired 100% shares of DHT in December 2007.

Spring House Entertainment Tech. Inc. (“SHE”) was incorporated in 2000. SHE engages mainly in network services, producing digital entertainment contents and broadband visual sound terrace development. Chunghwa obtained control interest over it in January 2008.

Ceylon Innovation Co., Ltd. (“CEI”) was established by SHE in April 2011. CEI engages mainly in international trade, general advertisement and book publishing services.

Chunghwa established Light Era Development Co., Ltd. (“LED”) in January 2008. LED engages mainly in development of property for rent and sale.

Yao Yong Real Property Co., Ltd. (“YYRP”) was incorporated in 2002. YYRP engages mainly in real estate management and leasing business. LED acquired 100% ownership interest of YYRP on March 1, 2010.

- 11 -

Chunghwa established Chunghwa Telecom Singapore Pte. Ltd. (“CHTS”) in July 2008. CHTS engages mainly in telecommunication wholesale, Internet transfer services, international data, long distance call wholesales to carriers and the world satellite business.

Chunghwa established Chunghwa Telecom Japan Co., Ltd. (“CHTJ”) in October 2008. CHTJ engages mainly in telecommunication business, information processing and information providing service, development and sale of software and consulting services in telecommunication.

InfoExplorer Co., Ltd. (“IFE”) issued new shares as the consideration to merge with International Integrated System, Inc. and e-ToYou International, Inc. on April 1, 2011. After the merger, IFE became the surviving entity and was renamed as International Integrated System, Inc. (“IISI”). International Integrated System, Inc. and e-ToYou International, Inc. were dissolved. As a result of the additional shares being issued by IFE in connection with this transaction, Chunghwa’s ownership interest in IISI decreased from 49% to 33% after the merger, and after the stockholders’ meeting of IISI on June 24, 2011, Chunghwa lost control of the board of directors.

Chunghwa Investment Co., Ltd. (“CHI”) was established in 2002. CHI engages mainly in professional investing in telecommunication business, and telecommunication valued-added services. CHI was equity-method investee of the parent company. Chunghwa acquired over 50% shares of CHI on September 2009.

Chunghwa Precision Test Tech. Co., Ltd. (“CHPT”) was established in 2005 as the subsidiary of CHI. CHPT engages mainly in production and marketing of semiconductor testers and printed circuit boards.

Chunghwa Precision Test Tech. USA Corporation (“CHPT (US)”) was established by CHPT in 2010. CHPT (US) engages mainly in production and marketing in semiconductor testers and printed circuit boards.

Chunghwa Investment Holding Company (“CIHC”) was established by CHI in 2004. CIHC engages mainly in investment activities.

CHI One Investment Co., Ltd. (“COI”) was established by CHI in 2009. COI engages mainly in investment activities.

Chunghwa has established New Prospect Investments Holdings Ltd. (“New Prospect”) in March 2006. The holding company is operating as investment company and Chunghwa has 100% ownership interest in an amount of US$1 in the holding company as of December 31, 2012.

Chunghwa has established Prime Asia Investments Group Ltd. (“Prime Asia”) in March 2006. This holding company is operating as an investment company.

Chunghwa Hsingta Company Ltd. (“CHC”) was established by Prime Asia in December 2010. CHC engages mainly in investment activities.

Chunghwa Telecom (China) Co., Ltd. (“CTC”) was established by CHC in March 2011. CTC engages mainly in energy conserving and providing services of planning, design, and integration of information systems.

Jiangsu Zhenhua Information Technology Company, LLC. (“JZIT”) was established by CHC and Zhenjiang New Area Hi-Tech Industrial Investment Co., Ltd. in January 2012. JZIT engages mainly in intelligent energy networks (iEN) and incorporating iEN into buildings.

Hua-Xiong Information Technology Co., Ltd. (“HXIT”) was established by CHC and Farglory Land Development Co., Ltd. in November 2012. HXIT engages mainly in providing intelligent system and energy saving system services in buildings.

- 12 -

Chunghwa has established Chunghwa Telecom Vietnam Co., Ltd. (“CHTV”) in May 2011. CHTV engages mainly in providing information and communications technology, international private leased circuit, and intelligent energy network service.

Chunghwa and Sochamp Technology Inc. established a joint venture, Chunghwa Sochamp Technology Inc. (“CHST”), in July 2011. CHST mainly engages in license plate recognition system.

Chunghwa and United Daily News established a joint venture, Smartfun Digital Co., Ltd. (“SFD”), in August 2011. SFD mainly engages in sales of educational software which provides digital parenting education.

As of December 31, 2012 and 2011, the Company had 30,432 and 28,772 employees, respectively.

The following diagram presents information regarding the relationship and ownership percentages between Chunghwa and its subsidiaries as of December 31, 2012:

Chunghwa together with its subsidiaries are hereinafter referred to collectively as the “Company”. Minority interests in the aforementioned subsidiaries are presented as a separate component of stockholders’ equity.

- 13 -

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying consolidated financial statements were prepared in conformity with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers and accounting principles generally accepted in the ROC (“ROC GAAP”). The significant accounting policies are summarized as follows:

Principle of Consolidation

The Company accounts for business combinations in accordance with the requirements of the Statement of Financial Accounting Standards No. 25, “Business Combinations”.

The accompanying consolidated financial statements include the accounts of all directly and indirectly majority owned subsidiaries of the Company, and the accounts of investees in which the Company’s ownership percentage is less than 50% but over which the Company has a controlling interest. All intercompany transactions and balances are eliminated upon consolidation.

The consolidated financial statements for the year ended December 31, 2012 include the accounts of Chunghwa, SENAO, SIS, SIHK, STF, SITS, SITJ, SEITS, CIYP, CHIEF, Unigate, CIC, CHSI, Concord, GNSS (Shanghai), CHTG, DHT, SHE, CEI, LED, YYRP, CHTS, CHTJ, CHI, CHPT, CHPT (US), CIHC, COI, New Prospect, Prime Asia, CHC, CTC, JZIT, HXIT, CHTV, CHST, and SFD. The consolidated financial statements for the year ended December 31, 2011 include the accounts of Chunghwa, SENAO, SIS, SIHK, STF, SITS, SITJ, SEITS, CIYP, CHIEF, Unigate, CIC, CHSI, Concord, GNSS (Shanghai), CHTG, DHT, SHE, CEI, LED, YYRP, CHTS, CHTJ, IISI, IESA, IEHK, CHI, CHPT, CHPT (US), CIHC, COI, New Prospect, Prime Asia, CHC, CTC, CHTV, CHST, and SFD.

For foreign subsidiaries using their local currency as their functional currency, assets and liabilities are translated into New Taiwan dollars at the exchange rates in effect on the balance sheet date; stockholders’ equity accounts are translated into New Taiwan dollars at historical exchange rates and income statement accounts are translated into New Taiwan dollars at average exchange rates during the year.

Foreign-currency Transactions

Foreign-currency transactions other than derivative contracts are recorded in New Taiwan dollars at the rates of exchange in effect when the transactions occur. Exchange gains or losses derived from foreign-currency transactions or monetary assets and liabilities denominated in foreign currencies are recognized in earnings. At the balance sheet date, monetary assets and liabilities denominated in foreign currencies are revalued at prevailing exchange rates with the resulting gains or losses recognized in earnings.

At the balance sheet date, foreign-currency nonmonetary assets (such as equity instruments) and liabilities that are measured at fair value are revalued using prevailing exchange rates. When a gain or loss on a nonmonetary item is recognized in stockholders’ equity, any exchange component of that gain or loss shall be recognized in stockholders’ equity. Conversely, when a gain or loss on a non-monetary item is recognized in earnings, any exchange component of that gain or loss shall be recognized in earnings.

Foreign-currency nonmonetary assets and liabilities that are carried at cost continue to be stated at exchange rates at trade dates.

The financial statements of foreign equity investees and consolidated subsidiaries are translated into New Taiwan dollars at the following exchange rates. Assets and liabilities—spot rates at year-end; stockholders’ equity—historical rates, income and expenses—average rates during the year.

The resulting translation adjustments of financial statements shall be recorded as cumulative translation adjustments, a separate component of stockholders’ equity.

- 14 -

Accounting Estimates

Under above guidelines, law and principles, certain estimates and assumptions have been used for the allowance for doubtful accounts, allowance for loss on inventories, depreciation of property, plant and equipment, impairment of assets, bonuses to employees, directors and supervisors, pension cost, income tax, etc. Actual results may differ from these estimates.

Current and Noncurrent Assets and Liabilities

Current assets include cash and cash equivalents, and those assets held primarily for trading purposes or to be realized, sold or consumed within one year from the balance sheet date. All other assets are classified as noncurrent. Current liabilities are obligations incurred for trading purposes or to be settled within one year from the balance sheet date. All other liabilities are classified as noncurrent.

LED engages mainly in development of property for rent and sale. The assets and liabilities of LED related to property development within its operating cycle, which is over one year, are classified as current items. Assets and liabilities related to property development over its operating cycle are classified as noncurrent items.

Cash Equivalents

Cash equivalents are commercial paper and treasury bills purchased with maturities of three months or less from the date of acquisition. The carrying amount approximates fair value.

Financial Assets and Liabilities at Fair Value Through Profit or Loss

Financial instruments classified as financial assets or financial liabilities at fair value through profit or loss (“FVTPL”) include financial assets or financial liabilities held for trading and are designated as at FVTPL on initial recognition. The Company recognizes a financial asset or a financial liability when the Company becomes a party to the contractual provisions of the financial instrument. A financial asset is derecognized when the Company losses control of its contractual rights over the financial asset. A financial liability is derecognized when the obligation specified in the relevant contract is discharged, cancelled or expired.

Financial instruments at FVTPL are initially measured at fair value. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognized as expenses as incurred. Financial assets or financial liabilities at FVTPL are remeasured at fair value, subsequently with changes in fair value recognized in earnings. Cash dividends received subsequently (including those received in the period of investment) are recognized as income. On derecognition of a financial asset or a financial liability, the difference between its carrying amount and the sum of the consideration received and receivable or consideration paid and payable is recognized in earnings. Regular way purchases or sales of financial assets are accounted for using trade date accounting.

Derivatives that do not meet the criteria for hedge accounting are classified as financial assets or financial liabilities held for trading. When the fair value is positive, the derivative is recognized as a financial asset; when the fair value is negative, the derivative is recognized as a financial liability.

Fair values of financial assets and financial liabilities at the balance sheet date are determined as follows: forward exchange contracts and currency swap contracts are estimated by valuation techniques; index future contracts are determined at their market quotation on the balance sheet date; bonds are based on prices quoted by GreTai Securities Market (GTSM).

- 15 -

Available-for-sale Financial Assets

Available-for-sale financial assets are initially recognized at fair value plus transaction costs that are directly attributable to the acquisition. Changes in fair value from subsequent remeasurement are reported as a separate component of stockholders’ equity. The corresponding accumulated gains or losses are recognized in earnings when the financial asset is derecognized from the balance sheet. A regular way purchase or sale of financial assets is accounted for using trade date accounting.

The recognition and derecognition of available-for-sale financial assets are the same with those of financial assets at FVTPL.

Fair values are determined as follows: Listed stocks—at closing prices at the balance sheet date; open-end mutual funds—at net asset values at the balance sheet date; bonds—quoted at prices provided by the Taiwan GreTai Securities Market; and financial assets and financial liabilities without quoted prices in an active market—at values determined using valuation techniques.

Cash dividends are recognized in earnings on the ex-dividend date, except for the dividends declared before acquisition which are treated as a reduction of investment cost. Stock dividends are recorded as an increase in the number of shares and do not affect investment income. The total number of shares subsequent to the increase of stock dividends is used to recalculate cost per share. The difference between the initial carrying amount of a debt instrument and its maturity amount is amortized using the effective interest method, with the amortized interest recognized in profit or loss.

An impairment loss is recognized when there is objective evidence that the financial asset is impaired. If, in a subsequent period, the amount of the impairment loss decreases, for equity securities, the previously recognized impairment loss is reversed to the extent of the decrease and recorded as an adjustment to stockholders’ equity; for debt securities, the amount of the decrease is recognized in earnings, provided that the decrease is clearly attributable to an event which occurred after the impairment loss was recognized.

Held-to-maturity Financial Assets

Held-to-maturity financial assets are carried at amortized cost using the effective interest method. Those financial assets are initially recognized at fair value plus transaction costs that are directly attributable to the acquisition. Gains and losses are recognized at the time of derecognition, impairment or amortization. A regular way purchase or sale of financial assets is accounted for using trade date accounting.

If there is objective evidence which indicates that a financial asset is impaired, a loss is recognized. If, in a subsequent period, the amount of the impairment loss decreases and the decrease is clearly attributable to an event which occurred after the impairment loss was recognized, the previously recognized impairment loss is reversed to the extent of the decrease. The reversal may not result in a carrying amount that exceeds the amortized cost that would have been determined as if no impairment loss had been recognized.

Financial Assets Carried at Cost

Investments in equity instruments with no quoted prices in an active market and with fair values that cannot be reliably measured, such as non-publicly traded stocks and stocks traded in the Emerging Stock Market, are measured at their original cost. The accounting treatment for dividends on financial assets carried at cost is the same with that for dividends on available-for-sale financial assets. An impairment loss is recognized when there is objective evidence that the asset is impaired. A reversal of this impairment loss is disallowed.

- 16 -

Impairment of Accounts Receivable

Accounts receivable are assessed for impairment at the end of each reporting period and considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the accounts receivable, the estimated future cash flows of the asset have been affected.

The amount of the impairment loss recognized is the difference between the asset carrying amount and the present value of estimated future cash flows, after taking into account the related collateral and guarantees, discounted at the receivable’s original effective interest rate.

The carrying amount of the accounts receivable is reduced through the use of an allowance account.

Inventories

Inventories including merchandise, work-in-process and raw materials are stated at the lower of cost (weighted-average cost) or net realizable value item by item, except for those that may be appropriate to group items of similar or related inventories. Net realizable value is the estimated selling price of inventories less all estimated costs of completion and costs necessary to make the sale. The calculation of the cost of inventory is derived using the weighted-average method.

Buildings and Lands Consigned to Constructing Firm

Inventories of LED are stated at the lower of cost or net realizable value item by item, except for those that may be appropriate to group as similar items or related inventories. Land acquired before construction is classified as land held for development, and then reclassified as land held under development after LED begins its construction project. Prepayments for licensing and other miscellaneous costs have been capitalized as part of inventory.

When using the completed-contract method for its construction projects, LED recognizes the proceeds from customers as advances from customers for land and building before the construction project is completed. After completion of the construction project and ownership is transferred to the customers, LED recognizes the relevant revenues.

When using percentage-of-completion method, profits are recorded based on LED’s estimates of the percentage of completion of individual contracts, commencing when the work performed under the contracts reaches a point where the final costs can be estimated with reasonable accuracy. Changes in job performance, job conditions and estimated profitability may result in revisions to costs and income and are recognized in the period in which the revisions are determined. If the current estimates of total contract revenue and contract cost indicate a loss, a provision for the entire loss on the contract is recorded in the period in which it becomes evident.

The percentage of completion is measured based on the completion of the contract milestones predetermined by the architects and engineers. Construction in progress is stated at cost plus (less) amounts associated with estimated profit (loss) recognized on the basis of the percentage-of-completion method.

Investments Accounted for Using Equity Method

Investments in companies in which the Company exercises significant influence over the operating and financial policy decisions are accounted for by the equity method. Under the equity method, the investment is initially stated at cost and subsequently adjusted for its proportionate share in the net earnings of the investee companies. Any cash dividends received are recognized as a reduction in the carrying value of the investments.

- 17 -

Gains or losses on sales from the Company to equity method investees wherein Chunghwa exercises significant influence over these equity method investees are deferred in proportion to the Company’s ownership percentage in the investees until such gains or losses are realized through transactions with third parties. Gains or losses on sales from equity method investees to Chunghwa are deferred in proportion to Chunghwa’s ownership percentages in the investees until they are realized through transactions with third parties.

When the Company subscribes for additional investees shares at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment in the investee differs from the amount of the Company’s share of the investee’s equity. The Company records such a difference as an adjustment to long-term investments with the corresponding amount charged or credited to additional paid-in capital to the extent available, with the balance charged to retained earnings.

Property, Plant and Equipment

Property, plant and equipment are stated at cost plus a revaluation increment, if any, less accumulated depreciation and accumulated impairment loss. The interest costs that are directly attributable to the acquisition, construction of a qualifying asset are capitalized as property, plant and equipment. Major renewals and betterments are capitalized, while maintenance and repairs are expensed as incurred.

When an indication of impairment is identified, any excess of the carrying amount of an asset over its recoverable amount is recognized as a loss. If the recoverable amount increases in a subsequent period, the amount previously recognized as impairment would be reversed and recognized as a gain. However, the adjusted amount may not exceed the carrying amount that would have been determined, net of depreciation, as if no impairment loss had been recognized.

An impairment loss on a revalued asset is charged to “unrealized revaluation increment” under equity to the extent available, with the balance recognized as a loss in earnings. If the recoverable amount increases in a subsequent period, the amount previously recognized as impairment loss could be reversed and recognized as a gain, with the remaining credited to “unrealized revaluation increment”.

Depreciation expense is computed using the straight-line method over the following estimated service lives: land improvements—2 to 30 years; buildings—3 to 60 years; computer equipment—2 to 15 years; telecommunication equipment—2 to 20 years; transportation equipment—3 to 10 years; and miscellaneous equipment—2 to 12 years.

Upon sale or disposal of property, plant and equipment, the related cost, accumulated depreciation, accumulated impairment losses and any unrealized revaluation increment are deducted from the corresponding accounts, and any gain or loss is recorded as non-operating gains or losses in the period of sale or disposal.

Intangible Assets

Intangible assets mainly included 3G Concession, computer software, patents and goodwill.

The 3G Concession is valid through December 31, 2018. The 3G Concession fee is amortized on a straight-line basis from the date operations commence through the date the license expires. Computer software costs and patents are amortized using the straight-line method over the estimated useful lives of 2 to 20 years.

When an indication of impairment is identified for intangible assets other than goodwill, any excess of the carrying amount of an asset over its recoverable amount is recognized as a loss. If the recoverable amount increases in a subsequent period, the amount previously recognized as impairment would be reversed and recognized as a gain. However, the adjusted amount may not exceed the carrying amount that would have been determined, as if no impairment loss had been recognized.

- 18 -

Goodwill represents the excess of the consideration paid for business acquisition over the fair value of identifiable net assets acquired. Goodwill is tested for impairment annually. If an event occurs or circumstances change which indicates that the fair value of goodwill is below its carrying amount, an impairment loss is recognized. A subsequent reversal of such impairment loss is not allowed.

Idle Assets

Idle assets are carried at the lower of recoverable amount or carrying amount.

Pension Costs

Pension cost under a defined benefit plan is determined by actuarial valuations. Contributions made under a defined contribution plan are recognized as pension cost during the period in which employees render services.

Income Tax

The Company applies inter-period allocations for its income tax, whereby deferred income tax assets and liabilities are recognized for the tax effects of temporary differences and unused tax credits. Valuation allowances are provided to the extent, if any, that it is more likely than not that deferred income tax assets will not be realized. A deferred tax asset or liability is classified as current or noncurrent in accordance with the classification of its related asset or liability. However, if a deferred tax asset or liability does not relate to an asset or liability in the financial statements, then it is classified as either current or noncurrent based on the expected length of time before it is realized or settled.

Any tax credits arising from purchases of machinery, equipment and technology, research and development expenditures, personnel training, and investments in important technology based enterprises are recognized using the flow-through method.

Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

Income taxes (10%) on undistributed earnings is recorded in the year of stockholders approval which is the year subsequent to the year the earnings are generated.

Share-based Compensation

Employee stock options granted between January 1, 2004 and December 31, 2007 were accounted for under the interpretations issued by the Accounting Research and Development Foundation (the “ARDF”). The Company adopted the intrinsic value method, under which compensation cost was amortized over the vesting period.

Employee stock options granted on or after January 1, 2008 are accounted for using fair value method in accordance with SFAS No. 39, “Accounting for Share-based Payment.”

Employee stock options granted between January 1, 2008 and December 31, 2009 by non-listed companies were accounted for in accordance with Rule No. 0960065898 issued by the Financial Supervisory Commission (“FSC”) on December 12, 2007. Thus, the stock options granted were initially measured at their intrinsic value and then adjusted at each reporting date for any change in intrinsic value until the date of final settlement.

- 19 -

Employee stock options granted on or after January 1, 2010 are accounted for in accordance with Rule No. 0990006370 issued by the FSC on March 15, 2010, which superseded Rule No. 0960065898. Under the FSC’s requirement, the value of the stock options granted, which is equal to the best available estimate of the number of stock options expected to vest multiplied by the grant-date fair value, is expensed on a straight-line basis over the vesting period, with a corresponding adjustment to capital surplus—employee stock options. The estimate is revised if subsequent information indicates that the number of stock options expected to vest differs from previous estimates.

Revenue Recognition

Revenues are recognized when they are realized or realizable and earned. Revenues are realized or realizable and earned when the Company has persuasive evidence of an arrangement, the goods have been delivered or the services have been rendered to the customer, the sales price is fixed or determinable and collectibility is reasonably assured.

Revenue is measured at the fair value of the consideration received or receivable and represents amounts agreed between the Company and the customers for goods sold in the normal course of business, net of sales discounts and volume rebates. For trade receivables due within one year from the balance sheet date, as the nominal value of the consideration to be received approximates its fair value and transactions are frequent, fair value of the consideration is not determined by discounting all future receipts using an imputed rate of interest.

Usage revenues from fixed-line services (including local, domestic long distance and international long distance), cellular services, Internet and data services, and interconnection and call transfer fees from other telecommunications companies and carriers are billed in arrears and are recognized based upon seconds or minutes of traffic processed when the services are provided in accordance with contract terms.

Other revenues are recognized as follows: (a) one-time subscriber connection fees (on fixed-line services) are deferred and recognized over the average expected customer service periods, (b) monthly fees (on fixed-line services, mobile, Internet and data services) are accrued every month, and (c) prepaid services (fixed-line, mobile, Internet and data services) are recognized as income based upon actual usage by customers or when the right to use those services expires.

Where the Company enters into transactions which involve both the provision of air time bundled with products such as 3G data card and handset, total consideration received from handsets in these arrangements are allocated and measured using units of accounting within the arrangement based on relative fair values limited to the amount that is not contingent upon the delivery of other items or services.

Where the Company sells products to third party cellular phone stores the Company records the direct sale of the products, typically handsets, as gross revenue when the Company is the primary obligor in the arrangement and when title is passed and the products are accepted by the stores.

Expense Recognition

The costs of providing services and operating expenses are recognized as incurred.

3. EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES

The Company adopted the newly-revised Statements of Financial Accounting Standards No. 34, “Financial Instruments,” (“SFAS No. 34”) beginning from January 1, 2011. When an enterprise adopts the revised provisions, the initial recognition of loans and receivables shall be accounted for under SFAS No. 34.

- 20 -

4. CASH AND CASH EQUIVALENTS

	December 31
	2012		2011
Cash
Cash on hand	$	447,399	$	238,850
Bank deposits		7,247,750		6,257,759
Negotiable certificate of deposit, annual yield rate—ranging from 0.83%-0.96% and 0.80%-1.05% for 2012 and 2011, respectively		26,550,000		41,627,037
		34,245,149		48,123,646
Cash equivalents
Commercial paper, annual yield rate—ranging from 0.71%-0.74% and 0.70%-0.80% for 2012 and 2011, respectively		18,957,163		18,966,431
Treasury bills, annual yield rate 0.70% for 2011		—		299,479
		18,957,163		19,265,910
	$	53,202,312	$	67,389,556

5. FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS

	December 31
	2012		2011
Derivatives—financial assets
Currency swap contracts	$	2,702	$	6,094
Forward exchange contracts		292		—
Designated financial assets at fair value through profit or loss		2,994		6,094
Convertible bonds		—		39,656
	$	2,994	$	45,750
Derivatives—financial liabilities
Currency swap contracts	$	1,935	$	3,665
Forward exchange contracts		24		73
Index future contracts		—		249
	$	1,959	$	3,987

The Company entered into currency swap contracts, forward exchange contracts and index future contracts to reduce its exposure to foreign currency risk and variability in operating results due to fluctuations in exchange rates and stock prices. However, the aforementioned derivatives did not meet the criteria for hedge accounting and were classified as financial assets or financial liabilities held for trading.

- 21 -

Outstanding currency swap contracts and forward exchange contracts as of December 31, 2012 and 2011 were as follows:

	Currency		Maturity Period		Contract Amount (In Thousands)
December 31, 2012
Currency swap contracts	US$	/NT$		2013.01-2013.03	US$	34,000/NT$991,188
	US$	/NT$		2013.01-2013.03	US$	32,000/NT$929,280
Forward exchange contracts—buy	NT$	/US$		2013.01	NT$	154,304/US$5,310
December 31, 2011
Currency swap contracts	US$	/NT$		2012.01-2012.03	US$	43,000/NT$1,306,834
	US$	/NT$		2012.01-2012.02	US$	19,000/NT$571,280
Forward exchange contracts—buy	NT$	/US$		2012.01	NT$	59,638/US$1,967

The Company did not have any outstanding index future contracts as of December 31, 2012.

Outstanding index future contracts as of December 31, 2012 were as follows:

	Maturity Period		Units		Contract Amount (In Thousands)
December 31, 2011
TAIFEX futures
TX		2012.01		2	NT$	2,952
TX		2012.02		4	NT$	5,558
TX		2012.03		37	NT$	51,614
TE		2012.03		19	NT$	11,370
TF		2012.01		8	NT$	6,401
TF		2012.02		5	NT$	3,877
TF		2012.03		15	NT$	11,658

As of December 31, 2011, the deposits paid for outstanding index future contracts were $5,408 thousand (classified as other current assets).

The convertible bonds owned by subsidiary are hybrid financial instruments that are designated to be measured at fair value and changes in fair value are recognized in earnings.

Net gains (losses) arising from financial assets and liabilities at fair value through profit or loss for the years ended December 31, 2012 and 2011 were $57,533 thousand (including realized settlement gain of $58,927 thousand and valuation loss of $1,394 thousand), and $(71,544) thousand (including realized settlement loss of $34,476 thousand and valuation loss of $37,068 thousand), respectively.

- 22 -

6. AVAILABLE-FOR-SALE FINANCIAL ASSETS

	December 31
	2012		2011
Domestic listed stocks	$	3,195,965	$	343,041
Open-end mutual funds		2,190,392		2,137,201
Corporate bonds		50,207		76,209
Foreign listed stocks		9,661		—
		5,446,225		2,556,451
Less: Current portion		2,250,260		2,498,712
	$	3,195,965	$	57,739

The board of directors of Chunghwa resolved to acquire 263,622 thousand common shares of China Airline Ltd. (“CAL”) at $11.73 per share for the three months ended March 31, 2012. Chunghwa expected to hold it as long-term investment and classified it as available-for-sale financial assets—noncurrent. CAL engages mainly in air transportation business.

After evaluating the available-for-sale financial assets, CHI determined that some investments were impaired and recognized an impairment loss of $26,779 thousand for the year ended December 31, 2012.

