Exhibit 99.2

Chunghwa Telecom Co., Ltd. and Subsidiaries

Consolidated Financial Statements for the

Nine Months Ended September 30, 2019 and 2018 and

Independent Auditors’ Review Report

INDEPENDENT AUDITORS’ REVIEW REPORT

The Board of Directors and Stockholders

Chunghwa Telecom Co., Ltd.

Introduction

We have reviewed the accompanying consolidated balance sheets of Chunghwa Telecom Co., Ltd. and its subsidiaries (the “Company”) as of September 30, 2019 and 2018, the related consolidated statements of comprehensive income for the three months ended September 30, 2019 and 2018, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the nine months ended September 30, 2019 and 2018, and related notes to the consolidated financial statements, including a summary of significant accounting policies (collectively referred to as the “consolidated financial statements”). Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34 “Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China. Our responsibility is to express a conclusion on the consolidated financial statements based on our reviews.

Scope of Review

We conducted our reviews in accordance with Statement of Auditing Standards No. 65 “Review of Financial Information Performed by the Independent Auditor of the Entity”. A review of consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our reviews, nothing has come to our attention that caused us to believe that the accompanying consolidated financial statements do not present fairly, in all material respects, the consolidated financial position of the Company as of September 30, 2019 and 2018, and of its consolidated financial performance for the three months ended September 30, 2019 and 2018, as well as of its consolidated financial performance and its consolidated cash flows for the nine months ended September 30, 2019 and 2018 in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and International Accounting Standard 34 “Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Emphasis of Matter

As disclosed in Note 5 to the consolidated financial statements, the Company initially applied IFRS 16 “Leases” in 2019. Our review result is not modified in respect of this matter.

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The engagement partners on the reviews resulting in this independent auditors’ review report are Mr. Dien Sheng Chang and Mr. Ching Pin Shih.

/s/ Dien Sheng Chang	/s/ Ching Pin Shih
Deloitte & Touche
Taipei, Taiwan
Republic of China

November 13, 2019

Notice to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance 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 review such consolidated financial statements are those generally applied in the Republic of China.

For the convenience of readers, the independent auditors’ review 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 independent auditors’ review report and consolidated financial statements shall prevail.

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CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Thousands of New Taiwan Dollars)

	September 30, 2019 (Reviewed)			December 31, 2018 (Audited)			September 30, 2018 (Reviewed)
ASSETS		Amount	%		Amount	%		Amount		%
CURRENT ASSETS
Cash and cash equivalents (Note 6)	$	24,072,337	5	$	27,644,780	6	$	20,325,004		5
Financial assets at fair value through profit or loss (Note 7)		24,595	—		—	—		195,682		—
Hedging financial assets (Note 20)		—	—		1,069	—		367		—
Contract assets (Note 28)		4,516,992	1		4,868,728	1		5,078,820		1
Trade notes and accounts receivable, net (Notes 9 and 28)		29,760,143	6		30,075,503	7		29,221,409		6
Receivables from related parties (Note 36)		19,077	—		24,270	—		31,067		—
Inventories (Notes 10 and 37)		17,888,077	4		15,120,715	3		14,012,185		3
Prepayments (Notes 5, 11 and 36)		4,564,748	1		1,872,984	—		5,069,493		1
Other current monetary assets (Note 12)		7,997,055	2		9,504,203	2		6,359,264		1
Other current assets (Notes 19 and 37)		2,496,710	1		2,576,084	1		3,055,785		1
Total current assets		91,339,734	20		91,688,336	20		83,349,076		18
NONCURRENT ASSETS
Financial assets at fair value through profit or loss (Note 7)		512,736	—		517,362	—		—		—
Financial assets at fair value through other comprehensive income (Note 8)		6,457,296	1		6,932,503	2		6,999,165		1
Investments accounted for using equity method (Note 14)		3,232,056	1		2,944,890	1		2,660,106		1
Contract assets (Note 28)		2,537,975	1		2,343,958	—		2,313,689		1
Property, plant and equipment (Notes 5, 15 and 37)		282,108,127	60		288,914,228	61		286,885,678		63
Right-of-use assets (Notes 3, 4, 5 and 16)		11,350,779	2		—	—		—		—
Investment properties (Note 17)		8,267,187	2		8,287,212	2		8,037,836		2
Intangible assets (Note 18)		47,920,083	10		50,943,682	11		51,753,224		11
Deferred income tax assets (Notes 3 and 5)		3,522,971	1		3,553,856	1		3,284,365		1
Incremental costs of obtaining contracts (Note 28)		961,348	—		1,335,030	—		1,587,709		—
Net defined benefit assets (Note 3)		842,890	—		1,164,088	—		1,069,336		—
Prepayments (Notes 5, 11 and 36)		2,761,579	1		3,463,337	1		3,286,667		1
Other noncurrent assets (Notes 19, 37 and 38)		5,888,995	1		5,180,222	1		5,234,262		1
Total noncurrent assets		376,364,022	80		375,580,368	80		373,112,037		82
TOTAL	$	467,703,756	100	$	467,268,704	100	$	456,461,113		100
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term loans (Note 21)	$	90,000	—	$	100,000	—	$	120,000		—
Financial liabilities at fair value through profit or loss (Note 7)		1,854	—		1,114	—		619		—
Contract liabilities (Notes 5 and 28)		16,417,493	4		10,687,772	2		10,392,850		2
Trade notes and accounts payable (Note 23)		16,932,170	4		20,464,792	5		20,546,011		5
Payables to related parties (Note 36)		379,020	—		917,951	—		543,919		—
Current tax liabilities (Note 3)		6,238,714	1		4,390,203	1		6,618,229		1
Lease liabilities (Notes 3, 4, 5, 16 and 36)		3,247,553	1		—	—		—		—
Other payables (Notes 5 and 24)		20,092,380	4		23,315,383	5		20,888,337		5
Provisions (Note 25)		248,858	—		128,200	—		104,880		—
Other current liabilities (Note 5)		999,685	—		1,381,606	—		1,321,764		—
Total current liabilities		64,647,727	14		61,387,021	13		60,536,609		13
NONCURRENT LIABILITIES
Contract liabilities (Notes 5 and 28)		6,802,600	2		2,595,149	1		2,559,789		1
Long-term loans (Notes 22 and 37)		1,600,000	—		1,600,000	—		1,600,000		—
Deferred income tax liabilities (Notes 3 and 5)		1,941,106	—		1,991,843	—		2,010,974		—
Provisions (Note 25)		85,090	—		78,627	—		74,670		—
Lease liabilities (Notes 3, 4, 5, 16 and 36)		6,339,175	1		—	—		—		—
Customers’ deposits (Note 36)		4,645,677	1		4,716,571	1		4,664,558		1
Net defined benefit liabilities (Note 3)		3,662,751	1		3,533,936	1		2,086,269		1
Other noncurrent liabilities (Note 5)		1,496,663	—		4,793,237	1		4,538,863		1
Total noncurrent liabilities		26,573,062	5		19,309,363	4		17,535,123		4
Total liabilities		91,220,789	19		80,696,384	17		78,071,732		17
EQUITY ATTRIBUTABLE TO STOCKHOLDERS OF THE PARENT (Notes 5, 13 and 27)
Common stocks		77,574,465	17		77,574,465	17		77,574,465		17
Additional paid-in capital		171,257,188	36		171,136,764	36		171,138,234		37
Retained earnings
Legal reserve		77,574,465	17		77,574,465	17		77,574,465		17
Special reserve		2,675,419	1		2,675,419	1		2,675,419		1
Unappropriated earnings		37,359,912	8		47,141,345	10		39,695,528		9
Total retained earnings		117,609,796	26		127,391,229	28		119,945,412		27
Other adjustments		22,151	—		459,914	—		(55,834	)	—
Total equity attributable to stockholders of the parent		366,463,600	79		376,562,372	81		368,602,277		81
NONCONTROLLING INTERESTS (Notes 5, 13 and 27)		10,019,367	2		10,009,948	2		9,787,104		2
Total equity		376,482,967	81		386,572,320	83		378,389,381		83
TOTAL	$	467,703,756	100	$	467,268,704	100	$	456,461,113		100

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

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CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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

(Reviewed, Not Audited)

	Three Months Ended September 30										Nine Months Ended September 30
	2019					2018					2019					2018
	Amount			%		Amount			%		Amount			%		Amount			%
REVENUES (Notes 28, 36 and 41)	$	50,848,160			100	$	52,704,885			100	$	152,287,496			100	$	159,995,602			100
OPERATING COSTS (Notes 10, 26, 28, 29, 36 and 41)		33,019,129			65		34,431,469			65		98,767,215			65		102,074,274			64
GROSS PROFIT		17,829,031			35		18,273,416			35		53,520,281			35		57,921,328			36
OPERATING EXPENSES (Notes 26, 29, 36 and 41)
Marketing		5,578,613			11		5,652,316			11		16,469,522			11		17,260,741			11
General and administrative		1,123,654			2		1,088,377			2		3,435,379			2		3,447,813			2
Research and development		1,088,190			2		951,424			2		2,963,501			2		2,786,269			1
Expected credit loss (reversal of credit loss) (Notes 9 and 29)		9,968			—		155,816			—		(91,793	)		—		923,781			1
Total operating expenses		7,800,425			15		7,847,933			15		22,776,609			15		24,418,604			15
OTHER INCOME AND EXPENSES (Notes 18 and 29)		(19,273	)		—		(8,753	)		—		(28,485	)		—		(89,253	)		—
INCOME FROM OPERATIONS		10,009,333			20		10,416,730			20		30,715,187			20		33,413,471			21
NON-OPERATING INCOME AND EXPENSES
Interest income		67,223			—		46,722			—		196,757			—		144,378			—
Other income (Notes 29 and 36)		143,583			—		267,542			1		479,259			—		625,170			—
Other gains and losses (Notes 14, 29 and 36)		47,230			—		(3,771	)		—		23,554			—		(24,569	)		—
Interest expenses (Notes 16 and 36)		(26,292	)		—		(4,508	)		—		(77,730	)		—		(13,212	)		—
Share of profits of associates accounted for using equity method (Note 14)		195,449			—		137,856			—		412,500			—		329,528			—
Total non-operating income and expenses		427,193			—		443,841			1		1,034,340			—		1,061,295			—
INCOME BEFORE INCOME TAX		10,436,526			20		10,860,571			21		31,749,527			20		34,474,766			21
INCOME TAX EXPENSE (Notes 3 and 30)		1,990,531			4		2,138,295			4		6,020,321			4		6,691,601			4
NET INCOME		8,445,995			16		8,722,276			17		25,729,206			16		27,783,165			17
TOTAL OTHER COMPREHENSIVE INCOME (LOSS)
Items that will not be reclassified to profit or loss:
Unrealized gain or loss on investments in equity instruments at fair value through other comprehensive income		(191,166	)		—		(137,447	)		—		(474,557	)		—		(824,632	)		(1	)
Gain or loss on hedging instruments subject to basis adjustment (Note 20)		(1,803	)		—		667			—		(1,069	)		—		1,217			—

(Continued)

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	Three Months Ended September 30										Nine Months Ended September 30
	2019					2018					2019					2018
	Amount			%		Amount			%		Amount			%		Amount			%
Income tax benefit relating to items that will not be reclassified to profit or loss (Note 30)	$	—			—	$	—			—	$	—			—	$	207,269			—
		(192,969	)		—		(136,780	)		—		(475,626	)		—		(616,146	)		(1	)
Items that may be reclassified subsequently to profit or loss:
Exchange differences arising from the translation of the foreign operations		(17,242	)		—		(15,591	)		—		45,756			—		50,761			—
Share of exchange differences arising from the translation of the foreign operations of associates (Note 14)		(17	)		—		2,263			—		299			—		4,522			—
		(17,259	)		—		(13,328	)		—		46,055			—		55,283			—
Total other comprehensive loss, net of income tax		(210,228	)		—		(150,108	)		—		(429,571	)		—		(560,863	)		(1	)
TOTAL COMPREHENSIVE INCOME	$	8,235,767			16	$	8,572,168			17	$	25,299,635			16	$	27,222,302			16
NET INCOME ATTRIBUTABLE TO
Stockholders of the parent	$	8,090,541			16	$	8,504,207			17	$	25,014,993			16	$	27,093,228			17
Noncontrolling interests		355,454			—		218,069			—		714,213			—		689,937			—
	$	8,445,995			16	$	8,722,276			17	$	25,729,206			16	$	27,783,165			17
COMPREHENSIVE INCOME ATTRIBUTABLE TO
Stockholders of the parent	$	7,886,427			16	$	8,368,866			17	$	24,577,230			16	$	26,535,177			16
Noncontrolling interests		349,340			—		203,302			—		722,405			—		687,125			—
	$	8,235,767			16	$	8,572,168			17	$	25,299,635			16	$	27,222,302			16
EARNINGS PER SHARE (Notes 31)
Basic	$	1.04				$	1.10				$	3.22				$	3.49
Diluted	$	1.04				$	1.10				$	3.22				$	3.49

(Concluded)

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

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CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In Thousands of New Taiwan Dollars)

(Reviewed, Not Audited)

	Equity Attributable to Stockholders of the Parent (Notes 13, 20 and 27)
														Other Adjustments
														Exchange Differences Arising from the			Unrealized Gain or Loss on Financial Assets at Fair Value
			Additional			Retained Earnings								Translation of			Through Other			Gain or Loss						Noncontrolling
			Paid-in			Legal		Special			Unappropriated			the Foreign			Comprehensive			on Hedging						Interests
	Common Stocks		Capital			Reserve		Reserve			Earnings			Operations			Income			Instruments			Total			(Notes 13 and 27)			Total Equity
BALANCE, JANUARY 1, 2018	$	77,574,465	$	169,466,883		$	77,574,465	$	2,680,823		$	49,595,850		$	(174,593	)	$	883,420		$	(850	)	$	377,600,463		$	8,693,650		$	386,294,113
Appropriation of 2017 earnings
Reversal of special reserve		—		—			—		(5,404	)		5,404			—			—			—			—			—			—
Cash dividends distributed by Chunghwa		—		—			—		—			(37,204,714	)		—			—			—			(37,204,714	)		—			(37,204,714	)
Cash dividends distributed by subsidiaries		—		—			—		—			—			—			—			—			—			(958,446	)		(958,446	)
Unclaimed dividend		—		2,481			—		—			—			—			—			—			2,481			—			2,481
Change in additional paid-in capital from investments in associates accounted for using equity method		—		1			—		—			—			—			—			—			1			203			204
Partial disposal of interests in subsidiaries		—		826,047			—		—			—			—			—			—			826,047			348,353			1,174,400
Change in additional paid-in capital for not participating in the capital increase of subsidiaries		—		776,781			—		—			—			—			—			—			776,781			699,899			1,476,680
Net income for the nine months ended September 30, 2018		—		—			—		—			27,093,228			—			—			—			27,093,228			689,937			27,783,165
Other comprehensive income (loss) for the nine months ended September 30, 2018		—		—			—		—			205,760			61,411			(826,439	)		1,217			(558,051	)		(2,812	)		(560,863	)
Total comprehensive income (loss) for the nine months ended September 30, 2018		—		—			—		—			27,298,988			61,411			(826,439	)		1,217			26,535,177			687,125			27,222,302
Share-based payment transactions of subsidiaries		—		12,119			—		—			—			—			—			—			12,119			38,120			50,239
Net increase in noncontrolling interests		—		53,922			—		—			—			—			—			—			53,922			278,200			332,122
BALANCE, SEPTEMBER 30, 2018	$	77,574,465	$	171,138,234		$	77,574,465	$	2,675,419		$	39,695,528		$	(113,182	)	$	56,981		$	367		$	368,602,277		$	9,787,104		$	378,389,381
BALANCE, JANUARY 1, 2019	$	77,574,465	$	171,136,764		$	77,574,465	$	2,675,419		$	47,141,345		$	(79,427	)	$	538,272		$	1,069		$	376,562,372		$	10,009,948		$	386,572,320
Effect of retrospective application (Note 5)		—		—			—		—			(50,823	)		—			—			—			(50,823	)		(19,603	)		(70,426	)
BALANCE, JANUARY 1, 2019 AS ADJUSTED		77,574,465		171,136,764			77,574,465		2,675,419			47,090,522			(79,427	)		538,272			1,069			376,511,549			9,990,345			386,501,894
Appropriation of 2018 earnings
Cash dividends distributed by Chunghwa		—		—			—		—			(34,745,603	)		—			—			—			(34,745,603	)		—			(34,745,603	)
Cash dividends distributed by subsidiaries		—		—			—		—			—			—			—			—			—			(709,817	)		(709,817	)
Unclaimed dividend		—		1,314			—		—			—			—			—			—			1,314			—			1,314
Change in additional paid-in capital from investments in associates accounted for using equity method		—		119,922			—		—			—			—			—			—			119,922			769			120,691
Net income for the nine months ended September 30, 2019		—		—			—		—			25,014,993			—			—			—			25,014,993			714,213			25,729,206
Other comprehensive income (loss) for the nine months ended September 30, 2019		—		—			—		—			—			27,706			(464,400	)		(1,069	)		(437,763	)		8,192			(429,571	)
Total comprehensive income (loss) for the nine months ended September 30, 2019		—		—			—		—			25,014,993			27,706			(464,400	)		(1,069	)		24,577,230			722,405			25,299,635
Share-based payment transactions of subsidiaries		—		(812	)		—		—			—			—			—			—			(812	)		16,428			15,616
Net decrease in noncontrolling interests		—		—			—		—			—			—			—			—			—			(763	)		(763	)
BALANCE, SEPTEMBER 30, 2019	$	77,574,465	$	171,257,188		$	77,574,465	$	2,675,419		$	37,359,912		$	(51,721	)	$	73,872		$	—		$	366,463,600		$	10,019,367		$	376,482,967

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

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CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

(Reviewed, Not Audited)

	Nine Months Ended September 30
	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax	$	31,749,527		$	34,474,766
Adjustments for:
Depreciation		23,169,471			20,613,767
Amortization		3,191,249			3,282,482
Amortization of incremental costs of obtaining contracts		953,109			1,519,228
Expected credit loss (reversal of credit loss)		(91,793	)		923,781
Interest expenses		77,730			13,212
Interest income		(196,757	)		(144,378	)
Dividend income		(296,360	)		(395,593	)
Compensation cost of share-based payment transactions		1,288			16,940
Share of profits of associates accounted for using equity method		(412,500	)		(329,528	)
Loss on disposal of property, plant and equipment		28,339			38,503
Loss on disposal of intangible assets		146			—
Gain on disposal of financial instruments		—			(5,763	)
Loss (gain) on disposal of investments accounted for using equity method		(30,152	)		125
Provision for inventory and obsolescence		155,761			122,884
Impairment loss on intangible assets		—			50,750
Valuation loss (gain) on financial assets and liabilities at fair value through profit or loss, net		3,197			(4,666	)
Others		(26,531	)		(3,700	)
Changes in operating assets and liabilities:
Decrease (increase) in:
Financial assets mandatorily measured at fair value through profit or loss		—			(132,790	)
Contract assets		159,557			2,570,131
Trade notes and accounts receivable		593,945			1,944,866
Receivables from related parties		5,193			18,300
Inventories		(2,923,123	)		(5,427,540	)
Prepayments		(2,648,742	)		(2,602,270	)
Other current monetary assets		(915,166	)		(238,682	)
Other current assets		79,373			(740,941	)
Incremental cost of obtaining contracts		(579,427	)		(632,794	)
Increase (decrease) in:
Contract liabilities		6,240,091			2,322,465
Trade notes and accounts payable		(3,531,938	)		1,149,538
Payables to related parties		(538,931	)		(140,266	)
Other payables		(1,556,888	)		(3,540,858	)
Provisions		127,121			(135	)

(Continued)

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CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

(Reviewed, Not Audited)

	Nine Months Ended September 30
	2019			2018
Other operating liabilities	$	(147,149	)	$	(37,764	)
Net defined benefit plans		450,013			(1,673,657	)
Cash generated from operations		53,089,653			53,010,413
Interest paid		(77,730	)		(13,212	)
Income tax paid		(4,166,080	)		(6,790,207	)
Net cash provided by operating activities		48,845,843			46,206,994
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of financial assets at fair value through other comprehensive income		—			(289,580	)
Proceeds from capital reduction of financial assets at fair value through other comprehensive income		—			4,022
Purchase of financial assets at fair value through profit or loss		(86,536	)		—
Proceed from disposal of financial assets at fair value through profit or loss		64,111			—
Acquisition of time deposits and negotiable certificates of deposit with maturities of more than three months		(13,483,451	)		(6,020,219	)
Proceeds from disposal of time deposits and negotiable certificates of deposit with maturities of more than three months		15,880,554			5,262,202
Proceeds from disposal of investments accounted for using equity method		32,470			3,379
Proceeds from capital reduction of investments accounted for using equity method		—			19,184
Acquisition of property, plant and equipment		(16,356,682	)		(19,346,884	)
Proceeds from disposal of property, plant and equipment		37,476			32,661
Acquisition of intangible assets		(167,593	)		(203,261	)
Acquisition of investment properties		—			(5,627	)
Decrease (increase) in other noncurrent assets		(882,141	)		824
Interest received		207,360			148,339
Cash dividends received		534,395			599,621
Net cash used in investing activities		(14,220,037	)		(19,795,339	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term loans		315,000			260,000
Repayment of short-term loans		(325,000	)		(210,000	)
Decrease in customers’ deposits		(91,492	)		(8,400	)
Payments for the principal of lease liabilities		(2,896,092	)		—
Increase in other noncurrent liabilities		186,333			216,958
Cash dividends		(34,745,603	)		(37,204,714	)
Partial disposal of interests in subsidiaries without losing control		—			1,174,400
Cash dividends distributed to noncontrolling interests		(709,817	)		(958,446	)

(Continued)

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CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

(Reviewed, Not Audited)

	Nine Months Ended September 30
	2019			2018
Change in other noncontrolling interests	$	13,565		$	1,842,101
Unclaimed dividend		1,314			2,481
Net cash used in financing activities		(38,251,792	)		(34,885,620	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		53,543			(25,966	)
NET DECREASE IN CASH AND CASH EQUIVALENTS		(3,572,443	)		(8,499,931	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		27,644,780			28,824,935
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	24,072,337		$	20,325,004

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

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CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018

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

(Reviewed, Not Audited)

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 as Chunghwa which continues to carry out the business and the DGT continues to be the industry regulator.

Effective August 12, 2005, the MOTC 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 stocks were listed and traded on the Taiwan Stock Exchange (the “TWSE”) on October 27, 2000. Certain of Chunghwa’s common stocks were 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 stocks were also 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 stocks 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.

Chunghwa together with its subsidiaries are hereinafter referred to collectively as the “Company”.

The consolidated financial statements are presented in Chunghwa’s functional currency, New Taiwan dollars.

2. APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements were approved by the Board of Directors on November 13, 2019.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Except for the following items, the accounting policies applied in these consolidated financial statements are consistent with those applied in the consolidated financial statements for the year ended December 31, 2018. Please refer to the consolidated financial statements for the year ended December 31, 2018 for the details.

Statement of Compliance

The accompanying consolidated financial statements have been prepared in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34 “Interim Financial Reporting” endorsed and issued into effect by the Financial

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Supervisory Commission (the “FSC”). The consolidated financial statements do not present all the disclosures required for a complete set of annual consolidated financial statements as required by International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), International Financing Reporting Interpretations Committee (IFRIC) and SIC Interpretation (SIC) (collectively, the “IFRSs”) endorsed and issued into effect by the FSC.

Basis of Consolidation

The detail information of the subsidiaries at the end of reporting period was as follows:

			Percentage of Ownership
Name of Investor	Name of Investee	Main Businesses and Products	September 30, 2019		December 31, 2018		September 30, 2018		Note
Chunghwa Telecom Co., Ltd.	Senao International Co., Ltd. (“SENAO”)	Handset and peripherals retailer, sales of CHT mobile phone plans as an agent		28		28		28	a.
	Light Era Development Co., Ltd. (“LED”)	Planning and development of real estate and intelligent buildings, and property management		100		100		100
	Donghwa Telecom Co., Ltd. (“DHT”)	International private leased circuit, IP VPN service, and IP transit services		100		100		100
	Chunghwa Telecom Singapore Pte., Ltd. (“CHTS”)	International private leased circuit, IP VPN service, and IP transit services		100		100		100
	Chunghwa System Integration Co., Ltd. (“CHSI”)	Providing system integration services and telecommunications equipment		100		100		100
	Chunghwa Investment Co., Ltd. (“CHI”)	Investment		89		89		89
	CHIEF Telecom Inc. (“CHIEF”)	Network integration, internet data center (“IDC”), communications integration and cloud application services		57		57		57	b.
	CHYP Multimedia Marketing & Communications Co., Ltd. (“CHYP”)	Digital information supply services and advertisement services		100		100		100
	Prime Asia Investments Group Ltd. (B.V.I.) (“Prime Asia”)	Investment		100		100		100
	Spring House Entertainment Tech. Inc. (“SHE”)	Software design services, internet contents production and play, and motion picture production and distribution		56		56		56
	Chunghwa Telecom Global, Inc. (“CHTG”)	International private leased circuit, internet services, and transit services		100		100		100
	Chunghwa Telecom Vietnam Co., Ltd. (“CHTV”)	Intelligent energy saving solutions, international circuit, and information and communication technology (“ICT”) services		100		100		100
	Smartfun Digital Co., Ltd. (“SFD”)	Providing diversified family education digital services		65		65		65
	Chunghwa Telecom Japan Co., Ltd. (“CHTJ”)	International private leased circuit, IP VPN service, and IP transit services		100		100		100
	Chunghwa Sochamp Technology Inc. (“CHST”)	Design, development and production of Automatic License Plate Recognition software and hardware		51		51		51
	Honghwa International Co., Ltd. (“HHI”)	Telecommunications engineering, sales agent of mobile phone plan application and other business services, etc.		100		100		100

(Continued)

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			Percentage of Ownership
Name of Investor	Name of Investee	Main Businesses and Products	September 30, 2019		December 31, 2018		September 30, 2018		Note
	Chunghwa Leading Photonics Tech Co., Ltd. (“CLPT”)	Production and sale of electronic components and finished products		75		75		75
	Chunghwa Telecom (Thailand) Co., Ltd. (“CHTT”)	International private leased circuit, IP VPN service, ICT and cloud VAS services		100		100		100
	CHT Security Co., Ltd. (“CHTSC”)	Computing equipment installation, wholesale of computing and business machinery equipment and software, management consulting services, data processing services, digital information supply services and internet identify services		80		80		80
Senao International Co., Ltd.	Senao International (Samoa) Holding Ltd. (“SIS”)	International investment		100		100		100
	Youth Co., Ltd. (“Youth”)	Sale of information and communication technologies products		93		93		89	c.
	Aval Technologies Co., Ltd. (“Aval”)	Sale of information and communication technologies products		100		100		100
	SENYOUNG Insurance Agent Co., Ltd. (“SENYOUNG”)	Property and liability insurance agency		100		100		100
Youth Co., Ltd.	ISPOT Co., Ltd. (“ISPOT”)	Sale of information and communication technologies products		100		100		100
	Youyi Co., Ltd. (“Youyi”)	Maintenance of information and communication technologies products		100		100		100
Aval Technologies Co., Ltd. (“Aval”)	Wiin Technology Co., Ltd. (WIIN)	Sale of information and communication technologies products		100		—		—	d.
Light Era Development Co., Ltd.	Taoyuan Asia Silicon Valley Innovation Co., Ltd. (“TASVI”)	Development of real estate		—		60		60	e.
CHIEF Telecom Inc.	Unigate Telecom Inc. (“Unigate”)	Telecommunications and internet service		100		100		100
	Chief International Corp. (“CIC”)	Telecommunications and internet service		100		100		100
	Shanghai Chief Telecom Co., Ltd. (“SCT”)	Telecommunications and internet service		49		49		49
Chunghwa System Integration Co., Ltd.	Concord Technology Co., Ltd. (“Concord”)	Investment		—		—		—	f.
Chunghwa Investment Co., Ltd.	Chunghwa Precision Test Tech. Co., Ltd. (“CHPT”)	Production and sale of semiconductor testing components and printed circuit board		34		34		34	g.
Chunghwa Precision Test Tech. Co., Ltd.	Chunghwa Precision Test Tech. USA Corporation (“CHPT (US)”)	Design and after-sale services of semiconductor testing components and printed circuit board		100		100		100
	CHPT Japan Co., Ltd. (“CHPT (JP)”)	Related services of electronic parts, machinery processed products and printed circuit board		100		100		100
	Chunghwa Precision Test Tech. International, Ltd. (“CHPT (International)”)	Wholesale and retail of electronic materials, and investment		100		100		100

(Continued)

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			Percentage of Ownership
Name of Investor	Name of Investee	Main Businesses and Products	September 30, 2019		December 31, 2018		September 30, 2018		Note
Senao International (Samoa) Holding Ltd.	Senao International HK Limited (“SIHK”)	International investment		100		100		100
Senao International HK Limited	Senao Trading (Fujian) Co., Ltd. (“STF”)	Sale of information and communication technologies products		—		100		100	h.
	Senao International Trading (Shanghai) Co., Ltd. (“SITS”)	Sale of information and communication technologies products		100		100		100
	Senao International Trading (Shanghai) Co., Ltd. (“SEITS”)	Maintenance of information and communication technologies products		—		—		—	i.
	Senao International Trading (Jiangsu) Co., Ltd. (“SITJ”)	Sale of information and communication technologies products		—		100		100	j.
Prime Asia Investments Group Ltd. (B.V.I.)	Chunghwa Hsingta Co., Ltd. (“CHC”)	Investment		100		100		100
Chunghwa Hsingta Co., Ltd. (“CHC”)	Chunghwa Telecom (China) Co., Ltd. (“CTC”)	Integrated information and communication solution services for enterprise clients, and intelligent energy network service		100		100		100
	Jiangsu Zhenhua Information Technology Company, LLC. (“JZIT”)	Providing intelligent energy saving solution and intelligent buildings services		—		—		75	k.
Chunghwa Precision Test Tech. International, Ltd.	Shanghai Taihua Electronic Technology Limited (“STET”)	Design of printed circuit board and related consultation service		100		100		100

(Concluded)

a. SENAO transferred its treasury stock to employees in June 2018 and the Company’s ownership interest in SENAO decreased to 28.18% as of September 30, 2018, December 31, 2018 and September 30, 2019. As Chunghwa continues to control over half of the seats of the Board of Directors of SENAO (six out of eleven seats as of September 30, 2019) through the support of large beneficial stockholders, the accounts of SENAO are included in the consolidated financial statements.

b. CHIEF issued new shares in March 2019, March and November 2018 as its employees exercised their options. In addition, Chunghwa and CHI disposed some shares of CHIEF in May 2018 before CHIEF traded its shares on the General Stock Market of the Taipei Exchange according to the local requirements. Furthermore, Chunghwa and CHI did not participate in the capital increase of CHIEF in June 2018. Therefore, the Company’s equity ownership interest in CHIEF decreased to 60.28%, 60.23% and 59.86% as of September 30, 2018, December 31, 2018 and September 30, 2019, respectively.

c. SENAO subscribed for all the shares in the capital increase of Youth in December 2018. Therefore, the Company’s equity ownership interest in Youth increased from 89% to 93%.

d. Aval invested 100% equity shares of Wiin Technology Co., Ltd. in September 2019.

e. LED invested 60% equity shares of Taoyuan Asia Silicon Valley Innovation Co., Ltd. (“TASVI”) in March 2018. TASVI completed its liquidation in September 2019.

f. Concord completed its liquidation in January 2018.

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g. CHI disposed some shares of CHPT from April to August 2018. Therefore, its ownership interest in CHPT decreased to 34.25% as of September 30, 2018, December 31, 2018 and September 30, 2019. However, considering the absolute and relative size of ownership interest, and the dispersion of shares owned by the other stockholders, the management concluded that the Company has a sufficiently dominant voting interest to direct the relevant activities; hence, CHPT is deemed as a subsidiary of the Company.

h. STF completed its liquidation in May 2019.

i. SEITS completed its liquidation in March 2018.

j. SITJ completed its liquidation in March 2019.

k. JZIT completed its liquidation in December 2018.

The following diagram presents information regarding the relationship and ownership percentages between Chunghwa and its subsidiaries as of September 30, 2019:

Other Significant Accounting Policies

The Company initial applied IFRS 16 “Leases” on January 1, 2019, and elected not to restate the figures in comparative periods. Different accounting policies for each accounting periods as a result of the application of new accounting standards are listed by year separately.

a. Defined benefit retirement benefits

Pension cost for an interim period is calculated on a year-to-date basis by using the actuarially determined pension cost rate at the end of the prior financial year, adjusted for significant market fluctuations since that time and for other significant one-off events.

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b. Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax. Income taxes for interim period are assessed on an annual basis and calculated by applying to an interim period’s pre-tax income the tax rate that would be applicable to expected total annual earnings. The effect of a change in tax rate resulting from a change in tax law is recognized in consistent with the accounting for the transaction itself for which the tax consequence arises from, and is recognized in profit or loss or other comprehensive income in full in the period in which the change in tax rate occurs.

The measurement of deferred tax assets and liabilities reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

c. Leasing

2019

At inception of a contract, the Company assesses whether the contract is, or contains, a lease.

1) The Company as lessor

Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease.

2) The Company as lessee

The Company recognizes right-of-use assets and lease liabilities for all leases at the commencement date of a lease, except for lease payments for low-value assets are recognized as expenses on a straight-line basis over the lease terms accounted for applying recognition exemption.

Right-of-use assets are initially measured at cost, which comprises the initial measurement of lease liabilities and for lease payments made at or before the commencement date. Right-of-use assets are subsequently measured at cost less accumulated depreciation and accumulated impairment losses and adjusted for any remeasurement of the lease liabilities. Right-of-use assets are presented separately on the consolidated balance sheets.

Right-of-use assets are depreciated using the straight-line basis from the commencement dates to the earlier of the end of the useful lives of the right-of-use assets or the end of the lease terms.

Lease liabilities were initially measured at the present value of the lease payments, which comprise fixed payments, in-substance fixed payments, variable lease payments which depend on an index or a rate. The lease payments are discounted using the interest rate implicit in a lease, if that rate can be readily determined. If such rate cannot be readily determined, the lessee’s incremental borrowing rate is used.

Lease liabilities are subsequently measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in a lease term or a change in future lease payments resulting from a change in an index or a rate used to determine those payments, the Company remeasures the lease liabilities with a corresponding adjustment to the right-of-use-assets. However, if the carrying amount of the right-of-use assets is reduced to zero, any remaining amount of the remeasurement is recognized in profit or loss. Lease liabilities are presented separately on the consolidated balance sheets.

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Variable lease payments not depending on an index or a rate are recognized as expenses in the periods in which they are incurred.

2018

1) The Company as lessor

Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease.

2) The Company as lessee

Operating lease payments are recognized as an expense on a straight-line basis over the lease term.

4. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION, UNCERTAINTY AND ASSUMPTION

In the application of the Company’s accounting policies, the management is required to make judgments, estimates and assumptions which are based on historical experience and other factors that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed by the management on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

Except for the following items, for the critical accounting judgments and key sources of estimation, uncertainty and assumption applied in these consolidated financial statements, please refer to the consolidated financial statements for the year ended December 31, 2018.

Lessees’ incremental borrowing rates—2019

In determining a lessee’s incremental borrowing rate used in discounting lease payments, a risk-free rate for relevant duration and the same currency is selected as a reference rate. The lessee’s credit spread adjustments and lease specific adjustments are also taken into account.

5. APPLICATION OF NEW AND REVISED STANDARDS AND INTERPRETATIONS

a. Initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs endorsed and issued into effect by the FSC

Except for the following, whenever applied, the initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs issued by the International Accounting Standards Board and endorsed and issued into effect by the FSC (collectively, the “Taiwan-IFRSs”) does not have material impacts on the Company’s consolidated financial statements.

IFRS 16 “Leases”

IFRS 16 sets out the accounting standards for identifying leases and accounting treatments for lessors and lessees. It supersedes IAS 17 “Lease”, IFRIC 4 - Determining Whether an Arrangement Contains a Lease and a number of related interpretations. Refer to Note 3 for information relating to the relevant accounting policies.

- 16 -

The Company reassessed whether a contract is, or contains, a lease in accordance with the definition of a lease under IFRS 16. Some contracts previously identified as containing a lease under IAS 17 and IFRIC 4 do not meet the definition of a lease under IFRS 16 and are accounted for in accordance with other accounting standards because the Company does not have the right to direct the use of the identified assets. Contracts that are reassessed as leases or containing a lease are accounted for in accordance with the transitional provisions under IFRS 16.

If the Company is a lessee, it shall recognize right-of-use assets and lease liabilities for all leases on the consolidated balance sheets except for those whose payments for low-value assets are recognized as expenses on a straight-line basis. On the consolidated statements of comprehensive income, the Company presents the depreciation expense charged on the right-of-use asset separately from the interest expense accrued on lease liability using the effective interest method. On the consolidated statements of cash flows, cash payments for the principal portion of lease liability are classified within financing activities; cash payments for interest portion are classified within operating activities. Before the application of IFRS 16, payments under operating lease contracts were recognized as expenses on a straight-line basis. Prepaid lease payments for use rights of leased assets were recognized as prepaid rents. Cash flows for operating leases were classified within operating activities on the statements of cash flows.

The Company did not make any adjustments for leases in which the Company is a lessor and accounts for those leases with the application of IFRS 16 starting from January 1, 2019.

The Company applied IFRS 16 retrospectively with the cumulative effect of the initial application of IFRS 16 recognized in retained earnings on January 1, 2019. Comparative financial information is not restated.

Lease liabilities are recognized on January 1, 2019 for leases previously classified as operating leases under IAS 17 and measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate on January 1, 2019. Right-of-use assets are measured at the present value discounted using the aforementioned incremental borrowing rate as if IFRS 16 had been applied since the commencement date of leases. The Company applies IAS 36 for assessing impairment of right-of-use assets.

The lessee’s weighted average incremental borrowing rate applied to lease liabilities recognized on January 1, 2019 is 0.85%. The difference between the (1) lease liabilities recognized and (2) future aggregate minimum lease payments of non-cancellable operating lease disclosed under IAS 17 on December 31, 2018 is explained as follows:

The future aggregate minimum lease payments of non-cancellable operating lease on December 31, 2018	$	10,557,854
Less: Recognition exemption for leases of low-value assets		(3,263	)
Undiscounted amount on January 1, 2019	$	10,554,591
Discounted amount using the incremental borrowing rate on January 1, 2019	$	10,339,868
Add: Adjustments as a result of a different treatment of extension options		189
Lease liabilities recognized on January 1, 2019	$	10,340,057

- 17 -

The impact on assets, liabilities and equity as of January 1, 2019 from the initial application of IFRS 16 is set out as follows:

	Carrying Amount as of January 1, 2019		Adjustments Arising from Initial Application of IFRS 16			Adjusted Carrying Amount as of January 1, 2019
Prepayments—current	$	1,872,984	$	(245,215	)	$	1,627,769
Property, plant and equipment	$	288,914,228		(1,308,990	)	$	287,605,238
Right-of-use assets	$	—		12,163,063		$	12,163,063
Deferred income tax assets	$	3,553,856		25,588		$	3,579,444
Prepayments—noncurrent	$	3,463,337		(413,521	)	$	3,049,816
Total effect on assets			$	10,220,925
Contract liabilities—current	$	10,687,772	$	214,174		$	10,901,946
Lease liabilities—current	$	—		3,394,119		$	3,394,119
Other payables	$	23,315,383		(48,712	)	$	23,266,671
Other current liabilities	$	1,381,606		(214,174	)	$	1,167,432
Contract liabilities—noncurrent	$	2,595,149		3,482,907		$	6,078,056
Deferred income tax liabilities	$	1,991,843		6		$	1,991,849
Lease liabilities—noncurrent	$	—		6,945,938		$	6,945,938
Other noncurrent liabilities	$	4,793,237		(3,482,907	)	$	1,310,330
Total effect on liabilities			$	10,291,351
Unappropriated earnings	$	47,141,345	$	(50,823	)	$	47,090,522
Noncontrolling interests	$	10,009,948		(19,603	)	$	9,990,345
Total effect on equity			$	(70,426	)

b. Amendments to the IFRSs endorsed by the FSC for application starting from 2020

New, Revised or Amended Standards and Interpretations		Effective Date Issued by IASB
Amendments to IFRS 3	Definition of a Business	January 1, 2020 (Note 1)
Amendments to IAS 1 and IAS 8	Definition of Materiality	January 1, 2020 (Note 2)

Note 1: The Company shall apply these amendments to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2020 and to asset acquisitions that occur on or after the beginning of that period.

Note 2: The Company shall apply these amendments prospectively in annual periods beginning on or after January 1, 2020.

As of the date the consolidated financial statements were authorized for issue, the Company is continuously assessing the possible impact that the application of above standards and interpretations will have on the Company’s financial position and operating result and will disclose the relevant impact when the assessment is completed.

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c. IFRSs issued by the IASB but not yet endorsed and issued into effect by the FSC

New, Revised or Amended Standards and Interpretations		Effective Date Announced by IASB (Note 1)
Amendments to IFRS 10 and IAS 28	Sale or Contribution of Assets between An Investor and Its Associate or Joint Venture	To be determined by IASB

Note 1: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on or after their respective effective dates.

As of the date the consolidated financial statements were authorized for issue, the Company is continuously assessing the possible impact that the application of above standards and interpretations will have on the Company’s financial position and operating result and will disclose the relevant impact when the assessment is completed.

6. CASH AND CASH EQUIVALENTS

	September 30, 2019		December 31, 2018		September 30, 2018
Cash
Cash on hand	$	347,622	$	462,719	$	475,146
Bank deposits		13,284,563		10,574,697		10,806,065
		13,632,185		11,037,416		11,281,211
Cash equivalents (investments with maturities of less than three months)
Commercial paper		7,903,428		6,143,672		6,706,418
Negotiable certificates of deposit		—		7,600,000		—
Time deposits		2,536,724		2,863,692		2,337,375
		10,440,152		16,607,364		9,043,793
	$	24,072,337	$	27,644,780	$	20,325,004

The annual yield rates of bank deposits, commercial paper, negotiable certificates of deposit and time deposits as of balance sheet dates were as follows:

	September 30, 2019	December 31, 2018		September 30, 2018
Bank deposits	0.00%-0.77%		0.00%-0.50%		0.00%-0.43%
Commercial paper	0.45%-0.58%		0.47%-0.57%		0.36%-0.46%
Negotiable certificates of deposit	—		0.55%-0.60%		—
Time deposits	0.09%-4.40%		0.09%-4.40%		0.40%-4.40%

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7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

	September 30, 2019		December 31, 2018		September 30, 2018
Financial assets-current
Mandatorily measured at FVTPL
Derivatives (not designated for hedge)
Forward exchange contracts	$	83	$	—	$	—
Hybrid financial assets
Financial commodities		—		—		195,682
Non-derivatives
Listed stocks—domestic		24,512		—		—
	$	24,595	$	—	$	195,682
Financial assets-noncurrent
Mandatorily measured at FVTPL
Non-derivatives
Non-listed stocks—domestic	$	280,363	$	292,910	$	—
Non-listed stocks—foreign		232,373		224,452		—
	$	512,736	$	517,362	$	—
Financial liabilities-current
Held for trading
Derivatives (not designated for hedge)
Forward exchange contracts	$	1,854	$	1,114	$	619

Outstanding forward exchange contracts not designated for hedge as of balance sheet dates were as follows:

	Currency	Maturity Period		Contract Amount (Thousands)
September 30, 2019
Forward exchange contracts—buy	EUR/NT$		2019.12	EUR1,568/NT$55,134
Forward exchange contracts—buy	US$/NT$		2019.10	US$1,610/NT$49,917
December 31, 2018
Forward exchange contracts—buy	EUR/NT$		2019.03-06	EUR5,452/NT$192,734
Forward exchange contracts—buy	US$/NT$		2019.01	US$2,020/NT$62,252
September 30, 2018
Forward exchange contracts—buy	EUR/NT$		2018.12-2019.03	EUR10,857/NT$386,578
Forward exchange contracts—buy	US$/NT$		2018.10	US$1,715/NT$52,765

The Company entered into the above forward exchange contracts to manage its exposure to foreign currency risk due to fluctuations in exchange rates. However, the aforementioned derivatives did not meet the criteria for hedge accounting.

- 20 -

SENAO entered into financial commodities with a bank. As the contractual terms to cash flows that are not solely payments of principal and interest on the principal amount outstanding, the financial commodities are assessed and classified as mandatorily measured at FVTPL according to IFRS 9.

Outstanding financial commodities as of balance sheet dates were as follows:

	Currency		Maturity Period		Contract Amount (In Thousands)
September 30, 2018
Financial commodities		RMB		2018.10		RMB43,600

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME - NONCURRENT

	September 30, 2019		December 31, 2018		September 30, 2018
Domestic investments
Listed stocks	$	2,393,689	$	2,899,843	$	2,438,505
Non-listed stocks		3,920,796		3,901,053		4,158,471
Foreign investments
Non-listed stocks		142,811		131,607		402,189
	$	6,457,296	$	6,932,503	$	6,999,165

The Company holds the above foreign and domestic stocks for medium to long-term strategic purposes and expects to profit from long-term investment. Accordingly, the management elected to designate these investments in equity instruments at FVOCI as they believe that recognizing short-term fair value fluctuations of these investments in profit or loss is not consistent with the Company’s strategy of holding these investments for long-term purposes.