Movements of unrealized gain (loss) on available-for-sale financial assets were as follows:

	Year Ended December 31
	2012			2011
Balance, beginning of year	$	67,674		$	176,048
Recognized in stockholders’ equity		240,522			(55,321	)
Transferred to profit or loss		(50,206	)		(53,053	)
Balance, end of year	$	257,990		$	67,674

7. HELD-TO-MATURITY FINANCIAL ASSETS

	December 31
	2012		2011
Corporate bonds, nominal interest rate ranging from 1.15%-2.90% and 1.20%-2.98% for 2012 and 2011, respectively; effective interest rate ranging from 1.00%-2.89% and 0.83%-2.89% for 2012 and 2011, respectively	$	14,791,151	$	13,790,447
Bank debentures, nominal interest rate ranging from 1.25%-1.60% and 1.37%-1.60% for 2012 and 2011, respectively; effective interest rate ranging from 1.15%-1.40% and 1.25%-1.40% for 2012 and 2011, respectively		1,255,139		905,745
		16,046,290		14,696,192
Less: Current portion		4,250,146		1,201,301
	$	11,796,144	$	13,494,891

- 23 -

8. ALLOWANCE FOR DOUBTFUL ACCOUNTS

	Year Ended December 31
	2012			2011
Balance, beginning of year	$	2,423,012		$	2,551,464
Provision for (reversal of) doubtful accounts		(1,473,042	)		104,603
Accounts receivable written off		(139,171	)		(234,802	)
Impact on acquisition of subsidiaries		—			1,747
Balance, end of year	$	810,799		$	2,423,012

Chunghwa evaluated the results of procedures implemented to enhance the collection of account receivable as well as the experience of decreases in uncollected receivables, and decided to refine the allowance calculation policy which led to the reversal of allowance for doubtful accounts for the year ended December 31, 2012.

9. OTHER MONETARY ASSETS—CURRENT

	December 31
	2012		2011
Accrued custodial receipts from other carriers	$	187,736	$	104,785
Accrued custodial receipts of Multimedia on Demand (MOD) service		182,455		119,295
Other receivables		1,815,164		1,844,308
	$	2,185,355	$	2,068,388

10. INVENTORIES

	December 31
	2012		2011
Merchandise	$	4,242,860	$	2,998,617
Work in process		812,973		782,238
Raw materials		36,069		24,584
		5,091,902		3,805,439
Land held for sale		14,766		579,226
Land and building held for sale		54,884		—
Land held under development		—		111,536
Construction in progress		—		682,177
Land held under development		2,034,549		35,816
	$	7,196,101	$	5,214,194

The operating costs related to inventories were $43,815,495 thousand (including the valuation loss on inventories of $112,562 thousand) and $32,825,993 thousand (including the valuation loss on inventories of $186,803 thousand) for the years ended December 31, 2012 and 2011, respectively.

Land held for sale on December 31, 2012 was for Li-Shui (A) and Wan-Xi projects. Land and building held for sale on December 31, 2012 was for Guang-Diang project. Land held for sale on December 31, 2011 was for Wan-Xi and Covent projects. Land and building held for sale on December 31, 2011 was nil.

- 24 -

Land held under development and Construction in progress on December 31, 2011 was for Guang-Diang and Li-Shui (A) projects. Li-Shui (A) project was completed in April 2012, and reclassified to land held for sale.

Land held for development on December 31, 2012 was for Subsection 2 Gongyuan Sec., Zhongzheng Dist., Taipei City and Yucheng Sec., Nangang Dist., Taipei City and Qingshan Sec., Dayuan Township, Taoyuan County. Land held for development on December 31, 2011 was for Subsection 2 Gongyuan Sec., Zhongzheng Dist., Taipei City and Yucheng Sec., Nangang Dist., Taipei City.

LED recognizes the relevant revenues of Guang-Diang project by percentage of completion method. The related information were as follows:

	December 31, 2011
Percentage of completion method
Guang-Diang project
Contract price	$	983,129
Estimated construction cost	$	430,188
Land held under development	$	64,987
Construction in progress
Construction cost	$	290,137
Recognized cumulative gain		392,040
	$	682,177
Deferred marketing expenses (classified as other current assets)	$	17,340
Advance from land and building (classified as other current liabilities)	$	178,882
Percentage of completion		79	%
Expected year of completion		2012

Guang-Diang project was completed in June 2012, and reclassified to land and building held for sale.

11. OTHER CURRENT ASSETS

	December 31
	2012		2011
Spare parts	$	4,046,050	$	2,305,655
Prepaid expenses		1,974,631		1,584,051
Prepaid rents		917,975		993,848
Others		417,980		635,206
	$	7,356,636	$	5,518,760

- 25 -

12. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

	December 31
	2012				2011
	Carrying Amount		% of Owner- ship		Carrying Amount		% of Owner- ship
Non-listed
ST-2 Satellite Ventures Pte., Ltd. (“STS”)	$	541,672		38	$	462,161		38
Senao Networks, Inc. (“SNI”)		412,666		40		345,505		41
International Integrated System, Inc. (“IISI”)		277,592		33		257,371		33
Viettel-CHT Co., Ltd. (“Viettel-CHT”)		265,052		30		255,121		30
Huada Digital Corporation (“HDD”)		241,309		50		250,689		50
Taiwan International Standard Electronics Co., Ltd. (“TISE”)		224,099		40		608,933		40
Skysoft Co., Ltd. (“SKYSOFT”)		127,686		30		113,304		30
Kingwaytek Technology Co., Ltd. (“KWT”)		77,449		33		75,369		33
So-net Entertainment Taiwan Limited (“So-net”)		31,152		30		34,545		30
HopeTech Technologies Limited (“HopeTech”)		21,742		45		20,970		45
Dian Zuan Intergrating Marketing Co., Ltd. (“DZIM”)		20,902		33		109,783		40
Xiamen Sertec Business Technology Co., Ltd. (“Sertec”)		8,634		49		698		49
Panda Monium Company Ltd.		—		43		—		43
		2,249,955				2,534,449
Prepayments for long-term investments in stocks
Jiangsu Zhenhua Information Technology Company, LLC.		—		—		29,187		—
	$	2,249,955			$	2,563,636

InfoExplorer Co., Ltd. (“IFE”) issued new shares as the consideration to merge with International Integrated System, Inc. and e-ToYou International, Inc. on April 1, 2011. After the merger, IFE became the surviving entity and was renamed as International Integrated System, Inc. (“IISI”). International Integrated System, Inc. and e-ToYou International, Inc. were dissolved. As a result of the additional shares being issued by IFE in connection with this transaction, Chunghwa’s ownership interest in IISI decreased from 49% to 33% after the merger, and after the stockholders’ meeting of IISI on June 24, 2011, Chunghwa lost control of the board of directors. Due to this loss of control, IISI was deconsolidated and going forward the investment is accounted for as an equity method investment.

Chunghwa invested in HDD in September 2011 at $250,000 thousand cash to acquire 50% of its shares and the rest of 50% ownership interest was held by HTC Corporation (“HTC”). After the stockholders’ meeting of HDD held on March 2, 2012, Chunghwa and HTC each obtained half of director seats. Thus, neither entities obtained control over HDD. HDD engages mainly in providing software service.

Chunghwa, President Chain Store Corporation and EasyCard Corporation established a joint venture, DZIM, in May 2011. Chunghwa invested $114,640 thousand cash and held 40% ownership of DZIM in May 2011. Chunghwa participated in the capital increase of DZIM by investing $14,360 thousand in May 2012 but did not subscribe the shares at its corresponding proportion. Thus, the ownership interest decreased from 40% to 33% after the capital increase of DZIM. DZIM reduced its capital by $193,490 thousand in December 2012. Chunghwa received $64,500 thousand from capital distribution and the ownership interest remains at 33%. DZIM engages mainly in information technology service and general advertisement service.

- 26 -

COI participated in the capital increase of Sertec by investing $11,552 thousand in February 2012. COI remained 49% ownership of Sertec after the capital increase.

Chunghwa established 100% owned subsidiary of Honghwa Human Resources Co., Ltd. (“HHR”) by prepaying $180,000 thousand in January 2013. HHR engages mainly in providing human resources service.

The equity in earnings and losses for the years ended December 31, 2012 and 2011 were based on the audited financial statements.

13. FINANCIAL ASSETS CARRIED AT COST

	December 31
	2012				2011
	Carrying Amount		% of Owner- ship		Carrying Amount		% of Owner- ship
Non-listed
Taipei Financial Center Corp. (“TFC”)	$	1,789,530		12	$	1,789,530		12
Industrial Bank of Taiwan II Venture Capital Co., Ltd. (“IBT II”)		180,000		17		200,000		17
Innovation Works Development Fund, L.P. (“IWDF”)		108,476		4		73,154		4
Global Mobile Corp. (“GMC”)		77,018		3		77,018		8
iD Branding Ventures (“iDBV”)		74,554		11		89,504		11
Tatung Technology Inc.		73,964		11		60,081		11
Tons Lightology Inc.		66,150		4		66,150		4
Innovation Works Limited (“IW”)		31,391		2		31,391		2
VisEra Technologies Company Ltd.		29,371		—		29,371		—
Alder Optomechanical Corp. (“Alder”)		23,310		2		29,750		1
UniDisplay Inc. (“UniDisplay”)		21,974		1		55,450		3
Ultra Fine Optical Technology Co., Ltd. (“UltraFine”)		18,000		8		27,000		8
Procrystal Technology Co., Ltd. (“Procrystal”)		16,200		2		68,185		2
N.T.U. Innovation Incubation		12,000		9		12,000		9
Digimax Inc. (“DIG”)		10,928		3		15,080		4
Mediapro Technology Ltd. (“Mediapro”)		8,177		—		—		—
3 Link Information Service Co., Ltd.		3,450		10		3,450		10
Aide Energy (“Cayman”) Holding Co., Ltd. (“Aide”)		2,550		1		9,380		1
Fashion Guide Co., Ltd. (“Fashion Guide”)		2,000		2		—		—
CoaTronics Inc. (“CoaTronics”)		1,168		6		12,000		9
CQi Energy Infocom Inc. (“CQi”)		—		18		6,000		18
RPTI Intergroup International Ltd. (“RPTI”)		—		10		—		10
Essence Technology Solution, Inc. (“ETS”)		—		7		—		7
A2peak Power Co., Ltd. (“A2P”)		—		3		—		3
Hiroca Holdings Ltd.		—		—		17,847		—
SuperAlloy Industrial Co., Ltd.		—		—		7,123		—
DelSolar Co.		—		—		6,097		—
OptiVision Technology. Inc. (“OptiVision”)		—		—		5,511		1
Cando Corporation		—		—		4,946		—

(Continued)

- 27 -

	December 31
	2012				2011
	Carrying Amount		% of Owner- ship		Carrying Amount		% of Owner- ship
Tatung Fine Chemicals Co., Ltd. (“TFChemicals”)	$	—		—	$	4,600		—
Subtron Technology Co.		—		—		3,658		—
XinTec Inc.		—		—		1,078		—
		2,550,211				2,705,354
Prepayments for long-term investments in stocks
Mediapro Technology Ltd. (“Mediapro”)		—		—		44,871		—
Fashion Guide Co., Ltd. (“Fashion Guide”)		—		—		10,000		—
		—				54,871
	$	2,550,211			$	2,760,225

(Concluded)

After evaluating the financial assets, the Company determined the following investments were impaired and recognized impairment losses for the years ended December 31, 2012 and 2011:

	Year Ended December 31
	2012		2011
	NT$		NT$
Procrystal	$	51,985	$	9,815
Mediapro		36,694		—
UniDisplay		33,476		—
CoaTronics		10,832		—
UltraFine		9,000		—
Fashion Guide		8,000		—
Alder		7,090		—
Aide		6,830		20,560
CQi		6,000		14,000
DIG		4,152		—
TFChemicals		2,315		4,535
GMC		—		50,000
RPTI		—		34,500
A2P		—		10,316
OptiVision		—		4,678
	$	176,374	$	148,404

The above investments do not have quoted market prices in an active market and the fair values cannot be reliably measured; therefore, these investments are carried at original cost.

14. OTHER MONETARY ASSETS-NONCURRENT

	December 31
	2012		2011
Piping Fund	$	1,000,000	$	1,000,000

- 28 -

As part of the government’s effort to upgrade the existing telecommunications infrastructure, Chunghwa and other public utility companies were required by the ROC government to contribute $1,000,000 thousand to a Piping Fund administered by the Taipei City Government. This fund was used to finance various telecommunications infrastructure projects.

15. PROPERTY, PLANT AND EQUIPMENT

	December 31
	2012		2011
Cost
Land	$	103,890,828	$	103,813,966
Land improvements		1,579,607		1,552,549
Buildings		67,841,805		67,692,355
Computer equipment		15,379,113		14,951,351
Telecommunications equipment		669,082,702		655,287,093
Transportation equipment		3,315,452		2,526,674
Miscellaneous equipment		7,343,656		6,973,939
Total cost		868,433,163		852,797,927
Revaluation increment on land		5,762,184		5,762,535
		874,195,347		858,560,462
Accumulated depreciation
Land improvements		1,092,703		1,040,886
Buildings		20,918,596		19,754,502
Computer equipment		11,387,207		10,946,415
Telecommunications equipment		547,407,905		531,124,012
Transportation equipment		1,270,172		1,254,273
Miscellaneous equipment		5,643,405		5,516,908
		587,719,988		569,636,996
Accumulated impairment		1,508,335		—
Construction in progress and advances related to acquisition of equipment		18,683,121		13,688,548
Property, plant and equipment, net	$	303,650,145	$	302,612,014

Pursuant to the related regulation, Chunghwa revalued its land owned as of April 30, 2000 based on the publicly announced value on July 1, 1999. These revaluations which have been approved by the Ministry of Auditing resulted in increases in the carrying values of property, plant and equipment of $5,986,074 thousand, liabilities for land value incremental tax of $211,182 thousand, and stockholders’ equity—other adjustments of $5,774,892 thousand.

The amendment to the Land Tax Act, relating to the article to permanently lower land value incremental tax, went effective from February 1, 2005. In accordance with the lowered tax rates, Chunghwa recomputed its land value incremental tax, and reclassified the reserve for land value incremental tax of $116,196 thousand to stockholders’ equity—other adjustments. As of December 31, 2012, the unrealized revaluation increment was decreased to $5,760,349 thousand by disposal of the revalued assets and recognition of impairment loss.

The Company determined that partial land and telecommunication equipment were impaired and recognized an impairment loss of $1,504,766 thousand for the year ended December 31, 2012. Due to the impairment, the unrealized revaluation increment was decreased by $2,054 thousand. Idle asset and other asset—others recognized impairment losses of $35,140 thousand and $20,394 thousand, respectively.

- 29 -

The Company did not recognized any property, plant and equipment impairment loss for the year ended December 31, 2011.

Depreciation expense on property, plant and equipment was $31,026,590 thousand and $30,888,961 thousand for the years ended December 31, 2012 and 2011, respectively. Interest expense capitalized for the years ended December 31, 2012 and 2011 was $44 thousand and $78 thousand, respectively. The capitalized interest rates for the years ended December 31, 2012 and 2011 were 1.22%-1.25% and 1.10%-1.25%, respectively.

16. SHORT-TERM LOANS

	December 31
	2012		2011
Unsecured loans—annual rate—1.25%-2.40% and 1.25%-1.53% for 2012 and 2011, respectively	$	111,473	$	75,000

17. ACCRUED EXPENSES

	December 31
	2012		2011
Accrued salary and compensation	$	9,838,182	$	10,505,866
Accrued franchise fees		2,164,220		2,246,265
Accrued employees’ bonuses and remuneration to directors and supervisors		1,784,767		2,343,593
Accrued maintenance fees		988,240		898,016
Other accrued expenses		3,157,434		2,577,804
	$	17,932,843	$	18,571,544

18. OTHER CURRENT LIABILITIES

	December 31
	2012		2011
Advances from subscribers	$	11,135,074	$	12,070,409
Payables to contractors		2,379,833		1,834,254
Payables to equipment suppliers		1,884,038		1,870,486
Amounts collected for others		1,326,777		1,200,618
Refundable customers’ deposits		1,219,355		1,095,183
Others		3,113,152		3,265,782
	$	21,058,229	$	21,336,732

- 30 -

19. LONG-TERM LOANS (INCLUDING LONG-TERM LOANS—CURRENT PORTION)

	December 31
	2012		2011
Secured loans—annual rate—1.13%-2.10% and 1.10%-1.83% for 2012 and 2011, respectively	$	2,050,000	$	1,651,419
Unsecured loans—annual rate—2.01% and 2.01%-2.04% for 2012 and 2011, respectively		8,372		108,840
		2,058,372		1,760,259
Less: Current portion of long-term loans		8,372		701,887
	$	2,050,000	$	1,058,372

LED obtained a secured loan from Chang Hwa Bank in September 2010. Interest is paid monthly. $300,000 thousand and $1,350,000 thousand are due in December 2014 and September 2015, respectively. LED obtained another secured loan from Chang Hwa Bank in December 2012 at $400,000 thousand which is due in December 2017.

CHIEF obtained an unsecured loan from Bank of Taiwan in January 2009. Interest and principal amount are paid monthly from January 2009 and all were repaid in January 2013.

CHPT obtained a secured loan from the E.SUN Commercial Bank in February 2009. Interest and the principal were paid monthly from March 2009 and all were repaid in February 2012.

20. MATURITY ANALYSIS OF ASSETS AND LIABILITIES

The Company classified LED’s assets and liabilities of the construction operations as current and noncurrent according to the length of the operating cycle of the construction operations. Maturity analysis of LED’s related assets and liabilities was as follows:

	December 31, 2012
	Within One Year		Over One Year		Total
Assets
Notes receivable	$	190	$	—	$	190
Inventories		69,650		2,034,549		2,104,199
Deferred expenses (classified as other current assets)		1,640		—		1,640
	$	71,480	$	2,034,549	$	2,106,029
Liabilities
Accrued expenses	$	42,682	$	—	$	42,682
Payables to contractors (classified as other current liabilities)		32,616		—		32,616
	$	75,298	$	—	$	75,298

- 31 -

	December 31, 2011
	Within One Year		Over One Year		Total
Assets
Accounts Receivable	$	3,938	$	—	$	3,938
Inventories		—		1,408,755		1,408,755
Deferred expenses (classified as other current assets)		—		20,018		20,018
Restricted assets		55,785		—		55,785
	$	59,723	$	1,428,773	$	1,488,496
Liabilities
Accounts payable	$	11,184	$	—	$	11,184
Accrued expenses		21,100		7,190		28,290
Payable to contractors (classified as other current liabilities)		—		25,257		25,257
Advance from land and building (classified as other current liabilities)		—		282,889		282,889
	$	32,284	$	315,336	$	347,620

21. STOCKHOLDERS’ EQUITY

Under Chunghwa’s Articles of Incorporation, Chunghwa’s authorized capital is $120,000,000 thousand which is divided into 12,000,000 thousand common shares (at $10 par value per share), among which 7,757,447 thousand common shares are issued and outstanding as of December 31, 2012.

For the purpose of privatizing Chunghwa, the MOTC sold 1,109,750 thousand common shares of Chunghwa in an international offering of securities in the form of American Depositary Shares (“ADS”) amounting to 110,975 thousand units (one ADS represents ten common shares) on the New York Stock Exchange on July 17, 2003. Afterwards, the MOTC sold 1,350,682 thousand common shares in the form of ADS amounting to 135,068 thousand units on August 10, 2005. Subsequently, the MOTC and Taiwan Mobile Co., Ltd. sold 505,389 thousand and 58,959 thousand common shares of Chunghwa, respectively, in the form of ADS totally amounting to 56,435 thousand units on September 29, 2006. The MOTC and Taiwan Mobile Co., Ltd. have sold 3,024,780 thousand common shares in the form of ADS amounting to 302,478 thousand units. As of December 31, 2012, the outstanding ADSs were 309,211 thousand common shares, which equaled approximately 30,921 thousand units and represented 3.99% of Chunghwa’s total outstanding common shares.

The ADS holders generally have the same rights and obligations as other common stockholders, subject to the provision of relevant laws. The exercise of such rights and obligations shall comply with the related regulations and deposit agreement, which stipulate, among other things, that ADS holders can, through deposit agents:

a. Exercise their voting rights,

b. Sell their ADSs, and

c. Receive dividends declared and subscribe to the issuance of new shares.

- 32 -

Under the ROC Company Law, additional paid-in capital may only be utilized to offset deficits. However, the additional paid-in capital from shares issued in excess of par and donations may be capitalized, which however is limited to a certain percentage of Chunghwa’s paid-in capital. However, where a company undergoes an organizational change (such as a merger, acquisition, or reorganization) that results in the capitalization of undistributed earnings after the organizational change, the above restriction does not apply. Under the revised Company Law issued on January 4, 2012, the aforementioned additional paid-in capital may also be distributed in cash. The additional paid-in capital from long-term investments may not be used for any purpose.

In addition, before distributing a dividend or making any other distribution to stockholders, Chunghwa must pay all outstanding taxes, offset deficits in prior years and set aside a legal reserve equal to 10% of its net income, and depending on its business needs or requirements, may also set aside or reverse special reserves. In accordance with the Articles of Incorporation, no less than 50% of the remaining earnings comprising remaining balance of net income, if any, plus cumulative undistributed earnings shall be distributed in the following order: (a) from 2% to 5% of distributable earnings shall be distributed to employees as employee bonus; (b) no more than 0.2% of distributable earnings shall be distributed to board of directors and supervisors as remuneration; and (c) cash dividends to be distributed shall not be less than 50% of the total amount of dividends to be distributed. If cash dividend to be distributed is less than $0.10 per share, such cash dividend shall be distributed in the form of common shares.

For the years ended December 31, 2012 and 2011, the accrual amounts for bonuses to employees and remuneration to directors and supervisors were accrued based on past experiences and the probable amount to be paid in accordance with Chunghwa’s Articles of Incorporation and Implementation Guidance for the Employee’s Bonus Distribution of Chunghwa Telecom Co., Ltd.

If the initial accrual amounts of the aforementioned bonus are significantly different from the amounts proposed by the board of directors, the difference is charged to the earnings of the year making the initial estimate. Otherwise, the difference between initial accrual amount and the amount resolved in the shareholders’ meeting is charged to the earnings of the following year as a result of change in accounting estimate.

Under the ROC Company Law, the appropriation for legal reserve shall be made until the accumulated reserve equals the aggregate par value of the outstanding capital stock of Chunghwa. This reserve can only be used to offset a deficit, or, under the revised Company Law issued on January 4, 2012, when the legal reserve has exceeded 25% of the Company’s paid-in capital, the excess may be transferred to capital or distributed in cash.

The appropriations and distributions of the 2011 and 2010 earnings of Chunghwa have been approved by the stockholders on June 22, 2012 and June 24, 2011 as follows:

	Appropriation of Earnings				Dividends Per Share
	For Fiscal Year 2011		For Fiscal Year 2010		For Fiscal Year 2011		For Fiscal Year 2010
Legal reserve	$	4,706,838	$	4,760,890
Cash dividends		42,361,864		42,854,462	$	5.46	$	5.52

The amounts for bonuses to employees and remuneration to directors and supervisors approved in the shareholders’ meeting on June 22, 2012, were $2,040,090 thousand and $44,446 thousand, respectively. There was no difference between the initial accrual amounts and the amounts resolved in shareholders’ meeting of the aforementioned bonuses to employees and the remuneration to directors and supervisors.

- 33 -

The amounts for bonuses to employees and remuneration to directors and supervisors approved in the stockholders’ meeting on June 24, 2011, were $2,144,074 thousand and $45,044 thousand, respectively. There was no difference between the initial accrual amounts and the amounts resolved in stockholders’ meeting of the aforementioned bonuses to employees and the remuneration to directors and supervisors. To date, the appropriation and distribution of 2012 earnings of Chunghwa has not been resolved by the board of directors. Information on the appropriation of Chunghwa’s earnings, employees bonuses and remuneration to directors and supervisors resolved by the board of directors and approved by the stockholders is available at the Market Observation Post System website.

The stockholders, at the stockholders’ meeting held on June 18, 2010, resolved to reduce the amount of $19,393,617 thousand in capital of Chunghwa by a cash distribution to its stockholders. The abovementioned 2010 capital reduction proposal was effectively approved by FSC. The board of directors of Chunghwa was authorized to designate the record date of capital reduction as of October 26, 2010. Subsequently, the stock transfer record date of capital reduction was designated as January 15, 2011. The amount due to stockholders for capital reduction was $19,393,617 thousand and such cash payment to stockholders was made in January 2011.

22. SHARE-BASED COMPENSATION PLANS

SENAO share-based compensation plans (“SENAO Plans”) described as follows:

Effective Date	Grant Date		Stock Options Units (Thousand)		Exercise Price (NT$)
2004.12.01		2005.11.28		1,500		$13.5 (Original price $18.3	)
2005.09.30		2006.05.05		10,000		$12.1 (Original price $16.9	)
2007.10.16		2007.10.31		6,181		$42.6 (Original price $44.2	)
				17,681

Each option is eligible to subscribe for one common share when exercisable. Under the terms of the Plans, the options are granted at an exercise price equal to the closing price of the SENAO’s common shares listed on the TSE on the higher of closing price or par value. The SENAO Plans have exercise price adjustment formula upon the issuance of new common shares, capitalization of retained earnings and/or capital reserves, stock split as well as distribution of cash dividends (except for 2007 Plan), except (i) in the case of issuance of new shares in connection with mergers and in the case of cancellation of outstanding shares in connection with capital reduction (2007 Plan is out of this exception), and (ii) except if the exercise price after adjustment exceeds the exercise price before adjustment. The options of all the Plans are valid for six years and the graded vesting schedule for which 50% of option granted will vest two years after the grant date and another two tranches of 25%, each will vest three and four years after the grant date respectively.

- 34 -

Information about SENAO’s outstanding stock options for the years ended December 31, 2012 and 2011 was as follows:

	Stock Options Outstanding
	2012					2011
	Number of Options (Thousand)			Weighted Average Exercise Price (NT$)		Number of Options (Thousand)			Weighted Average Exercise Price (NT$)
Options outstanding, beginning of year		2,278		$	38.85		5,103		$	36.15
Options exercised		(1,222	)		35.73		(2,780	)		33.76
Options expired		(5	)		12.1		(45	)		40.07
Options outstanding, end of year		1,051			42.6		2,278			38.85
Options exercisable, end of year		1,051					2,278

As of December 31, 2012, information about SENAO’s outstanding and exercisable options was as follows:

Options Outstanding								Options Exercisable
Range of Exercise Price (NT$)		Number of Options (Thousand)		Weighted- average Remaining Contractual Life (Years)		Weighted Average Exercise Price (NT$)		Number of Options (Thousand)		Weighted Average Exercise Price (NT$)
$	42.6		1,051		0.92	$	42.6		1,051	$	42.6

As of December 31, 2011, information about SENAO’s outstanding and exercisable options was as follows:

Options Outstanding								Options Exercisable
Range of Exercise Price (NT$)		Number of Options (Thousand)		Weighted- average Remaining Contractual Life (Years)		Weighted Average Exercise Price (NT$)		Number of Options (Thousand)		Weighted Average Exercise Price (NT$)
$	12.1		280		0.32	$	12.1		280	$	12.1
	42.6		1,998		1.92		42.6		1,998		42.6

No compensation cost was recognized under the intrinsic value method for the years ended December 31, 2012 and 2011. Had SENAO used the fair value method to recognize the compensation cost, there would have been no significant impact on the consolidated net income and earnings per share.

Had SENAO used the fair value to evaluate the options using the Black-Scholes model, the assumptions of SENAO for the year ended December 31, 2012 would have been as follows:

	October 31, 2007	May 5, 2006	November 28, 2005
Expected dividend yield	1.49%	—	—
Risk free interest rate	2.00%	1.75%	2.00%
Expected life	4.375 years	4.375 years	4.375 years
Expected volatility	39.82%	39.63%	43.40%
Weighted-average fair value of grants	$13.69	$5.88	$6.93

- 35 -

The board of SENAO resolved to authorize 10,000 thousand units of stock options on May 2, 2012. Each option is eligible to subscribe for one common share when exercisable. The aforementioned share-based compensation plan (2012 Plan) was effectively approved by FSC as of May 28, 2012. Under the terms of the 2012 Plan, the options are granted at an exercise price equal to the closing price of the SENAO’s common shares listed on the TSE on the higher of closing price or par value on the grant date. The 2012 Plan has exercise price adjustment formula upon the issuance of new common shares, capitalization of retained earnings and/or capital reserves, stock split as well as distribution of cash dividends, except (i) in the case of issuance of new shares in connection with mergers and in the case of cancellation of outstanding shares in connection with capital reduction, and (ii) except if the exercise price after adjustment exceeds the exercise price before adjustment. The options are valid for six years and based on the graded vesting schedule, 50% of option granted will vest two years after the grant date and another two tranches of 25% will vest three and four years after the grant date, respectively. As of March 26, 2013, SENAO has not granted options to employees.

CHTP share-based compensation plan (“CHTP Plan”) described as follows:

Effective Date	Grant Date		Stock Options Units		Exercise Price (NT$)
2007.08.15		2008.12.31		1,000	$	12.6

CHTP granted 1,000 options to some of its employees in December 2008. Under the terms of CHTP Plan, each option entitles the holder to subscribe for one thousand common shares when exercisable. The options are valid for 5 years and based on the graded vesting schedule, two tranches of 30% of option will vest two and three years after the grant date, respectively, and the rest of 40% will vest four years after the grant date. There is exercise price adjustment formula upon the issuance of new common shares, capitalization of retained earnings and/or capital reserves, stock split, issuance of new shares in connection with mergers, issuance of global depositary receipts as well as distribution of cash dividends, except if the exercise price after adjustment exceeds the exercise price before adjustment.

Information about CHTP’s outstanding stock options for the years ended December 31, 2012 and 2011 were as follows:

	Stock Options Outstanding
	2012				2011
	Number of Options		Weighted Average Exercise Price (NT$)		Number of Options			Weighted Average Exercise Price (NT$)
Options outstanding, beginning of year		920	$	10.1		960		$	12.2
Options granted		—		—		—			—
Options exercised		—		—		—			—
Options expired		—		—		(40	)		12.1
Options outstanding, end of year		920		10.1		920			12.1
Options exercisable, end of year		920				552

- 36 -

As of December 31, 2012, information about CHTP’s outstanding and exercisable options was as follows:

Options Outstanding
Range of Exercise Price (NT$)		Number of Options		Weighted- average Remaining Contractual Life (Years)		Weighted Average Exercise Price (NT$)		Options Exercisable
								Number of Options		Weighted Average Exercise Price (NT$)
$	10.1		920		1	$	10.1		920	$	10.1

As of December 31, 2011, information about CHTP’s outstanding and exercisable options was as follows:

Options Outstanding
Range of Exercise Price (NT$)		Number of Options		Weighted- average Remaining Contractual Life (Years)		Weighted Average Exercise Price (NT$)		Options Exercisable
								Number of Options		Weighted Average Exercise Price (NT$)
$	12.1		920		2	$	12.1		552	$	12.1

Compensation cost recognized was $3,017 thousand under the intrinsic value method for the year ended December 31, 2012. No compensation cost was recognized under the intrinsic value method for the year ended December 31, 2011.

23. COMPENSATION, DEPRECIATION AND AMORTIZATION EXPENSES

	Year Ended December 31, 2012
	Operating		Operating
	Costs		Expenses		Total
Compensation expense
Salaries	$	13,054,409	$	11,278,394	$	24,332,803
Insurance		1,239,795		1,048,462		2,288,257
Pension		1,810,433		1,315,675		3,126,108
Other compensation		8,604,796		6,074,384		14,679,180
	$	24,709,433	$	19,716,915	$	44,426,348
Depreciation expense	$	29,078,369	$	1,948,221	$	31,026,590
Amortization expense	$	1,217,121	$	258,911	$	1,476,032

	Year Ended December 31, 2011
	Operating		Operating
	Costs		Expenses		Total
Compensation expense
Salaries	$	12,740,876	$	10,894,609	$	23,635,485
Insurance		1,088,516		897,196		1,985,712
Pension		1,740,023		1,253,881		2,993,904
Other compensation		9,536,607		6,696,833		16,233,440
	$	25,106,022	$	19,742,519	$	44,848,541
Depreciation expense	$	29,123,094	$	1,765,867	$	30,888,961
Amortization expense	$	1,185,061	$	214,540	$	1,399,601

- 37 -

24. INCOME TAX

a. Income tax expense consisted of the following:

	Year Ended December 31
	2012			2011
Income tax payable	$	7,930,230		$	8,466,822
Income tax—deferred		(125,666	)		57,089
Adjustments of prior years’ income tax		29,553			52,088
Foreign income tax		24,304			27,372
Income tax	$	7,858,421		$	8,603,371

b. Net deferred income tax assets (liabilities) consisted of the following:

	December 31
	2012			2011
Current
Deferred income tax assets (liabilities)
Valuation loss on inventory	$	44,288		$	62,174
Unrealized accrued expense		32,578			25,786
Estimated warranty liabilities		25,779			8,138
Unrealized foreign exchange loss (gain), net		18,485			(13,207	)
Temporary difference from expense and sales allowance		12,257			1,845
Loss carryforward		3,437			27,540
Investment tax credits		3,238			1,600
Provision for doubtful accounts		2,166			178,467
Valuation gain on financial instruments, net		(130	)		(413	)
Others		831			378
		142,929			292,308
Valuation allowance		—			(176,844	)
Net deferred income tax assets—current	$	142,929		$	115,464
Noncurrent
Deferred income tax assets (liabilities)
Accrued pension cost	$	263,285		$	241,030
Loss carryforward		137,121			47,425
Equity in losses of equity method investees, net		89,396			41,150
Impairment loss		59,064			11,995
Investment tax credit		—			5,289
Abandonment of equipment not approved by National Tax Administration		—			107
Others		(2,018	)		(2,395	)
		546,848			344,601
Valuation allowance		(108,890	)		(4,844	)
Net deferred income tax assets—noncurrent	$	437,958		$	339,757

- 38 -

As of December 31, 2012, details for investment tax credit of subsidiary are as follows:

Law/Statue	Items	Remaining Creditable Amount		Expiry Year
Statute for Upgrading Industries	Personnel training expenditures	$	3,230		2013
	Purchase of machinery and equipment		8		2013
		$	3,238

As of December 31, 2012, loss carryforward of subsidiaries are as follows:

Company	Total Amounts		Unused Amounts		Expiry Year
Local income tax laws	$	38,393	$	38,393		2016
Local income tax laws		73,088		67,763		2017
Local income tax laws		6,248		3,049		2018
Local income tax laws		7,571		7,571		2019
Local income tax laws		7,965		7,965		2020
Local income tax laws		11,748		11,748		2021
Local income tax laws		4,069		4,069		2022
	$	149,082	$	140,558

c. The related information under the Integrated Income Tax System is as follows:

	December 31
	2012		2011
Balance of Imputation Credit Account (“ICA”)
Chunghwa	$	4,459,457	$	4,899,036

The estimated and the actual creditable ratios distribution of Chunghwa’s 2012 and 2011 for earnings were 19.05% and 17.63% respectively. The imputation credit allocated to stockholders is based on its balance as of the date of dividend distribution. The estimated ratio may change when the actual distribution of imputation credit is made.

d. Undistributed earnings information

All Chunghwa’s earnings generated prior to June 30, 1998 have been appropriated.

Chunghwa’s income tax returns have been examined by tax authorities through 2007. The following subsidiaries income tax returns have been examined by authorities through 2010: SENAO, CHPT, CHSI, SHE, CHIEF, Unigate, CHI, LED and CIYP. The following subsidiaries income tax returns have been examined by authorities through 2011: YYRP and CHST.

- 39 -

25. EARNINGS PER SHARE

EPS was calculated as follows:

	Amount (Numerator)						Weighted- average Number of Common Shares (Thousand) (Denominator)		Earnings Per Share (Dollars)
	Income Before Income Tax			Net Income					Income Before Income Tax		Net Income
Year ended December 31, 2012
Basic EPS
Income attributable to stockholders of the parent	$	47,374,923		$	39,903,974			7,757,447	$	6.11	$	5.14
Effect of dilutive potential common stock
SENAO’s stock options		(4,005	)		(4,005	)		—
Employee bonus		—			—			19,791
Diluted EPS
Income attributable to stockholders of the parent (including effect of dilutive potential common stock)	$	47,370,918		$	39,899,969			7,777,238	$	6.09	$	5.13
Year ended December 31, 2011
Basic EPS
Income attributable to stockholders of the parent	$	55,378,638		$	47,068,375			7,789,326	$	7.11	$	6.04
Effect of dilutive potential common stock
SENAO’s stock options		(8,928	)		(8,928	)		—
Employee bonus		—			—			21,279
Diluted EPS
Income attributable to stockholders of the parent (including effect of dilutive potential common stock)	$	55,369,710		$	47,059,447			7,810,605	$	7.09	$	6.03

In March 2007, the ARDF issued an Interpretation 96-052 that requires companies to recognize bonuses paid to employees, directors and supervisors as an expense rather than an appropriation of earnings beginning from January 1, 2008. According to the Interpretation 97-169 issued by ARDF in May 2008, Chunghwa presumed that the employees bonuses to be paid will be settled in shares and takes those shares into consideration when calculating the weighted average number of outstanding shares used in the calculation of diluted EPS if the shares have a dilutive effect for the years ended December 31, 2012 and 2011. The number of shares is calculated by dividing the amount of bonuses by the closing price of the Chunghwa’s shares of the balance sheet date. The dilutive effect of the shares needs to be considered until the stockholders resolve the number of shares to be distributed to employees in their meeting in the following year.

The diluted earnings per share for the years ended December 31, 2012 and 2011 were also due to the effect of potential common stock of stock options by SENAO.

- 40 -

26. PENSION PLAN

Chunghwa completed privatization plans on August 12, 2005. Chunghwa is required to pay all accrued pension obligations including service clearance payment, lump sum payment under civil service plan, additional separation payments, etc. upon the completion of the privatization in accordance with the Statute Governing Privatization of Stated-owned Enterprises. After paying all pension obligations for privatization, the plan assets of Chunghwa should be transferred to the Fund for Privatization of Government-owned Enterprises (the “Privatization Fund”) under the Executive Yuan. On August 7, 2006, Chunghwa transferred the remaining balance of fund to the Privatization Fund. However, according to the instructions of MOTC, Chunghwa is requested to pay all accrued pension obligations including service clearance payment, lump sum payment under civil service plan, additional separation payments, etc. upon the completion of the privatization.

The pension plan under the Labor Pension Act of ROC (the “LPA”) is considered as a defined contribution plan. Based on the LPA, Chunghwa and its subsidiaries make monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages.

The Company’s pension plan is considered as a defined benefit plan under the Labor Standards Law that provide benefits based on an employee’s length of service and average six-month salary prior to retirement. Chunghwa and its subsidiaries contribute an amount no more than 15% of salaries paid each month to their respective pension funds (the Funds), which are administered by the Labor Pension Fund Supervisory Committee (the Committee) and deposited in the names of the Committees in the Bank of Taiwan.

Pension costs of the Company were $3,211,686 thousand ($2,900,792 thousand subject to defined benefit plan and $310,894 thousand subject to defined contributed plan) and $3,056,881 thousand ($2,810,061 thousand subject to defined benefit plan and $246,820 thousand subject to defined contributed plan) for the years ended December 31, 2012 and 2011, respectively.

Pension information of the Company of the defined benefit plan is summarized as follows:

a. Components of net periodic pension cost for the year

Year ended December 31, 2012

	Chunghwa			SENAO			Other
Service cost	$	2,834,621		$	1,279		$	97
Interest cost		317,817			3,429			612
Expected return on plan assets		(252,645	)		(2,067	)		(368	)
Amortization		(4,022	)		1,702			337
Net periodic benefit pension cost	$	2,895,771		$	4,343		$	678

Year ended December 31, 2011

	Chunghwa			SENAO			Other
Service cost	$	2,759,070		$	1,204		$	—
Interest cost		261,522			2,805			1,487
Expected return on plan assets		(212,981	)		(1,949	)		(234	)
Amortization		(4,022	)		2,332			827
Net periodic benefit pension cost	$	2,803,589		$	4,392		$	2,080

- 41 -

Reconciliation between the fund status and accrued pension liabilities, vested benefit, actuarial assumptions and contributions and payments of the fund is summarized as follows:

b. Reconciliation between the fund status and accrued pension cost is summarized as follows:

December 31, 2012

	Chunghwa			SENAO			Other
Benefit obligation
Vested benefit obligation	$	(15,807,582	)	$	(42,607	)	$	(278	)
Non-vested benefit obligation		(4,068,647	)		(114,672	)		(23,395	)
Accumulated benefit obligation		(19,876,229	)		(157,279	)		(23,673	)
Additional benefit obligation		(1,981,949	)		(50,733	)		(10,422	)
Projected benefit obligation		(21,858,178	)		(208,012	)		(34,095	)
Fair values of plan assets		17,357,350			142,125			29,126
Funded status		(4,500,828	)		(65,887	)		4,969
Amortization of unrecognized net transition obligation (assets)		—			—			(409	)
Unrecognized prior service cost effect		(33,655	)		(6,579	)		—
Amortization of unrecognized net loss (gain)		2,962,988			92,059			4,216
Adjustment of accrued pension cost		(947,384	)		(34,747	)		—
Net amount recognized—prepaid pension cost—included in other assets—other (accrued pension liabilities)	$	(2,518,879	)	$	(15,154	)	$	(1,162	)

December 31, 2011

	Chunghwa			SENAO			Other
Benefit obligation
Vested benefit obligation	$	(12,527,833	)	$	(26,089	)	$	—
Non-vested benefit obligation		(4,234,319	)		(99,425	)		(20,153	)
Accumulated benefit obligation		(16,762,152	)		(125,514	)		(20,153	)
Additional benefit obligation		(1,724,407	)		(45,935	)		(10,449	)
Projected benefit obligation		(18,486,559	)		(171,449	)		(30,602	)
Fair values of plan assets		15,593,472			134,700			22,687
Funded status		(2,893,087	)		(36,749	)		(7,915	)
Amortization of unrecognized net transition obligation		—			—			(214	)
Unrecognized prior service cost effect		(37,677	)		(6,892	)		—
Amortization of unrecognized net loss (gain)		1,493,628			61,484			1,443
Adjustment of accrued pension cost		—			—			(385	)
Net amount recognized—prepaid pension cost—included in other assets—other (accrued pension liabilities)	$	(1,437,136	)	$	17,843		$	(7,071	)

c. Vested benefit

	Chunghwa		SENAO		Other
December 31
2012	$	18,440,277	$	50,086	$	308
2011	$	16,164,494	$	32,600	$	—

- 42 -

d. Actuarial assumptions

	December 31
	2012			2011
Discount rate used in determining present value		1.60	%		1.75	%
Rate of compensation increase		1.00	%		1.00	%
Expect long-term rate of return on plan assets		1.60	%		1.50	%

e. Contributions and payments of the Fund

Year ended December 31, 2012

	Chunghwa		SENAO		Other
Contributions	$	2,628,441	$	6,093	$	6,203
Payments	$	1,159,518	$	—	$	—

Year ended December 31, 2011

	Chunghwa		SENAO		Other
Contributions	$	2,593,658	$	6,209	$	3,154
Payments	$	321,925	$	—	$	—

27. TRANSACTIONS WITH RELATED PARTIES

The ROC Government, one of Chunghwa’s customers held significant equity interest in Chunghwa. Chunghwa provides fixed-line services, wireless services, Internet and data and other services to the various departments and institutions of the ROC Government and other state-owned enterprises in the normal course of business and at arm’s-length prices. The information on service revenues from government bodies and related organizations have not been provided because details of the type of transactions were not summarized by Chunghwa. Chunghwa believes that all revenues and costs of doing business are reflected in the financial statements.

a. The Company engages in business transactions with the following related parties:

Company	Relationship
Taiwan International Standard Electronics Co., Ltd. (“TISE”)	Equity-method investee
Kingwaytek Technology Co., Ltd. (“KWT”)	Equity-method investee
Skysoft Co., Ltd. (“SKYSOFT”)	Equity-method investee
So-net Entertainment Taiwan Limited (“So-net”)	Equity-method investee
Viettel—CHT Co., Ltd. (“Viettel—CHT”)	Equity-method investee
Huada Digital Corporation (“HDD”)	Equity-method investee
Dian Zuan Intergrating Marketing Co., Ltd. (“DZIM”)	Equity-method investee
Senao Networks, Inc. (“SNI”)	Equity-method investee of SENAO
HopeTech Technologies Limited (“HopeTech”)	Equity-method investee of SIS
Chunghwa Telecom Foundation (“CTF”)	A nonprofit organization of which the funds donated by Chunghwa exceeds one third of its total funds

(Continued)

- 43 -

Company	Relationship
Senao Technical and Cultural Foundation (“STCF”)	A nonprofit organization of which the funds donated by SENAO exceeds one third of its total funds
International Integrated System, Inc. (“IISI”)	Equity-method investee, which was a subsidiary of Chunghwa before Chunghwa lost control over IISI on June 24, 2011
ST-2 Satellite Ventures Pte., Ltd. (“STS”)	Equity-method investee of CHTS
Sochamp Technology Co., Ltd. (“Sochamp”)	Investor with significant influence over CHST
United Daily News Co., Ltd. (“UDN”)	Investor with significant influence over SFD
udn Digital Co., Ltd. (“udnD”)	Investor with significant influence over SFD
Xiamen Sertec Business Technology Co., Ltd. (“Sertec”)	Equity-method investee of COI
Cheng Fong Investment Co., Ltd.	The chairman of the board of directors, who is served as the president of SENAO

(Concluded)

b. Significant transactions with the above related parties are summarized as follows:

	December 31
	2012				2011
	Amount		%		Amount		%
1)      Receivables
Trade notes and accounts receivable
So-net	$	38,023		86	$	11,263		33
Hope Tech		—		—		17,565		52
Others		5,914		14		5,236		15
	$	43,937		100	$	34,064		100
2)      Payables
Trade notes payable, accounts payable and accrued expenses
TISE	$	594,340		71	$	519,612		66
IISI		113,215		14		120,166		15
SKYSOFT		32,951		4		10,041		1
STS		19,041		2		82,437		11
Hope Tech		12,669		1		11,767		1
Others		16,511		2		14,114		2
		788,727		94		758,137		96
Amounts collected for others
So-net		32,388		4		20,383		3
SKYSOFT		16,215		2		9,618		1
Others		—		—		9		—
		48,603		6		30,010		4
	$	837,330		100	$	788,147		100
3)      Customers’ deposits
Others	$	2,695		—	$	2,005		—

- 44 -

	Year Ended December 31
	2012				2011
	Amount		%		Amount		%
4)      Revenues
So-net	$	336,470		—	$	289,335		—
SKYSOFT		39,360		—		41,156		—
HopeTech		20,606		—		82,021		—
IISI		19,266		—		18,818		—
Others		9,121		—		6,009		—
	$	424,823		—	$	437,339		—
5)      Operating costs and expenses
TISE	$	572,878		—	$	493,875		—
STS		405,680		—		167,651		—
IISI		274,008		—		105,346		—
SKYSOFT		108,182		—		49,146		—
Hope Tech		72,995		—		34,773		—
CTF		47,250		—		49,553		—
KWT		35,503		—		45,468		—
STCF		17,406		—		17,834		—
Others		2,254		—		9,805		—
	$	1,536,156		—	$	973,451		—
6)      Non-operating income and gains
SNI	$	31,211		2	$	31,225		2
Others		937		—		749		—
	$	32,148		2	$	31,974		2
7)      Acquisition of property, plant and equipment
TISE	$	731,498		2	$	1,332,495		5
SKYSOFT		14,238		—		14,238		—
IISI		—		—		151,644		1
Others		1,190		—		302		—
	$	746,926		2	$	1,498,679		6
8)      Acquisition of intangible assets
udnD	$	—		—	$	9,743		—

- 45 -

Chunghwa has entered into a contract with ST-2 Satellite Ventures Pte., Ltd. on March 12, 2010 to lease capacity on the ST-2 satellite. This lease term is 15 years which will start from the official operation of ST-2 satellite and the total contract value is approximately $6,000,000 thousand (SG$260,723 thousand), which included a prepayment of $3,067,711 thousand, and the rest of amount will be paid annually when ST-2 satellite starts its official operation. ST-2 satellite was launched in May 2011, and began its official operation in August 2011. The total rental expense for the year ended December 31, 2012 was $405,680 thousand, which consisted of a reduction of the prepayment of $204,514 thousand and an additional accrual of $201,166 thousand. The prepayment was $2,777,983 thousand (classified as other current assets $204,514 thousand, and other assets—others $2,573,469 thousand) as of December 31, 2012.

SENAO rents out part of its plant to SNI, and the rent is collected monthly.

The transaction terms with the related parties were determined in accordance with mutual agreements when there were no similar transactions with third parties. Other transactions with related parties were not significantly different from those with third parties.

c. The compensation of directors, supervisors and managements is showed as follows:

	Year Ended December 31
	2012		2011
Salaries	$	124,796	$	156,435
Compensations		73,423		70,296
Bonus and remunerations		78,990		84,450
	$	277,209	$	311,181

28. PLEDGED ASSETS

The following assets are pledged as collaterals for long-term bank loans and contract deposits by the Company.

	December 31
	2012		2011
Property, plant and equipment, net	$	2,693,863	$	2,736,212
Land held for development		1,998,733		—
Restricted assets		10,000		9,033
	$	4,702,596	$	2,745,245

29. SIGNIFICANT COMMITMENTS AND CONTINGENCIES

As of December 31, 2012, in addition to those disclosed in other notes, the Company’s remaining commitments under non-cancelable contracts with various parties were as follows:

a. Acquisition of land and buildings of $30,921 thousand.

b. Acquisition of telecommunications equipment of $25,893,428 thousand.

c. Unused letters of credit of $17,798 thousand.

d. Contract to print billing, envelopes and selling gifts of $150,000 thousand.

- 46 -

e. The Company also has non-cancellable operating leases covering certain buildings, computers, computer peripheral equipment and operation system software under contracts that expire in various years. Future lease payments are as follows:

Year	Amount
2013	$	2,321,460
2014		1,820,880
2015		1,317,370
2016		923,532
2017 and thereafter		685,760

f. A commitment to contribute $2,000,000 thousand to a Piping Fund administered by the Taipei City Government, of which $1,000,000 thousand was contributed by Chunghwa on August 15, 1996 (classified as long-term investment—other monetary assets). If the fund is not sufficient, Chunghwa will contribute the remaining $1,000,000 thousand upon notification from the Taipei City Government. Based on Chunghwa’s understanding of the Piping Fund terms, if the project is considered to be no longer necessary by the ROC government, Chunghwa will receive back its proportionate share of the net equity of the Piping Fund upon its dissolution. Chunghwa does not know when its contribution to the Piping Fund will be returned; therefore, Chunghwa did not discount the face amount of its contribution to the Piping Fund.

30. FAIR VALUE OF FINANCIAL INSTRUMENTS

a. Fair values of financial instruments were as follows:

	December 31
	2012				2011
	Carrying				Carrying
	Amount		Fair Value		Amount		Fair Value
Assets
Cash and cash equivalents	$	53,202,312	$	53,202,312	$	67,389,556	$	67,389,556
Financial assets at fair value through profit or loss		2,994		2,994		45,750		45,750
Available-for-sale financial assets—current		2,250,260		2,250,260		2,498,712		2,498,712
Held-to-maturity financial assets—current		4,250,146		4,250,146		1,201,301		1,201,301
Trade notes and accounts receivable, net		24,354,817		24,354,817		22,396,071		22,396,071
Receivables from related parties		43,937		43,937		34,064		34,064
Other current monetary assets		2,185,355		2,185,355		2,068,388		2,068,388
Restricted assets—current		10,000		10,000		56,725		56,725
Financial assets carried at cost		2,550,211		—		2,760,225		—
Available-for-sale financial assets—noncurrent		3,195,965		3,195,965		57,739		57,739
Held-to-maturity financial assets—noncurrent		11,796,144		11,796,144		13,494,891		13,494,891
Other noncurrent monetary assets		1,000,000		1,000,000		1,000,000		1,000,000
Refundable deposits		2,087,034		2,087,034		1,760,149		1,760,149
Restricted assets—noncurrent		—		—		8,093		8,093
Liabilities
Short-term loans		111,473		111,473		75,000		75,000
Financial liabilities at fair value through profit or loss		1,959		1,959		3,987		3,987
Trade notes and accounts payable		13,513,437		13,513,437		14,264,769		14,264,769
Payables to related parties		837,330		837,330		788,147		788,147
Accrued expenses		17,932,843		17,932,843		18,571,544		18,571,544

(Continued)

- 47 -

	December 31
	2012				2011
	Carrying				Carrying
	Amount		Fair Value		Amount		Fair Value
Payables to equipment suppliers (included in “other current liabilities”)	$	2,379,833	$	2,379,833	$	1,834,254	$	1,834,254
Payables to contractors (included in “other current liabilities”)		1,884,038		1,884,038		1,870,486		1,870,486
Amounts collected for others (included in “other current liabilities”)		1,326,777		1,326,777		1,200,618		1,200,618
Refundable customers’ deposits (included in “other current liabilities”)		1,219,355		1,219,355		1,095,183		1,095,183
Current portion of long-term loans		8,372		8,372		701,887		701,887
Long-term loans		2,050,000		2,050,000		1,058,372		1,058,372
Customers’ deposits		4,911,010		4,911,010		5,013,981		5,013,981

(Concluded)

b. Methods and assumptions used in the estimation of fair values of financial instruments:

1) The fair values of certain financial instruments recognized in the balance sheet generally correspond to the market prices of the financial assets. Because of the short maturities of these instruments, the carrying value represents a reasonable basis to estimate fair values. This method does not apply to the financial instruments discussed in Notes 2, 3, and 4 below.

2) If the financial instruments have quoted market prices in an active market, the quoted market prices are viewed as fair values. If the market price of the other financial instruments are not readily available, valuation techniques are used incorporating estimates and assumptions that are consistent with prevailing market conditions.

3) Financial assets carried at cost are investments in unlisted shares, which have no quoted prices in an active market and entail an unreasonably high cost to obtain verifiable fair values. Therefore, no fair value is presented.

4) The fair value of long-term loans (including current portion) is discounted based on projected cash flow which approximate their carrying amounts. The projected cash flows were discounted using the interest rate of similar long-term loans.

c. Fair values of financial assets and liabilities using quoted market prices or valuation techniques were as follows:

	Amount Based on Quoted				Amount Determined Using
	Market Price				Valuation Techniques
	December 31				December 31
	2012		2011		2012		2011
Assets
Financial assets at fair value through profit or loss	$	—	$	39,656	$	2,994	$	6,094
Available-for-sale financial assets		5,395,754		2,480,242		50,207		76,209
Liabilities
Financial liabilities at fair value through profit or loss		—		249		1,959		3,738

- 48 -

d. Information about financial risks

1) Market risk

The foreign exchange rate fluctuations would result in the Company’s foreign-currency-dominated assets and liabilities, outstanding currency swap contracts, and forward exchange contracts exposed to rate risk.

The fluctuations of market price would result in the index future contracts exposed to price risk.

The financial instruments categorized as available-for-sale financial assets are mainly listed stocks, open-end mutual funds and corporate bonds. Therefore, the market risk is the fluctuations of market price. In order to manage this risk, the Company would assess the risk before investing; therefore, no material market risk is anticipated.

2) Credit risk

Credit risk represents the potential loss that would be incurred by the Company if the counter-parties or third-parties breach contracts. Financial instruments with positive fair values at the balance sheet date are evaluated for credit risk. The counter-parties or third-parties of the aforementioned financial instruments are reputable financial institutions and corporations. Management does not expect the Company’s exposure to default by those parties to be material. The Company held a variety of financial instruments, the maximum credit exposed amount is the same as their carrying amounts.

3) Liquidity risk

The Company has sufficient operating capital to meet cash needs upon settlement of derivative financial instruments. Therefore, the liquidity risk is low.

The financial instruments of the Company categorized as available-for-sale financial assets are publicly-traded, easily converted to cash. Therefore, no material liquidity risk is anticipated. The financial instruments categorized as financial assets carried at cost are investments that do not have a quoted market price in an active market. Therefore, material liquidity risk is anticipated.

4) Cash flow interest rate risk

The Company engages in investments in fixed-interest-rate debt securities. Therefore, cash flows from such securities are not expected to fluctuate significantly due to changes in market interest rates.