The Company recognized dividend income of $55,257 thousand and $278,168 thousand for the three months ended and nine months ended September 30, 2019, $164,154 thousand and $395,593 thousand for the three months and nine months ended September 20, 2018, respectively. All dividend income is from the investments held on September 30, 2018 and 2019.

9. TRADE NOTES AND ACCOUNTS RECEIVABLE, NET

	September 30, 2019			December 31, 2018			September 30, 2018
Trade notes and accounts receivable	$	32,234,790		$	32,677,558		$	31,901,780
Less: Loss allowance		(2,474,647	)		(2,602,055	)		(2,680,371	)
	$	29,760,143		$	30,075,503		$	29,221,409

The average credit terms range from 30 to 90 days.

The Company serves a large consumer base for telecommunications business; therefore, the concentration of credit risk is limited. When having transactions with customers, the Company considers the record of arrears in the past. In addition, the Company may also collect some telecommunication charges in advance to reduce the payment arrears in subsequent periods.

- 21 -

The Company adopts a policy of dealing with counterparties with certain credit ratings for project business and to obtain collateral where necessary to mitigate the risk of loss arising from default. Credit rating information is provided by independent rating agencies where available and, if such credit rating information is not available, the Company uses other publicly available financial information and its own historical transaction experience to rate its major customers. The Company continues to monitor the credit exposure and credit ratings of its counterparties and spread the credit risk amongst qualified counterparties.

In order to mitigate credit risk, the management of the Company has delegated a team responsible for determining credit limits, credit approvals and other monitoring procedures to ensure the recoverability of receivables. In addition, the Company reviews the recoverable amount of receivables at balance sheet dates to ensure that adequate allowance is provided for possible irrecoverable amounts. In this regard, the management believes the Company’s credit risk could be reasonably reduced.

The Company applies the simplified approach to providing for expected credit losses prescribed by IFRS 9, which permits the use of lifetime expected loss provision for receivables. The expected credit losses on receivables are estimated using a provision matrix by reference to past default experience of the customers and an analysis of the customers’ current financial positions, as well as the forward-looking indicators such as macroeconomic business indicator.

When there are evidences indicating that the counterparty is in evasion, bankruptcy, deregistration of its company or the accounts receivable are over two years past due and the recoverable amount cannot be reasonable estimated, the Company writes off the trade notes and accounts receivable. For accounts receivable that have been written off, the Company continues to engage in enforcement activity to attempt to recover the receivables due. Where recoveries are made, these are recognized in profit or loss.

Except for receivables arising from telecommunications business and project business, the Company’s remaining accounts receivable are limited. Therefore, only Chunghwa’s provision matrix arising from telecommunications business and project business is disclosed below.

September 30, 2019

	Not Past Due			Past Due Less than 30 Days			Pass Due 31 to 60 Days			Pass Due 61 to 90 Days			Pass Due 91 to 120 Days			Pass Due 121 to 180 Days			Pass Due Over 181 Days			Total
Telecommunications business
Expected credit loss rate (Note a)		0%-3	%		0%-26	%		5%-69	%		10%-83	%		15%-90	%		53%-96	%		100	%
Gross carrying amount	$	23,672,880		$	310,069		$	87,290		$	62,759		$	29,706		$	31,755		$	557,785		$	24,752,244
Loss allowance (Lifetime ECL)		(56,232	)		(24,883	)		(29,907	)		(27,399	)		(29,293	)		(22,092	)		(557,785	)		(747,591	)
Amortized cost	$	23,616,648		$	285,186		$	57,383		$	35,360		$	413		$	9,663		$	—		$	24,004,653
Project business
Expected credit loss rate (Note b)		0%-5	%		5	%		10	%		30	%		50	%		80	%		100	%
Gross carrying amount	$	2,041,041		$	578,854		$	177,408		$	35,526		$	16,018		$	15,530		$	1,582,987		$	4,447,364
Loss allowance (Lifetime ECL)		(1,684	)		(29,740	)		(17,741	)		(13,199	)		(8,940	)		(12,424	)		(1,582,987	)		(1,666,715	)
Amortized cost	$	2,039,357		$	549,114		$	159,667		$	22,327		$	7,078		$	3,106		$	—		$	2,780,649

- 22 -

December 31, 2018

	Not Past Due			Past Due Less than 30 Days			Pass Due 31 to 60 Days			Pass Due 61 to 90 Days			Pass Due 91 to 120 Days			Pass Due 121 to 180 Days			Pass Due Over 181 Days			Total
Telecommunications business
Expected credit loss rate (Note a)		0%-3	%		3%-30	%		7%-69	%		19%-82	%		32%-90	%		61%-95	%		100	%
Gross carrying amount	$	23,307,276		$	454,465		$	94,715		$	48,924		$	37,640		$	36,090		$	418,101		$	24,397,211
Loss allowance (lifetime ECL)		(79,857	)		(26,872	)		(24,023	)		(28,432	)		(28,196	)		(25,618	)		(418,101	)		(631,099	)
Amortized cost	$	23,227,419		$	427,593		$	70,692		$	20,492		$	9,444		$	10,472		$	—		$	23,766,112
Project business
Expected credit loss rate (Note b)		0%-5	%		5	%		10	%		30	%		50	%		80	%		100	%
Gross carrying amount	$	4,066,271		$	88,384		$	92,343		$	8,248		$	12,132		$	6,809		$	1,725,168		$	5,999,355
Loss allowance (lifetime ECL)		(152,624	)		(8,609	)		(10,142	)		(2,910	)		(8,492	)		(5,643	)		(1,725,168	)		(1,913,588	)
Amortized cost	$	3,913,647		$	79,775		$	82,201		$	5,338		$	3,640		$	1,166		$	—		$	4,085,767

September 30, 2018

	Not past due			Past due Less than 30 days			Pass due 31 to 60 days			Pass due 61 to 90 days			Pass due 91 to 120 days			Pass due 121 to 180 days			Pass due Over 181 days			Total
Telecommunications business
Expected credit loss rate (Note a)		0%-3	%		3%-31	%		7%-69	%		20%-82	%		34%-89	%		63%-95	%		100	%
Gross carrying amount	$	24,156,803		$	332,131		$	90,556		$	63,478		$	42,188		$	31,319		$	408,482		$	25,124,957
Loss allowance (Lifetime ECL)		(63,567	)		(29,624	)		(28,488	)		(26,986	)		(25,471	)		(22,972	)		(408,482	)		(605,590	)
Amortized cost	$	24,093,236		$	302,507		$	62,068		$	36,492		$	16,717		$	8,347		$	—		$	24,519,367
Project business
Expected credit loss rate (Note b)		0%-5	%		5	%		10	%		30	%		50	%		80	%		100	%
Gross carrying amount	$	3,018,692		$	238,556		$	168,881		$	67,167		$	44,985		$	96,923		$	1,653,639		$	5,288,843
Loss allowance (Lifetime ECL)		(173,801	)		(74,098	)		(52,456	)		(20,863	)		(13,973	)		(30,105	)		(1,653,639	)		(2,018,935	)
Amortized cost	$	2,844,891		$	164,458		$	116,425		$	46,304		$	31,012		$	66,818		$	—		$	3,269,908

Note a: Please refer to Notes 28 and 41 for the information of disaggregation of telecommunications service revenue. The expected credit loss rate applicable to different business revenue varies so as to reflect the risk level indicating by factors like historical experience.

Note b: The project business has different loss types according to the customer types. The expected credit loss rate listed above is for general customers. When customer is the government or its affiliates, it is expected that no credit loss will occur. For those who had bounced or exchanged checks as well as those accounts receivable were overdue more than six months that are classified as high risk customers, the expected credit loss of high risk customers is at least 50%, and the rate is increased when the overdue days increases.

Movements of the allowance for doubtful accounts were as follows:

	Nine Months Ended September 30
	2019			2018
Beginning balance	$	2,602,055		$	2,117,349
Add: Provision for (reversal of) credit loss		(23,064	)		839,302
Less: Amounts written off		(104,344	)		(276,280	)
Ending balance	$	2,474,647		$	2,680,371

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10. INVENTORIES

	September 30, 2019		December 31, 2018		September 30, 2018
Merchandise	$	4,569,690	$	6,067,750	$	5,270,664
Project in process		10,939,283		6,756,486		6,445,139
Work in process		136,752		109,191		107,311
Raw materials		163,226		111,566		113,726
		15,808,951		13,044,993		11,936,840
Land held under development		1,998,733		1,998,733		1,998,733
Construction in progress		80,393		76,989		76,612
	$	17,888,077	$	15,120,715	$	14,012,185

The operating costs related to inventories were $11,081,398 thousand (including the valuation loss on inventories of $10,415 thousand) and $33,787,522 thousand (including the valuation loss on inventories of $155,761 thousand) for the three months and nine months ended September 30, 2019, respectively. The operating costs related to inventories were $11,036,550 thousand (including the valuation loss on inventories of $86,723 thousand) and $33,648,752 thousand (including the valuation loss on inventories of $122,884 thousand) for the three months and nine months ended September 30, 2018, respectively.

As of September 30, 2019, December 31, 2018 and September 30, 2018, inventories of $2,079,126 thousand, $2,075,722 thousand and $2,075,345 thousand, respectively, were expected to be recovered after more than twelve months. The aforementioned amounts of inventories were related to property development owned by LED.

Land held under development and construction in progress was for Qingshan Sec., Dayuan Dist., Taoyuan City project.

11. PREPAYMENTS

	September 30, 2019		December 31, 2018		September 30, 2018
Prepaid rents	$	3,471,857	$	2,415,083	$	2,616,183
Prepaid salary and bonus		2,558,243		5,407		2,668,146
Others		1,296,227		2,915,831		3,071,831
	$	7,326,327	$	5,336,321	$	8,356,160
Current
Prepaid salary and bonus	$	2,558,243	$	5,407	$	2,668,146
Prepaid rents		710,452		599,817		926,884
Others		1,296,053		1,267,760		1,474,463
	$	4,564,748	$	1,872,984	$	5,069,493
Noncurrent
Prepaid rents	$	2,761,405	$	1,815,266	$	1,689,299
Others		174		1,648,071		1,597,368
	$	2,761,579	$	3,463,337	$	3,286,667

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Prepaid rents in 2019 comprises the prepayments from the lease agreements applying the recognition exemption and the prepayments for leases that do not meet the definition of leases under IFRS 16.

12. OTHER CURRENT MONETARY ASSETS

	September 30, 2019		December 31, 2018		September 30, 2018
Time deposits and negotiable certificatess of deposit with maturities of more than three months	$	5,746,069	$	8,156,647	$	4,851,358
Others		2,250,986		1,347,556		1,507,906
	$	7,997,055	$	9,504,203	$	6,359,264

The annual yield rates of time deposits and negotiable certificates of deposit with maturities of more than three months were as follows:

	September 30, 2019	December 31, 2018	September 30, 2018
Time deposits and negotiable certificates of deposit with maturities of more than three months	0.03%-2.90%	0.03%-3.05%	0.07%-2.83%

13. SUBSIDIARIES

a. Information on significant noncontrolling interest subsidiary

	Principal		Proportion of Ownership Interests and Voting Rights Held by Noncontrolling Interests
Subsidiaries	Place of Business		September 30, 2019			December 31, 2018			September 30, 2018
SENAO		Taiwan		72	%		72	%		72	%
CHPT		Taiwan		66	%		66	%		66	%

	Profit Allocated to Noncontrolling Interests
	Three Months Ended September 30				Nine Months Ended September 30
	2019		2018		2019		2018
SENAO	$	122,831	$	43,720	$	217,051	$	188,947
CHPT	$	162,788	$	116,218	$	302,018	$	348,393

	Accumulated Noncontrolling Interests
	September 30, 2019		December 31, 2018		September 30, 2018
SENAO	$	4,188,236	$	4,228,240	$	4,142,443
CHPT		4,129,773		4,044,322		3,935,766
Individually immaterial subsidiaries with noncontrolling interests		1,701,358		1,737,386		1,708,895
	$	10,019,367	$	10,009,948	$	9,787,104

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Summarized financial information in respect of SENAO and its subsidiaries that has material noncontrolling interests is set out below. The summarized financial information below represents amounts before intercompany eliminations.

	September 30, 2019			December 31, 2018			September 30, 2018
Current assets	$	7,439,800		$	7,041,416		$	7,186,828
Noncurrent assets		3,395,005			2,675,748			2,652,429
Current liabilities		(4,414,657	)		(3,740,162	)		(3,994,879	)
Noncurrent liabilities		(665,109	)		(164,056	)		(152,905	)
Equity	$	5,755,039		$	5,812,946		$	5,691,473
Equity attributable to the parent	$	1,566,803		$	1,584,706		$	1,549,030
Equity attributable to noncontrolling interests		4,188,236			4,228,240			4,142,443
	$	5,755,039		$	5,812,946		$	5,691,473

	Three Months Ended September 30						Nine Months Ended September 30
	2019			2018			2019		2018
Revenues and income	$	7,219,126		$	7,383,641		$	21,848,391	$	23,564,819
Costs and expenses		7,047,989			7,322,687			21,545,916		23,297,577
Profit for the period	$	171,137		$	60,954		$	302,475	$	267,242
Profit attributable to the parent	$	48,306		$	17,234		$	85,424	$	78,295
Profit attributable to noncontrolling interests		122,831			43,720			217,051		188,947
Profit for the period	$	171,137		$	60,954		$	302,475	$	267,242
Other comprehensive income (loss) attributable to the parent	$	(820	)	$	(3,802	)	$	7,508	$	303
Other comprehensive income (loss) attributable to noncontrolling interests		(1,740	)		(9,453	)		18,651		(5,318	)
	$	(2,560	)	$	(13,255	)	$	26,159	$	(5,015	)
Total comprehensive income attributable to the parent	$	47,486		$	13,432		$	92,932	$	78,598
Total comprehensive income attributable to noncontrolling interests		121,091			34,267			235,702		183,629
	$	168,577		$	47,699		$	328,634	$	262,227

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	Nine Months Ended September 30
	2019			2018
Net cash flow from operating activities	$	(225,183	)	$	610,363
Net cash flow from investing activities		239,726			(15,067	)
Net cash flow from financing activities		(631,723	)		(470,555	)
Effect of exchange rate changes on cash and cash equivalents		208			299
Net cash inflow (outflow)	$	(616,972	)	$	125,040
Dividends paid to noncontrolling interests	$	268,944		$	587,264

Summarized financial information in respect of CHPT and its subsidiaries that has material noncontrolling interests is set out below. The summarized financial information below represents amounts before intercompany eliminations.

	September 30, 2019			December 31, 2018			September 30, 2018
Current assets	$	3,819,176		$	4,416,910		$	4,525,604
Noncurrent assets		3,716,879			2,779,020			2,613,526
Current liabilities		(1,245,552	)		(1,044,054	)		(1,152,002	)
Noncurrent liabilities		(9,480	)		(816	)		(1,173	)
Equity	$	6,281,023		$	6,151,060		$	5,985,955
Equity attributable to CHI	$	2,151,250		$	2,106,738		$	2,050,189
Equity attributable to noncontrolling interests		4,129,773			4,044,322			3,935,766
	$	6,281,023		$	6,151,060		$	5,985,955

	Three Months Ended September 30				Nine Months Ended September 30
	2019		2018		2019		2018
Revenues and income	$	1,106,759	$	930,947	$	2,398,213	$	2,569,646
Costs and expenses		859,174		752,047		1,938,773		2,018,193
Profit for the period	$	247,585	$	178,900	$	459,440	$	551,453
Profit attributable to CHI	$	84,797	$	62,682	$	157,422	$	203,060
Profit attributable to noncontrolling interests		162,788		116,218		302,018		348,393
Profit for the period	$	247,585	$	178,900	$	459,440	$	551,453

(Continued)

- 27 -

	Three Months Ended September 30						Nine Months Ended September 30
	2019			2018			2019			2018
Other comprehensive income (loss) attributable to CHI	$	(349	)	$	(445	)	$	(135	)	$	35
Other comprehensive loss attributable to noncontrolling interests		(670	)		(959	)		(259	)		(306	)
	$	(1,019	)	$	(1,404	)	$	(394	)	$	(271	)
Total comprehensive income attributable to CHI	$	84,448		$	62,237		$	157,287		$	203,095
Total comprehensive income attributable to noncontrolling interests		162,118			115,259			301,759			348,087
	$	246,566		$	177,496		$	459,046		$	551,182

(Concluded)

	Nine Months Ended September 30
	2019			2018
Net cash flow from operating activities	$	111,119		$	646,686
Net cash flow from investing activities		(1,069,396	)		(510,256	)
Net cash flow from financing activities		(342,952	)		(327,890	)
Effect of exchange rate changes on cash and cash equivalents		(776	)		195
Net cash outflow	$	(1,302,005	)	$	(191,265	)
Dividends paid to noncontrolling interests	$	215,591		$	209,711

b. Equity transactions with noncontrolling interests

CHIEF issued new shares in March 2019 and 2018 as its employees exercised their options. In addition, Chunghwa and CHI disposed some shares of CHIEF in May 2018 before CHIEF traded its shares on the General Stock Market of the Taipei Exchange according to the local requirements. Furthermore, Chunghwa and CHI did not participate in the capital increase of CHIEF in June 2018. Therefore, the Company’s equity ownership interest in CHIEF decreased. See Note 32(c)(d) for details.

SENAO transferred its treasury stock to employees in June 2018; therefore, the Company’s ownership interest in SENAO decreased. See Note 32(b) for details.

CHI disposed some shares of CHPT from April to August 2018. Therefore, the Company’s ownership interest in CHPT decreased.

The above transactions were accounted for as equity transactions since the Company did not cease to have control over these subsidiaries.

- 28 -

Information of the Company’s equity transactions with noncontrolling interests for the nine months ended September 30, 2019 and 2018 were as follows:

	Nine Months Ended September 30, 2019
	CHIEF Share-Based Payment
Cash consideration received from noncontrolling interests	$	14,328
The proportionate share of the carrying amount of the net assets of the subsidiary transferred to noncontrolling interests		(15,140	)
Differences arising from equity transactions	$	(812	)
Line items for equity transaction adjustments
Additional paid-in capital—arising from changes in equities of subsidiaries	$	(812	)

	Nine Months Ended September 30, 2018
	SENAO Transferred its Treasury Stock			CHI Disposed Some Shares of CHPT			Chunghwa and CHI Did Not Participate in the Capital Increase of CHIEF			Chunghwa and CHI Disposed Some Shares of CHIEF			Share-based Payment of CHIEF
Cash consideration received from noncontrolling interests	$	327,122		$	1,041,689		$	1,476,680		$	132,711		$	33,299
The proportionate share of the carrying amount of the net assets of the subsidiary transferred to noncontrolling interests		(273,200	)		(330,100	)		(699,899	)		(18,253	)		(21,180	)
Differences arising from equity transactions	$	53,922		$	711,589		$	776,781		$	114,458		$	12,119
Line items for equity transaction adjustments
Additional paid-in capital-difference between consideration received or paid and the carrying amount of the subsidiaries’ net assets upon actual disposal or acquisition	$	—		$	711,589		$	—		$	114,458		$	—
Additional paid-in capital—arising from changes in equities of subsidiaries	$	53,922		$	—		$	776,781		$	—		$	12,119

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14. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

Investments in associates were as follows:

	Carrying Amount
	September 30, 2019		December 31, 2018		September 30, 2018
Listed
Senao Networks, Inc. (“SNI”)	$	920,063	$	919,841	$	887,402
KingwayTek Technology Co., Ltd. (“KWT”)		251,556		—		—
Non-listed
ST-2 Satellite Ventures Pte., Ltd. (“STS”)		575,355		496,033		558,770
International Integrated System, Inc. (“IISI”)		314,670		310,842		315,475
Viettel-CHT Co., Ltd. (“Viettel-CHT”)		301,623		286,510		268,313
Taiwan International Standard Electronics Co., Ltd. (“TISE”)		249,298		216,439		149,674
Chunghwa PChome Fund I Co., Ltd. (“CPFI”)		195,316		198,974		—
So-net Entertainment Taiwan Limited (“So-net”)		169,008		119,956		105,820
KKBOX Taiwan Co., Ltd. (“KKBOXTW”, previously known as Skysoft Co., Ltd.)		147,440		147,360		133,553
Taiwan International Ports Logistics Corporation (“TIPL”)		50,870		49,650		47,958
Click Force Co., Ltd. (“CF”)		36,173		37,876		37,297
UUPON Inc. (“UUPON”, previously known as Dian Zuan Integrating Marketing Co., Ltd.)		10,473		16,647		17,177
Cornerstone Ventures Co., Ltd. (“CVC”)		5,131		4,757		—
Alliance Digital Tech Co., Ltd. (“ADT”)		5,080		5,080		9,218
KingwayTek Technology Co., Ltd. (“KWT”)		—		134,925		129,449
MeWorks LIMITED (HK) (“MeWorks”)		—		—		—
	$	3,232,056	$	2,944,890	$	2,660,106

The percentages of ownership and voting rights in associates held by the Company as of balance sheet dates were as follows:

	% of Ownership and Voting Rights
	September 30, 2019		December 31, 2018		September 30, 2018
Senao Networks, Inc. (“SNI”)		34		34		34
KingwayTek Technology Co., Ltd. (“KWT”)		22		26		26
ST-2 Satellite Ventures Pte., Ltd. (“STS”)		38		38		38
International Integrated System, Inc. (“IISI”)		31		32		32
Viettel-CHT Co., Ltd. (“Viettel-CHT”)		30		30		30
Taiwan International Standard Electronics Co., Ltd. (“TISE”)		40		40		40
Chunghwa PChome Fund I Co., Ltd. (“CPFI”)		50		50		—
So-net Entertainment Taiwan Limited (“So-net”)		30		30		30

(Continued)

- 30 -

	% of Ownership and Voting Rights
	September 30, 2019		December 31, 2018		September 30, 2018
KKBOX Taiwan Co., Ltd. (“KKBOXTW”)		30		30		30
Taiwan International Ports Logistics Corporation (“TIPL”)		27		27		27
Click Force Co., Ltd. (“CF”)		49		49		49
UUpon Inc. (“UUPON”)		22		22		22
Cornerstone Ventures Co., Ltd. (“CVC”)		49		49		—
Alliance Digital Tech Co., Ltd. (“ADT”)		14		14		14
MeWorks LIMITED (HK) (“MeWorks”)		20		20		20

(Concluded)

None of the above associates is considered individually material to the Company. Summarized financial information of associates that are not individually material was as follows:

	Three Months Ended September 30					Nine Months Ended September 30
	2019			2018		2019		2018
The Company’s share of profits	$	195,449		$	137,856	$	412,500	$	329,528
The Company’s share of other comprehensive income (loss)		(17	)		2,263		299		4,522
The Company’s share of total comprehensive income	$	195,432		$	140,119	$	412,799	$	334,050

The Level 1 fair values based on the closing market prices of SNI and KWT as of the balance sheet dates were as follows:

	September 30, 2019		December 31, 2018		September 30, 2018
SNI	$	1,873,431	$	1,447,350	$	1,856,852
KWT	$	979,353	$	—	$	—

IISI issued new shares in March and September 2019 as its employees exercised their options; therefore, the Company’s ownership interest in IISI decreased to 31% as of September 30, 2019.