31. ADDITIONAL DISCLOSURES

Following are the additional disclosures required by the SFC for Chunghwa and its investees:

a. Financing provided: None.

b. Endorsement/guarantee provided: Please see Table 1.

c. Marketable securities held: Please see Table 2.

- 49 -

d. Marketable securities acquired and disposed of at costs or prices at least $100 million or 20% of the paid-in capital: Please see Table 3.

e. Acquisition of individual real estate at costs of at least $100 million or 20% of the paid-in capital: Please see Table 4.

f. Disposal of individual real estate at prices of at least $100 million or 20% of the paid-in capital: None.

g. Total purchase from or sale to related parties amounting to at least $100 million or 20% of the paid-in capital: Please see Table 5.

h. Receivables from related parties amounting to $100 million or 20% of the paid-in capital: Please see Table 6.

i. Names, locations, and other information of investees on which the Company exercises significant influence: Please see Table 7.

j. Financial transactions: Please see Notes 5 and 30.

k. Investment in Mainland China: Please see Table 8.

l. Intercompany relationships and significant intercompany transaction: Please see Table 9.

32. SEGMENT FINANCIAL INFORMATION

a. Segment information: Please see Table 10.

b. Products and service revenues from external customer information: Please see Table 11.

c. Geographic information

The users of the Company’s services are mainly from Taiwan, ROC. The revenues it derived outside Taiwan are mainly revenues from international long distance telephone and leased line services. The geographic information for revenues is as follows:

	Year Ended December 31
	2012		2011
Taiwan, ROC	$	212,547,264	$	211,825,801
Overseas		7,583,624		5,667,266
	$	220,130,888	$	217,493,067

The Company has long-lived assets in U.S., Singapore, Hong Kong, China, Vietnam, and Japan amounting to $1,415,148 thousand and $736,084 thousand at December 31, 2012 and 2011, respectively.

Except for the long-lived assets located in the aforementioned areas, the other long-lived assets are located in Taiwan, ROC.

- 50 -

d. Major customers’ information

The export sales revenue of the Company is less than 10% of the operating income as of December 31, 2012 and 2011, respectively.

33. OTHERS

The significant information of foreign-currency financial assets and liabilities as below:

	December 31
	2012						2011
	Foreign Currencies		Exchange Rate		New Taiwan Dollars		Foreign Currencies		Exchange Rate		New Taiwan Dollars
Financial assets
Monetary items
Cash
USD	$	13,380		29.04	$	388,545	$	8,392		30.28	$	254,110
HKD		63,697		3.75		238,674		121,692		3.90		474,599
JPY		106,647		0.34		35,834		78,436		0.39		30,590
SGD		5,323		23.76		126,478		35,417		23.31		825,570
Accounts receivable
USD		136,275		29.04		3,957,425		154,229		30.28		4,670,054
HKD		26,407		3.75		98,946		556		3.90		2,168
RMB		14,075		4.66		65,591		1,073		4.81		5,163
JPY		35,218		0.34		11,833		35,558		0.39		14,063
Available-for-sale financial assets
USD		75,517		29.04		2,193,024		68,243		30.28		2,066,398
Investments accounted for using equity method
USD		1,046		29.04		30,376		710		30.28		21,668
VND		196,334,815		0.00135		265,052		183,540,288		0.00139		255,121
SGD		22,798		23.76		541,672		19,827		23.31		462,161
Financial liabilities
Monetary items
Accounts payable
USD		124,240		29.04		3,607,930		115,758		30.28		3,505,152
EUR		34,058		38.49		1,310,892		28,037		39.18		1,098,504
HKD		22,337		3.75		83,697		795		3.90		3,101
SGD		871		23.76		20,695		3,579		23.31		83,426
RMB		12,477		4.66		58,143		15,522		4.81		74,661
JPY		39,397		0.34		13,253		13,186		0.39		5,156

34. PRE-DISCLOSURE FOR ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS

Under Rule No. 0990004943 issued by the Financial Supervisory Commission (FSC) on February 2, 2010, the Company pre-discloses the following information on the adoption of International Financial Reporting Standards as follows.

a. On May 14, 2009, the FSC announced the “Framework for Adoption of International Financial Reporting Standards by Companies in the ROC.” In this framework, starting 2013, companies with shares listed on the TSE or traded on the Taiwan GreTai Securities Market or Emerging Stock Market should prepare their financial statements in accordance with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards, International Accounting Standards, and the Interpretations as well as related guidance translated by the ARDF and issued by the FSC (IFRSs). To comply with this framework, the Company has set up a project team and made a plan to adopt the IFRSs. Leading the implementation of this plan is the

- 51 -

President. The main contents of the plan, anticipated schedule and status of execution as of December 31, 2012 were as follows:

Contents of Plan	Responsible Department	Status of Execution
1)      Evaluation Phase: (August 1, 2009—March 31, 2010)
a)      Make IFRSs adoption plan and set up a IFRSs project team	Accounting department	Completed
b)      Compare and analyze the differences between current accounting policies and IFRSs	Accounting department	Completed
c)      Complete the identification of consolidated entities under IFRSs	Accounting department	Completed
d)      Evaluate the modification of current accounting policies for IFRSs adoption	Accounting department	Completed
e)      Evaluate the adoption of IFRS 1, “First-time Adoption of International Financial Reporting Standards”	Accounting department	Completed
f)      Conduct the first stage of internal employee training	Accounting department	Completed
2)      Preparation Phase: (April 1, 2010—December 31, 2011)
a)      Determine accounting policies in accordance with IFRSs	Accounting department	Completed
b)      Choose the optional exemptions under IFRS 1, “First-time Adoption of International Financial Reporting Standards”	Accounting department	Completed
c)      Modify related information system	Information technology department, accounting department	Completed
d)      Amend internal control and related policies	Accounting department, related departments	Completed
e)      Conduct the second stage of internal employee training	Accounting department	Completed
3)      Application Phase: (January 1, 2012—December 31, 2013)
a)      Prepare opening IFRSs balance sheet	Accounting department	Completed
b)      Prepare IFRS comparative financial statements for the year ended December 31, 2012	Accounting department	In progress
c)      Prepare financial statements in accordance with IFRSs	Accounting department	In progress

- 52 -

b. Based on IFRS 1 “First-time adoption of International Financial Reporting Standards”, when the Company first adopts IFRSs, the Company should apply the IFRSs to establish its accounting policies, prepare its financial statements and make required adjustments retroactively to the transition date (January 1, 2012). IFRS 1 provided several optional exemptions. The main exemptions adopted by the Company were discussed as follows:

1) Business combination

The Company elected not to apply IFRS 3 retrospectively to business combinations occurred on or before December 31, 2011.

2) Share-based payment transactions

The Company elected not to apply IFRS 2 retrospectively to the share-based payment transactions which were granted and vested on or before December 31, 2011.

3) Deemed costs

The Company elected to measure its revalued land at the date of transition to IFRSs at its revalued amount determined under ROC GAAP as its deemed cost.

4) Employee benefits

The Company elected to recognize all unrecognized cumulative actuarial gains and losses as retained earnings as of January 1, 2012.

The impacts of the aforementioned optional exemptions were included in the following part e. of “explanation for the adjustments of IFRSs transition”.

c. The Company had assessed the material differences and the impacts between the existing accounting policies and the accounting policies to be adopted under IFRSs as follows:

1) Reconciliation of consolidated balance sheet as of January 1, 2012

			Adjustments
			Differences in Recognitions and Measurements			Differences in Presentations
ROC GAAP									IFRSs
Items	Amount								Amount		Items	Notes
Current assets	$	106,538,985	$	(337,754	)	$	(115,464	)	$	106,085,767	Current assets	4), 7), 9), 13)
Investments accounted for using equity method		2,563,636		(7,619	)		—			2,556,017	Investments accounted for using the equity method	10)
Financial assets carried at cost		2,760,225		—			—			2,760,225	Financial assets carried at cost
Available-for-sale financial assets		57,739		—			—			57,739	Available-for-sale financial assets
Held-to-maturity financial assets		13,494,891		—			—			13,494,891	Held-to-maturity financial assets
Other monetary assets		1,000,000		—			(1,000,000	)		—		13)
Property, plant and equipment		302,612,014		—			(7,580,183	)		295,031,831	Property, plant and equipment	1), 2), 13)
				—			9,060,081			9,060,081	Investment property	1), 2)
Intangible assets		6,330,253		—			12,475			6,342,728	Intangible assets	13)
Other assets		7,562,539		581,839			(356,827	)		7,787,551	Other noncurrent assets	1), 2), 4), 5), 6), 7), 13)
Total	$	442,920,282	$	236,466		$	20,082		$	443,176,830	Total
Current liabilities	$	59,280,808	$	567,407		$	—		$	59,848,215	Current liabilities	7), 8), 9)
Noncurrent liabilities		3,635,835		1,322,478			—			4,958,313	Long-term liabilities	7), 8)
Reserve for land value incremental tax		94,986		—			(94,986	)		—		4)
Other liabilities		6,866,005		1,549,205			115,068			8,530,278	Other noncurrent liabilities	4), 6)
Total liabilities		69,877,634		3,439,090			20,082			73,336,806	Total liabilities
Common stock		77,574,465		—			—			77,574,465	Common stock
Additional paid-in capital		169,536,289		20,621,248			—			190,157,537	Additional paid-in capital	6), 12)
Retained earnings		115,866,869		(18,052,348	)		—			97,814,521	Retained earnings	3), 5), 6), 7), 8), 9), 10), 11), 12)
Other adjustments		5,753,403		(5,724,647	)		—			28,756	Other adjustments	3), 6), 10)
Total equity attributable to stockholders of the parent		368,731,026		(3,155,747	)		—			365,575,279	Total equity attributable to shareholders of the parent
Minority interests in subsidiaries		4,311,622		(46,877	)		—			4,264,745	Noncontrolling interest	5), 6), 10), 11)
Total stockholders’ equity		373,042,648		(3,202,624	)		—			369,840,024	Total shareholders’ equity
Total	$	442,920,282	$	236,466		$	20,082		$	443,176,830	Total

- 53 -

2) Reconciliation of consolidated balance sheet as of December 31, 2012

			Adjustments
			Differences in Recognitions and Measurements			Differences in Presentations
ROC GAAP									IFRSs
Items	Amount								Amount		Items	Notes
Current assets	$	100,995,487	$	7,783		$	(142,364	)	$	100,860,906	Current assets	4), 7), 9), 13)
Investments accounted for using equity method		2,249,955		(9,663	)		—			2,240,292	Investments accounted for using the equity method	10), 12)
Financial assets carried at cost		2,550,211		—			—			2,550,211	Financial assets carried at cost
Available-for-sale financial assets		3,195,965		—			—			3,195,965	Available-for-sale financial assets
Held-to-maturity financial assets		11,796,144		—			—			11,796,144	Held-to-maturity financial assets
Other monetary assets		1,000,000		—			(1,000,000	)		—		13)
Property, plant and equipment		303,650,145		—			(6,307,796	)		297,342,349	Property, plant and equipment	1), 2), 13)
				—			7,788,898			7,788,898	Investment property	1), 2)
Intangible assets		5,812,709		—			33,647			5,846,356	Intangible assets	13)
Other assets		8,196,205		732,633			(364,954	)		8,563,884	Other noncurrent assets	1), 2), 4), 5), 6), 7), 13)
Total	$	439,446,821	$	730,753		$	7,431		$	440,185,005	Total
Current liabilities	$	56,783,972	$	64,503		$	—		$	56,848,475	Current liabilities	7), 8), 9)
Noncurrent liabilities		4,716,053		1,180,726			—			5,896,779	Long-term liabilities	7), 8)
Reserve for land value incremental tax		94,986		—			(94,986	)		—		4)
Other liabilities		7,941,596		2,078,841			102,417			101,122,854	Other noncurrent liabilities	4), 5), 6)
Total liabilities		69,536,607		3,324,070			7,431			72,868,108	Total liabilities
Common stock		77,574,465		—			—			77,574,465	Common stock
Additional paid-in capital		169,544,058		20,618,372			—			190,162,430	Additional paid-in capital	6), 11), 12)
Retained earnings		113,408,979		(1,820,248	)		—			94,988,731	Retained earnings	3), 5), 6), 7), 8), 9), 10), 11), 12)
Other adjustments		4,914,892		(4,753,831	)		—			161,061	Other adjustments	3), 5),6), 10)
Total equity attributable to stockholders of the parent		365,442,394		(2,555,707	)		—			362,886,687	Total equity attributable to shareholders of the parent
Minority interests in subsidiaries		4,467,820		(37,610	)		—			4,430,210	Noncontrolling interest	5), 6), 10), 11)
Total stockholders’ equity		369,910,214		(2,593,317	)		—			367,316,897	Total shareholders’ equity
Total	$	439,446,821	$	730,753		$	7,431		$	440,185,005	Total

3) Reconciliation of consolidated statement of comprehensive income for year ended December 31, 2012

				Adjustments
				Differences in Recognitions and Measurements			Differences in Presentations
ROC GAAP										IFRSs
Items	Amount									Amount			Items	Notes
Net revenues	$	220,130,888		$	1,288,941		$	—		$	221,419,829		Net revenues	7), 8), 9)
Operating costs		(141,177,220	)		(334,456	)		(1,132	)		(141,512,808	)	Operating costs	6), 7), 9), 14)
Gross profits		78,953,668			954,485			(1,132	)		79,907,021		Gross profits
Operating expenses		(30,040,263	)		39,568			35,195			(29,965,500	)	Operating expenses	6), 7), 9), 11), 14)
Income from operations		48,913,405			994,053			34,063			49,941,521		Income from operations
Non-operating income and losses		(17,242	)		3,221			151			(13,870	)	Non-operating income and losses	3), 10), 12)
Income before income tax		48,896,163			997,274			34,214			49,927,651		Income before income tax
Income tax expense		(7,858,421	)		(119,136	)		(34,214	)		(8,011,771	)	Income tax expenses	5), 14)
Consolidated net income	$	41,037,742		$	878,138		$	—			41,915,880		Consolidated net income
											(57,959	)	Exchange differences arising from the translation of the foreign operations
											192,114		Unrealized valuation gain on available-for-sale financial assets
											(1,496,742	)	Actuarial gains and losses on defined benefit plans	6)
											254,446		Tax relating to each component of other comprehensive income	5)
											(26,373	)	Share of the profit or loss of associates and joint ventures accounted for using the equity method	10)
											(1,134,514	)	Other comprehensive income—current period (after tax)
										$	40,781,366		Total comprehensive income

- 54 -

d. Appropriation for special reserve at the date of transition to IFRSs

In accordance with the Order No. 1010012865 issued by the FSC on April 6, 2012, upon the first-time adoption of IFRSs, an entity shall appropriate to the special reserve in the amount of the increase in retained earnings that resulted from applying the IFRS 1 exemptions to reclassify unrealized revaluation increment and cumulative translation differences (gain) to retained earnings. However, if the increase in retained earnings that resulted from all IFRSs adjustments is smaller than the amount of unrealized revaluation increment and cumulative translation differences (gain) reclassified to retained earnings, the special reserve is appropriated to the extent of the increased in retained earnings resulting from all IFRSs adjustments. The special reserve will be reversed in proportion to the usage, disposal or reclassification of the related assets. The adjustments from IFRSs adoption resulted in the decrease of retained earnings of the Company; therefore, the Company is not required to appropriate any amount to the special reserve.

e. Explanation for the adjustments of IFRSs transition:

1) Classification of investment property

On January 1, 2012, the assets that met definitions of investment property under IAS 40 “Investment Property” were reclassified from property, plant and equipment of $8,596,664 thousand, and other assets—idle assets of $463,417 thousand, to investment property. The total amount of reclassification was $9,060,081 thousand. On December 31, 2012, the assets that met definition of investment property were reclassified from property, plant and equipment, $7,329,796 thousand, and other assets—idle assets, $459,102 thousand, to investment property. The total amount of reclassification was $7,788,898 thousand.

2) Classification of leased assets and idle assets

Under ROC GAAP, leased and idle assets were classified as other assets; after the transition to IFRSs, leased and idle assets were reclassified to property, plant and equipment or investment property based on the nature of these assets.

The Company reclassified leased assets to property, plant and equipment and the amounts were $400,453 thousand and $389,521 thousand as of January 1, 2012 and December 31, 2012, respectively. Except for the abovementioned Item 1) which discussed the reclassification from idle assets to investment property, the Company reclassified the remaining idle assets to property, plant and equipment amounting to $436,619 thousand and $415,479 thousand, as of January 1, 2012 and December 31, 2012, respectively.

3) Deemed costs of property, plant and equipment

The Company elected to apply the optional exemption in IFRS 1. The management measured land (classified as property, plant and equipment and investment property under IFRSs) at its revalued amount which was determined under ROC GAAP as deemed costs. On January 1, 2012, the Company reclassified the unrealized revaluation increment (classified as stockholders’ equity) to retained earnings and the amount was $5,762,753 thousand. This reclassification did not affect total equity. Due to disposal of some revalued assets and recognition of impairment loss of the revalued assets, unrealized revaluation increment reclassified to retained earnings was decreased by $350 thousand and $2,054 thousand, respectively and unrealized revaluation increment as of December 31, 2012 was $5,760,349 thousand. As a result of the above adjustments, gain on disposal of property, plant and equipment was reduced by $350 thousand and impairment loss was increased by $2,054 thousand.

- 55 -

4) Classification of deferred income tax asset and liability, and valuation allowance

Under ROC GAAP, a deferred income tax asset and liability should be classified as current and noncurrent in accordance with the classification of its related asset or liability. When a deferred income tax asset and liability does not relate to an asset or liability, then it is classified as either current or noncurrent based on the expected length of time before it is realized or settled. However, under IFRSs, a deferred income tax asset and liability should be classified as noncurrent, and could not be offset.

Under ROC GAAP, if it is more likely than not that deferred income tax assets will not be realized, the valuation allowances are provided to the extent. However, under IFRSs, deferred income tax assets are only recognized when it is more likely than not to be realized, and the valuation allowance is not used under IFRSs.

Based on the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, the reserve for land value incremental tax caused by revaluation of land is classified as long-term liabilities. Under IFRSs, if the Company elects to apply the IFRS 1 exemption and measure the revalued land using the carrying amount determined under ROC GAAP as its deemed cost, the related reserve for land value incremental tax should be classified as deferred income tax liabilities.

The Company reclassified its deferred income tax assets—current to noncurrent assets and the amounts were $115,464 thousand and $142,929 thousand as of January 1, 2012 and December 31, 2012, respectively. Further, deferred income tax liabilities, which were netted with deferred income tax assets under ROC GAAP, were reversed. As a result of such reversal, deferred income tax liabilities—noncurrent and deferred income tax assets—noncurrent were increased by $20,082 thousand and $7,431 thousand, respectively, and reserve for land value incremental tax of $94,986 thousand was also reclassified as deferred income tax liabilities—noncurrent under IFRSs.

5) Income tax

Based on IAS 12 “Income Taxes”, the income tax adjustments as a result of the transition to IFRSs are as follows: Deferred income tax assets were increased by $596,271 thousand and $731,560 thousand (including the tax effects of actuarial gains and losses from defined benefit plans of $254,446 thousand) as of January 1, 2012 and December 31, 2012, respectively; retained earnings were increased by $587,418 thousand and $719,807 thousand as of January 1, 2012 and December 31, 2012, respectively; noncontrolling interests were increased by $8,853 thousand and $11,774 thousand as of January 1, 2012 and December 31, 2012, respectively. Deferred income tax liabilities were decreased by $21 thousand as of December 31, 2012. For the year ended December 31, 2012, due to the adjustment of deferred income tax assets and deferred income tax liabilities (decreased by $119,157 thousand in deferred tax assets and decreased by $21 thousand in deferred income tax liabilities), income tax expense was increased by $119,136 thousand and other comprehensive income gains (the tax income related to other comprehensive income) was increased by $254,446 thousand.

6) Employee benefits

Under ROC GAAP, net transaction obligation that was resulted from the first time adoption of SFAS No. 18 “Pension” should be amortized on a straight-line basis over the average remaining service life of active plan participants and recognized as net periodic pension cost. After the transition to IFRSs, transitional rules in IAS 19 “Employee Benefits” did not apply, so the related amounts of net transaction obligation should be recognized at once and adjusted in retain earnings.

- 56 -

Further, under ROC GAAP, actuarial gains (losses) are recognized based on the corridor approach and the amounts are amortized over the average remaining service life of active plan participants. However, under IFRSs, the Company elected to recognize pension gains (losses) resulting from defined benefit plans as other comprehensive income immediately and subsequent reclassification to earnings is not permitted.

As a result of the aforementioned adjustments, other liabilities were increased by $1,549,205 thousand and $2,078,862 thousand as of January 1, 2012 and December 31, 2012, respectively; other noncurrent assets were decreased by $14,524 thousand and increased by $931 thousand as of January 1, 2012 and December 31, 2012, respectively; retained earnings were decreased by $1,512,039 thousand and $2,990,802 thousand as of January 1, 2012 and December 31, 2012, respectively; unrecognized net losses of pension were decreased by $215 thousand and $957,202 thousand as of January 1, 2012 and December 31, 2012, respectively; noncontrolling interests were decreased by $51,905 thousand and $44,331 thousand as of January 1, 2012 and December 31, 2012, respectively. For the year ended December 31, 2012, pension cost was decreased by $793 thousand which increased $169 thousand in operating costs and decreased $962 thousand in operating expenses and actuarial losses resulting from defined benefit plans (classified as other comprehensive income) was decreased by $1,496,742 thousand.

Further, prior to Chunghwa’s privatization in 2005, the pension contributions were made according to the related regulations. After privatization, the pension obligations of retained employees that were civil employees and entitled to receive future monthly pension payments based on the “Labor Pension Act”, “Act of Privatization of Government-Owned Enterprises”, and “Enforcement Rules of Statute of Privatization of Government-Owned Enterprises” were borne by the government. The settlement impact upon privatization of $20,648,078 thousand calculated according to the actuarial report under IAS 19 shall be retroactively adjusted from retained earnings to additional paid-in capital—privatization at the date of transition to IFRSs.

7) Award credits (often known as “points”)

Under ROC GAAP, there’s no related guidance about award credits. After the transition to IFRSs, Chunghwa applied IFRIC 13 “Customer Royalty Program” retroactively. The award credit should be measured at its fair value to defer the recognition of revenue. When the customers redeem the points, the related revenues and costs shall be recognized. The guidance will replace Chunghwa’s current accounting policy that Chunghwa would accrue expenses when the award credits were given.

Accrued award credits liabilities (classified as other current liabilities) were decreased by $70,036 thousand and $120,863 thousand as of January 1, 2012 and December 31, 2012, respectively; receivables were increased by $12,128 thousand ($12,036 thousand was classified as current assets and $92 thousand was classified as noncurrent assets) and $7,925 thousand ($7,783 thousand was classified as current assets and $142 thousand was classified as noncurrent assets) as of January 1, 2012 and December 31, 2012, respectively; deferred award credits revenue (classified as long-term liabilities—deferred revenue) were increased by $36,370 thousand and $79,984 thousand as of January 1, 2012 and December 31, 2012, respectively; retained earnings were increased by $45,794 thousand and $48,804 thousand as of January 1, 2012 and December 31, 2012, respectively. The revenue was decreased by $47,817 thousand, the marketing expenses were decreased by $80,105 thousand and the operating cost was increased by $29,278 thousand for the year ended December 31, 2012.

- 57 -

8) Recognition of revenue from providing fixed line connection service

Prior to privatization, according to the laws and regulations applicable to state-owned enterprises in Taiwan, Chunghwa recorded revenue from providing fixed line connection service at the time the service was performed. Under IFRSs, following the revenue recognition guidance, the above service revenue should be treated as deferred income and recognized over the time when the service is continuously provided.

Chunghwa should retrospectively adjust the deferred income of $1,925,816 thousand and $1,286,108 thousand as of January 1, 2012 and December 31, 2012, respectively, by decreasing retained earnings and increasing the deferred revenue from providing fixed line connection service ($639,708 thousand and $185,366 thousand were classified as current liabilities—deferred income; $1,286,108 thousand and $1,100,742 thousand were classified as long-term liabilities—deferred income as of January 1, 2012 and December 31, 2012, respectively). For the year ended December 31, 2012, revenue from providing fixed line connection service was increased by $639,708 thousand.

9) Recognition of construction contract revenue

The construction contracts did not meet the criteria in IFRIC 15.11, so IAS 11 “Construction Contracts” does not apply. The Company could only recognize the revenues when the projects are completed and sold out based on IAS 18 “Revenue”. Due to the reasons mentioned above, the Company should reverse the revenue that was recognized based on percentage completion method, and recognize the related revenue, cost and expense when the project is completed in 2012.

Inventories were decreased by $392,040 thousand and nil as of January 1, 2012 and December 31, 2012, respectively; deferred marketing expenses (classified as other current assets) were increased by $42,250 thousand and nil as of January 1, 2012 and December 31, 2012, respectively; accrued expenses (classified as other current liabilities—accrued expense) were decreased by $2,265 thousand and nil of January 1, 2012 and December 31, 2012, respectively; retained earnings were decreased by $347,525 thousand and nil as of January 1, 2012 and December 31, 2012, respectively. The construction revenue was increased by $697,050 thousand, the construction cost was increased by $305,009 thousand and the marketing expenses were increased by $44,516 thousand for the year ended December 31, 2012.

10) Equity method investments

Associates and joint ventures that accounted for using equity method should also adopt IFRSs in coordinated with the Company’s transition to IFRSs. The main adjustment includes employee benefit and share-based payments, etc. Due to the adjustments, long-term investments were decreased by $7,619 thousand and $9,394 thousand as of January 1, 2012 and December 31, 2012, respectively; retained earnings were decreased by $40,028 thousand and $52,057 thousand as of January 1, 2012 and December 31, 2012, respectively; unrecognized net loss of pension were decreased by $37,891 thousand and $49,316 thousand as of January 1, 2012 and December 31, 2012, respectively; noncontrolling interests was decreased by $5,482 thousand and $6,653 thousand as of January 1, 2012 and December 31, 2012, respectively. Investment income from associates and joint ventures that accounted for using equity method was increased by $4,389 thousand and other comprehensive income—associates and joint ventures that accounted for using equity method was decreased $17,589 thousand for the year ended December 31, 2012.

11) Share-based payment transactions

The employee stock options granted by subsidiary were not vested on the transition date. Therefore, the subsidiary should apply IFRS 2 “Share-based Payment” retroactively.

- 58 -

Under IFRSs, paid-in capital—employee stock option recognized by subsidiary does not belong to the equity attributable to parent company, so it should be treated as noncontrolling interests. As of January 1, 2012, retained earnings were decreased by $1,657 thousand and noncontrolling interests was increased by $1,657 thousand. As of December 31, 2012, retained earnings were increased by $229 thousand, noncontrolling interests was increased by $1,600 thousand and paid-in capital—equity in additional paid-in capital reported by equity-method investees was decreased by $1,371 thousand. For the year ended December 31, 2012, the compensation cost under general and administrative expense was decreased by $3,017 thousand.

12) Subscription of associates/subsidiaries new shares and adjustment of paid-in capital reported related to equity-method investees

When an investee issues new shares and original shareholders do not acquire new shares proportionately, this would result in changes in the investor’s shareholdings of the equity method investee. According to SFAS No. 5 “Long-term Investments under Equity Method” under ROC GAAP, since there are changes in the net assets value of the equity method investee attributable to the investor, the investor shall reflect such changes by adjusting additional paid-in capital and long-term investments. However, under IFRSs, if the changes do not cause the investor to lose significant influence over associates, the change shall be treated as a deemed disposal with the related gain or loss recognized in earnings. If the changes do not cause the investor to lose control over subsidiaries, the change shall be treated as equity transactions. In addition, the Company complied with the IFRSs FAQs published by the Taiwan Stock Exchange, and reclassified the paid-in capital which did not meet the definitions under IFRSs or the Company Act and Regulations of Ministry of Economic Affairs to retained earnings. The Company reclassified such paid-in capital of $26,830 thousand as of January 1, 2012 to retained earnings. As of December 31, 2012, paid-in capital was decreased by $1,505 thousand, retained earnings was increased by $1,236 thousand, and long-term investment was decreased by $269 thousand. Gain on disposal of financial instruments was increased by $1,236 thousand for the year ended December 31, 2012.

13) Presentation of consolidated balance sheets

a) Piping fund

As part of the government’s effort to upgrade the existing telecommunications infrastructure project, Chunghwa and other public utility companies were required by the ROC government to contribute a total of $1,000,000 thousand to a Piping Fund administered by the Taipei City Government. Since the net assets of this fund would be returned proportionately after the project was completed, in order to conform to the presentation of the financial statements under IFRSs, the fund was reclassified as other noncurrent assets.

b) Time deposits with maturities of more than three months

Under ROC GAAP, cash and cash equivalents includes time deposits that are cancellable but without any loss of principal. Under IFRSs, cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Therefore, an investment normally qualifies as a cash equivalent only when it has a short maturity of three months or less from the date of acquisition.

Time deposits with maturities of more than three months held by the Company were $40,709,500 thousand and $21,960,000 thousand as of January 1, 2012 and December 31, 2012, respectively. In order to conform to the presentation of the financial statements under IFRSs, such amounts were reclassified from cash to other monetary assets—current.

- 59 -

c) Deferred expense

Under IFRSs, the deferred expense, which was classified as other assets under ROC GAAP, was reclassified based on its nature. Deferred expenses belonged to decoration construction projects and advertisement signboard, etc. were reclassified as prepaid expenses of nil and $565 thousand as of January 1, 2012 and December 31, 2012, respectively. Deferred expenses belonged to decoration construction projects and advertisement signboard, etc. were reclassified as property, plant and equipment of $157,529 thousand and $215,646 thousand as of January 1, 2012 and December 31, 2012, respectively. Deferred expenses belonged to computer software were reclassified as intangible assets of $12,475 thousand and $33,647 thousand as of January 1, 2012 and December 31, 2012, respectively.

d) Assets expected for arrangement

Under IFRSs, the property, plant and equipment which were classified as assets expected for arrangement (included in other assets—others) under ROC GAAP, was reclassified based on its nature. Assets expected for arrangement were reclassified as property, plant and equipment of $21,880 thousand and $1,354 thousand as of January 1, 2012 and December 31, 2012, respectively.

14) Presentation of consolidated statements of comprehensive income

After the transition to IFRSs, the consolidated statement of comprehensive income includes net income and other comprehensive income. Further, certain accounts were reclassified to conform to the presentation of the financial statements under IFRSs.

f. The Company has prepared the above assessments in compliance with (a) the 2010 version of the IFRSs translated by the ARDF and issued by the FSC and (b) the Guidelines Governing the Preparation of Financial Reports by Securities Issuers amended and issued by the FSC on December 22, 2011. These assessments may be changed as the FSC may issue new rules governing the adoption of IFRSs, and as other laws and regulations may be amended to comply with the adoption of IFRSs. Therefore, the above assessments may be affected, and differ from the new accounting policies that are drafted by IFRSs.

- 60 -

TABLE 1

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

ENDORSEMENTS/GUARANTEES PROVIDED

FOR THE YEAR ENDED DECEMBER 31, 2012

(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

No.	Endorsement/Guarantee Provider	Guaranteed Party		Limits on Endorsement/								Amount of Endorsement/			Ratio of Accumulated Endorsement/			Maximum Endorsement/
		Name	Nature of Relationship (Note 2)	Guarantee Amount Provided to Each Guaranteed Party			Maximum Balance for the Year		Ending Balance			Guarantee Collateralized by Properties			Guarantee to Net Equity Per Latest Financial Statements			Guarantee Amount Allowable
0	Chunghwa Telecom Co., Ltd.	Donghwa Telecom Co., Ltd.	b	$	3,654,424 (Note 3	)	$	1,031,923	$	315,680 (Note 4	)	$	—			0.09	%	$	14,617,696 (Note 6	)
25	Yao Yong Real Property Co., Ltd.	Light Era Development Co., Ltd.	d		3,665,887 (Note 7	)		2,150,000		1,650,000 (Note 5	)		1,650,000 (Note 5	)		0.5	%		3,665,887 (Note 7	)

Note 1:	Significant transactions between the Company and its subsidiaries or among subsidiaries are numbered as follows:
	a.      “0” for the Company.
	b.      Subsidiaries are numbered from “1”.
Note 2:	Relationships between the endorsement/guarantee provider and the guaranteed party:
	a.      Trading partner.
	b.      Majority owned subsidiary.
	c.      The Company and subsidiary owns over 50% ownership of the investee company.
	d.      A subsidiary jointly owned by the Company and the Company’s directly-owned subsidiary.
	e.      Guaranteed by the Company according to the construction contract.
	f.       An investee company. The guarantees were provided based on the Company’s proportionate share in the investee company.
Note 3:	The maximum amount of endorsement or guarantee is up to 1% of the total stockholders’ equity of the latest financial statements of the Company.
Note 4:	The actual amount used by guaranteed party is $315,680 thousand.
Note 5:	The actual amount used by guaranteed party is $1,650,000 thousand.
Note 6:	The maximum amount of endorsement or guarantee is up to 4% of the total stockholders’ equity of the latest financial statements of the Company.
Note 7:	The maximum amount of endorsement or guarantee is up to 200% of the asset value of the latest financial statements of Yao Yong Real Property Co., Ltd.

- 61 -

TABLE 2

CHUNGHWA TELECOM CO., LTD.

MARKETABLE SECURITIES HELD

DECEMBER 31, 2012

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	December 31, 2012									Note
					Shares (Thousands/ Thousand Units)		Carrying Value (Note 5)			Percentage of Ownership		Market Value or Net Asset Value
0	Chunghwa Telecom Co., Ltd.	Stocks
		Senao International Co., Ltd.	Subsidiary	Investments accounted for using equity method		71,773	$	1,623,305 (Note 10	)		28	$	6,825,627		Note 4
		Light Era Development Co., Ltd.	Subsidiary	Investments accounted for using equity method		300,000		3,785,310 (Note 10	)		100		3,790,828		Note 1
		Donghwa Telecom Co., Ltd.	Subsidiary	Investments accounted for using equity method		305,090		1,168,032 (Note 10	)		100		1,168,032		Note 1
		Chunghwa Telecom Singapore Pte., Ltd.	Subsidiary	Investments accounted for using equity method		26,383		746,122 (Note 10	)		100		746,122		Note 1
		Chunghwa System Integration Co., Ltd.	Subsidiary	Investments accounted for using equity method		60,000		707,250 (Note 10	)		100		690,341		Note 1
		Chunghwa Investment Co., Ltd.	Subsidiary	Investments accounted for using equity method		80,100		614,217 (Note 10	)		89		672,509		Note 1
		CHIEF Telecom Inc.	Subsidiary	Investments accounted for using equity method		37,942		591,706 (Note 10	)		69		534,053		Note 1
		International Integrated System, Inc.	Equity- method investee	Investments accounted for using equity method		22,498		277,592			33		253,259		Note 1
		Viettel-CHT Co., Ltd.	Equity- method investee	Investments accounted for using equity method		—		265,052			30		265,052		Note 1
		Huada Digital Corporation	Equity- method investee	Investments accounted for using equity method		25,000		241,309			50		241,309		Note 1
		Taiwan International Standard Electronics Co., Ltd.	Equity- method investee	Investments accounted for using equity method		1,760		224,099			40		523,348		Note 1
		Chunghwa International Yellow Pages Co., Ltd.	Subsidiary	Investments accounted for using equity method		15,000		188,738 (Note 10	)		100		188,738		Note 1
		Prime Asia Investments Group Ltd. (B.V.I.)	Subsidiary	Investments accounted for using equity method		7,270		155,357 (Note 10	)		100		155,479		Note 1
		Skysoft Co., Ltd.	Equity- method investee	Investments accounted for using equity method		4,438		127,686			30		91,144		Note 1
		Spring House Entertainment Tech. Inc.	Subsidiary	Investments accounted for using equity method		7,015		125,929 (Note 10	)		56		112,642		Note 1
		Chunghwa Telecom Global, Inc.	Subsidiary	Investments accounted for using equity method		6,000		96,614 (Note 10	)		100		109,643		Note 1
		Kingwaytek Technology Co., Ltd.	Equity- method investee	Investments accounted for using equity method		2,214		77,449			33		43,691		Note 1
		Chunghwa Telecom Vietnam Co., Ltd.	Subsidiary	Investments accounted for using equity method		—		55,448 (Note 10	)		100		55,448		Note 1

(Continued)

- 62 -

No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	December 31, 2012										Note
					Shares (Thousands/ Thousand Units)		Carrying Value (Note 5)			Percentage of Ownership		Market Value or Net Asset Value
		Smartfun Digital Co., Ltd.	Subsidiary	Investments accounted for using equity method		6,500	$	44,549 (Note 10	)		65	$	44,657			Note 1
		So-net Entertainment Taiwan Co., Ltd.	Equity- method investee	Investments accounted for using equity method		3,429		31,152			30		13,670			Note 1
		Chunghwa Telecom Japan Co., Ltd.	Subsidiary	Investments accounted for using equity method		1		25,689 (Note 10	)		100		25,689			Note 1
		Dian Zuan Integrating Marketing Co., Ltd.	Equity- method investee	Investments accounted for using equity method		6,450		20,902			33		20,902			Note 1
		Chunghwa Sochamp Technology Inc.	Subsidiary	Investments accounted for using equity method		2,040		17,414 (Note 10	)		51		21,076			Note 1
		New Prospect Investments Holdings Ltd. (B.V.I.)	Subsidiary	Investments accounted for using equity method		—	(US$	—   1 dollar (Note 10	)  )		100	(US$	—   1 dollar	)		Note 8
		Taipei Financial Center Corp.	—	Financial assets carried at cost—noncurrent		172,927		1,789,530			12		1,679,386			Note 2
		Industrial Bank of Taiwan II Venture Capital Co., Ltd. (IBT II)	—	Financial assets carried at cost—noncurrent		18,000		180,000			17		164,111			Note 2
		Innovation Works Development Fund, L.P.	—	Financial assets carried at cost—noncurrent		—		108,476			4		105,242			Note 2
		Global Mobile Corp.	—	Financial assets carried at cost—noncurrent		7,617		77,018			3		48,555			Note 2
		iD Branding Ventures	—	Financial assets carried at cost—noncurrent		5,625		56,250			8		49,067			Note 2
		Innovation Works Limited	—	Financial assets carried at cost—noncurrent		1,000		31,391			2		36,403			Note 2
		CQi Energy Infocom Inc.	—	Financial assets carried at cost—noncurrent		2,000		—			18		—			Note 2
		RPTI Intergroup International Ltd.	—	Financial assets carried at cost—noncurrent		4,765		—			10		—			Note 2
		Essence Technology Solution, Inc.	—	Financial assets carried at cost—noncurrent		200		—			7		450			Note 2
		Beneficiary certificates (mutual fund)
		PIMCO GIS Total Return Bond Fund—H Institutional Class (Acc)	—	Available-for-sale financial assets		770		534,453			—		581,193			Note 3
		PIMCO Global Investment Grade Credit—Ins H Acc	—	Available-for-sale financial assets		1,071		456,118			—		507,266			Note 3
		PIMCO GIS Diversified Bond Fund—H Institutional Class (Acc)	—	Available-for-sale financial assets		984		347,452			—		406,507			Note 3
		Fidelity Funds—US Dollar Bond Fund Y-ACC-USD	—	Available-for-sale financial assets		778		297,283			—		302,047			Note 3
		Janus Flexible Income Bond Fund	—	Available-for-sale financial assets		671		230,472			—		245,103			Note 3
		Eastpring Investments—US Corporation Bond Fund	—	Available-for-sale financial assets		433		149,190			—		148,276			Note 3
		Stocks
		China Airlines Ltd.	—	Available-for-sale financial assets—noncurrent		263,622		3,092,287			5		3,163,465			Note 4
		Bond
		Taiwan Power Co. 2nd Unsecured Bond-EB Issue in 2005	—	Held-to-maturity financial assets		—		305,673			—		305,673			Note 6
		Taiwan Power Co. 2nd Unsecured Bond-EB Issue in 2005	—	Held-to-maturity financial assets		—		203,455			—		203,455			Note 6
		Chinese Petroleum Corporation 1st Unsecured Corporate Bond-B Issue in 2006	—	Held-to-maturity financial assets		—		151,457			—		151,457			Note 6

(Continued)

- 63 -

No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	December 31, 2012								Note
					Shares (Thousands/ Thousand Units)		Carrying Value (Note 5)		Percentage of Ownership		Market Value or Net Asset Value
		Chinese Petroleum Corporation 1st Unsecured Corporate Bond-B Issue in 2006	—	Held-to-maturity financial assets		—	$	201,943		—	$	201,943		Note 6
		Chinese Petroleum Corporation 1st Unsecured Corporate Bond-C Issue in 2006	—	Held-to-maturity financial assets		—		103,417		—		103,417		Note 6
		Chinese Petroleum Corporation 1st Unsecured Corporate Bond-C Issue in 2006	—	Held-to-maturity financial assets		—		206,970		—		206,970		Note 6
		Taiwan Power Co. 2nd Unsecured Corporate Bond-C Issue in 2006	—	Held-to-maturity financial assets		—		208,143		—		208,143		Note 6
		Taiwan Power Co. 3rd Unsecured Corporate Bond-C Issue in 2006	—	Held-to-maturity financial assets		—		209,091		—		209,091		Note 6
		Chinese Petroleum Corporation 1st Unsecured Corporate Bond-A Issue in 2008	—	Held-to-maturity financial assets		—		100,953		—		100,953		Note 6
		China Steel Corporation 1st Unsecured Corporate Bonds Issue in 2008	—	Held-to-maturity financial assets		—		50,512		—		50,512		Note 6
		China Steel Corporation 2nd Unsecured Corporate Bonds-A Issue in 2008	—	Held-to-maturity financial assets		—		50,005		—		50,005		Note 6
		China Steel Corporation 2nd Unsecured Corporate Bonds-A Issue in 2008	—	Held-to-maturity financial assets		—		50,502		—		50,502		Note 6
		China Steel Corporation 2nd Unsecured Corporate Bonds-B Issue in 2008	—	Held-to-maturity financial assets		—		204,379		—		204,379		Note 6
		China Steel Corporation 2nd Unsecured Corporate Bonds-B Issue in 2008	—	Held-to-maturity financial assets		—		307,722		—		307,722		Note 6
		Taiwan Power Co. 2nd Unsecured Corporate Bonds-B Issue in 2008	—	Held-to-maturity financial assets		—		151,002		—		151,002		Note 6
		Taiwan Power Co. 3rd Unsecured Corporate Bond-B Issue in 2008	—	Held-to-maturity financial assets		—		25,179		—		25,179		Note 6
		Taiwan Power Co. 4th Unsecured Corporate Bond-B Issue in 2008	—	Held-to-maturity financial assets		—		202,005		—		202,005		Note 6
		Taiwan Power Co. 7th Unsecured Corporate Bond-A Issue in 2008	—	Held-to-maturity financial assets		—		151,636		—		151,636		Note 6
		NAN YA Company 2nd Unsecured Corporate Bonds Issue in 2008	—	Held-to-maturity financial assets		—		200,990		—		200,990		Note 6
		NAN YA Company 3rd Unsecured Corporate Bonds Issue in 2008	—	Held-to-maturity financial assets		—		100,654		—		100,654		Note 6
		China Development Financial Holding Corporation 1st Unsecured Corporate Bonds-A Issue in 2008	—	Held-to-maturity financial assets		—		100,496		—		100,496		Note 6
		Formosa Petrochemical Corporation 1st Unsecured Corporate Bonds Issue in 2008	—	Held-to-maturity financial assets		—		49,985		—		49,985		Note 6
		Formosa Petrochemical Corporation 2nd Unsecured Corporate Bonds Issue in 2008	—	Held-to-maturity financial assets		—		50,335		—		50,335		Note 6
		Formosa Petrochemical Corporation 2nd Unsecured Corporate Bonds Issue in 2008	—	Held-to-maturity financial assets		—		201,740		—		201,740		Note 6
		Formosa Petrochemical Corporation 3rd Unsecured Corporate Bonds Issue in 2008	—	Held-to-maturity financial assets		—		24,991		—		24,991		Note 6
		Formosa Petrochemical Corporation 3rd Unsecured Corporate Bonds Issue in 2008	—	Held-to-maturity financial assets		—		101,100		—		101,100		Note 6

(Continued)

- 64 -

No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	December 31, 2012								Note
					Shares (Thousands/ Thousand Units)		Carrying Value (Note 5)		Percentage of Ownership		Market Value or Net Asset Value
		Chinese Petroleum Corporation 1st Unsecured Corporate Bonds-A Issue in 2009	—	Held-to-maturity financial assets		—	$	200,415		—	$	200,415		Note 6
		FCFC 1st Unsecured Corporate Bonds Issue in 2009	—	Held-to-maturity financial assets		—		250,789		—		250,789		Note 6
		Taiwan Power Co. 1st Secured Corporate Bond-A Issue in 2009	—	Held-to-maturity financial assets		—		200,434		—		200,434		Note 6
		Taiwan Power Co. 1st Secured Corporate Bond-A Issue in 2009	—	Held-to-maturity financial assets		—		40,198		—		40,198		Note 6
		Taiwan Power Co. 2nd Secured Corporate Bond-B Issue in 2009	—	Held-to-maturity financial assets		—		100,170		—		100,170		Note 6
		Taiwan Power Company 4th Secured Corporate Bond-B Issue in 2009	—	Held-to-maturity financial assets		—		349,472		—		349,472		Note 6
		Taiwan Power Company 5th Secured Corporate Bond-B Issue in 2009	—	Held-to-maturity financial assets		—		100,324		—		100,324		Note 6
		NAN YA Company 1st Unsecured Corporate Bond-A Issue in 2009	—	Held-to-maturity financial assets		—		99,978		—		99,978		Note 6
		NAN YA Company 1st Unsecured Corporate Bond-A Issue in 2009	—	Held-to-maturity financial assets		—		201,009		—		201,009		Note 6
		NAN YA Company 1st Unsecured Corporate Bond-A Issue in 2009	—	Held-to-maturity financial assets		—		301,415		—		301,415		Note 6
		NAN YA Company 3rd Unsecured Corporate Bond-A Issue in 2009	—	Held-to-maturity financial assets		—		200,275		—		200,275		Note 6
		NAN YA Company 3rd Unsecured Corporate Bond-A Issue in 2009	—	Held-to-maturity financial assets		—		50,157		—		50,157		Note 6
		NAN YA Company 4th Unsecured Corporate Bond-A Issue in 2009	—	Held-to-maturity financial assets		—		199,846		—		199,846		Note 6
		NAN YA Company 4th Unsecured Corporate Bond-A Issue in 2009	—	Held-to-maturity financial assets		—		301,462		—		301,462		Note 6
		MLPC 1st Unsecured Corporate Bond Issue in 2008	—	Held-to-maturity financial assets		—		99,965		—		99,965		Note 6
		MLPC 1st Unsecured Corporate Bond Issue in 2008	—	Held-to-maturity financial assets		—		99,965		—		99,965		Note 6
		MLPC 1st Unsecured Corporate Bond Issue in 2009	—	Held-to-maturity financial assets		—		301,780		—		301,780		Note 6
		Formosa Petrochemical Corporation 1st Unsecured Corporate Bonds Issue in 2008	—	Held-to-maturity financial assets		—		200,188		—		200,188		Note 6
		Formosa Petrochemical Corporation 1st Unsecured Corporate Bonds Issue in 2008	—	Held-to-maturity financial assets		—		200,673		—		200,673		Note 6
		Formosa Petrochemical Corporation 1st Unsecured Corporate Bonds Issue in 2008	—	Held-to-maturity financial assets		—		301,389		—		301,389		Note 6
		Hon Hai Precision Industry Co., Ltd. First Debenture Issuing of 2009	—	Held-to-maturity financial assets		—		175,911		—		175,911		Note 6
		Hon Hai Precision Industry Co., Ltd. First Debenture Issuing of 2009	—	Held-to-maturity financial assets		—		100,458		—		100,458		Note 6
		Hon Hai Precision Industry Co., Ltd. First Debenture Issuing of 2009	—	Held-to-maturity financial assets		—		100,546		—		100,546		Note 6

(Continued)

- 65 -

No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	December 31, 2012								Note
					Shares (Thousands/ Thousand Units)		Carrying Value (Note 5)		Percentage of Ownership		Market Value or Net Asset Value
		FCFC 2nd Unsecured Corporate Bonds Issue in 2010	—	Held-to-maturity financial assets		—	$	200,686		—	$	200,686		Note 6
		FCFC 2nd Unsecured Corporate Bonds Issue in 2010	—	Held-to-maturity financial assets		—		100,241		—		100,241		Note 6
		TaipeiFubon Bank 5th Financial Debenturees-A Issue in 2010	—	Held-to-maturity financial assets		—		302,444		—		302,444		Note 6
		TaipeiFubon Bank 5th Financial Debenturees-A Issue in 2010	—	Held-to-maturity financial assets		—		201,160		—		201,160		Note 6
		TaipeiFubon Bank 5th Financial Debenturees-A Issue in 2010	—	Held-to-maturity financial assets		—		100,463		—		100,463		Note 6
		Formosa Petrochemical Corporation 1st Unsecured Corporate Bonds Issue in 2010	—	Held-to-maturity financial assets		—		301,704		—		301,704		Note 6
		Formosa Petrochemical Corporation 1st Unsecured Corporate Bonds Issue in 2010	—	Held-to-maturity financial assets		—		100,287		—		100,287		Note 6
		Taiwan Power Company 2nd Secured Corporate Bond-A Issue in 2010	—	Held-to-maturity financial assets		—		100,148		—		100,148		Note 6
		Taiwan Power Co 3rd Secured Corporate Bond-A Issue in 2010	—	Held-to-maturity financial assets		—		200,964		—		200,964		Note 6
		Taiwan Power Co. 4th Secured Corporate Bond-A Issue in 2010	—	Held-to-maturity financial assets		—		199,912		—		199,912		Note 6
		Taiwan Power Co. 4th Secured Corporate Bond-A Issue in 2010	—	Held-to-maturity financial assets		—		99,956		—		99,956		Note 6
		Taiwan Power Co. 4th Secured Corporate Bond-A Issue in 2010	—	Held-to-maturity financial assets		—		300,433		—		300,433		Note 6
		Mega Securities Co., Ltd. 1st Unsecured Corporate Bond Issue in 2009	—	Held-to-maturity financial assets		—		300,000		—		300,000		Note 6
		NAN YA Company 2nd Unsecured Corporate Bonds Issue in 2010	—	Held-to-maturity financial assets		—		50,327		—		50,327		Note 6
		China Development Holding Corporation 1st Unsecured Corporate Bond-A Issue in 2009	—	Held-to-maturity financial assets		—		201,904		—		201,904		Note 6
		Formosa Petrochemical Corporation 3rd Unsecured Corporate Bonds Issue in 2010	—	Held-to-maturity financial assets		—		299,752		—		299,752		Note 6
		Yuanta FHC 1st Unsecured Corporate Bonds-A Issue in 2011	—	Held-to-maturity financial assets		—		300,000		—		300,000		Note 6
		China Steel Corporation 1st Unsecured Corporate Bonds Issue in 2011	—	Held-to-maturity financial assets		—		100,352		—		100,352		Note 6
		China Steel Corporation 1st Unsecured Corporate Bonds Issue in 2011	—	Held-to-maturity financial assets		—		302,024		—		302,024		Note 6
		FCFC 1st Unsecured Corporate Bonds Issue in 2011	—	Held-to-maturity financial assets		—		299,564		—		299,564		Note 6
		TSMC 1st Unsecured Corporate Bond-A Issue in 2011	—	Held-to-maturity financial assets		—		299,777		—		299,777		Note 6
		TSMC 1st Unsecured Corporate Bond-A Issue in 2011	—	Held-to-maturity financial assets		—		100,726		—		100,726		Note 6
		Fubon Financial Holding Co., Ltd. 1st Unsecured Corporate Bond issued in 2011	—	Held-to-maturity financial assets		—		301,689		—		301,689		Note 6

(Continued)

- 66 -

No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	December 31, 2012										Note
					Shares (Thousands/ Thousand Units)		Carrying Value (Note 5)			Percentage of Ownership		Market Value or Net Asset Value
		Fubon Financial Holding Co., Ltd. 1st Unsecured Corporate Bond issued in 2011	—	Held-to-maturity financial assets		—	$	100,525			—	$	100,525			Note 6
		HSBC Bank (Taiwan) Limited 1st Financial Debenture-C Issue in 2011	—	Held-to-maturity financial assets		—		201,072			—		201,072			Note 6
		HSBC Bank (Taiwan) Limited 1st Financial Debenture-D Issue in 2011	—	Held-to-maturity financial assets		—		300,000			—		300,000			Note 6
		Formosa Petrochemical Corporation 1st Unsecured Corporate Bonds Issue in 2011	—	Held-to-maturity financial assets		—		149,792			—		149,792			Note 6
		Formosa Petrochemical Corporation 3rd Unsecured Corporate Bonds Issue in 2011	—	Held-to-maturity financial assets		—		199,697			—		199,697			Note 6
		Chinese Petroleum Corporation 2nd Unsecured Corporate Bond-A Issue in 2012	—	Held-to-maturity financial assets		—		199,815			—		199,815			Note 6
		Taiwan Power Co. 1st Unsecured Corporate Bond-A Issue in 2012	—	Held-to-maturity financial assets		—		99,915			—		99,915			Note 6
		Taiwan Power Co. 1st Unsecured Corporate Bond-A Issue in 2012	—	Held-to-maturity financial assets		—		39,966			—		39,966			Note 6
		Taiwan Power Co. 1st Unsecured Corporate Bond-2A Issue in 2012	—	Held-to-maturity financial assets		—		99,912			—		99,912			Note 6
		TSMC 1st Unsecured Corporate Bond-A Issue in 2012	—	Held-to-maturity financial assets		—		99,922			—		99,922			Note 6
		TSMC 1st Unsecured Corporate Bond-A Issue in 2012	—	Held-to-maturity financial assets		—		199,843			—		199,843			Note 6
		TSMC 1st Unsecured Corporate Bond-A Issue in 2012	—	Held-to-maturity financial assets		—		200,312			—		200,312			Note 6
		TSMC 2nd Unsecured Corporate Bond-A Issue in 2012	—	Held-to-maturity financial assets		—		199,819			—		199,819			Note 6
		TSMC 3rd Unsecured Corporate Bond-A Issue in 2012	—	Held-to-maturity financial assets		—		199,814			—		199,814			Note 6
		KGI Securities Co., Ltd. 1st Unsecured Corporate Bonds in 2012	—	Held-to-maturity financial assets		—		300,000			—		300,000			Note 6
		Fubon Financial Holding Co., Ltd. 1st Unsecured Corporate Bond-A Issue in 2012	—	Held-to-maturity financial assets		—		300,000			—		300,000			Note 6
		China Development Holding Corporation 1st Unsecured Corporate Bond-A Issue in 2012	—	Held-to-maturity financial assets		—		150,059			—		150,059			Note 6
		China Development Holding Corporation 1st Unsecured Corporate Bond-A Issue in 2012	—	Held-to-maturity financial assets		—		100,080			—		100,080			Note 6
		China Development Holding Corporation 1st Unsecured Corporate Bond-A Issue in 2012	—	Held-to-maturity financial assets		—		100,080			—		100,080			Note 6
		Eximbank 19-2nd Unsecured Financial Debentures	—	Held-to-maturity financial assets		—		150,000			—		150,000			Note 6
1	Senao International Co., Ltd.	Stocks
		Senao Networks, Inc.	Equity- method investee	Investments accounted for using equity method		16,824		412,666			40		412,666			Note 1
		Senao International (Samoa) Holding Ltd.	Subsidiary	Investments accounted for using equity method		33,475	(US$	544,489  18,688 (Note 10	)  )		100	(US$	545,062  18,708	)		Note 1
		N.T.U. Innovation Incubation Corporation	—	Financial assets carried at cost		1,200		12,000			9		12,000			Note 2