The Company disposed some shares of KingwayTek Technology Co., Ltd. (“KWT”) in April 2019 before KWT traded its shares on the General Stock Market of the Taipei Exchange according to the local requirements and recognized disposal gain of $30,152 thousand. In addition, the Company did not participate in the capital increase of KWT in May 2019. Therefore, the Company’s ownership interest in KWT decreased to 22% as of September 30, 2019.

The Company invested 50% equity shares of Chunghwa PChome Fund I Co., Ltd. (“CPFI”) in October 2018. The Company has only two out of five seats of the Board of Directors of CPFI, and has no control but significant influence over CPFI. Therefore, the Company recognized CPFI as investment in associate. CPFI engages mainly in investment business.

The Company invested 49% equity shares of Cornerstone Ventures Co., Ltd. (“CVC”) in October 2018. The Company has only two out of five seats of the Board of Directors of CVC, and has no control but significant influence over CVC. Therefore, the Company recognized CVC as investment in associate. CVC engages mainly in investment business.

- 31 -

HopeTech returned the proceeds of $19,184 thousand as a result of capital reduction in January 2018. The Company received $3,379 thousand by disposing all shares of HopeTech in June 2018 and recognized disposal loss of $125 thousand.

The Company owns 14% equity shares of ADT. As the Company remains the seat in the Board of Directors of ADT and considers the relative size of ownership interest and the dispersion of shares owned by the other stockholders, the Company remains significant influence over ADT. In June 2018, the stockholders of ADT approved to dissolve. The liquidation of ADT is still in process.

The Company’s share of profit and other comprehensive income of associates was recognized based on the reviewed financial statements.

15. PROPERTY, PLANT AND EQUIPMENT

	September 30, 2019
Assets used by the Company	$	274,337,903
Assets subject to operating leases		7,770,224
	$	282,108,127

a. Assets used by the Company—2019

	Land			Land Improvements			Buildings			Computer Equipment			Telecommuni- cations Equipment			Transportation Equipment			Miscellaneous Equipment			Construction in Progress and Equipment to be Accepted			Total
Cost
Balance on January 1, 2019	$	103,972,052		$	1,600,323		$	72,911,010		$	14,258,485		$	715,748,118		$	3,882,534		$	9,873,589		$	18,644,766		$	940,890,877
Effect of retrospective application of IFRS 16		(3,617,627	)		(689	)		(3,582,774	)		—			(3,884,421	)		—			—			—			(11,085,511	)
Balance on January 1, 2019 as adjusted		100,354,425			1,599,634			69,328,236			14,258,485			711,863,697			3,882,534			9,873,589			18,644,766			929,805,366
Additions		—			—			12,857			36,536			74,375			1,118			46,043			14,577,257			14,748,186
Disposal		(28,641	)		—			(3,101	)		(778,818	)		(25,854,514	)		(24,330	)		(278,941	)		—			(26,968,345	)
Effect of foreign exchange differences		—			—			—			55			18,736			64			(216	)		(26	)		18,613
Others		(1,229,480	)		11,272			(1,015,551	)		174,946			15,714,115			60,571			252,180			(16,212,384	)		(2,244,331	)
Balance on September 30, 2019	$	99,096,304		$	1,610,906		$	68,322,441		$	13,691,204		$	701,816,409		$	3,919,957		$	9,892,655		$	17,009,613		$	915,359,489
Accumulated depreciation and impairment
Balance on January 1, 2019	$	—		$	(1,337,704	)	$	(28,126,983	)	$	(12,143,307	)	$	(599,425,774	)	$	(3,651,139	)	$	(7,291,742	)	$	—		$	(651,976,649	)
Effect of retrospective application of IFRS 16		—			512			1,265,356			—			2,575,431			—			—			—			3,841,299
Balance on January 1, 2019 as adjusted		—			(1,337,192	)		(26,861,627	)		(12,143,307	)		(596,850,343	)		(3,651,139	)		(7,291,742	)		—			(648,135,350	)
Depreciation expenses		—			(32,297	)		(955,977	)		(626,361	)		(17,917,740	)		(72,206	)		(514,733	)		—			(20,119,314	)
Disposal		—			—			3,101			772,552			25,825,485			24,327			277,065			—			26,902,530
Effect of foreign exchange differences		—			—			—			(34	)		(6,191	)		(24	)		483			—			(5,766	)
Others		—			(543	)		365,072			(6,877	)		(2,332	)		(2,421	)		(16,585	)		—			336,314
Balance on September 30, 2019	$	—		$	(1,370,032	)	$	(27,449,431	)	$	(12,004,027	)	$	(588,951,121	)	$	(3,701,463	)	$	(7,545,512	)	$	—		$	(641,021,586	)
Balance on January 1, 2019, net	$	103,972,052		$	262,619		$	44,784,027		$	2,115,178		$	116,322,344		$	231,395		$	2,581,847		$	18,644,766		$	288,914,228
Balance on January 1, 2019 as adjusted	$	100,354,425		$	262,442		$	42,466,609		$	2,115,178		$	115,013,354		$	231,395		$	2,581,847		$	18,644,766		$	281,670,016
Balance on September 30, 2019, net	$	99,096,304		$	240,874		$	40,873,010		$	1,687,177		$	112,865,288		$	218,494		$	2,347,143		$	17,009,613		$	274,337,903

There was no indication that property, plant and equipment was impaired so the Company did not recognize any impairment loss for the nine months ended September 30, 2019.

- 32 -

Depreciation expense for assets used by the Company is computed using the straight-line method over the following estimated service lives:

Land improvements	8-30 years
Buildings
Main buildings	35-60 years
Other building facilities	3-20 years
Computer equipment	2-8 years
Telecommunications equipment
Telecommunication circuits	2-30 years
Telecommunication machinery and antennas equipment	2-30 years
Transportation equipment	3-10 years
Miscellaneous equipment
Leasehold improvements	1-9 years
Mechanical and air conditioner equipment	3-16 years
Others	1-10 years

b. Assets subject to operating leases—2019

	Land		Land Improvements			Buildings			Total
Cost
Balance on January 1, 2019	$	—	$	—		$	—		$	—
Effect of retrospective application of IFRS 16		3,617,627		689			3,582,774			7,201,090
Balance on January 1, 2019 as adjusted		3,617,627		689			3,582,774			7,201,090
Additions		—		—			4,284			4,284
Transferred from (to) assets used by the Company		1,229,480		(689	)		1,008,444			2,237,235
Balance on September 30, 2019	$	4,847,107	$	—		$	4,595,502		$	9,442,609
Accumulated depreciation and impairment
Balance on January 1, 2019	$	—	$	—		$	—		$	—
Effect of retrospective application of IFRS 16		—		(512	)		(1,265,356	)		(1,265,868	)
Balance on January 1, 2019 as adjusted		—		(512	)		(1,265,356	)		(1,265,868	)
Depreciation expenses		—		(31	)		(64,750	)		(64,781	)
Transferred to (from) assets used by the company		—		543			(342,279	)		(341,736	)
Balance on September 30, 2019	$	—	$	—		$	(1,672,385	)	$	(1,672,385	)
Balance on January 1, 2019 as adjusted, net	$	3,617,627	$	177		$	2,317,418		$	5,935,222
Balance on September 30, 2019, net	$	4,847,107	$	—		$	2,923,117		$	7,770,224

The Company leases out land and buildings with lease terms between 1 to 20 years. The lessees do not have bargain purchase options to acquire the assets at the expiry of the lease periods.

- 33 -

The future aggregate lease collection under operating lease for the freehold plant, property and equipment is as follows:

	September 30, 2019
Year 1	$	305,593
Year 2		257,654
Year 3		232,656
Year 4		193,882
Year 5		145,573
Onwards		1,245,923
	$	2,381,281

The above items of property, plant and equipment subject to operating leases are depreciated on a straight-line basis over their estimated useful lives as follows:

Land improvements	10 years
Buildings
Main buildings	35-60 years
Other building facilities	3-15 years

c. Property, plant and equipment—2018

	Land			Land Improvements			Buildings			Computer Equipment			Telecommuni- cations Equipment			Transportation Equipment			Miscellaneous Equipment			Construction in Progress and Equipment to be Accepted			Total
Cost
Balance on January 1, 2018	$	104,079,190		$	1,594,899		$	72,694,050		$	14,161,797		$	722,054,435		$	3,834,372		$	9,514,875		$	18,526,814		$	946,460,432
Additions		—			—			14,325			33,610			59,196			270			196,611			18,497,861			18,801,873
Disposal		(28,379	)		(337	)		(23	)		(455,245	)		(25,165,235	)		(21,047	)		(492,999	)		—			(26,163,265	)
Effect of foreign exchange differences		—			—			—			(169	)		48,787			37			(809	)		99			47,945
Others		10,488			3,607			114,883			218,095			16,366,803			26,787			415,193			(17,151,377	)		4,479
Balance on September 30, 2018	$	104,061,299		$	1,598,169		$	72,823,235		$	13,958,088		$	713,363,986		$	3,840,419		$	9,632,871		$	19,873,397		$	939,151,464
Accumulated depreciation and impairment
Balance on January 1, 2018	$	—		$	(1,292,527	)	$	(26,798,694	)	$	(11,787,847	)	$	(607,154,914	)	$	(3,513,529	)	$	(7,205,011	)	$	—		$	(657,752,522	)
Depreciation expenses		—			(34,760	)		(1,016,433	)		(756,705	)		(18,152,985	)		(130,657	)		(506,643	)		—			(20,598,183	)
Disposal		—			337			23			444,637			25,139,451			21,013			486,640			—			26,092,101
Effect of foreign exchange differences		—			—			—			97			(16,907	)		(23	)		504			—			(16,329	)
Others		—			(18	)		11,398			(4,976	)		24,402			(4,087	)		(17,572	)		—			9,147
Balance on September 30, 2018	$	—		$	(1,326,968	)	$	(27,803,706	)	$	(12,104,794	)	$	(600,160,953	)	$	(3,627,283	)	$	(7,242,082	)	$	—		$	(652,265,786	)
Balance on January 1, 2018, net	$	104,079,190		$	302,372		$	45,895,356		$	2,373,950		$	114,899,521		$	320,843		$	2,309,864		$	18,526,814		$	288,707,910
Balance on September 30, 2018, net	$	104,061,299		$	271,201		$	45,019,529		$	1,853,294		$	113,203,033		$	213,136		$	2,390,789		$	19,873,397		$	286,885,678

There was no indication that property, plant and equipment was impaired so the Company did not recognize any impairment loss for the nine months ended September 30, 2018.

Depreciation expense is computed using the straight-line method over the following estimated service lives:

Land improvements	8-30 years
Buildings
Main buildings	35-60 years
Other building facilities	3-20 years
Computer equipment	2-8 years
Telecommunications equipment
Telecommunication circuits	2-30 years
Telecommunication machinery and antennas equipment	2-30 years
Transportation equipment	3-10 years

(Continued)

- 35 -

Miscellaneous equipment
Leasehold improvements	1-6 years
Mechanical and air conditioner equipment	3-16 years
Others	1-10 years

(Concluded)

16. LEASE ARRANGEMENTS

a. Right-of-use Assets—2019

	September 30, 2019
Land and buildings
Handsets base stations	$	6,895,757
Others		1,754,009
Equipment		2,701,013
	$	11,350,779

	Nine Months Ended September 30, 2019
Additions to right-of-use assets	$	2,671,187

	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Depreciation charge for right-of-use assets
Land and buildings
Handsets base stations	$	689,311	$	2,037,060
Others		205,489		614,508
Equipment		104,644		313,783
	$	999,444	$	2,965,351

b. Lease liabilities—2019

	September 30, 2019
Lease liabilities
Current	$	3,247,553
Non-current		6,339,175
	$	9,586,728

- 35 -

Range of discount rate for lease liabilities is as follows:

	September 30, 2019
Land and buildings
Handsets base stations		0.58%-1.18%
Others		0.58%-9.00%
Equipment		0.59%-4.50%

c. Important lease-in activities and terms

The Company mainly enters into lease-in agreements of land and buildings for handsets base stations located all over Taiwan with lease terms from 1 to 20 years. There’s no clause for bargain purchase options to acquire the assets at the expiry of the lease periods in the agreement. In most lease-in agreements of handsets base station agreements, the Company is able to terminate the agreement prior to the maturity date provided that the premise the Company fails to meet the purpose to build telecommunication equipment due to legal restriction, controversial events, or other events.

The Company also leases land and buildings for the use of offices, server rooms, and stores with lease terms from 1 to 30 years. Most of the lease agreements for national land adjust the lease payment according to the changes of present values of land announced by the authority. At the expiry of the lease term, the Company does not have bargain purchase options to acquire the assets.

The lease agreements for equipment include a contract between Chunghwa and ST-2 Satellite Ventures Pte., Ltd. to lease capacity on the ST-2 satellite. The information of lease agreements with related parties, please refer to Note 36 to the consolidated financial statements for details.

d. Other lease information

2019

	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Expenses relating to low-value asset leases	$	1,797	$	4,782
Expenses relating to variable lease payments not included in the measurement of lease liabilities	$	2,107	$	4,510

	Nine Months Ended September 30, 2019
Total cash outflow for leases	$	2,968,915

The Company leases certain equipment which qualify as low-value asset leases. The Company has elected to apply the recognition exemption and, thus, not to recognize right-of-use assets and lease liabilities for these leases.

Lease-out arrangements under operating leases for freehold property, plant, and equipment and investment properties and are set out in Notes 15 and 17 to the consolidated financial statements.

- 36 -

2018

The future aggregate minimum lease payments under non-cancellable operating leases are as follows:

	December 31, 2018		September 30, 2018
Within one year	$	3,439,259	$	3,422,216
Longer than one year but within five years		6,375,101		6,983,034
Longer than five years		743,494		932,348
	$	10,557,854	$	11,337,598

17. INVESTMENT PROPERTIES

Cost
Balance on January 1, 2018	$	9,134,817
Additions		5,627
Balance on September 30, 2018	$	9,140,444
Accumulated depreciation and impairment
Balance on January 1, 2018	$	(1,087,024	)
Depreciation expense		(15,584	)
Balance on September 30, 2018	$	(1,102,608	)
Balance on January 1, 2018, net	$	8,047,793
Balance on September 30, 2018, net	$	8,037,836
Cost
Balance on January 1, 2019	$	9,392,452
Disposal		(5,831	)
Balance on September 30, 2019	$	9,386,621
Accumulated depreciation and impairment
Balance on January 1, 2019	$	(1,105,240	)
Depreciation expense		(20,025	)
Disposal		5,831
Balance on September 30, 2019	$	(1,119,434	)
Balance on January 1, 2019, net	$	8,287,212
Balance on September 30, 2019, net	$	8,267,187

- 37 -

Depreciation expense is computed using the straight-line method over the following estimated service lives:

Land improvements	8-30 years
Buildings
Main buildings	35-60 years
Other building facilities	4-10 years

The fair values of the Company’s investment properties as of December 31, 2018 and 2017 were determined by Level 3 fair value measurements inputs based on the appraisal reports conducted by independent appraisers. The Company used the aforementioned appraisal reports as the basis to determine the fair values as of September 30, 2019 and 2018 because there was no material change in the economic environment and the market transaction price. Those appraisal reports are based on the comparison approach, income approach or cost approach. Key assumptions and the fair values were as follows:

	September 30, 2019		December 31, 2018		September 30, 2018
Fair value	$	18,514,801	$	18,514,801	$	17,728,012
Overall capital interest rate		1.02%~4.04%		1.02%~4.04%		1.46%~2.20%
Profit margin ratio		12%~20%		12%~20%		12%~20%
Discount rate		—		—		1.04%
Capitalization rate		0.79%~1.75%		0.79%~1.75%		0.47%~1.69%

All of the Company’s investment properties are held under freehold interest.

2019

The future aggregate lease collection under operating lease for investment properties is as follows:

	September 30, 2019
Year 1	$	115,191
Year 2		95,189
Year 3		76,280
Year 4		63,022
Year 5		45,885
Onwards		103,160
	$	498,727

2018

The future aggregate minimum lease collection under non-cancellable operating leases is as follows:

	December 31, 2018		September 30, 2018
Within one year	$	343,981	$	325,756
Longer than one year but within five years		580,451		620,089
Longer than five years		205,747		195,371
	$	1,130,179	$	1,141,216

- 38 -

18. INTANGIBLE ASSETS

	3G and 4G Concession			Computer Software			Goodwill			Others			Total
Cost
Balance on January 1, 2018	$	70,144,000		$	3,311,610		$	236,200		$	418,150		$	74,109,960
Additions-acquired separately		—			199,149			—			4,112			203,261
Disposal		—			(321,356	)		—			(58,009	)		(379,365	)
Effect of foreign exchange difference		—			41			—			(95	)		(54	)
Balance on September 30, 2018	$	70,144,000		$	3,189,444		$	236,200		$	364,158		$	73,933,802
Accumulated amortization and impairment
Balance on January 1, 2018	$	(16,674,565	)	$	(2,431,797	)	$	(26,677	)	$	(93,653	)	$	(19,226,692	)
Amortization expenses		(2,955,280	)		(309,998	)		—			(17,204	)		(3,282,482	)
Disposal		—			321,356			—			58,009			379,365
Impairment losses		—			—			—			(50,750	)		(50,750	)
Effect of foreign exchange difference		—			(40	)		—			21			(19	)
Balance on September 30, 2018	$	(19,629,845	)	$	(2,420,479	)	$	(26,677	)	$	(103,577	)	$	(22,180,578	)
Balance on January 1, 2018, net	$	53,469,435		$	879,813		$	209,523		$	324,497		$	54,883,268
Balance on September 30, 2018, net	$	50,514,155		$	768,965		$	209,523		$	260,581		$	51,753,224
Cost
Balance on January 1, 2019	$	70,144,000		$	3,425,969		$	236,200		$	373,203		$	74,179,372
Additions-acquired separately		—			164,375			—			3,218			167,593
Disposal		(10,179,000	)		(329,027	)		—			(157	)		(10,508,184	)
Effect of foreign exchange difference		—			90			—			(69	)		21
Others		—			247			—			—			247
Balance on September 30, 2019	$	59,965,000		$	3,261,654		$	236,200		$	376,195		$	63,839,049
Accumulated amortization and impairment
Balance on January 1, 2019	$	(20,632,474	)	$	(2,467,170	)	$	(26,677	)	$	(109,369	)	$	(23,235,690	)
Amortization expenses		(2,879,679	)		(293,218	)		—			(18,352	)		(3,191,249	)
Disposal		10,179,000			329,027			—			11			10,508,038
Effect of foreign exchange difference		—			(91	)		—			26			(65	)
Balance on September 30, 2019	$	(13,333,153	)	$	(2,431,452	)	$	(26,677	)	$	(127,684	)	$	(15,918,966	)
Balance on January 1, 2019, net	$	49,511,526		$	958,799		$	209,523		$	263,834		$	50,943,682
Balance on September 30, 2019, net	$	46,631,847		$	830,202		$	209,523		$	248,511		$	47,920,083

The concessions are granted and issued by the NCC. The concession fees are amortized using the straight-line method from the date operations commence through the date the license expires. The carrying amount of 3G concession fee was fully amortized by December 2018, and 4G concession fees will be fully amortized by December 2030 and December 2033.

The computer software is amortized using the straight-line method over the estimated useful lives of 1 to 10 years. Other intangible assets are amortized using the straight-line method over the estimated useful lives of 3 to 20 years. Goodwill is not amortized.

- 39 -

SENAO evaluated and determined that the recoverable amount of certain licensed contract was nil and recognized the impairment loss of $50,750 thousand for the nine months ended September 30, 2018. The recoverable amount was based on the value in use. The aforementioned impairment loss was included in other income and expenses of statement of comprehensive income.

19. OTHER ASSETS

	September 30, 2019		December 31, 2018		September 30, 2018
Spare parts	$	2,328,662	$	2,422,060	$	2,788,548
Refundable deposits		1,788,380		1,992,206		1,824,679
Other financial assets		1,000,000		1,000,000		1,000,000
Prepayment for investments		838,000		—		—
Others		2,430,663		2,342,040		2,676,820
	$	8,385,705	$	7,756,306	$	8,290,047
Current
Spare parts	$	2,328,662	$	2,422,060	$	2,788,548
Others		168,048		154,024		267,237
	$	2,496,710	$	2,576,084	$	3,055,785
Noncurrent
Refundable deposits	$	1,788,380	$	1,992,206	$	1,824,679
Other financial assets		1,000,000		1,000,000		1,000,000
Prepayment for investments		838,000		—		—
Others		2,262,615		2,188,016		2,409,583
	$	5,888,995	$	5,180,222	$	5,234,262

The participation of establishing Next Commercial Bank Co., Ltd. (“NCB”) was approved by Chunghwa’s Board of Directors in January 2019. The Company expects to invest $4,500,000 thousand at most in NCB’s common stock and the Company’s equity ownership interest in NCB will be no more than 45%. Chunghwa prepaid $838,000 thousand for the first phase of investment as of September 30, 2019. The establishment of NCB was approved by the FSC in July 2019.

Other financial assets—noncurrent was Piping Fund. 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 to a Piping Fund administered by the Taipei City Government. This fund was used to finance various telecommunications infrastructure projects. Net assets of this fund will be returned proportionately after the project is completed.

20. HEDGING DERIVATIVE FINANCIAL INSTRUMENTS

Chunghwa’s hedge strategy is to enter forward exchange contracts—buy to avoid its foreign currency exposure to certain foreign currency denominated equipment payments in the following six months. In addition, Chunghwa’s management considers the market condition to determine the hedge ratio and enters into forward exchange contracts with the banks to avoid the foreign currency risk.

- 40 -

Chunghwa signed equipment purchase contracts with suppliers and entered into forward exchange contracts to avoid foreign currency risk exposure to Euro-denominated purchase commitments. Those forward exchange contracts were designated as cash flow hedges. When forecast purchases actually take place, basis adjustments are made to the initial carrying amounts of hedged items.

For the hedges of highly probable forecast sales and purchases, as the critical terms (i.e. the notional amount, life and underlying) of the forward foreign exchange contracts and their corresponding hedged items are the same, the Company performs a qualitative assessment of effectiveness and it is expected that the value of the forward contracts and the value of the corresponding hedged items will systematically change in opposite direction in response to movements in the underlying exchange rates.