(Continued)

- 67 -

No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	December 31, 2012										Note
					Shares (Thousands/ Thousand Units)		Carrying Value (Note 5)			Percentage of Ownership		Market Value or Net Asset Value
2	CHIEF Telecom Inc.	Stocks
		Unigate Telecom Inc.	Subsidiary	Investments accounted for using equity method		200	$	1,669 (Note 10	)		100	$	1,669			Note 1
		Chief International Corp.	Subsidiary	Investments accounted for using equity method		200	(US$	14,234 490 (Note 10	)  )		100	(US$	14,234 490	)		Note 1
		3 Link Information Service Co., Ltd.	—	Financial assets carried at cost		374		3,450			10		6,734			Note 2
		21Vianet Group. Inc.	—	Available-for-sale financial assets		208	(US$	9,661 333	)		—	(US$	9,661 333	)		Note 4
3	Chunghwa System Integration Co., Ltd.	Stocks
		Concord Technology Co., Ltd.	Subsidiary	Investments accounted for using equity method		1,500		19,041 (RMB 4,124 (Note 10	)  )		100		19,041 (RMB 4,124	)		Note 1
7	Spring House Entertainment Tech. Inc.	Stocks
		Ceylon Innovation Co., Ltd.	Subsidiary	Investments accounted for using equity method		100		913 (Note 10	)		100		913			Note 1
8	Light Era Development Co., Ltd.	Stocks
		Yao Yong Real Property Co., Ltd.	Subsidiary	Investments accounted for using equity method		83,290		2,719,688 (Note 10	)		100		1,826,292			Note 1
9	Chunghwa Telecom Singapore Pte., Ltd.	Stocks
		ST-2 Satellite Ventures Pte., Ltd.	Equity- method investee	Investments accounted for using equity method		18,102	(SG$	541,672 22,798	)		38	(SG$	541,672 22,798	)		Note 1
14	Chunghwa Investment Co., Ltd.	Stocks
		Chunghwa Precision Test Tech. Co., Ltd.	Subsidiary	Investments accounted for using equity method		10,317		138,060 (Note 10	)		53		138,060			Note 1
		Chunghwa Investment Holding Co., Ltd. (CIHC)	Subsidiary	Investments accounted for using equity method		1,432	(US$	18,835 649 (Note 10	)  )		100	(US$	18,835 649	)		Note 1
		PandaMonium Company Ltd.	Equity- method investee	Investments accounted for using equity method		602		—			43		—			Note 1
		CHIEF Telecom Inc.	Equity- method investee	Investments accounted for using equity method		2,000		28,181 (Note 10	)		4		28,181			Note 1
		Senao International Co., Ltd.	Equity- method investee	Investments accounted for using equity method		1,001		47,016 (Note 10	)		—		95,195			Note 4
		Tatung Technology Inc.	—	Financial assets carried at cost		4,571		73,964			11		73,180			Note 2
		Digimax Inc.	—	Financial assets carried at cost		2,000		10,928			3		17,980			Note 2
		iD Branding Ventures	—	Financial assets carried at cost		1,875		18,750			3		16,350			Note 2
		Uni Display Inc.	—	Financial assets carried at cost		2,269		21,974			1		12,659			Note 2
		A2peak Power Co., Ltd.	—	Financial assets carried at cost		990		—			3		—			Note 2
		CoaTronics Inc.	—	Financial assets carried at cost		840		1,168			6		3,083			Note 2
		VisEra Technologies Company Ltd.	—	Financial assets carried at cost		649		29,371			—		12,889			Note 2
		Ultra Fine Optical Technology Co., Ltd.	—	Financial assets carried at cost		1,800		18,000			8		14,418			Note 2
		Procrystal Technology Co., Ltd.	—	Financial assets carried at cost		1,350		16,200			2		16,268			Note 2
		Tons Lightology Inc.	—	Financial assets carried at cost		1,113		66,150			4		34,080			Note 7

(Continued)

- 68 -

No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	December 31, 2012										Note
					Shares (Thousands/ Thousand Units)		Carrying Value (Note 5)			Percentage of Ownership		Market Value or Net Asset Value
		Alder Optomechanical Corp.	—	Financial assets carried at cost		666	$	23,310			2	$	11,139			Note 2
		Aide Energy (Cayman) Holding Co., Ltd.	—	Financial assets carried at cost		800		2,550			1		6,149			Note 2
		Mediapro Technology Ltd.	—	Financial assets carried at cost		55		8,177			—		5,816			Note 2
		Fashion Guide Co., Ltd.	—	Financial assets carried at cost		200		2,000			2		638			Note 2
		PChome Store Inc.	—	Available-for-sale financial assets—noncurrent		325		14,073			2		32,500			Note 4
		Bond
		Hua Nan Financial Holdings Company 1st Unsecured Subordinate Corporate Bonds Issue in 2006	—	Available-for-sale financial assets		50,000		50,203			—		50,471			Note 9
18	Concord Technology Co., Ltd.	Stocks
		Glory Network System Service (Shanghai) Co., Ltd.	Subsidiary	Investments accounted for using equity method		1,500		19,041 (RMB 4,124 (Note 10	)  )		100		19,041 (RMB 4,124	)		Note 1
20	Chunghwa Precision Test Tech. Co., Ltd.	Stocks
		Chunghwa Precision Test Tech. USA Corporation	Subsidiary	Investments accounted for using equity method		400	(US$	10,513 362 (Note 10	)  )		100	(US$	10,513 362	)		Note 1
22	Senao International (Samoa) Holding Ltd.	Stocks
		Senao International HK Limited	Subsidiary	Investments accounted for using equity method		32,760	(US$	521,718 17,906 (Note 10	)  )		100	(US$	521,718 17,906	)		Note 1
		HopeTech Technologies Limited	Equity- method investee	Investments accounted for using equity method		5,240	(US$	22,315 766	)		45	(US$	22,315 766	)		Note 1
23	Senao International HK Limited	Stocks
		Senao Trading (Fujian) Co., Ltd.	Subsidiary	Investments accounted for using equity method		—	(US$	184,251 6,324 (Note 10	)  )		100	(US$	184,251 6,324	)		Note 1
		Senao International Trading (Shanghai) Co., Ltd.	Subsidiary	Investments accounted for using equity method		—	(US$	125,656 4,313 (Note 10	)  )		100	(US$	125,656 4,313	)		Note 1
		Senao International Trading (Shanghai) Co., Ltd.	Subsidiary	Investments accounted for using equity method		—	(US$	52,704 1,809 (Note 10	)  )		100	(US$	52,704 1,809	)		Note 1 and 11
		Senao International Trading (Jiangsu) Co., Ltd.	Subsidiary	Investments accounted for using equity method		—	(US$	156,241 5,362 (Note 10	)  )		100	(US$	156,241 5,362	)		Note 1
24	Chunghwa Investment Holding Co., Ltd.	Stocks
		CHI One Investment Co., Limited	Subsidiary	Investments accounted for using equity method		6,520	(HK$	9,101 2,429 (Note 10	)  )		100	(HK$	9,101 2,429	)		Note 1

(Continued)

- 69 -

No.

Held Company Name

Marketable Securities Type and Name

Relationship with the Company

Financial Statement Account

December 31, 2012

Note

Shares (Thousands/ Thousand Units)

Carrying Value (Note 5)

Percentage of Ownership

Market Value or Net Asset Value

26

CHI One Investment Co., Limited

Stocks

Xiamen Sertec Business Technology Co., Ltd.

Equity- method investee

Investments accounted for using equity method

—

$

8,634 (RMB 1,853

)

49

$

8,634 (RMB 1,853

)

Note 1

27

Prime Asia Investments Group, Ltd. (B.V.I.)

Stocks

Chunghwa Hsingta Company Ltd.

Subsidiary

Investments accounted for using equity method

—

155,476 (RMB 33,360 (Note 10

)  )

100

155,476 (RMB 33,360

)

Note 1

29

Chunghwa Hsingta Company Ltd.

Stocks

Chunghwa Telecom (China) Co., Ltd.

Subsidiary

Investments accounted for using equity method

—

122,628 (RMB 26,315 (Note 10

)  )

100

122,628 (RMB 26,315

)

Note 1

Jiangsu Zhenhua Information Technology Company, LLC

Subsidiary

Investments accounted for using equity method

—

24,218 (RMB 5,197 (Note 10

)  )

75

24,218 (RMB 5,197

)

Note 1

Hua-Xiong Information Technology Co., Ltd.

Subsidiary

Investments accounted for using equity method

—

8,630 (RMB 1,852 (Note 10

)  )

51

8,630 (RMB 1,852

)

Note 1

Note 1:	The net asset values of investees were based on audited financial statements.
Note 2:	The net asset values of investees were based on unaudited financial statements.
Note 3:	The net asset values of beneficiary certificates (mutual fund) were based on the net asset values on December 31, 2012.
Note 4:	Market value was based on the closing price of December 31, 2012.
Note 5:	Showing at their original carrying amounts without adjustments for fair values, except for held-to-maturity financial assets.
Note 6:	The net asset values of investees were based on amortized cost.
Note 7:	Market value of emerging stock was based on the average trading price on December 31, 2012.
Note 8:	New Prospect Investments Holdings Ltd. (B.V.I.) was incorporated in March 2006, but not yet begun operation as of December 31, 2012.
Note 9:	The market value is determined by the hundred price of transaction market on December 31, 2012.
Note 10:	The amount was eliminated upon consolidation.
Note 11:	The English name is the same as the above entity; however, the Chinese names included in the respective Articles of Incorporations are different.

(Concluded)

- 70 -

TABLE 3

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$100 MILLION OR 20% OF

THE PAID-IN CAPITAL

FOR THE YEAR ENDED DECEMBER 31, 2012

(Amounts in Thousands of New Taiwan Dollars)

No.	Company Name	Marketable Securities Type and Name	Financial Statement Account	Counter- party		Nature of Relationship	Beginning Balance					Acquisition					Disposal										Ending Balance
							Shares (Thousands/ Thousand Units)		Amount (Note 1)			Shares (Thousands/ Thousand Units)		Amount			Shares (Thousands/ Thousand Units)		Amount		Carrying Value (Note 1)			Gain (Loss) on Disposal			Shares (Thousands/ Thousand Units)		Amount (Note 1)
0	Chunghwa Telecom Co., Ltd.	Stocks
		Donghwa Telecom Co., Ltd.	Investments accounted for using equity method		—	Subsidiary		223,190	$	891,526 (Note 3	)		81,900	$ (HK$	313,299 81,900	)		—	$	—	$	—		$	—			305,090	$	1,168,032 (Notes 3 and 5	)
		Chunghwa Investment Co., Ltd.	Investments accounted for using equity method		—	Subsidiary		178,000		1,742,779 (Note 3	)		—		—			97,900		979,000		979,000 (Note 4	)		—			80,100		614,217 (Notes 3 and 5	)
		China Airlines Ltd.	Available-for-sale financial assets—noncurrent		—	—		—		—			263,622		3,092,287			—		—		—			—			263,622		3,092,287
		Beneficiary certificates (mutual fund)
		HSBC Glbl Emerging Markets Bd A Inc.	Available-for-sale financial assets		—	—		304		172,231			—		—			304		181,011		172,231			8,780			—		—
		Templeton Global Bond A (ACC)	Available-for-sale financial assets		—	—		418		307,114			—		—			418		308,560		307,114			1,446			—		—
		PIMCO Global Investment Grade Credit—Ins H Acc	Available-for-sale financial assets		—	—		751		307,245			320		148,873			—		—		—			—			1,071		456,118
		Fidelity Funds—US Dollar Bond Fund Y-ACC-USD	Available-for-sale financial assets		—	—		—		—			778		297,283			—		—		—			—			778		297,283
		HSBC Global Investment Funds—Global Emerging Markets Bond ID	Available-for-sale financial assets		—	—		—		—			273		177,180			273		172,956		177,180			(4,224	)		—		—
		Eastpring Investment—US Corporate Bond Fund	Available-for-sale financial assets		—	—		—		—			433		149,190			—		—		—			—			433		149,190
		Bonds
		NAN YA Company 2nd Unsecured Corporate Bonds Issue in 2008	Held-to-maturity financial assets		—	—		—		400,000 (Note 2	)		—		—			—		—		200,000 (Note 2	)		—			—		200,000 (Note 2	)
		NAN YA Company 3rd Unsecured Corporate Bonds Issue in 2008	Held-to-maturity financial assets		—	—		—		200,000 (Note 2	)		—		—			—		—		100,000 (Note 2	)		—			—		100,000 (Note 2	)
		TSMC 1st Unsecured Corporate Bond-C Issue in 2002	Held-to-maturity financial assets		—	—		—		300,000 (Note 2	)		—		—			—		—		300,000 (Note 2	)		—			—		—
		TSMC 1st Unsecured Corporate Bond-C Issue in 2002	Held-to-maturity financial assets		—	—		—		300,000 (Note 2	)		—		—			—		—		300,000 (Note 2	)		—			—		—
		TSMC 1st Unsecured Corporate Bond-A Issue in 2011	Held-to-maturity financial assets		—	—		—		300,000 (Note 2	)		—		100,000 (Note 2	)		—		—		—			—			—		400,000 (Note 2	)
		TSMC 1st Unsecured Corporate Bond-A Issue in 2012	Held-to-maturity financial assets		—	—		—		—			—		500,000 (Note 2	)		—		—		—			—			—		500,000 (Note 2	)
		TSMC 2nd Unsecured Corporate Bond-A Issue in 2012	Held-to-maturity financial assets		—	—		—		—			—		200,000 (Note 2	)		—		—		—			—			—		200,000 (Note 2	)
		TSMC 3rd Unsecured Corporate Bond-A Issue in 2012	Held-to-maturity financial assets		—	—		—		—			—		200,000 (Note 2	)		—		—		—			—			—		200,000 (Note 2	)
		Formosa Petrochemical Corporation 2nd Unsecured Corporate Bonds Issue in 2008	Held-to-maturity financial assets		—	—		—		500,000 (Note 2	)		—		—			—		—		250,000 (Note 2	)		—			—		250,000 (Note 2	)
		Formosa Petrochemical Corporation 3rd Unsecured Corporate Bonds Issue in 2008	Held-to-maturity financial assets		—	—		—		250,000 (Note 2	)		—		—			—		—		125,000 (Note 2	)		—			—		125,000 (Note 2	)

(Continued)

- 71 -

No.	Company Name	Marketable Securities Type and Name	Financial Statement Account	Counter- party		Nature of Relationship	Beginning Balance					Acquisition					Disposal									Ending Balance
							Shares (Thousands/ Thousand Units)		Amount (Note 1)			Shares (Thousands/ Thousand Units)		Amount			Shares (Thousands/ Thousand Units)		Amount		Carrying Value (Note 1)			Gain (Loss) on Disposal		Shares (Thousands/ Thousand Units)		Amount (Note 1)
		Chinese Petroleum Corporation 1st Unsecured Corporate Bonds-B Issue in 2006	Held-to-maturity financial assets		—	—		—	$	700,000 (Note 2	)		—	$	—			—	$	—	$	350,000 (Note 2	)	$	—		—	$	350,000 (Note 2	)
		Chinese Petroleum Corporation 1st Unsecured Corporate Bonds-C Issue in 2006	Held-to-maturity financial assets		—	—		—		100,000 (Note 2	)		—		200,000 (Note 2	)		—		—		—			—		—		300,000 (Note 2	)
		Chinese Petroleum Corporation 2st Unsecured Corporate Bonds-A Issue in 2012	Held-to-maturity financial assets		—	—		—		—			—		200,000 (Note 2	)		—		—		—			—		—		200,000 (Note 2	)
		China Steel Corporation 2nd Unsecured Corporate Bonds-A Issue in 2008	Held-to-maturity financial assets		—	—		—		200,000 (Note 2	)		—		—			—		—		100,000 (Note 2	)		—		—		100,000 (Note 2	)
		China Steel Corporation 1nd Unsecured Corporate Bonds-A Issue in 2011	Held-to-maturity financial assets		—	—		—		100,000 (Note 2	)		—		300,000 (Note 2	)		—		—		—			—		—		400,000 (Note 2	)
		Taiwan Power Co. 3rd Unsecured Corporate Bond-C Issue in 2006	Held-to-maturity financial assets		—	—		—		—			—		200,000 (Note 2	)		—		—		—			—		—		200,000 (Note 2	)
		Taiwan Power Co. 1st Unsecured Corporate Bond-A Issue in 2012	Held-to-maturity financial assets		—	—		—		—			—		140,000 (Note 2	)		—		—		—			—		—		140,000 (Note 2	)
		Taiwan Power Co. 2nd Unsecured Corporate Bond-A Issue in 2012	Held-to-maturity financial assets		—	—		—		—			—		100,000 (Note 2	)		—		—		—			—		—		100,000 (Note 2	)
		Yuanta Securities Co., Ltd. 1st Unsecured Corporate Bonds-B Issue in 2007	Held-to-maturity financial assets		—	—		—		200,000 (Note 2	)		—		—			—		—		200,000 (Note 2	)		—		—		—
		KGI Securities Co., Ltd. 1st Unsecured Corporate Bonds in 2011	Held-to-maturity financial assets		—	—		—		—			—		300,000 (Note 2	)		—		—		—			—		—		300,000 (Note 2	)
		China Development Holding Corporation 1st Unsecured Corporate Bonds Issue in 2007	Held-to-maturity financial assets		—	—		—		400,000 (Note 2	)		—		—			—		—		400,000 (Note 2	)		—		—		—
		China Development Holding Corporation 1st Unsecured Corporate Bonds-A Issue in 2011	Held-to-maturity financial assets		—	—		—		—			—		350,000 (Note 2	)		—		—		—			—		—		350,000 (Note 2	)
		Fubon Financial Holding Co., Ltd. 1st Unsecured Corporate Bonds Issue in 2011	Held-to-maturity financial assets		—	—		—		—			—		400,000 (Note 2	)		—		—		—			—		—		400,000 (Note 2	)
		Fubon Financial Holding Co., Ltd. 1st Unsecured Corporate Bonds-A Issue in 2012	Held-to-maturity financial assets		—	—		—		—			—		300,000 (Note 2	)		—		—		—			—		—		300,000 (Note 2	)
		HSBC Bank (Taiwan) Limited 1st Financial Debenture—C Issue in 2011	Held-to-maturity financial assets		—	—		—		—			—		200,000 (Note 2	)		—		—		—			—		—		200,000 (Note 2	)
		Eximoank 19-2nd Unsecured Financial Debenture	Held-to-maturity financial assets		—	—		—		—			—		150,000 (Note 2	)		—		—		—			—		—		150,000 (Note 2	)
1	Senao International Co., Ltd.	Stocks
		Senao International (Samoa) Holding Ltd.	Investments accounted for using equity method		—	Subsidiary		15,875	(US$	466,517 15,875	)		17,600	(US$	522,080 17,600	)		—		—		—			—		33,475	(US$	988,597 33,475) (Notes 3 and 5)
22	Senao International (Samoa) Holding Ltd.	Stocks Senao International HK Limited	Investments accounted for using equity method		—	Subsidiary		15,180		444,712 (US$15,180)			17,580		521,474 (US$17,580)			—		—		—			—		32,760		966,186 (US$32,760) (Notes 3 and 5)

(Continued)

- 72 -

No.	Company Name	Marketable Securities Type and Name	Financial Statement Account	Counter- party		Nature of Relationship		Beginning Balance					Acquisition					Disposal								Ending Balance
								Shares (Thousands/ Thousand Units)		Amount (Note 1)			Shares (Thousands/ Thousand Units)		Amount			Shares (Thousands/ Thousand Units)		Amount		Carrying Value (Note 1)		Gain (Loss) on Disposal		Shares (Thousands/ Thousand Units)		Amount (Note 1)
23	Senao International HK Limited	Stocks
		Senao International Trading (Jiangsu) Co., Ltd.	Investments accounted for using equity method		—		Subsidiary		—	$ (US$	115,971 4,000	)		—	$ (US$	147,765 5,000	)		—	$	—	$	—	$	—		—		$263,736 (US$ 9,000) (Notes 3 and 5)
		Senao International Trading (Fujian) Co., Ltd.	Investments accounted for using equity method		—		Subsidiary		—	(US$	116,821 4,000	)		—	(US$	221,972 7,500	)		—		—		—		—		—		338,793 (US$11,500) (Notes 3 and 5)
		Senao International Trading (Shanghai) Co., Ltd.	Investments accounted for using equity method		—		Subsidiary		—	(US$	148,413 5,000	)		—	(US$	149,313 5,000	)		—		—		—		—		—		297,726 (US$10,000) (Notes 3 and 5)

Note 1:	Showing at their original carrying amounts without adjustments for fair values.
Note 2:	Stated at its nominal amounts.
Note 3:	The ending balance includes equity in earnings or losses of equity method investees and cumulative transaction adjustments.
Note 4:	The amount decrease was because of capital reduction.
Note 5:	The amount was eliminated upon consolidation.

(Concluded)

- 73 -

TABLE 4

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

ACQUISITION OF REAL ESTATE AMOUNTING AT COST OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL

FOR THE YEAR ENDED DECEMBER 31, 2012

(Amounts in Thousands of New Taiwan Dollars)

Company Name

Type of Property

Transactions Date

Transaction Amount

Payment Term

Counter- party

Nature of Relationship

Prior Transaction made by Related Counter-party

Price Reference

Purpose of Acquisition

Other Terms

Owner

Relationship

Transfer Date

Amount

Light Era Development Co., Ltd.

Land

2012.10.04

$

1,977,932

Paid

5 people (Mr. Shen, etc.)

None

—

—

—

$

—

In accordance with land appraisal report and mutual agreement

Investment and development

None

- 74 -

TABLE 5

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR

20% OF THE PAID-IN CAPITAL

FOR THE YEAR ENDED DECEMBER 31, 2012

(Amounts in Thousands of New Taiwan Dollars)

No.	Company Name	Related Party	Nature of Relationship	Transaction Details								Abnormal Transaction (Note 3)				Notes/Accounts Payable or Receivable
				Purchase/Sale	Amount (Note 1)			% to Total		Payment Terms		Units Price		Payment Terms		Ending Balance (Note 2)			% to Total
0	Chunghwa Telecom Co., Ltd.	Senao International Co., Ltd.	Subsidiary	Purchase	$	9,832,009 (Note 4	)		7		30-90 days	$	—		—	$	(1,305,378 (Note 4	)  )		(9	)
				Sales		713,394 (Note 4	)		1		30 days		—		—		534,784 (Note 4	)		6
		Chunghwa System Integration Co., Ltd.	Subsidiary	Purchase		803,102 (Note 4	)		1		30 days		—		—		(525,183 (Note 4	)  )		(4	)
		CHIEF Telecom Inc.	Subsidiary	Purchase		334,152 (Note 4	)		—		30 days		—		—		(60,209 (Note 4	)  )		—
				Sales		260,808 (Note 4	)		—		60 days		—		—		27,952 (Note 4	)		—
		Taiwan International Standard Electronics Co., Ltd.	Equity-method investee	Purchase		572,878			—		30-90 days		—		—		(594,340	)		(4	)
		Chunghwa Telecom Global Inc.	Subsidiary	Purchase		270,069 (Note 4	)		—		90 days		—		—		(69,735 (Note 4	)  )		—
		Skysoft Co., Ltd.	Equity-method investee	Purchase		108,182			—		30 days		—		—		(32,951	)		—
		So-net Entertainment Taiwan	Equity-method investee	Sales		336,470			—		60 days		—		—		20,606			—
		Donghwa Telecom Co., Ltd.	Subsidiary	Purchase		109,516 (Note 4	)		—		30 days		—		—		(81,964 (Note 4	)  )		(1	)
				Sales		123,151 (Note 4	)		—		30 days		—		—		39,865 (Note 4	)		—
		InforExplorer Co., Ltd.	Equity-method investee	Purchase		274,008			—		90 days		—		—		(112,161	)		(1	)
		ST-Satellite Ventures Pte. Ltd.	Equity-method investee	Purchase		405,680			—		30 days		—		—		(19,041	)		—
1	Senao International Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company	Purchase		639,532 (Note 4	)		2		30 days		—		—		(531,018 (Note 4	)  )		(21	)
				Sales		9,865,446 (Note 4	)		28		30-90 days		—		—		1,327,409 (Note 4	)		55
2	CHIEF Telecom Inc.	Chunghwa Telecom Co., Ltd.	Parent company	Purchase		260,379 (Note 4	)		26		60 days		—		—		(27,324 (Note 4	)  )		(34	)
				Sales		334,152 (Note 4	)		24		30 days		—		—		62,392 (Note 4	)		40

(Continued)

- 75 -

No.	Company Name	Related Party	Nature of Relationship	Transaction Details								Abnormal Transaction (Note 3)				Notes/Accounts Payable or Receivable
				Purchase/Sale	Amount (Note 1)			% to Total		Payment Terms		Units Price		Payment Terms		Ending Balance (Note 2)			% to Total
3	Chunghwa System Integration Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company	Sales	$	2,517,203 (Note 4	)		90		30 days		—		—	$	549,584 (Note 4	)		90
5	Chunghwa Telecom Global Inc.	Chunghwa Telecom Co., Ltd.	Parent company	Sales		270,069 (Note 4	)		57		90 days		—		—		69,735 (Note 4	)		82
6	Dongwa Telecom Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company	Purchase		123,151 (Note 4	)		31		30 days		—		—		(39,865 (Note 4	)  )		49
				Sales		109,516 (Note 4	)		24		30 days		—		—		81,964 (Note 4	)		83

Note 1: The differences were because Chunghwa Telecom Co., Ltd. and subsidiaries classified the amount as inventories, property, plant and equipment, intangible assets, and operating expenses.

Note 2: Notes and accounts receivable did not include the amount as amounts collected for others and other receivables.

Note 3: Transaction terms with the related parties were determined in accordance with mutual agreements when there were no similar transactions with third parties. Other transactions with related parties were not significantly different from those with third parties.

Note 4: The amount was eliminated upon consolidation.

(Concluded)

- 76 -

TABLE 6

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL

DECEMBER 31, 2012

(Amounts in Thousands of New Taiwan Dollars)

No.	Company Name	Related Party	Nature of Relationship	Ending Balance			Turnover Rate (Note 1)		Overdue				Amounts Received in Subsequent Period		Allowance for Bad Debts
									Amounts		Action Taken
0	Chunghwa Telecom Co., Ltd.	Senao International Co., Ltd.	Subsidiary	$	1,443,395 (Note 2	)		12.44	$	—		—	$	1,443,395	$	—
1	Senao International Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company		1,779,706 (Note 2	)		7.64		—		—		1,558,720		—
3	Chunghwa System Integration Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company		549,584 (Note 2	)		4.27		—		—		536,890		—
4	Chunghwa International Yellow Pages Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company		153,887 (Note 2	)		7.40		—		—		136,247		—

Note 1:	Payments and receipts collected in trust for others are excluded from the accounts receivable for calculating the turnover rate.
Note 2:	The amount was eliminated upon consolidation.