The main source of hedge ineffectiveness in these hedging relationships is the effect of credit risks of the Company and the counterparty on the fair value of the forward exchange contracts. Such credit risks do not impact the fair value of the hedged item attributable to changes in foreign exchange rates. No other sources of ineffectiveness emerged from these hedging relationships.

The following tables summarized the information relating to the hedges for foreign currency risk.

There is no outstanding forward exchange contract designated for hedge on September 30, 2019.

December 31, 2018

Notional Amount (In Thousands)

Forward

Line Item in

Carrying Amount

Change in Fair Values of Hedging Instruments Used for Calculating Hedge

Hedging Instruments

Currency

Maturity

Rate

Balance Sheet

Asset

Liability

Ineffectiveness

Cash flow hedge

Forecast purchases - forward exchange contracts

EUR/NT$

EUR 4,911/ NT$ 171,797

2019.03

$

34.98

Hedging financial assets (liabilities)

$

1,069

$

—

$

1,919

	Change in Value of Hedged Item Used for Calculating Hedge Ineffectiveness			Accumulated Gain or Loss on Hedging Instruments in Other Equity
Hedged Items				Continuing Hedges		Hedge Accounting no Longer Applied
Cash flow hedge
Forecast equipment purchases	$	(1,919	)	$	1,069	$	—

September 30, 2018

Notional Amount

Forward

Line Item in

Carrying Amount

Change in Fair Values of Hedging Instruments Used for Calculating Hedge

Hedging Instruments

Currency

(In Thousands)

Maturity

Rate

Balance Sheet

Asset

Liability

Ineffectiveness

Cash flow hedge

Forecast purchases - forward exchange contracts

EUR/NT$

EUR2,500/ NT$88,583

2018.12

$

35.43

Hedging financial assets (liabilities)

$

367

$

—

$

1,217

- 41 -

	Change in Value of Hedged Item Used for Calculating Hedge Ineffectiveness			Accumulated Gain or Loss on Hedging Instruments in Other Equity
Hedged Items				Continuing Hedges		Hedge Accounting no Longer Applied
Cash flow hedge
Forecast equipment purchases	$	(1,217	)	$	367	$	—

Nine months ended September 30, 2019

	Comprehensive Income
								Reclassification from Equity to Profit or Loss and the Adjusted Line Item
Hedge Transaction	Hedging Gain or Loss Recognized in OCI			Amount of Hedge Ineffectiveness Recognized in Profit or Loss		Line Item in Which Hedge Ineffectiveness is Included		Amount Reclassified to P/L and the Adjusted Line Item			Due to Hedged Future Cash Flows No Longer Expected to Occur
Cash flow hedge
Forecast equipment purchases	$	(1,069	)	$	—		—	$	(1,766 Construction in progress and equipment to be accepted	)	$	—   Other gains and losses

Nine months ended September 30, 2018

	Comprehensive Income
							Reclassification from Equity to Profit or Loss and the Adjusted Line Item
Hedge Transaction	Hedging Gain or Loss Recognized in OCI		Amount of Hedge Ineffectiveness Recognized in Profit or Loss		Line Item in Which Hedge Ineffectiveness is Included		Amount Reclassified to P/L and the Adjusted Line Item			Due to Hedged Future Cash Flows No Longer Expected to Occur
Cash flow hedge
Forecast equipment purchases	$	1,217	$	—		—	$	(3,529 Construction in progress and equipment to be accepted	)	$	(297 Other gains and losses	)

21. SHORT-TERM LOANS

	September 30, 2019		December 31, 2018		September 30, 2018
Unsecured loans	$	90,000	$	100,000	$	120,000

- 42 -

The annual interest rates of loans were as follows:

	September 30, 2019	December 31, 2018	September 30, 2018
Unsecured loans	1.20%-2.50%	1.35%-2.35%	1.35%-2.35%

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

	September 30, 2019		December 31, 2018		September 30, 2018
Secured loans (Note 37)	$	1,600,000	$	1,600,000	$	1,600,000

The annual interest rates of loans were as follows:

	September 30, 2019			December 31, 2018			September 30, 2018
Secured loans		0.92	%		0.92	%		0.92	%

LED obtained a secured loan from Chang Hwa Bank in September 2010. Interest is paid monthly. $300,000 thousand and $1,350,000 thousand were originally due in December 2014 and September 2015, respectively. In October 2014, the bank borrowing mentioned above was extended to September 2018 for one time repayment. LED made an early repayment of $50,000 thousand in April 2015. LED entered into a contract with Chang Hwa Bank to renew the contract upon the maturity of the aforementioned contract in December 2017 and the due date of the renew contract is September 2021.

23. TRADE NOTES AND ACCOUNTS PAYABLE

	September 30, 2019		December 31, 2018		September 30, 2018
Trade notes and accounts payable	$	16,932,170	$	20,464,792	$	20,546,011

Trade notes and accounts payable were attributable to operating activities and the trading conditions were agreed separately.

24. OTHER PAYABLES

	September 30, 2019		December 31, 2018		September 30, 2018
Accrued salary and compensation	$	7,385,472	$	9,040,692	$	6,872,977
Amounts collected for others		1,414,354		1,226,031		1,173,806
Payables to contractors		1,176,504		1,709,778		1,384,653
Accrued maintenance costs		1,163,052		1,049,849		1,020,974
Accrued compensation to employees and remuneration to directors and supervisors		1,152,002		1,738,716		1,405,065
Accrued franchise fees		824,985		1,151,084		871,167
Payables to equipment suppliers		404,978		1,459,246		1,818,405
Others		6,571,033		5,939,987		6,341,290
	$	20,092,380	$	23,315,383	$	20,888,337

- 43 -

25. PROVISIONS

	September 30, 2019		December 31, 2018		September 30, 2018
Warranties	$	157,237	$	131,664	$	129,056
Onerous contracts		117,433		19,323		—
Employee benefits		54,881		51,393		46,047
Others		4,397		4,447		4,447
	$	333,948	$	206,827	$	179,550
Current	$	248,858	$	128,200	$	104,880
Noncurrent		85,090		78,627		74,670
	$	333,948	$	206,827	$	179,550

	Warranties			Onerous Contracts		Employee Benefits			Others			Total
Balance on January 1, 2018	$	131,789		$	—	$	43,429		$	4,467		$	179,685
Additional provisions recognized		135,558			—		3,834			80			139,472
Used / forfeited during the period		(138,291	)		—		(1,216	)		(100	)		(139,607	)
Balance on September 30, 2018	$	129,056		$	—	$	46,047		$	4,447		$	179,550
Balance on January 1, 2019	$	131,664		$	19,323	$	51,393		$	4,447		$	206,827
Additional provisions recognized		89,022			98,110		4,330			—			191,462
Used / forfeited during the period		(63,449	)		—		(842	)		(50	)		(64,341	)
Balance on September 30, 2019	$	157,237		$	117,433	$	54,881		$	4,397		$	333,948

a. The provision for warranties claims represents the present value of the management’s best estimate of the future outflow of economic benefits that will be required under the Company’s obligation for warranties in sales agreements. The estimate has been made based on the historical warranty experience.

b. The provision for employee benefits represents vested long-term service compensation accrued.

c. The provision for onerous contracts represents the present obligation resulting from the measurement for the unavoidable costs of meeting the obligations under the Company’s contracts exceed the economic benefits expected to be received.

26. RETIREMENT BENEFIT PLANS

According to the Article 56 of the Labor Standards Law revised in February 2015, entities are required to contribute the difference in one appropriation to their pension funds before the end of next March when the balance of the Funds is insufficient to pay the eligible employees who meet the retirement criteria in the following year. Chunghwa contributed $2,118,583 thousand to its pension fund as of March 31, 2018. There is no difference that requires to contribute into the Fund in 2019.

- 44 -

Relevant pension costs for defined benefit plans which were determined by the pension cost rates of actuarial valuation as of December 31, 2018 and 2017 were as follows:

	Three Months Ended September 30				Nine Months Ended September 30
	2019		2018		2019		2018
Operating costs	$	429,939	$	448,462	$	1,295,094	$	1,346,614
Marketing expenses		217,992		221,238		649,579		665,283
General and administrative expenses		41,124		41,375		122,109		122,639
Research and development expenses		25,635		27,064		77,920		80,466
	$	714,690	$	738,139	$	2,144,702	$	2,215,002

27. EQUITY

a. Share capital

1) Common stocks

	September 30, 2019		December 31, 2018		September 30, 2018
Number of authorized shares (thousand)		12,000,000		12,000,000		12,000,000
Authorized shares	$	120,000,000	$	120,000,000	$	120,000,000
Number of issued and paid shares (thousand)		7,757,447		7,757,447		7,757,447
Issued shares	$	77,574,465	$	77,574,465	$	77,574,465

The issued common stocks of a par value at $10 per share entitled the right to vote and receive dividends.

2) Global depositary receipts

The MOTC and some stockholders sold some common stocks of Chunghwa in an international offering of securities in the form of American Depositary Shares (“ADS”) (one ADS represents 10 common stocks) in July 2003, August 2005, and September 2006. The ADSs were traded on the New York Stock Exchange since July 17, 2003. As of September 30, 2019, the outstanding ADSs were 229,921 thousand common stocks, which equaled 22,992 thousand units and represented 2.96% of Chunghwa’s total outstanding common stocks.

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 are entitled to, 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.

- 45 -

b. Additional paid-in capital

The adjustments of additional paid-in capital for the nine months ended September 30, 2019 and 2018 were as follows:

	Share Premium		Movements of Additional Paid-in Capital for Associates Accounted for Using Equity Method		Movements of Additional Paid-in Capital Arising from Changes in Equities of Subsidiaries			Difference between Consideration Received and Carrying Amount of the Subsidiaries’ Net Assets upon Disposal		Donated Capital		Stockholders’ Contribution due to Privatization		Total
Balance on January 1, 2018	$	147,329,386	$	90,937	$	1,221,046		$	161,243	$	16,193	$	20,648,078	$	169,466,883
Unclaimed dividend		—		—		—			—		2,481		—		2,481
Change in additional paid-in capital from investments in associates accounted for using equity method		—		1		—			—		—		—		1
Partial disposal of interests in subsidiaries		—		—		—			826,047		—		—		826,047
Change in additional paid-in capital for not participating in the capital increase of subsidiaries		—		—		776,781			—		—		—		776,781
Share-based payment transactions of subsidiaries		—		—		12,119			—		—		—		12,119
Treasury stock transfer of subsidiaries		—		—		53,922			—		—		—		53,922
Balance on September 30, 2018	$	147,329,386	$	90,938	$	2,063,868		$	987,290	$	18,674	$	20,648,078	$	171,138,234
Balance on January 1, 2019	$	147,329,386	$	89,893	$	2,063,148		$	987,611	$	18,648	$	20,648,078	$	171,136,764
Unclaimed dividend		—		—		—			—		1,314		—		1,314
Change in additional paid-in capital from investments in associates accounted for using equity method		—		119,922		—			—		—		—		119,922
Share-based payment transactions of subsidiaries		—		—		(812	)		—		—		—		(812	)
Balance on September 30, 2019	$	147,329,386	$	209,815	$	2,062,336		$	987,611	$	19,962	$	20,648,078	$	171,257,188

Additional paid-in capital from share premium, donated capital and the difference between consideration received and the carrying amount of the subsidiaries’ net assets upon disposal may be utilized to offset deficits. Furthermore, when Chunghwa has no deficit, it may be distributed in cash or capitalized, which however is limited to a certain percentage of Chunghwa’s paid-in capital except the additional paid-in capital arising from claimed dividend can only be utilized to offset deficits.

The additional paid-in capital from movements of paid-in capital arising from changes in equities of subsidiaries may only be utilized to offset deficits.

Among additional paid-in capital from movements of investments in associates accounted for using equity method, the portion arising from the difference between consideration received and the carrying amount of the subsidiaries net assets upon disposal may be utilized to offset deficits; furthermore, when the Company has no deficit, it may be distributed in cash or capitalized. However, other additional paid-in capital recognized in proportion of share ownership may only be utilized to offset deficits.

c. Retained earnings and dividends policy

In accordance with the Chunghwa’s Articles of Incorporation, Chunghwa must pay all outstanding taxes, offset deficits in prior years and set aside a legal reserve equal to 10% of its net income before distributing a dividend or making any other distribution to stockholders, except when the accumulated amount of such legal reserve equals to Chunghwa’s total issued capital, and depending on its business needs or requirements, may also set aside or reverse special reserves. No less than 50% of the remaining earnings comprising remaining balance of net income, if any, plus cumulative undistributed earnings shall be distributed as stockholders’ dividends, of which 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 stocks.

- 46 -

Chunghwa should appropriate or reverse a special reserve in accordance with Rule No. 1010012865 and Rule No. 1010047490 issued by the FSC and the directive entitled “Questions and Answers on Special Reserves Appropriated Following the Adoption of Taiwan-IFRSs”. Distributions can be made out of any subsequent reversal of the debit to other equity items.

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, when the legal reserve has exceeded 25% of Chunghwa’s paid-in capital, the excess may be transferred to capital or distributed in cash.

The appropriations of the 2018 and 2017 earnings of Chunghwa approved by the stockholders in their meetings on June 21, 2019 and June 15, 2018 were as follows:

	Appropriation of Earnings				Dividends Per Share (NT$)
	For Fiscal Year 2018		For Fiscal Year 2017		For Fiscal Year 2018		For Fiscal Year 2017
Reversal of special reserve	$	—	$	5,404
Cash dividends		34,745,603		37,204,714	$	4.479	$	4.796

Information of the appropriation of Chunghwa’s earnings proposed by the Board of Directors and approved by the stockholders is available on the Market Observation Post System website.

d. Other adjustments

1) Exchange differences arising from the translation of the foreign operations

The exchange differences arising from the translation of the foreign operations from their functional currency to New Taiwan dollars were recognized as exchange differences arising from the translation of the foreign operations in other comprehensive income.

2) Unrealized gain or loss on financial assets at FVOCI

	Nine Months Ended September 30
	2019			2018
Beginning balance	$	538,272		$	883,420
Unrealized gain or loss for the period Equity instruments		(464,400	)		(826,439	)
Ending balance	$	73,872		$	56,981

e. Noncontrolling interests

	Nine Months Ended September 30
	2019			2018
Beginning balance	$	10,009,948		$	8,693,650
Effect of retrospective application		(19,603	)		—
Beginning balance as adjusted		9,990,345			8,693,650
Shares attributed to noncontrolling interests
Net income for the period		714,213			689,937
Exchange differences arising from the translation of the foreign operations		18,068			(6,683	)

(Continued)

- 47 -

	Nine Months Ended September 30
	2019			2018
Unrealized gain or loss on financial assets at FVOCI	$	(10,157	)	$	1,807
Income tax relating to remeasurments of defined benefit pension plans		—			1,509
Share of other comprehensive income of associates accounted for using equity method		281			555
Cash dividends distributed by subsidiaries		(709,817	)		(958,446	)
Changes in additional paid-in capital from investments in associates accounted for using equity method		769			203
Partial disposal of interests in subsidiaries		—			348,353
Change in additional paid-in capital for not participating in the capital increase of subsidiaries		—			699,899
Share-based payment transactions of subsidiaries		16,428			38,120
Increase (decrease) in noncontrolling interests		(763	)		278,200
Ending balance	$	10,019,367		$	9,787,104

(Concluded)

28. REVENUES

	Three Months Ended September 30				Nine Months Ended September 30
	2019		2018		2019		2018
Revenue from contracts with customers	$	50,595,069	$	52,410,781	$	151,449,766	$	159,309,639
Other revenues
Rental income		216,558		171,658		607,370		486,927
Other		36,533		122,446		230,360		199,036
		253,091		294,104		837,730		685,963
	$	50,848,160	$	52,704,885	$	152,287,496	$	159,995,602

The information of performance obligations in customer contracts, please refer to Note 3 Summary of Significant Accounting Policies to the consolidated financial statements for the year ended December 31, 2018 for details.

a. Disaggregation of revenue

Nine months ended September 30, 2019

	Domestic Fixed Communi- cations Business		Mobile Communi- cations Business		Internet Business		International Fixed Communi- cations Business		Others		Total
Main Products and Service Revenues
Mobile services revenue	$	—	$	44,114,766	$	—	$	—	$	—	$	44,114,766
Sales of products		1,411,248		26,040,008		32,646		191,201		2,489,023		30,164,126
Local telephone and domestic long distance telephone services revenue		21,076,977		—		—		—		—		21,076,977
Broadband access and domestic leased line services revenue		16,550,818		—		—		—		—		16,550,818

(Continued)

- 48 -

	Domestic Fixed Communi- cations Business		Mobile Communi- cations Business		Internet Business		International Fixed Communi- cations Business		Others		Total
Data communications internet services revenue	$	—	$	—	$	15,722,032	$	—	$	—	$	15,722,032
International network and leased telephone services revenue		—		—		—		5,662,625		—		5,662,625
Others		7,815,573		790,131		6,017,643		2,960,312		574,763		18,158,422
	$	46,854,616	$	70,944,905	$	21,772,321	$	8,814,138	$	3,063,786	$	151,449,766

(Concluded)

Nine months ended September 30, 2018

	Domestic Fixed Communi- cations Business		Mobile Communi- cations Business		Internet Business		International Fixed Communi- cations Business		Others		Total
Main Products and Service Revenues
Mobile services revenue	$	—	$	48,867,385	$	—	$	—	$	—	$	48,867,385
Sales of products		1,250,685		26,089,979		16,632		180,933		2,904,720		30,442,949
Local telephone and domestic long distance telephone services revenue		22,678,369		—		—		—		—		22,678,369
Broadband access and domestic leased line services revenue		16,824,397		—		—		—		—		16,824,397
Data communications internet services revenue		—		—		15,816,447		—		—		15,816,447
International network and leased telephone services revenue		—		—		—		7,046,828		—		7,046,828
Others		7,501,594		908,820		5,424,719		3,172,069		626,062		17,633,264
	$	48,255,045	$	75,866,184	$	21,257,798	$	10,399,830	$	3,530,782	$	159,309,639

b. Contract balances

	September 30, 2019			December 31, 2018			September 30, 2018
Trade notes and account receivables (Note 9)	$	29,760,143		$	30,075,503		$	29,221,409
Contract assets
Products and service bundling	$	6,958,114		$	7,122,875		$	7,282,941
Other		113,785			108,581			109,568
Less: Loss allowance		(16,932	)		(18,770	)		—
	$	7,054,967		$	7,212,686		$	7,392,509
Current	$	4,516,992		$	4,868,728		$	5,078,820
Non-current		2,537,975			2,343,958			2,313,689
	$	7,054,967		$	7,212,686		$	7,392,509
Contract liabilities
Telecommunications business	$	12,530,094		$	8,193,215		$	8,464,901
Project business		9,820,467			4,508,200			3,832,921
Products and service bundling		44,068			105,559			149,259
Other		825,464			475,947			505,558
	$	23,220,093		$	13,282,921		$	12,952,639

(Continued)

- 49 -

	September 30, 2019		December 31, 2018		September 30, 2018
Current	$	16,417,493	$	10,687,772	$	10,392,850
Non-current		6,802,600		2,595,149		2,559,789
	$	23,220,093	$	13,282,921	$	12,952,639

(Concluded)

The changes in the contract asset and the contract liability balances primarily result from the timing difference between the satisfaction of performance obligations and the payments collected from customers.

The Company applies the simplified approach to providing for expected credit losses prescribed by IFRS 9, which permits the use of lifetime expected loss provision for receivables. Contract assets will be reclassified to trade receivables when the corresponding invoice is billed to the client. Contract assets have substantially the same risk characteristics as the trade receivables of the same types of contracts. Therefore, the Company concluded that the expected loss rates for trade receivables can be applied to the contract assets.

c. Incremental costs of obtaining contracts

	September 30, 2019		December 31, 2018		September 30, 2018
Noncurrent
Incremental costs of obtaining contracts	$	961,348	$	1,335,030	$	1,587,709

The Company considered the past experience and the default clauses in the telecommunications service contracts and believes the commissions and equipment subsidies paid for obtaining such contracts are expected to be recoverable, therefore, such costs are capitalized. Amortization recognized in the three months and nine months ended September 30, 2019 were $262,170 thousand and $953,109 thousand, respectively. Amortization recognized in the three months and nine months ended September 30, 2018 were $420,817 thousand and $1,519,228 thousand, respectively.

29. NET INCOME

a. Other income and expenses

	Three Months Ended September 30						Nine Months Ended September 30
	2019			2018			2019			2018
Loss on disposal of property, plant and equipment	$	(19,273	)	$	(8,753	)	$	(28,339	)	$	(38,503	)
Loss on disposal of intangible assets		—			—			(146	)		—
Impairment loss on intangible assets		—			—			—			(50,750	)
	$	(19,273	)	$	(8,753	)	$	(28,485	)	$	(89,253	)

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b. Other income

	Three Months Ended September 30				Nine Months Ended September 30
	2019		2018		2019		2018
Dividend income	$	55,511	$	164,154	$	296,360	$	395,593
Rental income		23,062		14,610		64,704		49,218
Others		65,010		88,778		118,195		180,359
	$	143,583	$	267,542	$	479,259	$	625,170

c. Other gains and losses

	Three Months Ended September 30						Nine Months Ended September 30
	2019			2018			2019			2018
Net foreign currency exchange gains	$	51,943		$	2,191		$	37,280		$	6,011
Gains (losses) on disposal of investments accounted for using equity method		—			—			30,152			(125	)
Gains on disposal of financial instruments		—			—			—			5,763
Valuation gains (losses) on financial assets and liabilities at fair value through profit or loss, net		2,800			4,428			(3,197	)		4,666
Others		(7,513	)		(10,390	)		(40,681	)		(40,884	)
	$	47,230		$	(3,771	)	$	23,554		$	(24,569	)

d. Impairment loss (reversal of impairment loss)

	Three Months Ended September 30					Nine Months Ended September 30
	2019			2018		2019			2018
Contract assets	$	(1,105	)	$	19,410	$	(1,838	)	$	19,410
Trade notes and accounts receivable	$	1,389		$	106,266	$	(23,064	)	$	839,302
Other receivables	$	9,684		$	30,140	$	(66,891	)	$	65,069
Inventories	$	10,415		$	86,723	$	155,761		$	122,884
Intangible assets	$	—		$	—	$	—		$	50,750

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e. Depreciation and amortization expenses

	Three Months Ended September 30				Nine Months Ended September 30
	2019		2018		2019		2018
Property, plant and equipment	$	6,732,778	$	6,849,673	$	20,184,095	$	20,598,183
Right-of-use assets		999,444		—		2,965,351		—
Investment properties		5,149		5,194		20,025		15,584
Intangible assets		1,062,234		1,107,595		3,191,249		3,282,482
Incremental costs of obtaining contracts		262,170		420,817		953,109		1,519,228
Total depreciation and amortization expenses	$	9,061,775	$	8,383,279	$	27,313,829	$	25,415,477
Depreciation expenses summarized by functions
Operating costs	$	7,256,485	$	6,493,284	$	21,686,614	$	19,474,658
Operating expenses		480,886		361,583		1,482,857		1,139,109
	$	7,737,371	$	6,854,867	$	23,169,471	$	20,613,767
Amortization expenses summarized by functions
Operating costs	$	1,267,217	$	1,470,665	$	3,971,884	$	4,612,851
Marketing expenses		23,552		24,601		73,728		89,916
General and administrative expenses		23,268		23,551		70,553		71,730
Research and development expenses		10,367		9,595		28,193		27,213
	$	1,324,404	$	1,528,412	$	4,144,358	$	4,801,710

f. Employee benefit expenses

	Three Months Ended September 30				Nine Months Ended September 30
	2019		2018		2019		2018
Post-employment benefit
Defined contribution plans	$	163,662	$	162,010	$	490,303	$	473,853
Defined benefit plans		714,690		738,139		2,144,702		2,215,002
		878,352		900,149		2,635,005		2,688,855
Share-based payment
Equity-settled share—based payment		429		483		1,288		16,940

(Continued)

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	Three Months Ended September 30				Nine Months Ended September 30
	2019		2018		2019		2018
Other employee benefit
Salaries	$	6,278,607	$	6,577,415	$	19,056,884	$	19,771,591
Insurance		682,712		679,151		2,072,893		2,056,703
Others		3,908,055		3,320,037		10,784,939		10,629,343
		10,869,374		10,576,603		31,914,716		32,457,637
Total employee benefit expenses	$	11,748,155	$	11,477,235	$	34,551,009	$	35,163,432
Summary by functions
Operating costs	$	5,984,774	$	5,908,401	$	17,731,271	$	18,212,803
Operating expenses		5,763,381		5,568,834		16,819,738		16,950,629
	$	11,748,155	$	11,477,235	$	34,551,009	$	35,163,432

(Concluded)

Chunghwa distributes employees’ compensation at the rates from 1.7% to 4.3% and remuneration to directors not higher than 0.17%, respectively, of net income before income tax, employees’ compensation, and remuneration of directors and supervisors.

If there is a change in the proposed amounts after the annual financial statements are authorized for issue, the differences are recorded as a change in accounting estimate.

The compensation to the employees and remuneration to the directors of 2018 and 2017 approved by the Board of Directors on March 19, 2019 and March 13, 2018, respectively, were as follows:

	Cash
	2018		2017
Compensation distributed to the employees	$	1,404,264	$	1,596,012
Remuneration paid to the directors		38,216		40,750

There was no difference between the initial accrual amounts recognized in 2018 and 2017 and the amounts approved by the Board of Directors in 2019 and 2018 of the aforementioned compensation to employees and the remuneration to directors.

Information of the appropriation of Chunghwa’s employees compensation and remuneration to directors and those approved by the Board of Directors is available on the Market Observation Post System website.

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30. INCOME TAX

a. Income tax recognized in profit or loss

The major components of income tax expense were as follows:

	Three Months Ended September 30						Nine Months Ended September 30
	2019			2018			2019			2018
Current tax
Current tax expenses recognized for the period	$	1,972,343		$	2,152,686		$	6,015,903		$	6,378,976
Income tax on unappropriated earnings		15,839			—			19,523			47,528
Income tax adjustments on prior years		(11,264	)		24,476			(35,452	)		22,828
Others		5,247			5,532			10,443			6,610
		1,982,165			2,182,694			6,010,417			6,455,942
Deferred tax
Deferred tax expenses recognized for the period		8,982			(44,399	)		10,354			253,761
Income tax adjustments on prior years		(616	)		—			(450	)		19,550
Change in tax rate		—			—			—			(37,652	)
		8,366			(44,399	)		9,904			235,659
Income tax recognized in profit or loss	$	1,990,531		$	2,138,295		$	6,020,321		$	6,691,601

Income Tax Act in the ROC was amended in 2018 and the corporate income tax rate is adjusted from 17% to 20%. All deferred tax resulting from the change of tax rate has been recognized in profit or loss in the period in which the change in tax rate occurs. In addition, the rate of the corporate surtax applicable to 2018 unappropriated earnings is reduced from 10% to 5%. The applicable tax rate used by subsidiaries in China is 25%, and tax rates used by other entities in the Company operating in other jurisdictions are based on the tax laws in those jurisdictions.

b. Income tax benefit recognized in other comprehensive income

	Three Months Ended September 30				Nine Months Ended September 30
	2019		2018		2019		2018
Deferred tax benefit
Change in tax rate	$	—	$	—	$	—	$	(207,269	)

c. Income tax examinations

Income tax returns of Chunghwa have been examined by the tax authorities through 2017. Income tax returns of Aval and HHI have been examined by the tax authorities through 2016. Income tax returns of CHSI, CHST, SENAO, CHIEF, CHI, CHPT, LED, Unigate, CLPT, SFD, CHYP, CHTSC, SHE, ISPOT, Youth, Youyi and SENYOUNG have been examined by the tax authorities through 2017.

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31. EARNINGS PER SHARE (“EPS”)

Net income and weighted average number of common stocks used in the calculation of earnings per share were as follows:

Net Income

	Three Months Ended September 30						Nine Months Ended September 30
	2019			2018			2019			2018
Net income used to compute the basic earnings per share
Net income attributable to the parent	$	8,090,541		$	8,504,207		$	25,014,993		$	27,093,228
Assumed conversion of all dilutive potential common stocks
Employee stock options and employee compensation of subsidiaries		(1,070	)		(1,330	)		(3,936	)		(6,430	)
Net income used to compute the diluted earnings per share	$	8,089,471		$	8,502,877		$	25,011,057		$	27,086,798

Weighted Average Number of Common Stocks

(Thousand Shares)

	Three Months Ended September 30				Nine Months Ended September 30
	2019		2018		2019		2018
Weighted average number of common stocks used to compute the basic earnings per share		7,757,447		7,757,447		7,757,447		7,757,447
Assumed conversion of all dilutive potential common stocks
Employee compensation		990		1,379		7,774		9,011
Weighted average number of common stocks used to compute the diluted earnings per share		7,758,437		7,758,826		7,765,221		7,766,458

Because Chunghwa may settle the employee compensation in shares or cash, Chunghwa shall presume that it 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. The dilutive effect of the shares needs to be considered until the approval of the number of shares to be distributed to employees as compensation in the following year.

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32. SHARE-BASED PAYMENT ARRANGEMENT

a. SENAO share-based compensation plan (“SENAO Plan”) described as follows:

Effective Date for Plan Registration	Resolution Date by SENAO’s Board of Directors	Stock Options Units (Thousand)		Exercise Price (NT$)
2012.05.28	2013.04.29		10,000	$ (Original price $	66.20 93.00)

Each option is eligible to subscribe for one common share when exercisable. Under the terms of the SENAO Plan, the options are granted at an exercise price equal to the closing price of the SENAO’s common stocks listed on the TSE on the higher of closing price or par value. The SENAO Plan have exercise price adjustment formula upon the changes in common stocks equity (including cash capital increase, new share issue through capitalization of earnings and additional paid-in capital, merger, spin off and new share issue for Global Depositary Shares, and so on) or distribution of cash dividends. The options of SENAO Plan 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.

No compensation cost of stock options granted on May 7, 2013 was recognized for the three months and nine months ended September 30, 2018 and 2019, respectively.

SENAO modified the plan terms of the outstanding stock options in July 2018 and the exercise price changed from $70.70 to $66.20 per share. The modification did not cause any incremental fair value granted.

Information about SENAO’s outstanding stock options for the nine months ended September 30, 2019 and 2018 was as follows:

	Nine Months Ended September 30
	2019					2018
	Granted on May 7, 2013					Granted on May 7, 2013
	Number of Options (Thousand)			Weighted Average Exercise Price (NT$)		Number of Options (Thousand)			Weighted Average Exercise Price (NT$)
Employee stock options
Options outstanding at beginning of the period		5,318		$	66.20		5,926		$	70.70
Options forfeited		(5,318	)		—		(585	)		—
Options outstanding at end of the period		—			—		5,341			66.20
Option exercisable at end of the period		—			—		5,341			66.20

As of September 30, 2019, there was no outstanding stock options.

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As of December 31, 2018, information about employee stock options outstanding 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$)
$	66.20		5,318		0.35	$	66.20		5,318	$	66.20

As of September 30, 2018, information about employee stock options outstanding 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$)
$	66.20		5,341		0.60	$	66.20		5,341	$	66.20

SENAO used the fair value method to evaluate the options using the Black-Scholes model and the related assumptions and the fair value of the options were as follows:

	Stock Options Granted on May 7, 2013
Grant-date share price (NT$)	$	93.00
Exercise price (NT$)	$	93.00
Dividends yield		—
Risk-free interest rate		0.91	%
Expected life		4.375 years
Expected volatility		36.22	%
Weighted average fair value of grants (NT$)	$	28.72

Expected volatility was based on the historical share price volatility of SENAO over the period equal to the expected life of SENAO Plan.

b. SENAO transferred the treasury stock

The Board of Directors of SENAO resolved to transfer treasury stock 6,658 thousand shares to specific employees in April 2018. The aforementioned treasury stock transferred to employees were measured at the fair value on the grant date. The compensation cost of $15,564 thousand was recognized for the nine months ended September 30 2018.

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SENAO used the fair value method to evaluate share-based payment transaction using the Black-Scholes model and the related assumptions and the fair value of the option were as follows:

	Stock Options Granted on May 7, 2018
Grant-date share price (NT$)	$	51.60
Exercise price (NT$)	$	49.28
Dividends yield		—
Risk-free interest rate		0.59	%
Expected life		18 days
Expected volatility		8.78	%
Weighted average fair value of grants (NT$)	$	2.34

Expected volatility was based on the historical share price volatility of SENAO over three months before the grant date.

c. CHIEF share-based compensation plan (“CHIEF Plan”) described as follows:

Effective Date for Plan Registration	Resolution Date by CHIEF’s Board of Directors	Stock Options Units		Exercise Price (NT$)
2017.12.18	2017.12.19		950.00	$ (Original price $	135.60 147.00	)
	2018.10.31		50.00	$ (Original price $	141.70 147.00	)
2015.11.17	2015.10.22		2,000.00	$ (Original price $	34.40 43.00	)

Each option is eligible to subscribe for one thousand common stocks when exercisable. The options are granted to specific employees that meet the vesting conditions. The CHIEF Plan has exercise price adjustment formula upon the changes in common stocks or distribution of cash dividends. The options of CHIEF Plan are valid for five years and the graded vesting schedule will vest two years after the grant date.

The compensation cost for stock options granted on October 31, 2018 were $138 thousand and $414 thousand for the three months and nine months ended September 30, 2019, respectively.

The compensation costs of stock options granted on December 19, 2017 were $167 thousand and $502 thousand for the three months and nine months ended September 30, 2019, respectively. The compensation costs were $168 thousand and $430 thousand for the three months and nine months ended September 30, 2018, respectively.

The compensation costs of stock options granted on October 22, 2015 were $124 thousand and $372 thousand for the three months and nine months ended September 30, 2019, respectively. The compensation costs were $315 thousand and $946 thousand for the three months and nine months ended September 30, 2018, respectively.

CHIEF modified the plan terms of stock options granted on October 31, 2016 in June 2019 and the exercise price changed from $147.00 to $141.70 per share. The modification did not cause any incremental fair value granted.

- 58 -

CHIEF modified the plan terms of stock options granted on December 19, 2017 in June 2019 and the exercise price changed from $140.60 to $135.60 per share. The modification did not cause any incremental fair value granted.

CHIEF modified the plan terms of stock options granted on December 19, 2017 in June and August 2018 and the exercise price changed from $147.00 to $144.10 and $140.60 per share, repectively. The modification did not cause any incremental fair value granted.

Information about CHIEF’s outstanding stock options for the nine months ended September 30, 2019 and 2018 was as follows:

	Nine Months Ended September 30, 2019
	Granted on October 31, 2018					Granted on December 19, 2017					Granted on October 22, 2015
	Number of Options			Weighted Average Exercise Price (NT$)		Number of Options			Weighted Average Exercise Price (NT$)		Number of Options			Weighted Average Exercise Price (NT$)
Employee stock options
Options outstanding at beginning of the period		50.00		$	147.00		925.00		$	140.60		882.75		$	34.40
Options exercised		—			—		—			—		(416.50	)		34.40
Options forfeited		(4.00	)		—		(32.00	)		—		(21.25	)		—
Options outstanding at end of the period		46.00			141.70		893.00			135.60		445.00			34.40
Options exercisable at end of the period		—			—		—			—		—			—

	Nine Months Ended September 30, 2018
	Granted on December 19, 2017					Granted on October 22, 2015
	Number of Options (Thousand)			Weighted Average Exercise Price (NT$)		Number of Options (Thousand)			Weighted Average Exercise Price (NT$)
Employee stock options
Options outstanding at beginning of the period		950.00		$	147.00		1,936.00		$	34.40
Options exercised		—			—		(968.00	)		34.40
Options forfeited		(16.00	)		—		(16.50	)		—
Options outstanding at end of the period		934.00			140.60		951.50			34.40
Option exercisable at end of the period		—			—		—			—

- 59 -

As of September 30, 2019, information about employee stock options outstanding was as follows:

Granted on October 31, 2018
Options Outstanding								Options Exercisable
Range of Exercise Price (NT$)		Number of Options		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price (NT$)		Number of Options		Weighted Average Exercise Price (NT$)
$	141.70		46.00		4.08	$	141.70		—	$	—

Granted on December 19, 2017
Options Outstanding								Options Exercisable
Range of Exercise Price (NT$)		Number of Options		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price (NT$)		Number of Options		Weighted Average Exercise Price (NT$)
$	135.60		893.00		3.22	$	135.60		—	$	—

Granted on October 22, 2015
Options Outstanding								Options Exercisable
Range of Exercise Price (NT$)		Number of Options		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price (NT$)		Number of Options		Weighted Average Exercise Price (NT$)
$	34.40		445.00		1.06	$	34.40		—	$	—

As of December 31, 2018, information about employee stock options outstanding was as follows:

Granted on October 31, 2018
Options Outstanding								Options Exercisable
Range of Exercise Price (NT$)		Number of Options		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price (NT$)		Number of Options		Weighted Average Exercise Price (NT$)
$	147.00		50.00		4.83	$	147.00		—	$	—

Granted on December 19, 2017
Options Outstanding								Options Exercisable
Range of Exercise Price (NT$)		Number of Options		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price (NT$)		Number of Options		Weighted Average Exercise Price (NT$)
$	140.60		925.00		3.96	$	140.60		—	$	—

- 60 -

Granted on October 22, 2015
Options Outstanding								Options Exercisable
Range of Exercise Price (NT$)		Number of Options		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price (NT$)		Number of Options		Weighted Average Exercise Price (NT$)
$	34.40		882.75		1.81	$	34.40		416.50	$	34.40

As of September 30, 2018, information about employee stock options outstanding was as follows:

Granted on December 19, 2017
Options Outstanding								Options Exercisable
Range of Exercise Price (NT$)		Number of Options		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price (NT$)		Number of Options		Weighted Average Exercise Price (NT$)
$	140.60		934.0		4.22	$	140.60		—	$	—

Granted on October 22, 2015
Options Outstanding								Options Exercisable
Range of Exercise Price (NT$)		Number of Options		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price (NT$)		Number of Options		Weighted Average Exercise Price (NT$)
$	34.40		951.5		2.06	$	34.40		—	$	—

CHIEF used the fair value method to evaluate the options using the Black-Scholes model and binomial option pricing model and the related assumptions and the fair value of the options were as follows:

	Stock Options Granted on October 31, 2018			Stock Options Granted on December 19, 2017			Stock Options Granted on October 22, 2015
Grant-date share price (NT$)	$	166.00		$	95.92		$	39.55
Exercise price (NT$)	$	147.00		$	147.00		$	43.00
Dividends yield		—			—			—
Risk-free interest rate		0.72	%		0.62	%		0.86	%
Expected life		5 years			5 years			5 years
Expected volatility		16.60	%		17.35	%		21.02	%
Weighted average fair value of grants (NT$)	$	33,540		$	2,318		$	4,863

Expected volatility was based on the average annualized historical share price volatility of CHIEF’s comparable companies before the grant date.

- 61 -

d. New shares reserved for subscription by employees under cash injection of CHIEF

In March 2018, the Board of Directors of CHIEF approved the cash injection to issue 7,842 thousand shares and simultaneously reserved 1,176 thousand shares for subscription by employees according to the Company Act of the ROC. Furthermore, when the employees subscribed some shares or discarded their rights to subscribe shares, the Board of Directors of CHIEF authorized the chairman of the Board of Directors to contact specific people or group to subscribe.

The aforementioned options granted to employees are accounted for and measured at fair value of the grant date. No compensation cost was recognized.

CHIEF used the fair value method to evaluate the options granted to employees on May 22, 2018 using the Black-Scholes model and the related assumptions and the fair value of the options were as follows:

	Stock Options Granted on May 22, 2018
Grant-date share price (NT$)	$	156.41
Exercise price (NT$)	$	170.00
Dividends yield		—
Risk-free interest rate		0.34	%
Expected life		7 days
Expected volatility		14.33	%
Weighted average fair value of grants (NT$)	$	—

Expected volatility was based on the average annualized historical share price volatility of CHIEF’s comparable companies before the grant date.

33. CASH FLOW INFORMATION

For the nine months ended September 30, 2019 and 2018, the Company entered into the following non-cash investing activities:

	Nine Months Ended September 30
	2019		2018
Increase in property, plant and equipment	$	14,752,470	$	18,801,873
Changes in other payables		1,604,212		545,011
	$	16,356,682	$	19,346,884

For the nine months ended September 30, 2019, changes in liabilities arising from financing activities, including non-cash transactions, were as follows:

	Balance on January 1,		Cash Flows from Financing			Changes in Non-Cash Transactions					Cash Flows from Operation Activities—Interest			Balance on September 30,
	2019		Activities			New Leases		Others			Paid			2019
Lease liabilities	$	10,340,057	$	(2,896,092	)	$	2,671,187	$	(464,893	)	$	(63,531	)	$	9,586,728

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34. CAPITAL MANAGEMENT

The Company manages its capital to ensure that entities in the Company will be able to continue as going concerns while maximizing the return to stakeholders through the optimization of the debt and equity balance.

The capital structure of the Company consists of debt of the Company and the equity attributable to the parent.

Some consolidated entities are required to maintain minimum paid-in capital amount as prescribed by the applicable laws.

The management reviews the capital structure of the Company as needed. As part of this review, the management considers the cost of capital and the risks associated with each class of capital.

According to the management’s suggestion, the Company maintains a balanced capital structure through paying cash dividends, increasing its share capital, purchasing outstanding shares, and proceeds from new debt or repayment of debt.

35. FINANCIAL INSTRUMENTS

Fair Value Information

The fair value measurement guidance establishes a framework for measuring fair value and expands disclosure about fair value measurements. The standard describes a fair value hierarchy based on three levels of inputs that may be used to measure fair value. These levels are:

Level 1 fair value measurements: These measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 fair value measurements: These measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3 fair value measurements: These measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

a. Financial instruments that are not measured at fair value but for which fair value is disclosed

The Company considers that the carrying amounts of financial assets and liabilities not measured at fair value approximate their fair values or the fair values cannot be reliable estimated, no financial instruments need to be disclosed on balance sheet date.

b. Financial instruments that are measured at fair values on a recurring basis

September 30, 2019

	Level 1		Level 2		Level 3		Total
Financial assets at FVTPL
Derivatives	$	—	$	83	$	—	$	83
Listed stocks		24,512		—		—		24,512

(Continued)

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	Level 1		Level 2		Level 3		Total
Non-listed stocks	$	—	$	—	$	512,736	$	512,736
	$	24,512	$	83	$	512,736	$	537,331
Financial assets at FVOCI
Equity investment	$	2,393,689	$	—	$	4,063,607	$	6,457,296
Financial liabilities at FVTPL
Derivatives	$	—	$	1,854	$	—	$	1,854

(Concluded)

December 31, 2018

	Level 1		Level 2		Level 3		Total
Financial assets at FVTPL
Non-listed stocks	$	—	$	—	$	517,362	$	517,362
Hedging financial assets	$	—	$	1,069	$	—	$	1,069
Financial assets at FVOCI
Equity investment	$	2,899,843	$	—	$	4,032,660	$	6,932,503
Financial liabilities at FVTPL
Derivatives	$	—	$	1,114	$	—	$	1,114

September 30, 2018

	Level 1		Level 2		Level 3		Total
Financial assets at FVTPL
Hybrid financial assets	$	—	$	195,682	$	—	$	195,682
Hedging financial assets	$	—	$	367	$	—	$	367
Financial assets at FVOCI
Equity investment	$	2,438,505	$	—	$	4,560,660	$	6,999,165
Financial liabilities at FVTPL
Derivatives	$	—	$	619	$	—	$	619

There were no transfers between Levels 1 and 2 for the nine months ended September 30, 2019 and 2018.

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The reconciliation for financial assets measured at Level 3 is listed below and the amount recognized in profit or loss is unrealized.

	Nine Months Ended September 30
	2019			2018
Financial assets
Beginning balance	$	4,550,022		$	4,467,650
Acquisitions		—			289,580
Recognized in profit or loss under “Other gains and losses”		(4,626	)		—
Recognized in other comprehensive income under “Unrealized gain or loss on investments in equity instruments at fair value through other comprehensive income”		30,947			(192,548	)
Proceed from return of investments		—			(4,022	)
Ending balance	$	4,576,343		$	4,560,660

The fair values of financial assets and financial liabilities of Level 2 are determined as follows:

1) The fair values of financial assets and financial liabilities with standard terms and conditions and traded in active markets are determined with reference to quoted market prices.

2) For derivatives, fair values are estimated using discounted cash flow model. Future cash flows are estimated based on observable inputs including forward exchange rates at the end of the reporting periods and the forward and spot exchange rates stated in the contracts, discounted at a rate that reflects the credit risk of various counterparties.

3) For hybrid financial assets, fair values are estimated based on the related financial instrument information provided by financial institution. The valuation is measured at the principal of deposit and the yield rate of the embedded instrument.

The fair values of non-listed domestic and foreign equity investments were Level 3 fair value assets, and determined using the market approach by reference the Price-to-Book ratios (P/B ratios) of peer companies that traded in active market or using assets approach. The significant unobservable inputs used were listed in the table below. A decrease in discount for the lack of marketability or noncontrolling interests discount would result in increases in the fair values.