- 77 -

TABLE 7

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

NAMES, LOCATIONS, AND OTHER INFORMATION OF INVESTEES IN WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE

FOR THE YEAR ENDED DECEMBER 31, 2012

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

No.	Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount						Balance as of December 31, 2012							Net Income (Loss) of the Investee			Recognized Gain (Loss) (Notes 1 and 2)			Note
					December 31, 2012			December 31, 2011			Shares (Thousands)		Percentage of Ownership (%)		Carrying Value
0	Chunghwa Telecom Co., Ltd.	Senao International Co., Ltd.	Taiwan	Selling and maintaining mobile phones and its peripheral products	$	1,065,813		$	1,065,813			71,773		28	$	1,623,305 (Note 4	)	$	1,492,099		$	410,617 (Note 4	)	Subsidiary
		Light Era Development Co., Ltd.	Taiwan	Housing, office building development, rent and sale services		3,000,000			3,000,000			300,000		100		3,785,310 (Note 4	)		667,951			664,064 (Note 4	)	Subsidiary
		Donghwa Telecom Co., Ltd.	Hong Kong	International telecommunications IP fictitious internet and internet transfer services		1,195,518			882,219			305,090		100		1,168,032 (Note 4	)		4,007			4,007 (Note 4	)	Subsidiary
		Chunghwa Telecom Singapore Pte., Ltd.	Singapore	Telecommunication wholesale, internet transfer services international data and long distance call wholesales to carriers		574,112			574,112			26,383		100		746,122 (Note 4	)		73,988			73,988 (Note 4	)	Subsidiary
		Chunghwa System Integration Co., Ltd.	Taiwan	Providing communication and information aggregative services		838,506			838,506			60,000		100		707,250 (Note 4	)		61,507			46,084 (Note 4	)	Subsidiary
		Chunghwa Investment Co., Ltd.	Taiwan	Telecommunications, telecommunications value-added services and other related professional investment		759,709			1,738,709			80,100		89		614,217 (Note 4	)		(165,530	)		(148,528 (Note 4	)  )	Subsidiary
		CHIEF Telecom Inc.	Taiwan	Internet communication and internet data center (“IDC”) service		482,165			482,165			37,942		69		591,706 (Note 4	)		161,291			113,354 (Note 4	)	Subsidiary
		InfoExplorer Co., Ltd.	Taiwan	IT solution provider, IT application consultation, system integration and package solution		283,500			283,500			22,498		33		277,592			48,242			20,605		Equity-method investee
		Viettel-CHT Co., Ltd.	Vietnam	IDC services		288,327			288,327			—		30		265,052			64,217			19,274		Equity-method investee
		Huada Digital Corporation	Taiwan	Providing software service		250,000			250,000			25,000		50		241,309			(18,761	)		(9,380	)	Equity-method investee
		Taiwan International Standard Electronics Co., Ltd.	Taiwan	Manufacturing, selling, designing, and maintaining of telecommunications systems and equipment		164,000			164,000			1,760		40		224,099			775,038			301,024		Equity-method investee
		Chunghwa International Yellow Pages Co., Ltd.	Taiwan	Yellow pages sales and advertisement services		150,000			150,000			15,000		100		188,738 (Note 4	)		29,151			29,151 (Note 4	)	Subsidiary
		Prime Asia Investments Group Ltd. (B.V.I.)	British Virgin Islands	Investment		215,020			206,089			7,270		100		155,357 (Note 4	)		(35,832	)		(35,813 (Note 4	)  )	Subsidiary
		Skysoft Co., Ltd.	Taiwan	Providing of music on-line, software, electronic information, and advertisement services		67,025			67,025			4,438		30		127,686			139,988			41,031		Equity-method investee
		Spring House Entertainment Tech. Inc.	Taiwan	Network services, producing digital entertainment contents and broadband visual sound terrace development		62,209			62,209			7,015		56		125,929 (Note 4	)		69,532			39,922 (Note 4	)	Subsidiary
		Chunghwa Telecom Global, Inc.	United States	International data and internet services and long distance call wholesales to carriers		70,429			70,429			6,000		100		96,614 (Note 4	)		12,257			14,510 (Note 4	)	Subsidiary
		KingWay Technology Co., Ltd.	Taiwan	Publishing books, data processing and software services		71,770			71,770			2,214		33		77,449			54,879			12,300		Equity-method investee
		Chunghwa Telecom Vietnam Co., Ltd.	Vietnam	Information and communications technology, international circuit, and intelligent energy network service		73,157			43,847			—		100		55,448 (Note 4	)		(9,287	)		(9,287 (Note 4	)  )	Subsidiary
		Smartfun Digital Co., Ltd.	Taiwan	Software retail		65,000			65,000			6,500		65		44,549 (Note 4	)		(23,870	)		(15,576 (Note 4	)  )	Subsidiary
		So-net Entertainment Taiwan	Taiwan	Online service and sale of computer hardware		60,008			60,008			3,429		30		31,152			(11,517	)		(3,393	)	Equity-method investee
		Chunghwa Telecom Japan Co., Ltd.	Japan	Telecom business, information process and information provide service, development and sale of software and consulting services in telecommunication		17,291			17,291			1		100		25,689 (Note 4	)		7,020			7,020 (Note 4	)	Subsidiary
		Dian Zuan Integrating Marketing Co., Ltd.	Taiwan	Information technology service and general advertisement service		64,500			114,640			6,450		33		20,902			(118,646	)		(39,854	)	Equity-method investee
		Chunghwa Sochamp Technology Inc.	Taiwan	License plate recognition system		20,400			20,400			2,040		51		17,414 (Note 4	)		1,107			(2,937 (Note 4	)  )	Subsidiary
		New Prospect Investments Holdings Ltd. (B.V.I.)	British Virgin Islands	Investment		—   (Note 3	)		—   (Note 3	)		—		100		—   (Notes 3 and 4	)		—			—   (Notes 3 and 4	)	Subsidiary
1	Senao International Co., Ltd.	Senao Networks, Inc.	Taiwan	Telecommunication facilities manufactures and sales		206,190			206,190			16,824		40		412,666			293,650			118,946		Equity-method investee
		Senao International (Samoa) Holding Ltd.	Samoa Islands	International investment.	(US$	988,597 33,475	)	(US$	466,517 15,875	)		33,475		100	(US$	544,489 18,688 (Note 4	)  )	(US$	(280,990 (9,494	)  ))	(US$	(281,022 (9,495 (Note 4	)  ))  )	Subsidiary

(Continued)

- 78 -

No.	Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount						Balance as of December 31, 2012							Net Income (Loss) of the Investee			Recognized Gain (Loss) (Notes 1 and 2)			Note
					December 31, 2012			December 31, 2011			Shares (Thousands)		Percentage of Ownership (%)		Carrying Value
2	CHIEF Telecom Inc.	Unigate Telecom Inc.	Taiwan	Telecommunication and internet service.	$	2,000		$	2,000			200		100	$	1,669 (Note 4	)	$	(135	)	$	(135 (Note 4	)  )		Subsidiary
		Chief International Corp.	Samoa Islands	Network communication and engine room hiring	(US$	6,068 200	)	(US$	6,068 200	)		200		100	(US$	14,234 490 (Note 4	)  )	(US$	4,521 153)		(US$	4,521 153 (Note 4	)  )		Subsidiary
3	Chunghwa System Integrated Co., Ltd.	Concord Technology Co., Ltd.	Brunei	Providing advanced business solutions to telecommunications	(US$	47,321 1,500	)	(US$	31,973 1,010	)		1,500		100	(RMB	19,041 4,124 (Note 4	)  )	(RMB	(1,799) (384))		(RMB	(1,799) (384)) (Note 4)			Subsidiary
7	Spring House Entertainment Tech. Inc.	Ceylon Innovation Co., Ltd.	Taiwan	International trading, general advertisement and book publishment service		1,000			1,000			100		100		913 (Note 4	)		(41	)		(41 (Note 4	)  )		Subsidiary
8	Light Era Development Co., Ltd.	Yao Yong Real Property Co., Ltd.	Taiwan	Real estate leasing business		2,793,667			2,793,667			83,290		100		2,719,688 (Note 4	)		51,958			35,718 (Note 4	)		Subsidiary
9	Chunghwa Telecom Singapore Pte., Ltd.	ST-2 Satellite Ventures Pte., Ltd.	Singapore	Operation of ST-2 telecommunication satellite	(SG$	409,061 18,102	)	(SG$	409,061 18,102	)		18,102		38	(SG$	541,672 22,798	)	(SG$	184,427 7,792	)	(SG$	70,324 2,971	)		Equity- method investee
14	Chunghwa Investment Co., Ltd.	Chunghwa Precision Test Tech Co., Ltd.	Taiwan	Semiconductor testing components and printed circuit board industry production and marketing of electronic products		91,875			91,875			10,317		53		138,060 (Note 4	)		39,940			21,306 (Note 4	)		Subsidiary
		Chunghwa Investment Holding Co., Ltd.	Brunei	General investment	(US$	46,035 1,432	)	(US$	34,483 1,043	)		1,432		100	(US$	18,835 649 (Note 4	)  )	(US$	(3,530 (119	)  ))	(US$	(3,530 (119 (Note 4	)  ))  )		Subsidiary
		Panda Monium Company Ltd.	Cayman	The production of animation	(US$	20,000 602	)	(US$	20,000 602	)		602		43		—			—			—			Equity- method investee
		CHIEF Telecom Inc.	Taiwan	Telecommunication and internet service		20,000			20,000			2,000		4		28,181 (Note 4	)		161,291			6,272 (Note 4	)		Equity- method investee
		Senao International Co., Ltd.	Taiwan	Selling and maintaining mobile phones and its peripheral products		49,731			49,731			1,001		—		47,016 (Note 4	)		1,492,099			2,895 (Note 4	)		Equity- method investee
18	Concord Technology Co., Ltd.	Glory Network System Service (Shanghai) Co., Ltd.	China	Providing advanced business solutions to telecommunications	(US$	47,321 1,500	)	(US$	31,973 1,010	)		1,500		100	(RMB	19,041 4,124 (Note 4	)  )	(RMB	(1,799 (384	)  ))	(RMB	(1,799 (384 (Note 4	)  ))  )		Subsidiary
20	Chunghwa Precision Test Tech. Co., Ltd.	Chunghwa Precision Test Tech. USA Corporation	United States	Semiconductor testing components and printed circuit board industry production and marketing of electronic products	(US$	12,504 400	)	(US$	12,504 400	)		400		100	(US$	10,513 362 (Note 4	)  )	(US$	2,552 86	)	(US$	2,552 86 (Note 4	)  )		Subsidiary
22	Senao International (Samoa) Holding Ltd.	Senao International HK Limited.	Hong Kong	International investment.	(US$	966,186 32,760	)	(US$	444,712 15,180	)		32,760		100	(US$	521,718 17,906 (Note 4	)  )	(US$	(282,550 (9,547	)  ))	(US$	(282,550 (9,547 (Note 4	)  ))  )		Subsidiary
		HopeTech Technologies Limited	Hong Kong	Information technology and telecommunication products sales.	(US$	21,177 675	)	(US$	21,177 675	)		5,240		45	(US$	22,315 766	)	(US$	3,556 120	)	(US$	1,600 54	)		Equity- method investee
24	Chunghwa Investment Holding Co., Ltd.	CHI One Investment Co., Limited	Hong Kong	General investment	(HK$	26,035 6,520	)	(HK$	14,483 3,924	)		6,520		100	(HK$	9,101 2,429 (Note 4	)  )	(HK$	(3,499 (918	)  ))	(HK$	(3,499 (918 (Note 4	)  ))  )		Subsidiary
26	CHI One Investment Co., Limited	Xiamen Sertec Business Technology Co., Ltd.	China	Customer Services and platform rental activities		25,414 (RMB 5,390	)		13,862 (RMB 2,963	)		—		49	(RMB	8,634 1,853	)	(RMB	(7,092 (1,514	)  ))	(RMB	(3,475) (742	))		Equity- method investee
23	Senao International HK Limited	Senao Trading (Fujian) Co., Ltd.	China	Information technology services and sale of communication products	(US$	338,793 11,500	)	(US$	116,821 4,000	)		—		100	(US$	184,251 6,324 (Note 4	)  )	(US$	(109,697 (3,706	)  ))	(US$	(109,697 (3,706 (Note 4	)  ))  )		Subsidiary
		Senao International Trading (Shanghai) Co., Ltd.	China	Information technology services and sale of communication products	(US$	297,726 10,000	)	(US$	148,413 5,000	)		—		100	(US$	125,656 4,313 (Note 4	)  )	(US$	(100,209 (3,386	)  ))	(US$	(100,209 (3,386 (Note 4	)  ))  )		Subsidiary
		Senao International Trading (Shanghai) Co., Ltd.	China	Information technology services and sale of communication products	(US$	57,860 2,000	)	(US$	57,860 2,000	)		—		100	(US$	52,704 1,809 (Note 4	)  )	(US$	(5,127 (173	)  ))	(US$	(5,127 (173 (Note 4	)  ))  )		Subsidiary (Note 5	)
		Senao International Trading (Jiangsu) Co., Ltd.	China	Information technology services and sale of communication products	(US$	263,736 9,000	)	(US$	115,971 4,000	)		—		100	(US$	156,241 5,362 (Note 4	)  )	(US$	(67,454 (2,279	)  ))	(US$	(67,454 (2,279 (Note 4	)  ))  )		Subsidiary
27	Prime Asia Investments Group, Ltd. (B.V.I.)	Chunghwa Hsingta Co., Ltd.	Hong Kong	Investment		215,019 (RMB 47,373	)		206,089 (RMB 45,448	)		—		100	(RMB	155,476 33,364 (Note 4	)  )	(RMB	(35,835 (7,649	)  ))	(RMB	(35,835 (7,649 (Note 4	)  ))  )		Subsidiary

(Continued)

- 79 -

No.

Investor Company

Investee Company

Location

Main Businesses and Products

Original Investment Amount

Balance as of December 31, 2012

Net Income (Loss) of the Investee

Recognized Gain (Loss) (Notes 1 and 2)

Note

December 31, 2012

December 31, 2011

Shares (Thousands)

Percentage of Ownership (%)

Carrying Value

29

Chunghwa Hsingta Company Ltd.

Chunghwa Telecom

(China)  Co., Ltd.

China

Planning and design of energy conservation and software and hardware system services, and integration of information system

$ (RMB

177,176 39,376

)

$ (RMB

177,176 39,376

)

—

100

$ (RMB

122,628 26,315 (Note 4

)  )

$ (RMB

(31,394 (6,701

)  ))

$ (RMB

(31,394 (6,701 (Note 4

)  ))  )

Subsidiary

Jiangsu Zhenhua Information Technology Company, LLC

China

Intelligent energy conserving and intelligent building services

(RMB

28,912 6,072

)

—

—

75

24,218 (RMB 5,197 (Note 4

)  )

(RMB

(5,463 (1,166

)  ))

(RMB

(4,097) (875 (Note 4

) )  )

Subsidiary

Hua-Xiong Information Technology Co., Ltd.

China

Intelligent system and energy saving system services in buildings

(RMB

8,931 1,925

)

—

—

51

8,630 (RMB 1,852 (Note 4

)  )

(RMB

(665) (142

))

(RMB

(342 (73 (Note 4

)  ))  )

Subsidiary

Note 1: The equity in net income (loss) of investees was based on audited financial statements.

Note 2: The equity in net income (loss) of investees includes amortization of differences between the investment cost and net value and elimination of unrealized transactions.

Note 3: New Prospect Investments Holdings Ltd. (B.V.I.) was incorporated in March 2006, but have not yet begun operation as of December 31, 2012.

Note 4: The amount was eliminated upon consolidation.

Note 5: The English name is the same as the above entity; however, the Chinese names included in the respective Articles of Incorporations are different.

(Concluded)

- 80 -

TABLE 8

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

INVESTMENT IN MAINLAND CHINA

FOR THE YEAR ENDED DECEMBER 31, 2012

(Amounts in Thousands of New Taiwan Dollars, in Thousands of U.S. Dollars)

	Main Businesses and	Total Amount of Paid-in		Investment		Accumulated Outflow of Investment from Taiwan as of January 1,		Investment Flows				Accumulated Outflow of Investment from Taiwan as of December 31,		% Ownership of Direct or Indirect			Investment Gain (Loss)			Carrying Value as of December 31,			Accumulated Inward Remittance of Earnings as of December 31,
Investee	Products	Capital		Type		2012		Outflow		Inflow		2012		Investment			(Note 2)			2012			2012
Glory Network System Service (Shanghai) Co., Ltd.	Providing advanced business solutions to telecommunications	$	47,321		Note 1	$	31,973	$	15,348	$	—	$	47,321		100	%	$	(1,799 (Note 7	)  )	$	19,041 (Note 7	)	$	—
Xiamen Sertec Business Technology Co., Ltd.	Customer services and platform rental activities		51,552		Note 1		13,862		11,552		—		25,414		49	%		(3,475	)		8,634			—
Senao Trading (Fujian) Co., Ltd.	Information technology services and sale of communication products		338,793		Note 1		116,821		221,972		—		338,793		100	%		(109,697 (Note 7	)  )		184,251 (Note 7	)		—
Senao International Trading (Shanghai) Co., Ltd.	Information technology services and sale of communication products		297,726		Note 1		148,413		149,313		—		297,726		100	%		(100,209 (Note 7	)  )		125,656 (Note 7	)		—
Senao International Trading (Shanghai) Co., Ltd. (Note 8)	Information technology services and sale of communication products		57,860		Note 1		57,860		—		—		57,860		100	%		(5,127 (Note 7	)  )		52,704 (Note 7	)		—
Senao International Trading (Jiangsu) Co., Ltd.	Information technology services and sale of communication products		263,736		Note 1		115,971		147,765		—		263,736		100	%		(67,454 (Note 7	)  )		156,241 (Note 7	)		—
Chunghwa Telecom (China) Co., Ltd.	Energy conserving and providing installation, design and maintenance services		177,176		Note 1		177,176		—		—		177,176		100	%		(31,394 (Note 7	)  )		122,628 (Note 7	)		—
Jiangsu Zhenghua Information Technology Company, LLC	Intelligent energy serving and intelligent building services		38,549		Note 1		28,912		—		—		28,912		75	%		(4,099 (Note 7	)  )		24,218 (Note 7	)		—
Hua-Xiong Information Technology Co., Ltd.	Intelligent system and energy saving system services in buildings		17,511		Note 1		—		8,931		—		8,931		51	%		(342 (Note 7	)  )		8,630 (Note 7	)		—

(Continued)

- 81 -

Accumulated Investment in  Mainland China as of December 31, 2012			Investment Amounts  Authorized by Investment Commission, MOEA			Upper Limit on  Investment Stipulated by Investment Commission, MOEA
$ (US$	47,321 1,500	)	$ (US$	47,321 1,500	)	$	414,205 (Note 3	)
(US$	25,414 820	)	(US$	79,882 2,500	)		526,247 (Note 4	)
(US$	958,115 32,500	)	(US$	958,115 32,500	)		3,293,687 (Note 5	)
(US$	177,176 6,000	)	(US$	177,176 6,000	)		221,946,128 (Note 6	)
(US$	28,912 960	)	(US$	141,077 4,800	)		221,946,128 (Note 6	)
(US$	8,931 306	)	(US$	44,653 1,530	)		221,946,128 (Note 6	)

Note 1: Investments were through an holding company registered in a third region.

Note 2: Recognition of investment gains (losses) was calculated based on the investee’s audited financial statements.

Note 3: The amount was calculated based on the net assets value of Chunghwa System Integration Co., Ltd.

Note 4: The amount was calculated based on the consolidated net assets value of Chunghwa Investment Co., Ltd.

Note 5: The amount was calculated based on the consolidated net assets value of Senao International Co., Ltd.

Note 6: The amount was calculated based on the consolidated net assets value of Chunghwa Telecom Co., Ltd.

Note 7: The amount was eliminated upon consolidation.

Note 8: The English name is the same as the above entity; however, the Chinese names included in the respective Articles of Incorporations are different.

(Concluded)

- 82 -

TABLE 9

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT TRANSACTIONS

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011

(Amount in Thousands of New Taiwan Dollars)

Year	No. (Note  1)		Company Name	Related Party	Nature of Relationship (Note 2)		Transaction Details
							Financial Statement Account	Amount (Note 5)		Payment Terms (Note 3)		% to Total Sales or Assets (Note 4)
2012		0	Chunghwa Telecom Co., Ltd.	Senao International Co., Ltd.		a	Accounts receivable	$	534,789		—		—
							Accounts payable		1,305,378		—		—
							Accrued custodial receipts		908,606		—		—
							Amounts collected for others		474,581		—		—
							Revenues		713,394		—		—
							Non-operating income and gains		499		—		—
							Operating costs and expenses		9,832,009		—		4
							Property, plant and equipment		25,779		—		—
							Customer’s deposits		1,181		—		—
				CHIEF Telecom Inc.		a	Accounts receivable		27,952		—		—
							Accounts payable		60,209		—		—
							Amounts collected for others		3,468		—		—
							Revenues		260,808		—		—
							Operating costs and expenses		334,152		—		—
							Property, plant and equipment		1,497		—		—
							Customer’s deposits		333		—		—
				Chunghwa Precision Test Tech. Co., Ltd.		a	Accounts receivable		68		—		—
							Accounts payable		969		—		—
							Revenues		2,495		—		—
							Non-operating income and gains		405		—		—
				Chunghwa International Yellow Pages Co., Ltd.		a	Accounts receivable		13,897		—		—
							Accounts payable		55,296		—		—
							Amounts collected for others		98,591		—		—
							Revenues		23,025		—		—
							Operating costs and expenses		70,209		—		—
				Chunghwa System Integration Co., Ltd.		a	Accounts receivable		23,294		—		—
							Accrued custodial receipts		4,621		—		—
							Accounts payable		525,183		—		—
							Payables to contractors		26,650		—		—
							Revenues		8,853		—		—
							Non-operating income and gains		650		—		—
							Operating costs and expenses		803,102		—		—
							Property, plant and equipment		1,161,098		—		—
							Office supplies		2,189		—		—
							Work in process		24,108		—		—
							Spare parts		19,411		—		—

(Continued)

- 83 -

Year	No. (Note 1)	Company Name	Related Party	Nature of Relationship (Note 2)		Transaction Details
						Financial Statement Account	Amount (Note 5)		Payment Terms (Note  3)		% to Total  Sales or Assets (Note 4)
						Intangible assets	$	327,875		—		—
						Other deferred expenses		18,796		—		—
						Customer’s deposits		64,465		—		—
			Chunghwa Telecom Global Inc.		a	Accounts receivable		15,249		—		—
						Accounts payable		69,735		—		—
						Revenues		55,425		—		—
						Operating costs and expenses		270,069		—		—
						Property, plant and equipment		23,815		—		—
						Customer’s deposits		14,257		—		—
			Donghwa Telecom Co., Ltd.		a	Accounts receivable		39,865		—		—
						Accounts payable		81,964		—		—
						Revenues		123,151		—		—
						Operating costs and expenses		109,516		—		—
						Property, plant and equipment		188,697		—		—
			Spring House Entertainment Inc.		a	Accounts receivable		3,904		—		—
						Accounts payable		4,254		—		—
						Amounts collected for others		46,251		—		—
						Revenues		27,938		—		—
						Non-operating income and gains		51		—		—
						Operating costs and expenses		32,292		—		—
						Customer’s deposits		5		—		—
						Intangible assets		2,628		—		—
			Chunghwa Telecom Japan Co., Ltd.		a	Accounts receivable		5,171		—		—
						Accounts payable		5,946		—		—
						Revenues		31,803		—		—
						Operating costs and expenses		66,220		—		—
			Light Era Development Co., Ltd.		a	Accounts receivable		1,088		—		—
						Accounts payable		16,996		—		—
						Amounts collected for others		1,869		—		—
						Revenues		10,904		—		—
						Operating costs and expenses		7,434		—		—
						Property, plant and equipment		10,571		—		—
						Work in process		507		—		—
			Chunghwa Telecom Singapore Pte., Ltd.		a	Accounts receivable		4,631		—		—
						Accounts payable		9,330		—		—
						Revenues		48,395		—		—
						Operating costs and expenses		50,182		—		—
			Chunghwa Investment Co., Ltd.		a	Revenues		538		—		—
			Chunghwa Telecom (China) Co., Ltd.		a	Accounts receivable		436		—		—
						Accounts payable		777		—		—
						Revenues		436		—		—
						Operating costs and expenses		9,675		—		—
			Smartfun Digital Co., Ltd.		a	Accounts payable		342		—		—
						Revenues		2,226		—		—
						Operating costs and expenses		135		—		—

(Continued)

- 84 -

Year	No. (Note  1)		Company Name	Related Party	Nature of Relationship (Note 2)		Transaction Details
							Financial Statement Account	Amount (Note 5)		Payment Terms (Note  3)		% to Total Sales or Assets (Note 4)
				Chunghwa Telecom Vietnam Co., Ltd.		a	Accounts receivable	$	2,179		—		—
.							Accounts payable		1,195		—		—
							Revenues		20		—		—
							Operating costs and expenses		1,782		—		—
				Chunghwa Sochamp Technology Inc.		a	Accounts receivable		35,238		—		—
							Accounts payable		173,206		—		—
							Revenues		227		—		—
							Operating costs and expenses		94,212		—		—
							Work in process		71,603		—		—
							Refundable deposits		28		—		—
				Ceylon Innovation Co., Ltd.		a	Revenues		1		—		—
				Chief International Corp.		a	Accounts receivable		4,358		—		—
							Accounts payable		4,019		—		—
		1	Senao International Co., Ltd.	Chunghwa Telecom Co., Ltd.		b	Accounts receivable		1,327,409		—		—
							Other receivables		452,297		—		—
							Prepaid expenses		253		—		—
							Accounts payable		531,018		—		—
							Other payables		912,377		—		—
							Revenues		9,857,768		—		4
							Non-operating income and gains		20		—		—
							Purchase		639,532		—		—
							Operating expenses		73,862		—		—
							Non-operating costs and expenses		499		—		—
							Refundable deposits		1,181		—		—
				Chunghwa System Integration Co., Ltd.		c	Accounts receivable		59		—		—
							Other deferred expenses		7,671		—		—
							Revenues		77		—		—
				Spring House Entertainment Inc.		c	Accounts receivable		299		—		—
							Revenues		1,291		—		—
				Chunghwa International Yellow Pages Co., Ltd.		c	Revenues		90		—		—
							Operating costs and expenses		10		—		—
				Light Era Development Co., Ltd.		c	Revenues		129		—		—
				Smartfun Digital Co., Ltd.		c	Revenues		45		—		—
		2	CHIEF Telecom Inc.	Chunghwa Telecom Co., Ltd.		b	Accounts receivable		62,392		—		—
							Prepaid expenses		12		—		—
							Other deferred expenses		1,273		—		—
							Accounts payable		27,324		—		—
							Advances from customers		628		—		—
							Revenues		334,152		—		—
							Non-operating income and gains		1,497		—		—
							Operating costs and expenses		260,808		—		—
							Refundable deposits		333		—		—
				Chunghwa System Integration Co., Ltd.		c	Revenues		91		—		—

(Continued)

- 85 -

Year	No. (Note  1)		Company Name	Related Party	Nature of Relationship (Note 2)		Transaction Details
							Financial Statement Account	Amount (Note 5)		Payment Terms (Note  3)		% to Total Sales or Assets (Note 4)
				Chunghwa Telecom Singapore Pte., Ltd.		c	Accounts receivable	$	1,831		—		—
							Accounts payable		1,326		—		—
							Revenues		13,798		—		—
							Operating costs and expenses		14,097		—		—
				Donghwa Telecom Co., Ltd.		c	Accounts receivable		68		—		—
							Revenues		792		—		—
				Chunghwa Telecom Japan Co., Ltd.		c	Accounts payable		1		—		—
							Revenues		107		—		—
							Operating costs and expenses		882		—		—
				Spring House Entertainment Inc.		c	Revenues		216		—		—
				Yao Yong Real Property Co., Ltd.		c	Operating costs and expenses		86,667		—		—
		3	Chunghwa System Integration Co., Ltd.	Chunghwa Telecom Co., Ltd.		b	Accounts receivable		549,583		—		—
							Accounts payable		6,448		—		—
							Advances from customers		19,217		—		—
							Deferred revenue		23,607		—		—
							Revenues		2,332,972		—		1
							Operating costs and expenses		9,503		—		—
							Refundable deposits		64,465		—		—
				Senao International Co., Ltd.		c	Accounts payable		59		—		—
							Revenues		7,671		—		—
							Operating costs and expenses		77		—		—
				CHIEF Telecom Inc.		c	Operating costs and expenses		91		—		—
				Chunghwa International Yellow Pages Co., Ltd.		c	Accounts payable		94		—		—
							Revenues		1,217		—		—
							Operating costs and expenses		90		—		—
				Spring House Entertainment Inc.		c	Revenues		1,178		—		—
				Light Era Development Co., Ltd.		c	Accounts receivable		37		—		—
							Revenues		675		—		—
				Chunghwa Precision Test Tech. Co., Ltd.		c	Accounts receivable		964		—		—
							Revenues		1,938		—		—
				Chunghwa Investment Co., Ltd.		c	Accounts receivable		21		—		—
							Revenues		20		—		—
				Smartfun Digital Co., Ltd.		c	Revenues		36		—		—
		4	Chunghwa International Yellow Pages Co., Ltd.	Chunghwa Telecom Co., Ltd.		b	Accounts receivable		79,203		—		—
							Accrued custodial receipts		72,067		—		—
							Accrued custodial payments		1,093		—		—
							Prepaid expenses		1,524		—		—
							Accounts payable		9,995		—		—
							Amounts collected for others		1,945		—		—
							Advances from customers		1,957		—		—
							Revenues		70,209		—		—
							Operating costs and expenses		23,025		—		—
				Senao International Co., Ltd.		c	Revenues		10		—		—
							Operating costs and expenses		90		—		—