	September 30, 2019	December 31, 2018	September 30, 2018
Discount for lack of marketability	12.73%-20.00%	12.73%-20.00%	14.25%-20.00%
Noncontrolling interests discount	24.41%-25.00%	24.41%-25.00%	23.00%-24.40%

If the inputs to the valuation model were changed to reflect reasonably possible alternative assumptions while all the other variables were held constant, the fair values of equity investments would increase as below table. When related discounts increase, the fair value of equity investments would be the negative amount of the same amount.

	September 30, 2019		September 30, 2018
Discount for lack of marketability 5% decrease	$	268,494	$	248,513
Noncontrolling interests discount 5% decrease	$	17,480	$	19,948

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Categories of Financial Instruments

	September 30, 2019		December 31, 2018		September 30, 2018
Financial assets
Measured at FVTPL
Mandatorily measured at FVTPL	$	537,331	$	517,362	$	195,682
Hedging financial assets		—		1,069		367
Financial assets at amortized cost (Note a)		64,636,992		70,240,962		58,761,423
Financial assets at FVOCI		6,457,296		6,932,503		6,999,165
Financial liabilities
Measured at FVTPL
Held for trading		1,854		1,114		619
Measured at amortized cost (Note b)		35,201,773		40,335,289		40,084,783

Note a:	The balances included cash and cash equivalents, trade notes and accounts receivable, receivables from related parties, other current monetary assets and refundable deposits (classified as other noncurrent assets), which were financial assets measured at amortized cost.
Note b:	The balances included short-term loans, trade notes and accounts payable, payables to related parties, partial other payables, customers’ deposits and long-term loans which were financial liabilities carried at amortized cost.

Financial Risk Management Objectives

The main financial instruments of the Company include equity investments, accounts receivable, accounts payable, lease liabilities and loans. The Company’s Finance Department provides services to its business units, co-ordinates access to domestic and international capital markets, monitors and manages the financial risks relating to the operations of the Company through internal risk reports which analyze exposures by degree and magnitude of risks. These risks include market risk (including foreign currency risk, interest rate risk and other price risk), credit risk, and liquidity risk.

The Company seeks to minimize the effects of these risks by using derivative financial instruments to hedge risk exposures. The use of financial derivatives is governed by the Company’s policies approved by the Board of Directors. Those derivatives are used to hedge the risks of exchange rate fluctuation arising from operating or investment activities. Compliance with policies and risk exposure limits is reviewed by the Company’s Finance Department on a continuous basis. The Company does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

Chunghwa reports the significant risk exposures and related action plans timely and actively to the audit committee and to the Board of Directors if needed.

a. Market risk

The Company is exposed to market risks of changes in foreign currency exchange rates and interest rates. The Company uses forward exchange contracts to hedge the exchange rate risk arising from assets and liabilities denominated in foreign currencies.

There were no changes to the Company’s exposure to market risks or the manner in which these risks are managed and measured.

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1) Foreign currency risk

The carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities at the balance sheet dates were as follows:

	September 30, 2019		December 31, 2018		September 30, 2018
Assets
USD	$	6,165,652	$	5,903,025	$	6,306,993
EUR		32,842		34,059		20,253
SGD		67,691		123,916		94,354
JPY		17,451		16,689		16,781
RMB		9,314		2,082		932
Liabilities
USD		6,519,851		6,998,564		6,882,060
EUR		338,103		1,216,812		1,531,019
SGD		1,270,743		50,921		48,050
JPY		16,178		13,968		19,759
RMB		701		—		—

The carrying amounts of the Company’s derivatives with exchange rate risk exposures at the balance sheet dates were as follows:

	September 30, 2019		December 31, 2018		September 30, 2018
Assets
USD	$	83	$	—	$	—
EUR		—		1,069		367
Liabilities
USD		47		217		383
EUR		1,807		897		236

Foreign currency sensitivity analysis

The Company is mainly exposed to the fluctuations of the currencies USD, EUR, SGD, JPY and RMB listed above.

The following table details the Company’s sensitivity to a 5% increase and decrease in the functional currency against the relevant foreign currencies. 5% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the reasonably possible changes in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and forward exchange contracts. A positive number below indicates an increase in pre-tax profit or equity where the functional currency weakens 5% against the relevant currency.

	Nine Months Ended September 30
	2019			2018
Profit or loss
Monetary assets and liabilities (a)
USD	$	(17,710	)	$	(28,753	)
EUR		(15,263	)		(75,538	)
SGD		(60,153	)		2,315

(Continued)

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	Nine Months Ended September 30
	2019		2018
JPY	$	64	$	(149	)
RMB		431		47
Derivatives (b)
USD		2,498		2,618
EUR		2,662		19,261
Equity
Derivatives (c)
EUR		—		4,435

(Concluded)

a) This is mainly attributable to the exposure to foreign currency denominated receivables and payables of the Company outstanding at the balance sheet dates.

b) This is mainly attributable to the forward exchange contracts.

c) This is mainly attributable to the changes in the fair value of derivatives that are designated as cash flow hedges.

For a 5% strengthening of the functional currency against the relevant currencies, it would have equal but opposite effect on the pre-tax profit or equity for the amounts shown above.

2) Interest rate risk

The carrying amounts of the Company’s exposures to interest rates on financial assets and financial liabilities at the balance sheet dates were as follows:

	September 30, 2019		December 31, 2018		September 30, 2018
Fair value interest rate risk
Financial assets	$	17,015,191	$	25,821,638	$	15,282,885
Financial liabilities		9,586,728		—		—
Cash flow interest rate risk
Financial assets		12,605,731		9,160,863		10,213,768
Financial liabilities		1,690,000		1,700,000		1,720,000

Interest rate sensitivity analysis

The sensitivity analyses below have been determined based on the exposure to interest rates for non-derivative instruments at the end of the reporting period. A 25 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.

If interest rates had been 25 basis points higher/lower and all other variables were held constant, the Company’s pre-tax income would increase/decrease by $27,289 thousand and $21,234 thousand for the nine months ended September 30, 2019 and 2018, respectively. This is mainly attributable to the Company’s exposure to floating interest rates on its financial assets and short-term and long-term loan.

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3) Other price risk

The Company is exposed to equity price risks arising from equity securities investments. Such investments are held for strategic rather than trading purposes. The management managed the risk through holding various risk portfolios. Further, the Company assigned finance and investment departments to monitor the price risk.

Equity price sensitivity analysis

The sensitivity analyses below have been determined based on the exposure to equity price risks at the end of the reporting period.

If equity prices had been 5% higher/lower, pre-tax profit and pre-tax other comprehensive income would have increased/decreased by $26,862 thousand and $322,685 thousand as a result of the changes in fair value of financial assets at FVTPL and financial assets at FVOCI for the nine months ended September 30, 2019. If equity prices had been 5% higher/lower, other comprehensive income would have increased/decreased by $349,958 thousand as a result of the changes in fair value of financial assets at FVTPL for the nine months ended September 30, 2018.

b. Credit risk

Credit risk refers to the risk that a counterparty would default on its contractual obligations resulting in financial loss to the Company. The maximum credit exposure of the aforementioned financial instruments is equal to their carrying amounts recognized in consolidated balance sheet as of the balance sheet date.

The Company has large trade receivables outstanding with its customers. A substantial majority of the Company’s outstanding trade receivables are not covered by collateral or credit insurance. The Company has implemented ongoing measures including enhancing credit assessments and strengthening overall risk management to reduce its credit risk. While the Company has procedures to monitor and limit exposure to credit risk on trade receivables, there can be no assurance such procedures will effectively limit its credit risk and avoid losses. This risk is heightened during periods when economic conditions worsen.

As the Company serves a large number of unrelated consumers, the concentration of credit risk was limited.

c. Liquidity risk

The Company manages and maintains sufficient cash and cash equivalent position to support the operations and reduce the impact on fluctuation of cash flow.

1) Liquidity and interest risk tables

The following tables detailed the Company’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables had been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company is required to pay.

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	Weighted Average Effective Interest Rate (%)		Less than 1 Month		1-3 Months		3 Months to 1 Year		1-5 Years		More than 5 Years		Total
September 30, 2019
Non-derivative financial liabilities
Non-interest bearing		—	$	35,426,583	$	—	$	1,976,987	$	4,645,677	$	—	$	42,049,247
Floating interest rate instruments		0.98		10,000		—		80,000		1,600,000		—		1,690,000
			$	35,436,583	$	—	$	2,056,987	$	6,245,677	$	—	$	43,739,247

Information about the maturity analysis for lease liabilities was as follows:

	Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years		Total
Lease liabilities	$	3,266,203	$	4,341,335	$	1,553,871	$	602,270	$	9,763,679

	Weighted Average Effective Interest Rate (%)		Less than 1 Month		1-3 Months		3 Months to 1 Year		1-5 Years		More than 5 Years		Total
December 31, 2018
Non-derivative financial liabilities
Non-interest bearing		—	$	41,808,326	$	—	$	2,889,800	$	4,716,571	$	—	$	49,414,697
Floating interest rate instruments		0.98		—		—		100,000		1,600,000		—		1,700,000
			$	41,808,326	$	—	$	2,989,800	$	6,316,571	$	—	$	51,114,697
September 30, 2018
Non-derivative financial liabilities
Non-interest bearing		—	$	39,702,035	$	—	$	2,276,232	$	4,664,558	$	—	$	46,642,825
Floating interest rate instruments		0.99		20,000		—		100,000		1,600,000		—		1,720,000
			$	39,722,035	$	—	$	2,376,232	$	6,264,558	$	—	$	48,362,825

The following table detailed the Company’s liquidity analysis for its derivative financial instruments. The table had been drawn up based on the undiscounted gross inflows and outflows on those derivatives that require gross settlement.

	Less than 1 Month			1-3 Months			3 Months to 1 Year		1-5 Years		Total
September 30, 2019
Gross settled
Forward exchange contracts
Inflow	$	49,953		$	53,327		$	—	$	—	$	103,280
Outflow		49,917			55,134			—		—		105,051
	$	36		$	(1,807	)	$	—	$	—	$	(1,771	)
December 31, 2018
Gross settled
Forward exchange contracts
Inflow	$	62,035		$	238,302		$	126,401	$	—	$	426,738
Outflow		62,252			238,459			126,072		—		426,783
	$	(217	)	$	(157	)	$	329	$	—	$	(45	)

(Continued)

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	Less than 1 Month			1-3 Months		3 Months to 1 Year			1-5 Years		Total
September 30, 2018
Gross settled
Forward exchange contracts
Inflow	$	52,382		$	422,080	$	53,212		$	—	$	527,674
Outflow		52,765			421,322		53,839			—		527,926
	$	(383	)	$	758	$	(627	)	$	—	$	(252	)

(Concluded)

2) Financing facilities

	September 30, 2019		December 31, 2018		September 30, 2018
Unsecured bank loan facility
Amount used	$	123,305	$	132,445	$	133,385
Amount unused		46,111,895		46,328,280		51,324,490
	$	46,235,200	$	46,460,725	$	51,457,875
Secured bank loan facility
Amount used	$	1,600,000	$	1,600,000	$	1,600,000
Amount unused		1,340,000		1,340,000		1,340,000
	$	2,940,000	$	2,940,000	$	2,940,000

36. RELATED PARTIES TRANSACTIONS

The ROC Government, one of Chunghwa’s customers, has 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 in the normal course of business and at arm’s-length prices. The transactions with the ROC government bodies have not been disclosed because the transactions are not individually or collectively significant. However, the related revenues and operating costs have been appropriately recorded.

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

Company	Relationship
Taiwan International Standard Electronics Co., Ltd.	Associate
So-net Entertainment Taiwan Limited	Associate
KKBOX Taiwan Co., Ltd.	Associate
KingwayTek Technology Co., Ltd.	Associate
UUPON Inc.	Associate
Taiwan International Ports Logistics Corporation	Associate
International Integrated System, Inc.	Associate
Senao Networks, Inc.	Associate
EnRack Technology Inc.	Subsidiary of the Company’s associate, Senao Networks, Inc.

(Continued)

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Company	Relationship
Emplus Technologies, Inc.	Subsidiary of the Company’s associate, Senao Networks, Inc.
ST-2 Satellite Ventures Pte., Ltd.	Associate
Viettel-CHT Co., Ltd.	Associate
Click Force Co., Ltd.	Associate
Alliance Digital Tech Co., Ltd.	Associate
MeWorks LIMITED ( HK )	Associate
Chunghwa PChome Fund I Co., Ltd. (“CPFI”)	Associate
Cornerstone Ventures Co., Ltd. (“CVC”)	Associate
Other related parties
Chunghwa Telecom Foundation	A nonprofit organization of which the funds donated by Chunghwa exceeds one third of its total funds
Senao Technical and Cultural Foundation	A nonprofit organization of which the funds donated by SENAO exceeds one third of its total funds
Sochamp Technology Co., Ltd.	Investor of significant influence over CHST
E-Life Mall Co., Ltd.	One of the directors of E-Life Mall and a director of SENAO are members of an immediate family
Engenius Technologies Co., Ltd.	Chairman of Engenius Technologies Co., Ltd. is a member of SENAO’s management
Cheng Keng Investment Co., Ltd.	Chairman of Cheng Keng Investment Co., Ltd. and SENAO’s chief executive officer are members of an immediate family
Cheng Feng Investment Co., Ltd.	Chairman of Cheng Feng Investment Co., Ltd. and SENAO’s chief executive officer are members of an immediate family
All Oriented Investment Co., Ltd.	Chairman of All Oriented Investment Co., Ltd. and SENAO’s chief executive officer are members of an immediate family
Hwa Shun Investment Co., Ltd.	Chairman of Hwa Shun Investment Co., Ltd. and SENAO’s chief executive officer are members of an immediate family
Yu Yu Investment Co., Ltd.	Chairman of Yu Yu Investment Co., Ltd. and SENAO’s chief executive officer are members of an immediate family
United Daily News Co., Ltd.	Investor of significant influence over SFD
Shenzhen Century Communication Co., Ltd.	Investor of significant influence over SCT
Taoyuan Aerotropolis Co., Ltd.	Investor of significant influence over TASUI

(Concluded)

b. Balances and transactions between Chunghwa and its subsidiaries, which are related parties of Chunghwa, have been eliminated on consolidation and are not disclosed in this note. Terms of the foregoing transactions with related parties were not significantly different from transactions with non-related parties. When no similar transactions with non-related parties can be referenced, terms were determined in accordance with mutual agreements. Details of transactions between the Company and other related parties are disclosed below:

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1) Operating transactions

	Revenues
	Three Months Ended September 30				Nine Months Ended September 30
	2019		2018		2019		2018
Associates	$	70,117	$	71,727	$	195,172	$	257,457
Others		16,473		27,829		57,333		64,741
	$	86,590	$	99,556	$	252,505	$	322,198

	Operating Costs and Expenses
	Three Months Ended September 30				Nine Months Ended September 30
	2019		2018		2019		2018
Associates	$	221,095	$	308,872	$	575,777	$	798,509
Others		5,933		4,099		72,021		70,876
	$	227,028	$	312,971	$	647,798	$	869,385

2) Non-operating transactions

	Non-operating Income and Expenses
	Three Months Ended September 30				Nine Months Ended September 30
	2019		2018		2019		2018
Associates	$	38,135	$	7,819	$	22,193	$	23,430
Others		221		7		238		24
	$	38,356	$	7,826	$	22,431	$	23,454

3) Receivables

	September 30, 2019		December 31, 2018		September 30, 2018
Associates	$	12,960	$	10,785	$	15,574
Others		6,117		13,485		15,493
	$	19,077	$	24,270	$	31,067

4) Payables

	September 30, 2019		December 31, 2018		September 30, 2018
Associates	$	375,633	$	914,177	$	540,449
Others		3,387		3,774		3,470
	$	379,020	$	917,951	$	543,919

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5) Customers’ deposits

	September 30, 2019		December 31, 2018		September 30, 2018
Associates	$	6,809	$	5,925	$	5,932

6) Acquisition of property, plant and equipment

	Three Months Ended September 30				Nine Months Ended September 30
	2019		2018		2019		2018
Associates	$	62,988	$	39,711	$	94,823	$	39,711
Others		182		—		182		—
	$	63,170	$	39,711	$	95,005	$	39,711

7) Lease-in agreements

Chunghwa 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 for 15 years which should start from the official operation of ST-2 satellite and the total contract value is approximately $6,000,000 thousand (SG$260,723 thousand), including a prepayment of $3,067,711 thousand, and the rest of amount should 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.

2019

The lease liabilities of ST-2 Satellite Ventures Pte., Ltd. as of September 30, 2019 was as follows:

	September 30, 2019
Lease liabilities—current	$	189,876
Lease liabilities—noncurrent		1,077,779
	$	1,267,655

The interest expense recognized for the aforementioned lease liabilities for the three months and nine months ended September 30, 2019 are $2,675 thousand and $8,347 thousand, respectively.

2018

The total rental expense for the three months ended September 30, 2018 was $98,694 thousand, which consisted of an offsetting credit of the prepayment of $51,100 thousand and an additional accrual of $47,594 thousand. The total rental expense for the nine months ended September 30, 2018 was $295,538 thousand, which consisted of an offsetting credit of the prepayment of $153,300 thousand and an additional accrual of $142,238 thousand. The prepaid rents (classified as prepayments) as of December 31, 2018 and September 30, 2018, were as follows:

	December 31, 2018		September 30, 2018
Prepaid rents—current	$	204,398	$	204,398
Prepaid rents—noncurrent		1,345,623		1,396,721
	$	1,550,021	$	1,601,119

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c. Compensation of key management personnel

The compensation of directors and key management personnel was as follows:

	Three Months Ended September 30				Nine Months Ended September 30
	2019		2018		2019		2018
Short-term employee benefits	$	74,139	$	67,504	$	209,553	$	216,768
Post-employment benefits		2,070		2,299		6,349		6,983
Share-based payment		70		108		202		9,401
	$	76,279	$	69,911	$	216,104	$	233,152

The compensation of directors and key management personnel was mainly determined by the compensation committee having regard to the performance of individual and market trends.

37. PLEDGED ASSETS

The following assets are pledged as collaterals for bank loans and custom duties of the imported materials.

	September 30, 2019		December 31, 2018		September 30, 2018
Property, plant and equipment	$	2,498,703	$	2,520,838	$	2,528,217
Land held under development (included in inventories)		1,998,733		1,998,733		1,998,733
Restricted assets (included in other assets - others)		2,500		2,500		2,500
	$	4,499,936	$	4,522,071	$	4,529,450

38. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

As of September 30, 2019, the Company’s significant commitments and contingent liabilities, excluding those disclosed in other notes, were as follows:

a. Acquisitions of land and buildings of $62,597 thousand.

b. Acquisitions of telecommunications equipment of $13,678,081 thousand.

c. Unused letters of credit amounting to $50,000 thousand.

- 75 -

d. 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 other monetary assets—noncurrent). If the fund is not sufficient, Chunghwa will contribute the remaining $1,000,000 thousand upon notification from the Taipei City Government.

e. CHPT signed the contract for its headquarters construction amounted to $1,613,800 thousand in July, 2017. The payment of $1,294,249 thousand has been made as of September 30, 2019.

f. The Company committed to participate in the capital increase of Taiwania Capital Buffalo Fund Co., Ltd. at its original ownership percentage and paid $300,000 thousand in October 2019.

39. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The following information summarizes the disclosure of the currency which is other than functional currency of Chunghwa and its subsidiaries. The following exchange rates are the exchange rates used to translate to the presentation currency in the consolidated financial statements, which is NTD:

	September 30, 2019
	Foreign Currencies (Thousands)		Exchange Rate		New Taiwan Dollars (Thousands)
Assets denominated in foreign currencies
Monetary items
USD	$	198,635		31.04	$	6,165,652
EUR		967		33.95		32,842
SGD		3,013		22.47		67,691
JPY		60,635		0.288		17,451
RMB		2,141		4.35		9,314
Non-monetary items
Investments accounted for using equity method
SGD		25,605		22.47		575,355
VND		247,231,882		0.00122		301,623
Liabilities denominated in foreign currencies
Monetary items
USD		210,047		31.04		6,519,851
EUR		9,959		33.95		338,103
SGD		56,553		22.47		1,270,743
JPY		56,213		0.288		16,178
RMB		161		4.35		701
	December 31, 2018
	Foreign Currencies (Thousands)		Exchange Rate		New Taiwan Dollars (Thousands)
Assets denominated in foreign currencies
Monetary items
USD	$	192,187		30.72	$	5,903,025
EUR		968		35.20		34,059

(Continued)

- 76 -

	December 31, 2018
	Foreign Currencies (Thousands)		Exchange Rate		New Taiwan Dollars (Thousands)
SGD	$	5,512		22.48	$	123,916
JPY		60,034		0.278		16,689
RMB		466		4.472		2,082
Non-monetary items
Investments accounted for using equity method
SGD		22,066		22.48		496,033
VND		238,757,968		0.0012		286,510
Liabilities denominated in foreign currencies
Monetary items
USD		227,855		30.72		6,998,564
EUR		34,569		35.20		1,216,812
SGD		2,265		22.48		50,921
JPY		50,243		0.278		13,968

(Concluded)

	September 30, 2018
	Foreign Currencies (Thousands)		Exchange Rate		New Taiwan Dollars (Thousands)
Assets denominated in foreign currencies
Monetary items
USD	$	206,617		30.53	$	6,306,993
EUR		571		35.48		20,253
SGD		4,226		22.33		94,354
JPY		62,336		0.269		16,781
RMB		210		4.436		932
Non-monetary items
Investments accounted for using equity method
SGD		25,023		22.33		558,770
VND		227,383,898		0.00118		268,313
Liabilities denominated in foreign currencies
Monetary items
USD		225,457		30.53		6,882,060
EUR		43,152		35.48		1,531,019
SGD		2,152		22.33		48,050
JPY		73,399		0.269		19,759

The unrealized foreign currency exchange gains and losses were gain of $26,460 thousand and loss of $38,860 thousand for the three months ended September 30, 2019 and 2018, respectively. The unrealized foreign currency exchange gains and losses were gain of $15,397 thousand and loss of $8,994 thousand for the nine months ended September 30, 2019 and 2018, respectively. Due to the various foreign currency transactions and the functional currency of each individual entity of the Company, foreign exchange gains and losses cannot be disclosed by the respective significant foreign currency.

- 77 -

40. ADDITIONAL DISCLOSURES

Following are the additional disclosures required by the FSC for the Company:

a. Financing provided: None.

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

c. Marketable securities held (excluding investments in subsidiaries and associates): Please see Table 2.

d. Marketable securities acquired and disposed of at costs or prices at least $300 million or 20% of the paid-in capital: None.

e. Acquisition of individual real estate at costs of at least $300 million or 20% of the paid-in capital: Please see Table 3.

f. Disposal of individual real estate at prices of at least $300 million or 20% of the paid-in capital: None.

g. Total purchases from or sales to related parties amounting to at least $100 million or 20% of the paid-in capital: Please see Table 4.

h. Receivables from related parties amounting to $100 million or 20% of the paid-in capital: Please see Table 5.

i. Names, locations, and other information of investees on which the Company exercises significant influence (excluding investment in Mainland China): Please see Table 6.

j. Derivative instruments transactions: Please see Notes 7, 20 and 35.

k. Investment in Mainland China: Please see Table 7.

l. Intercompany relationships and significant intercompany transaction: Please see Table 8.