(Continued)

- 86 -

Year	No. (Note  1)		Company Name	Related Party	Nature of Relationship (Note 2)	Transaction Details
						Financial Statement Account	Amount (Note 5)		Payment Terms (Note 3)	% to Total Sales or Assets (Note 4)
				Chunghwa System Integration Co., Ltd.	c	Accounts receivable	$	94	—	—
						Revenues		90	—	—
						Property, plant and equipment		357	—	—
						Intangible assets		860	—	—
				Light Era Development Co., Ltd.	c	Revenues		67	—	—
				Chunghwa Telecom Global Inc.	c	Revenues		129	—	—
		5	Chunghwa Telecom Global, Inc.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		69,726	—	—
						Prepaid expenses		9	—	—
						Advances from customers		1,527	—	—
						Accounts payable		13,722	—	—
						Revenues		293,884	—	—
						Operating costs and expenses		55,425	—	—
						Refundable deposits		14,257	—	—
				Donghwa Telecom Co., Ltd.	c	Revenues		3,418	—	—
				Chunghwa Precision Test Tech. Co., Ltd.	c	Accounts receivable		134	—	—
						Revenues		453	—	—
				Chunghwa International Yellow Pages Co., Ltd.	c	Operating costs and expenses		129	—	—
		7	Spring House Entertainment Inc.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		4,254	—	—
						Accrued custodial receipts		46,251	—	—
						Accounts payable		3,904	—	—
						Revenues		34,920	—	—
						Operating costs and expenses		27,989	—	—
						Refundable deposits		5	—	—
				Senao International Co., Ltd.	c	Accounts payable		299	—	—
						Operating costs and expenses		1,260	—	—
						Property, plant and equipment		31	—	—
				Smartfun Digital Co., Ltd.	c	Prepaid expenses		1,012	—	—
						Operating costs and expenses		227	—	—
				CHIEF Telecom Inc.	c	Operating costs and expenses		216	—	—
				Chunghwa System Integration Co., Ltd.	c	Operating costs and expenses		40	—	—
						Property, plant and equipment		234	—	—
						Other assets		904	—	—
		6	Donghwa Telecom Co., Ltd.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		24,359	—	—
						Prepaid expenses		57,605	—	—
						Accounts payable		39,865	—	—
						Advances from customers		188,697	—	—
						Revenues		109,516	—	—
						Operating costs and expenses		123,151	—	—
				CHIEF Telecom Inc.	c	Accounts payable		68	—	—
						Operating costs and expenses		792	—	—
				Chunghwa Telecom Global, Inc.	c	Operating costs and expenses		3,418	—	—
				Chunghwa Telecom Singapore Pte., Ltd.	c	Accounts payable		171	—	—
						Prepaid expenses		23,763	—	—
						Operating costs and expenses		12,242	—	—

(Continued)

- 87 -

Year	No. (Note  1)		Company Name	Related Party	Nature of Relationship (Note 2)	Transaction Details
						Financial Statement Account	Amount (Note 5)		Payment Terms (Note 3)	% to Total Sales or Assets (Note 4)
		8	Light Era Development Co., Ltd.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable	$	18,587	—	—
						Prepaid expenses		278	—	—
						Accounts payable		1,088	—	—
						Advances from customers		507	—	—
						Revenues		18,005	—	—
						Operating costs and expenses		4,398	—	—
						Property, plant and equipment		476	—	—
						Work in process		6,030	—	—
				Senao International Co., Ltd.	c	Operating costs and expenses		47	—	—
						Property, plant and equipment		82	—	—
				Chunghwa System Integration Co., Ltd.	c	Accounts payable		37	—	—
						Operating costs and expenses		3	—	—
						Property, plant and equipment		530	—	—
						Intangible assets		107	—	—
						Work in process		35	—	—
				Chunghwa International Yellow Pages Co., Ltd.	c	Operating costs and expenses		67	—	—
		9	Chunghwa Telecom Singapore Pte., Ltd.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		9,330	—	—
						Accounts payable		4,631	—	—
						Revenues		50,182	—	—
						Operating costs and expenses		48,395	—	—
				CHIEF Telecom Inc.	c	Accounts receivable		1,326	—	—
						Accounts payable		1,831	—	—
						Revenues		14,097	—	—
						Operating costs and expenses		13,798	—	—
				Donghwa Telecom Co., Ltd.	c	Accounts receivable		171	—	—
						Advances from customers		23,763	—	—
						Revenues		12,242	—	—
				Chunghwa Telecom Japan Co., Ltd.	c	Accounts receivable		442	—	—
						Revenues		928	—	—
		10	Chunghwa Telecom Japan Co., Ltd.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		5,946	—	—
						Accounts payable		4,467	—	—
						Advances from customers		704	—	—
						Revenues		66,220	—	—
						Operating costs and expenses		31,803	—	—
				CHIEF Telecom Inc.	c	Accounts receivable		1	—	—
						Revenues		882	—	—
						Operating costs and expenses		107	—	—
				Chunghwa Telecom Singapore Pte., Ltd.	c	Accounts payable		442	—	—
						Operating costs and expenses		928	—	—
		14	Chunghwa Investment Co., Ltd.	Chunghwa Telecom Co., Ltd.	b	Operating costs and expenses		538	—	—
				Chunghwa System Integration Co., Ltd.	c	Accounts payable		21	—	—
						Operating costs and expenses		20	—	—

(Continued)

- 88 -

Year	No. (Note  1)		Company Name	Related Party	Nature of Relationship (Note 2)	Transaction Details
						Financial Statement Account	Amount (Note 5)		Payment Terms (Note 3)	% to Total Sales or Assets (Note 4)
		20	Chunghwa Precision Test Tech. Co., Ltd.	Chunghwa Telecom Co., Ltd.	b	Prepaid expenses	$	969	—	—
						Accounts payable		68	—	—
						Operating costs and expenses		2,900	—	—
				Chunghwa System Integration Co., Ltd.	c	Accounts payable		964	—	—
						Operating costs and expenses		1,938	—	—
				Chunghwa Telecom Global, Inc.	c	Accounts payable		134	—	—
						Operating costs and expenses		453	—	—
		25	Yao Yong Real Property Co., Ltd.	CHIEF Telecom Inc.	c	Revenues		86,667	—	—
		30	Chunghwa Telecom (China) Co., Ltd.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		777	—	—
						Accounts payable		436	—	—
						Revenues		9,675	—	—
						Operating costs and expenses		436	—	—
		31	Smartfun Digital Co., Ltd.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		342	—	—
						Revenues		135	—	—
						Operating costs and expenses		2,226	—	—
				Senao International Co., Ltd.	c	Operating costs and expenses		45	—	—
				Chunghwa System Integration Co., Ltd.	c	Operating costs and expenses		33	—	—
						Prepaid expenses		3	—	—
				Spring House Entertainment Inc.	c	Advances from customers		1,012	—	—
						Revenues		227	—	—
		32	Chunghwa Telecom Vietnam Co., Ltd.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		1,195	—	—
						Accounts payable		2,179	—	—
						Revenues		1,782	—	—
						Operating costs and expenses		20	—	—
		33	Chunghwa Sochamp Technology Inc.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		173,206	—	—
						Advances from customers		35,238	—	—
						Revenues		165,815	—	—
						Operating costs and expenses		227	—	—
						Customer’s deposits		28	—	—
		36	Ceylon Innovation Co., Ltd.	Chunghwa Telecom Co., Ltd.	b	Operating costs and expenses		1	—	—
		16	Chief International Corp.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		4,019	—	—
						Accounts payable		4,358	—	—
2011		0	Chunghwa Telecom Co., Ltd.	Senao International Co., Ltd.	a	Accounts receivable		45,189	—	—
						Accrued custodial receipts		680,862	—	—
						Accounts payable		1,222,386	—	—
						Amounts collected for others		366,211	—	—
						Revenues		831,109	—	—
						Non-operating income and gains		9	—	—

(Continued)

- 89 -

Year	No. (Note 1)	Company Name	Related Party	Nature of Relationship (Note 2)	Transaction Details
					Financial Statement Account	Amount (Note 5)		Payment Terms (Note 3)	% to Total Sales or Assets (Note 4)
					Operating costs and expenses	$	7,385,083	—	3
					Property, plant and equipment		15,223	—	—
					Work in process		266	—	—
					Customer’s deposits		1,328	—	—
			CHIEF Telecom Inc.	a	Accounts receivable		30,852	—	—
					Accounts payable		46,849	—	—
					Amounts collected for others		3,759	—	—
					Revenues		272,276	—	—
					Operating costs and expenses		307,458	—	—
					Customer’s deposits		333	—	—
			Chunghwa System Integration Co., Ltd.	a	Accounts receivable		1,494	—	—
					Accrued custodial receipts		11,883	—	—
					Accounts payable		704,538	—	—
					Revenues		10,141	—	—
					Non-operating income and gains		1,028	—	—
					Operating costs and expenses		499,937	—	—
					Office supplies		1,429	—	—
					Work in process		371,103	—	—
					Spare parts		28,718	—	—
					Property, plant and equipment		1,209,201	—	—
					Intangible assets		252,740	—	—
					Other deferred expenses		12,325	—	—
					Customer’s deposits		21,474	—	—
			Chunghwa Telecom Global, Inc.	a	Accounts receivable		19,817	—	—
					Accounts payable		74,240	—	—
					Revenues		96,404	—	—
					Operating costs and expenses		243,584	—	—
					Property, plant and equipment		49,418	—	—
					Customer’s deposits		14,846	—	—
			Spring House Entertainment Tech. Inc.	a	Accounts receivable		731	—	—
					Accounts payable		4,001	—	—
					Amounts collected for others		31,867	—	—
					Revenues		10,775	—	—
					Operating costs and expenses		36,641	—	—
					Intangible assets		20,810	—	—
					Customer’s deposits		5	—	—
			Chunghwa International Yellow Pages Co., Ltd.	a	Accounts receivable		2,413	—	—
					Accrued custodial receipts		11,569	—	—
					Accounts payable		21,323	—	—
					Amounts collected for others		104,363	—	—
					Revenues		15,570	—	—
					Operating costs and expenses		45,732	—	—
					Work in process		1,204	—	—
			Donghwa Telecom Co., Ltd.	a	Accounts receivable		32,472	—	—
					Accounts payable		78,845	—	—
					Revenues		112,821	—	—
					Operating costs and expenses		106,327	—	—

(Continued)

- 90 -

Year	No. (Note  1)		Company Name	Related Party	Nature of Relationship (Note 2)	Transaction Details
						Financial Statement Account	Amount (Note 5)		Payment Terms (Note 3)	% to Total Sales or Assets (Note 4)
				Light Era Development Co., Ltd.	a	Advances from customers	$	249	—	—
						Amounts collected for others		17,070	—	—
						Revenues		107,343	—	—
						Operating costs and expenses		274	—	—
				Chunghwa Telecom Japan Co., Ltd.	a	Accounts receivable		7,619	—	—
						Accounts payable		6,463	—	—
						Revenues		38,544	—	—
						Operating costs and expenses		65,501	—	—
						Property, plant and equipment		37,591	—	—
				Chunghwa Telecom Singapore Pte., Ltd.	a	Accounts receivable		6,571	—	—
						Accounts payable		3,924	—	—
						Revenues		45,163	—	—
						Operating costs and expenses		36,479	—	—
						Property, plant and equipment		53,588	—	—
				Chunghwa Precision Test Tech Co., Ltd.	a	Accounts receivable		52	—	—
						Revenues		2,214	—	—
						Non-operating income and gains		283	—	—
						Operating costs and expenses		1	—	—
				Chunghwa Investment Co., Ltd.	a	Revenues		3	—	—
				Chunghwa Telecom (China) Co., Ltd.	a	Accounts payable		934	—	—
						Operating costs and expenses		6,808	—	—
				Smartfun Digital Co., Ltd.	a	Revenues		334	—	—
						Customer’s deposits		8	—	—
				Chunghwa Telecom Vietnam Co., Ltd.	a	Accounts payable		150	—	—
						Operating costs and expenses		1,081	—	—
				Chunghwa Sochamp Technology Inc.	a	Accounts payable		1,841	—	—
						Revenues		64	—	—
						Operating costs and expenses		1,249	—	—
				InfoExplorer Co., Ltd.	a	Revenues		4,085	—	—
						Operating costs and expenses		76,494	—	—
		1	Senao International Co., Ltd.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		1,253,842	—	—
						Other receivables		334,501	—	—
						Prepaid expenses		254	—	—
						Accounts payable		44,874	—	—
						Other payables		681,177	—	—
						Advances from customers		27,261	—	—
						Revenues		7,427,731	—	3
						Non-operating income and gains		102	—	—
						Operating costs and expenses		831,109	—	—
						Non-operating costs and expenses		9	—	—
						Refundable deposits		1,328	—	—
				Chunghwa System Integration Co., Ltd.	c	Accounts receivable		2,294	—	—
						Revenues		2,328	—	—
				Spring House Entertainment Tech. Inc.	c	Accounts receivable		62	—	—
						Revenues		397	—	—

(Continued)

- 91 -

Year	No. (Note  1)		Company Name	Related Party	Nature of Relationship (Note 2)	Transaction Details
						Financial Statement Account	Amount (Note 5)		Payment Terms (Note 3)		% to Total Sales or Assets (Note 4)
				Chunghwa International Yellow Pages Co., Ltd.	c	Revenues	$	73		—		—
						Operating costs and expenses		10		—		—
				CHIEF Telecom Inc.	c	Revenues		1		—		—
				Light Era Development Co., Ltd.	c	Revenues		199		—		—
		2	CHIEF Telecom Inc.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		48,728		—		—
						Prepaid expenses		1,880		—		—
						Accounts payable		30,223		—		—
						Advances from customers		629		—		—
						Revenues		307,458		—		—
						Operating costs and expenses		271,759		—		—
						Property, plant and equipment		517		—		—
						Refundable deposits		333		—		—
				Senao International Co., Ltd.	c	Operating costs and expenses		1		—		—
				Chunghwa System Integration Co., Ltd.	c	Revenues		91		—		—
				Chunghwa Telecom Singapore Pte., Ltd.	c	Accounts receivable		439		—		—
						Accounts payable		1,137		—		—
						Revenues		6,632		—		—
						Operating costs and expenses		6,111		—		—
				Donghwa Telecom Co., Ltd.	c	Accounts receivable		71		—		—
						Revenues		849		—		—
				Chunghwa Telecom Japan Co., Ltd.	c	Accounts payable		135		—		—
						Operating costs and expenses		7,571		—		—
				Chunghwa Telecom Global, Inc.	c	Operating costs and expenses		24		—		—
				Yao Yong Real Property Co., Ltd.	c	Operating costs and expenses		86,667		—		—
		3	Chunghwa System Integration Co., Ltd.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		704,538		—		—
						Accounts payable		13,377		—		—
						Deferred revenue		207,593		—		—
						Revenues		2,167,860		—		1
						Operating costs and expenses		11,169		—		—
						Refundable deposits		21,474		—		—
				Senao International Co., Ltd.	c	Accounts payable		2,294		—		—
						Operating costs and expenses		2,328		—		—
				CHIEF Telecom Inc.	c	Operating costs and expenses		91		—		—
				Chunghwa International Yellow Pages Co., Ltd.	c	Accounts payable		147		—		—
						Revenues		1,255		—		—
						Operating costs and expenses		217		—		—
				Chunghwa Telecom Global, Inc.	c	Revenues		354		—		—
				Spring House Entertainment Tech. Inc.	c	Accounts receivable		356		—		—
						Revenues		1,229		—		—
				Chunghwa Precision Test Tech Co., Ltd.	c	Accounts receivable		347		—		—
						Revenues		330		—		—

(Continued)

- 92 -

Year	No. (Note  1)		Company Name	Related Party	Nature of Relationship (Note 2)	Transaction Details
						Financial Statement Account	Amount (Note 5)		Payment Terms (Note 3)		% to Total Sales or Assets (Note 4)
		4	Chunghwa International Yellow Pages Co., Ltd.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable	$	19,892		—		—
						Accrued custodial receipts		104,363		—		—
						Prepaid expenses		1,431		—		—
						Accounts payable		379		—		—
						Amounts collected for others		11,569		—		—
						Advances from customers		2,034		—		—
						Revenues		47,012		—		—
						Operating costs and expenses		15,646		—		—
				Senao International Co., Ltd.	c	Revenues		10		—		—
						Operating costs and expenses		73		—		—
				Chunghwa System Integration Co., Ltd.	c	Accounts receivable		147		—		—
						Revenues		217		—		—
						Operating costs and expenses		1,255		—		—
				Chunghwa Telecom (China) Co., Ltd.	c	Revenues		59		—		—
		5	Chunghwa Telecom Global, Inc.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		74,233		—		—
						Prepaid expenses		7		—		—
						Accounts payable		18,606		—		—
						Advances from customers		1,211		—		—
						Revenues		293,002		—		—
						Operating costs and expenses		96,404		—		—
						Refundable deposits		14,846		—		—
				CHIEF Telecom Inc.	c	Revenues		24		—		—
				Chunghwa System Integration Co., Ltd.	c	Operating costs and expenses		354		—		—
				Chunghwa Precision Test Tech Co., Ltd.	c	Accounts receivable		140		—		—
						Revenues		1,625		—		—
		7	Spring House Entertainment Tech. Inc.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		35,868		—		—
						Accounts payable		731		—		—
						Revenues		57,451		—		—
						Operating costs and expenses		10,775		—		—
						Refundable deposits		5		—		—
				Senao International Co., Ltd.	c	Accounts payable		62		—		—
						Operating costs and expenses		397		—		—
				Chunghwa System Integration Co., Ltd.	c	Accounts payable		356		—		—
						Operating costs and expenses		1,229		—		—
		6	Donghwa Telecom Co., Ltd.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		15,351		—		—
						Prepaid expenses		63,494		—		—
						Accounts payable		9,044		—		—
						Advances from customers		23,428		—		—
						Revenues		106,327		—		—
						Operating costs and expenses		112,821		—		—
				CHIEF Telecom Inc.	c	Accounts payable		71		—		—
						Operating costs and expenses		849		—		—
				Chunghwa Telecom Singapore Pte., Ltd.	c	Accounts payable		6,227		—		—

(Continued)

- 93 -

Year	No. (Note  1)		Company Name	Related Party	Nature of Relationship (Note 2)	Transaction Details
						Financial Statement Account	Amount (Note 5)		Payment Terms (Note 3)		% to Total Sales or Assets (Note 4)
		8	Light Era Development Co., Ltd.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable	$	17,070		—		—
						Prepaid expenses		249		—		—
						Revenues		274		—		—
						Operating costs and expenses		101,246		—		—
						Inventories		5,888		—		—
						Intangible assets		209		—		—
				Senao International Co., Ltd.	c	Operating costs and expenses		199		—		—
		9	Chunghwa Telecom Singapore Pte., Ltd.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		3,924		—		—
						Accounts payable		6,571		—		—
						Revenues		36,479		—		—
						Operating costs and expenses		45,163		—		—
						Advances from customers		53,588		—		—
				CHIEF Telecom Inc.	c	Accounts receivable		1,137		—		—
						Accounts payable		439		—		—
						Revenues		6,111		—		—
						Operating costs and expenses		6,632		—		—
				Donghwa Telecom Co., Ltd.	c	Revenues		6,227		—		—
				Chunghwa Telecom Japan Co., Ltd.	c	Accounts receivable		556		—		—
		10	Chunghwa Telecom Japan Co., Ltd.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		6,463		—		—
						Accounts payable		6,990		—		—
						Advances from customers		629		—		—
						Revenues		103,092		—		—
						Operating costs and expenses		38,544		—		—
				CHIEF Telecom Inc.	c	Accounts receivable		135		—		—
						Revenues		7,571		—		—
				Chunghwa Telecom Singapore Pte., Ltd.	c	Accounts payable		556		—		—
		14	Chunghwa Investment Co., Ltd.	Chunghwa Telecom Co., Ltd.	b	Operating costs and expenses		3		—		—
		20	Chunghwa Precision Test Tech Co., Ltd.	Chunghwa Telecom Co., Ltd.	b	Accounts payable		52		—		—
						Operating costs and expenses		2,497		—		—
						Non-operating income and gains		1		—		—
				Chunghwa System Integration Co., Ltd.	c	Accounts payable		347		—		—
						Operating costs and expenses		330		—		—
				Chunghwa Telecom Global, Inc.	c	Accounts payable		140		—		—
						Operating costs and expenses		1,625		—		—
		25	Yao Yong Real Property Co., Ltd.	CHIEF Telecom Inc.	c	Revenues		86,667		—		—
		30	Chunghwa Telecom (China) Co., Ltd.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		934		—		—
						Revenues		6,808		—		—
				Chunghwa International Yellow Pages Co., Ltd.	c	Operating costs and expenses		59		—		—
		31	Smartfun Digital Co., Ltd.	Chunghwa Telecom Co., Ltd.	b	Operating costs and expenses		334		—		—
						Refundable deposits		8		—		—

(Continued)

- 94 -

Year	No. (Note  1)		Company Name	Related Party	Nature of Relationship (Note 2)	Transaction Details
						Financial Statement Account	Amount (Note 5)		Payment Terms (Note 3)		% to Total Sales or Assets (Note 4)
		32	Chunghwa Telecom Vietnam Co., Ltd.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable	$	150		—		—
						Revenues		1,081		—		—
		31	Chunghwa Sochamp Technology Inc.	Chunghwa Telecom Co., Ltd.	b	Operating costs and expenses		64		—		—
						Revenues		1,249		—		—
						Accounts receivable		1,841		—		—

Note 1: Significant transactions between the Company and its subsidiaries or among subsidiaries are numbered as follows:

a. “0” for the Company.

b. Subsidiaries are numbered from “1”.

Note 2: Related party transactions are divided into three categories as follows:

a. The Company to subsidiaries.

b. Subsidiaries to the Company.

c. Subsidiaries to subsidiaries.

Note 3: Transaction terms were determined in accordance with mutual agreements.

Note 4: For assets and liabilities, amount is shown as a percentage to consolidated total assets as of December 31, 2012, while revenues, costs and expenses are shown as a percentage to consolidated total operating revenues for the year ended December 31, 2012.

Note 5: The amount was eliminated upon consolidation.

(Concluded)

- 95 -

TABLE 10

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

SEGMENT INFORMATION

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011

(Amount in Thousands of New Taiwan Dollars)

	Domestic Fixed Communications Business		Mobile Communications Business		Internet Business		International Fixed Communications Business		Others			Adjustment			Total
Year ended December 31, 2012
Revenues from external customers	$	75,550,173	$	100,793,998	$	24,757,192	$	15,318,567	$	3,710,958		$	—		$	220,130,888
Intersegment revenues (Note 2)		16,990,921		6,580,870		2,876,919		2,231,235		1,035,324			(29,715,269	)		—
Interest income		6,045		11,543		2,056		3,993		718,300			—			741,937
Other income		164,793		279,103		13,126		69,020		819,205			(229,952	)		1,115,295
	$	92,711,932	$	107,665,514	$	27,649,293	$	17,622,815	$	6,283,787		$	(29,945,221	)	$	221,988,120
Interest expense	$	—	$	44	$	2,251	$	—	$	19,738		$	—		$	22,033
Depreciation and amortization	$	19,394,985	$	8,665,806	$	2,691,696	$	1,436,694	$	336,129		$	—		$	32,525,310
Other expense	$	1,309,275	$	367,504	$	7,085	$	313,424	$	62,417		$	(229,952	)	$	1,829,753
Segment income before tax	$	15,023,200	$	25,830,495	$	8,581,693	$	1,316,426	$	(1,855,651	)	$	—		$	48,896,163
Total assets	$	229,246,121	$	67,002,756	$	23,961,114	$	24,412,693	$	94,824,137		$	—		$	439,446,821
Capital expenditures for segment assets	$	19,550,852	$	7,232,110	$	3,441,150	$	2,379,225	$	676,941		$	—		$	33,280,278
Year ended December 31, 2011
Revenues from external customers	$	79,350,966	$	92,998,024	$	24,833,873	$	15,217,551	$	5,092,653		$	—		$	217,493,067
Intersegment revenues (Note 2)		15,354,542		6,994,224		1,917,221		2,619,540		725,192			(27,610,719	)		—
Interest income		4,401		8,439		1,352		2,760		664,903			—			681,855
Other income		465,000		129,399		10,039		40,787		562,353			(9,069	)		1,198,509
	$	95,174,909	$	100,130,086	$	26,762,485	$	17,880,638	$	7,045,101		$	(27,619,788	)	$	219,373,431
Interest expense	$	169	$	45	$	4,366	$	1	$	26,132		$	—		$	30,713
Depreciation and amortization	$	20,138,758	$	8,287,976	$	2,277,687	$	1,282,204	$	319,723		$	—		$	32,306,348
Other expense	$	14,863	$	7,381	$	5,865	$	2,464	$	196,511		$	(9,069	)	$	218,015
Segment income before tax	$	18,481,679	$	27,839,522	$	9,561,788	$	2,040,654	$	(1,225,076	)	$	—		$	56,698,567
Total assets	$	227,822,041	$	64,742,522	$	20,322,906	$	24,769,820	$	105,262,993		$	—		$	442,920,282
Capital expenditures for segment assets	$	16,569,480	$	4,333,592	$	3,745,832	$	1,529,460	$	698,072		$	—		$	26,876,436

(Continued)

- 96 -

Note 1: The Company organizes its reporting segments based on types of organizational business. The five reporting segments are segregated as below: Domestic fixed communications business, mobile communications business, internet business, international fixed communications business and others.

^¡   Domestic fixed communications business—the provision of local telephone services, domestic long distance telephone services, broadband access, and related services;

^¡   Mobile communications business—the provision of mobile services, sales of mobile handsets and data cards, and related services;

^¡   Internet business—the provision of HiNet services and related services;

^¡   International fixed communications business—the provision of international long distance telephone services and related services;

^¡   Others—the provision of non-Telecom Services, and the corporate related items not allocated to reportable segments.

Note 2: Represents intersegment revenues from goods and services.

(Concluded)

- 97 -

TABLE 11

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

PRODUCTS AND SERVICE REVENUES FROM EXTERNAL CUSTOMER INFORMATION

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011

(Amounts in Thousands of New Taiwan Dollars)

	Year Ended December 31
	2012		2011
Mobile services revenue	$	72,356,021	$	70,773,384
Local telephone services revenue		41,819,346		42,950,591
Sales revenue		28,419,575		22,065,776
Leased line services revenue		25,855,650		27,067,868
Internet services revenue		21,341,416		21,949,338
International long distance telephone services revenue		12,067,624		12,421,792
Domestic long distance telephone services revenue		3,770,052		5,792,664
Others		14,501,204		14,471,654
	$	220,130,888	$	217,493,067

- 98 -