41. SEGMENT INFORMATION

The Company has the following reportable segments that provide different products or services. The reportable segments are managed separately because each segment represents a strategic business unit that serves different markets. Segment information is provided to CEO who allocates resources and assesses segment performance. The Company’s measure of segment performance is mainly based on revenues and income before income tax. The Company’s reportable segments are as follows:

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

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

c. Internet business—the provision of HiNet services and related services;

- 78 -

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

e. Others—the provision of non-telecom services and the corporate related items not allocated to reportable segments.

Some operating segments have been aggregated into a single operating segment taking into account the following factors: (a) similar economic characteristics such as long-term gross profit margins; (b) the nature of the telecommunications products and services are similar; (c) the nature of production processes of the telecommunications products and services are similar; (d) the type or class of customer for the telecommunications products and services are similar; and (e) the methods used to provide the services to the customers are similar.

There was no material differences between the accounting policies of the operating segments and the accounting policies described in Note 3.

Segment Revenues and Operating Results

Analysis by reportable segment of revenue and operating results of continuing operations are as follows:

	Domestic Fixed Communi- cations Business		Mobile Communi- cations Business		Internet Business		International Fixed Communi- cations Business		Others			Total
For the three months ended September 30, 2019
Revenues
From external customers	$	15,626,976	$	23,629,079	$	7,269,202	$	2,941,355	$	1,381,548		$	50,848,160
Intersegment revenues		4,025,434		389,498		980,963		576,929		1,261,373			7,234,197
Segment revenues	$	19,652,410	$	24,018,577	$	8,250,165	$	3,518,284	$	2,642,921			58,082,357
Intersegment elimination													(7,234,197	)
Consolidated revenues												$	50,848,160
Segments operating costs and expenses	$	13,492,888	$	17,965,998	$	3,344,164	$	2,929,556	$	3,086,948		$	40,819,554
Segment income before income tax	$	4,625,431	$	2,838,741	$	2,962,026	$	267,236	$	(256,908	)	$	10,436,526
For the nine months ended September 30, 2019
Revenues
From external customers	$	47,336,075	$	71,006,351	$	21,945,887	$	8,821,448	$	3,177,735		$	152,287,496
Intersegment revenues		12,061,671		1,133,367		2,911,479		1,715,751		3,438,839			21,261,107
Segment revenues	$	59,397,746	$	72,139,718	$	24,857,366	$	10,537,199	$	6,616,574			173,548,603
Intersegment elimination													(21,261,107	)
Consolidated revenues												$	152,287,496
Segments operating costs and expenses	$	40,594,438	$	53,719,290	$	9,982,674	$	8,797,681	$	8,449,741		$	121,543,824
Segment income before income tax	$	14,565,179	$	8,779,149	$	8,994,894	$	734,580	$	(1,324,275	)	$	31,749,527
For the three months ended September 30, 2018
Revenues
From external customers	$	16,496,740	$	23,446,380	$	7,188,615	$	4,190,691	$	1,382,459		$	52,704,885
Intersegment revenues		4,101,647		412,040		1,095,076		471,890		1,196,291			7,276,944
Segment revenues	$	20,598,387	$	23,858,420	$	8,283,691	$	4,662,581	$	2,578,750			59,981,829
Intersegment elimination													(7,276,944	)
Consolidated revenues												$	52,704,885
Segments operating costs and expenses	$	14,610,433	$	17,308,953	$	3,289,216	$	4,008,965	$	3,061,835		$	42,279,402
Segment income before income tax	$	4,523,392	$	3,113,999	$	3,179,749	$	314,605	$	(271,174	)	$	10,860,571

(Continued)

- 79 -

	Domestic Fixed Communi- cations Business		Mobile Communi- cations Business		Internet Business		International Fixed Communi- cations Business		Others			Total
For the nine months ended September 30, 2018
Revenues
From external customers	$	48,735,029	$	75,904,284	$	21,316,442	$	10,408,126	$	3,631,721		$	159,995,602
Intersegment revenues		12,997,387		1,290,565		2,906,366		1,686,202		3,500,178			22,380,698
Segment revenues	$	61,732,416	$	77,194,849	$	24,222,808	$	12,094,328	$	7,131,899			182,376,300
Intersegment elimination													(22,380,698	)
Consolidated revenues												$	159,995,602
Segments operating costs and expenses	$	43,345,319	$	54,754,504	$	9,409,477	$	10,327,998	$	8,655,580		$	126,492,878
Segment income before income tax	$	13,992,048	$	12,201,127	$	8,595,206	$	698,715	$	(1,012,330	)	$	34,474,766

(Concluded)

Main Products and Service Revenues

	Three Months Ended September 30				Nine Months Ended September 30
	2019		2018		2019		2018
Mobile services revenue	$	14,729,163	$	15,016,988	$	44,114,766	$	48,867,385
Sales of products		10,318,026		9,727,746		30,164,126		30,442,949
Local telephone and domestic long distance telephone services revenue		7,004,246		7,498,097		21,076,977		22,678,369
Broadband access and domestic leased line services revenue		5,491,616		5,575,452		16,550,818		16,824,397
Data communications internet services revenue		5,219,220		5,275,797		15,722,032		15,816,447
International network and leased telephone services revenue		1,790,271		2,945,898		5,662,625		7,046,828
Others		6,295,618		6,664,907		18,996,152		18,319,227
	$	50,848,160	$	52,704,885	$	152,287,496	$	159,995,602

- 80 -

TABLE 1

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

ENDORSEMENTS/GUARANTEES PROVIDED

NINE MONTHS ENDED SEPTEMBER 30, 2019

(Amounts in Thousands of New Taiwan Dollars)

No. (Note 1)	Endorsement/ Guarantee Provider	Guaranteed Party			Limits on Endorsement/ Guarantee Amount Provided to Each Guaranteed Party		Maximum Balance for the Period		Ending Balance		Actual Borrowing Amount		Amount of Endorsement/ Guarantee Collateralized by Properties		Ratio of Accumulated Endorsement/ Guarantee to Net Equity Per Latest Financial Statements		Maximum Endorsement/ Guarantee Amount Allowable		Endorsement/ Guarantee Given by Parent on Behalf of Subsidiaries		Endorsement/ Guarantee Given by Subsidiaries on Behalf of Parent		Endorsement/ Guarantee Given on Behalf of Companies in Mainland China		Note
		Name	Nature of Relationship (Note 2)
1	Senao International Co., Ltd.	Aval Technologies Co., Ltd.		b	$	573,704	$	300,000	$	300,000	$	300,000	$	—		5.23	$	2,868,521		Yes		No		No		Notes 3 and 4
		Wiin Technology Co., Ltd.		b		573,704		100,000		100,000		—		—		1.74		2,868,521		Yes		No		No		Notes 3 and 4

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. A company with which it does business.

b. A company in which the Company directly and indirectly holds more than 50 percent of the voting shares.

c. A company that directly and indirectly holds more than 50 percent of the voting shares in the Company.

d. Companies in which the Company holds, directly or indirectly, 90% or more of the voting shares.

e. The Company fulfills its contractual obligations by providing mutual endorsements/guarantees for another company in the same industry or for joint builders for purposes of undertaking a construction project.

f. All capital contributing shareholders make endorsements/guarantees for their jointly invested company in proportion to their shareholding percentages.

g. Companies in the same industry provide among themselves joint and several security for a performance guarantee of a sales contract for pre-construction homes pursuant to the Consumer Protection Act for each other.

Note 3: The limits on endorsement or guarantee amount provided to each guaranteed party is up to 10% of the net assets value of the latest financial statements of Senao International Co., Ltd.

Note 4: The total amount of endorsement or guarantee that the Company is allowed to provide is up to 50% of the net assets value of the latest financial statements of Senao International Co., Ltd.

- 81 -

TABLE 2

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES HELD

September 30, 2019

(Amounts in Thousands of New Taiwan Dollars)

Held Company Name	Marketable Securities Type and Name	Relationship with the Company		Financial Statement Account	September 30, 2019								Note
					Shares (Thousands/ Thousand Units)		Carrying Value (Note 1)		Percentage of Ownership		Fair Value
Chunghwa Telecom Co., Ltd.	Stocks
	Taipei Financial Center Corp.		—	Financial assets at FVOCI		172,927	$	3,597,186		12	$	3,597,186		—
	Innovation Works Development Fund, L.P.		—	Financial assets at FVTPL		—		232,373		4		232,373		—
	Industrial Bank of Taiwan II Venture Capital Co., Ltd. (IBT II)		—	Financial assets at FVOCI		5,252		21,555		17		21,555		—
	Global Mobile Corp.		—	Financial assets at FVOCI		7,617		—		3		—		—
	Innovation Works Limited		—	Financial assets at FVOCI		1,000		2,746		2		2,746		—
	RPTI Intergroup International Ltd.		—	Financial assets at FVOCI		4,765		—		10		—		—
	Taiwan mobile payment Co., Ltd.		—	Financial assets at FVOCI		1,200		4,608		2		4,608		—
	Taiwania Capital Buffalo Fund Co., Ltd.		—	Financial assets at FVTPL		300,000		280,363		13		280,363		—
	China Airlines Ltd.		—	Financial assets at FVOCI		263,622		2,393,689		5		2,393,689		Note 2
	4 Gamers Entertainment Inc.		—	Financial assets at FVOCI		136		126,781		19.9		126,781		—
Senao International Co., Ltd.	Stocks
	N.T.U. Innovation Incubation Corporation		—	Financial assets at FVOCI		1,200		9,577		9		9,577		—
CHIEF Telecom Inc.	Stocks
	3 Link Information Service Co., Ltd.		—	Financial assets at FVOCI		374		930		10		930		—
	WPG Holdings Limited		—	Financial assets at FVTPL		50		1,910		—		1,910		Note 2
	Formosa Plastics Corp.		—	Financial assets at FVTPL		230		21,735		—		21,735		Note 2
	Tong Yang Industry Co., Ltd.		—	Financial assets at FVTPL		10		469		—		469		Note 2
	Pou Chen Corp.		—	Financial assets at FVTPL		10		398		—		398		Note 2
Chunghwa Investment Co., Ltd.	Stocks
	Tatung Technology Inc.		—	Financial assets at FVOCI		4,571		163,496		11		163,496		—
	iSing99 Inc.		—	Financial assets at FVOCI		10,000		—		7		—		—
	Powertec Energy Corp.		—	Financial assets at FVOCI		20,000		123,444		2		123,444		—
Chunghwa Hsingta Co., Ltd.	Stocks
	Cotech Engineering Fuzhou Corp.		—	Financial assets at FVOCI		—		13,284		5		13,284		—

Note 1: Showed at carrying amounts with fair value adjustments.

Note 2: Fair value was based on the closing price on September 27, 2019.

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TABLE 3

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

ACQUISITION OF INDIVIDUAL REAL ESTATE AT COSTS OF AT LEAST $300 MILLION OR 20% OF THE PAID-IN CAPITAL

NINE MONTHS ENDED SEPTEMBER 30, 2019

(Amounts in Thousands of New Taiwan Dollars)

Buyer

Property

Event Date

Transaction Amount

Payment Status

Counterparty

Relationship

Information on Previous Title Transfer If Counterparty is a Related Party

Pricing Reference

Purpose of Acquisition

Other Terms

Property Owner

Relationship

Transaction Date

Amount

Chunghwa Precision Test Tech. Co., Ltd.

Headquarters

2017.07.29- 2019.09.30

$1,431,898

Monthly settlement based on the construction progress and acceptance

Fu Tsu Construction Co., Ltd.

—

Not applicable

Not applicable

Not applicable

Not applicable

Bidding, price comparison and price negotiation

Manufacturing purpose

None

- 83 -

TABLE 4

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

NINE MONTHS ENDED SEPTEMBER 30, 2019

(Amounts in Thousands of New Taiwan Dollars)

Company Name	Related Party	Nature of Relationship	Transaction Details						Abnormal Transaction				Notes / Accounts Payable or Receivable
			Purchase/Sales (Note 1)	Amount (Notes 2 and 5)		% to Total		Payment Terms	Units Price		Payment Terms		Ending Balance (Notes 3 and 5)			% to Total
Chunghwa Telecom Co., Ltd.	Senao International Co., Ltd.	Subsidiary	Sales	$	1,351,134		1	30 days	$	—		—	$	536,216			2
			Purchase		677,297		1	30-90 days		—		—		(1,320,047	)		(9	)
	CHIEF Telecom Inc.	Subsidiary	Sales		265,855		—	30 days		—		—		45,252			—
	Chunghwa System Integration Co., Ltd.	Subsidiary	Purchase		684,043		1	30 days		—		—		(298,260	)		(2	)
	Honghwa International Co., Ltd.	Subsidiary	Purchase		3,853,251		5	30-60 days		—		—		(865,375	)		(6	)
	Donghwa Telecom Co., Ltd.	Subsidiary	Sales		152,377		—	30 days		—		—		34,197			—
			Purchase		466,730		1	90 days		—		—		(157,776	)		(1	)
	Chunghwa Telecom Global, Inc.	Subsidiary	Purchase		285,556		—	90 days		—		—		(41,417	)		—
	Chunghwa Telecom Singapore Pte., Ltd.	Subsidiary	Sales		216,386		—	30 days		—		—		35,801			—
			Purchase		285,686		—	90 days		—		—		(79,291	)		(1	)
	CHT Security Co., Ltd.	Subsidiary	Purchase		117,937		—	30 days		—		—		(25,286	)		—
	Taiwan International Standard Electronics Co., Ltd.	Associate	Purchase		439,750		1	30-90 days		—		—		(188,877	)		(1	)
Senao International Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company	Sales		4,939,721		23	30-90 days		—		—		1,328,008			57
			Purchase		1,213,442		7	30 days		—		—		(504,722	)		(19	)
	Aval Technologies Co., Ltd.	Subsidiary	Purchase		487,796		3	30 days		—		—		(9,218	)		—
CHIEF Telecom Inc.	Chunghwa Telecom Co., Ltd.	Parent company	Sales		200,587		12	60 days		—		—		35,512			17
			Purchase		265,461		27	30 days		—		—		(45,252	)		(34	)
Chunghwa System Integration Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company	Sales		1,149,528		97	30 days		—		—		297,244			82
Honghwa International Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company	Sales		3,846,045		97	30-60 days		—		—		864,096			98
Donghwa Telecom Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company	Sales		466,730		47	90 days		—		—		157,776			77
			Purchase		152,377		16	30 days		—		—		(34,197	)		(19	)
Chunghwa Telecom Global, Inc.	Chunghwa Telecom Co., Ltd.	Parent company	Sales		285,556		61	90 days		—		—		41,417			67
Chunghwa Telecom Singapore Pte., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company	Sales		285,686		52	90 days		—		—		79,291			20
			Purchase		216,386		42	30 days		—		—		(35,801	)		(11	)
CHT Security Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company	Sales		208,238		45	30 days		—		—		25,286			25

Note 1: Purchase included acquisition of services costs.

Note 2: The differences were because Chunghwa Telecom Co., Ltd. and subsidiaries classified the amount as incremental costs of obtaining contracts, inventories, property, plant and equipment, intangible assets, and operating expenses.

Note 3: Notes and accounts receivable did not include the amounts collected for others and other receivables.

Note 4: 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 5: All inter-company transactions, balances, income and expenses are eliminated upon consolidation.

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TABLE 5

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

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

September 30, 2019

(Amounts in Thousands of New Taiwan Dollars)

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
Chunghwa Telecom Co., Ltd.	Senao International Co., Ltd.	Subsidiary	$	859,270 (Note 2	)		10.18	$	—		—	$	840,376	$	—
Senao International Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company		1,912,544 (Note 2	)		5.85		—		—		820,538		—
Chunghwa System Integration Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company		297,244 (Note 2	)		3.31		—		—		131,066		—
Honghwa International Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company		864,096 (Note 2	)		5.33		—		—		202,722		—
Donghwa Telecom Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company		157,776 (Note 2	)		3.77		—		—		105,380		—

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.

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TABLE 6

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

NAMES, LOCATIONS, AND OTHER INFORMATION OF INVESTEES IN WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE (EXCLUDING INVESTMENT IN MAINLAND CHINA)

NINE MONTHS ENDED SEPTEMBER 30, 2019

(Amounts in Thousands of New Taiwan Dollars)

Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount				Balance as of September 30, 2019							Net Income (Loss) of the Investee			Recognized Gain (Loss) (Notes 1, 2 and 3)			Note
				September 30, 2019		December 31, 2018		Shares (Thousands)		Percentage of Ownership (%)		Carrying Value (Note 3)
Chunghwa Telecom Co., Ltd.	Senao International Co., Ltd.	Taiwan	Handset and peripherals retailer; sales of CHT mobile phone plans as an agent	$	1,065,813	$	1,065,813		71,773		28	$	1,587,508		$	303,357		$	80,096		Subsidiary (Note 6)
	Light Era Development Co., Ltd.	Taiwan	Planning and development of real estate and intelligent buildings, and property management		3,000,000		3,000,000		300,000		100		3,848,735			1,812			2,134		Subsidiary (Note 6)
	Donghwa Telecom Co., Ltd.	Hong Kong	International private leased circuit, IP VPN service, and IP transit services		1,567,453		1,567,453		402,590		100		1,661,072			26,916			26,916		Subsidiary (Note 6)
	Chunghwa Telecom Singapore Pte., Ltd.	Singapore	International private leased circuit, IP VPN service, and IP transit services		574,112		574,112		26,383		100		1,014,336			104,494			104,498		Subsidiary (Note 6)
	Chunghwa System Integration Co., Ltd.	Taiwan	Providing system integration services and telecommunications equipment		838,506		838,506		60,000		100		720,333			(14,540	)		(17,779	)	Subsidiary (Note 6)
	CHIEF Telecom Inc.	Taiwan	Network integration, internet data center (“IDC”), communications integration and cloud application services		459,652		459,652		39,426		57		1,648,392			400,029			230,875		Subsidiary (Note 6)
	Chunghwa Investment Co., Ltd.	Taiwan	Investment		639,559		639,559		68,085		89		3,102,412			152,175			135,639		Subsidiary (Note 6)
	Prime Asia Investments Group Ltd. (B.V.I.)	British Virgin Islands	Investment		385,274		385,274		1		100		190,458			33			33		Subsidiary (Note 6)
	Honghwa International Co., Ltd.	Taiwan	Telecommunication engineering, sales agent of mobile phone plan application and other business services		180,000		180,000		18,000		100		335,376			77,628			78,118		Subsidiary (Note 6)
	CHYP Multimedia Marketing & Communications Co., Ltd.	Taiwan	Digital information supply services and advertisement services		150,000		150,000		15,000		100		183,118			7,785			7,878		Subsidiary (Note 6)
	Chunghwa Telecom Vietnam Co., Ltd.	Vietnam	Intelligent energy saving solutions, international circuit, and information and communication technology (“ICT”) services.		148,275		148,275		—		100		108,297			469			469		Subsidiary (Note 6)
	Chunghwa Telecom Global, Inc.	United States	International private leased circuit, internet services, and transit services		70,429		70,429		6,000		100		346,221			54,111			55,791		Subsidiary (Note 6)
	CHT Security Co., Ltd.	Taiwan	Computing equipment installation, wholesale of computing and business machinery equipment and software, management consulting services, data processing services, digital information supply services and internet identify services		240,000		240,000		24,000		80		282,184			67,075			47,598		Subsidiary (Note 6)
	Chunghwa Telecom (Thailand) Co., Ltd.	Thailand	International private leased circuit, IP VPN service, ICT and cloud VAS services		88,592		100,000		1,000		100		80,534			(7,776	)		(7,776	)	Subsidiary (Note 6)
	Spring House Entertainment Tech. Inc.	Taiwan	Software design services, internet contents production and play, and motion picture production and distribution		62,209		62,209		10,277		56		106,554			14,816			8,303		Subsidiary (Note 6)
	Chunghwa leading Photonics Tech Co., Ltd.	Taiwan	Production and sale of electronic components and finished products		70,500		70,500		7,050		75		108,879			8,260			10,250		Subsidiary (Note 6)
	Smartfun Digital Co., Ltd.	Taiwan	Providing diversified family education digital services		65,000		65,000		6,500		65		70,295			5,061			4,073		Subsidiary (Note 6)
	Chunghwa Telecom Japan Co., Ltd.	Japan	International private leased circuit, IP VPN service, and IP transit services		17,291		17,291		1		100		74,828			10,167			10,167		Subsidiary (Note 6)
	Chunghwa Sochamp Technology Inc.	Taiwan	Design, development and production of Automatic License Plate Recognition software and hardware		20,400		20,400		2,040		51		(10,996	)		(7,860	)		(4,769	)	Subsidiary (Note 6)
	International Integrated System, Inc.	Taiwan	IT solution provider, IT application consultation, system integration and package solution		283,500		283,500		22,498		31		314,670			55,732			18,217		Associate
	Viettel-CHT Co., Ltd.	Vietnam	IDC services		288,327		288,327		—		30		301,623			167,577			50,274		Associate

(Continued)

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CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

NAMES, LOCATIONS, AND OTHER INFORMATION OF INVESTEES IN WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE (EXCLUDING INVESTMENT IN MAINLAND CHINA)

NINE MONTHS ENDED SEPTEMBER 30, 2019

(Amounts in Thousands of New Taiwan Dollars)

Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount				Balance as of September 30, 2019						Net Income (Loss) of the Investee			Recognized Gain (Loss) (Notes 1, 2 and 3)			Note
				September 30, 2019		December 31, 2018		Shares (Thousands)		Percentage of Ownership (%)		Carrying Value (Note 3)
	Taiwan International Standard Electronics Co., Ltd.	Taiwan	Manufacturing, selling, designing, and maintaining of telecommunications systems and equipment	$	164,000	$	164,000		1,760		40	$	249,298	$	197,886		$	109,618		Associate
	KKBOX Taiwan Co., Ltd.	Taiwan	Providing of music on-line, software, electronic information, and advertisement services		67,025		67,025		4,438		30		147,440		(310	)		(93	)	Associate
	So-net Entertainment Taiwan Limited	Taiwan	Online service and sale of computer hardware		120,008		120,008		9,429		30		169,008		164,385			49,315		Associate
	KingwayTek Technology Co., Ltd.	Taiwan	Publishing books, data processing and software services		66,684		69,013		7,897		22		251,556		(5,413	)		(830	)	Associate
	Taiwan International Ports Logistics Corporation	Taiwan	Import and export storage, logistic warehouse, and ocean shipping service		80,000		80,000		8,000		27		50,870		4,529			1,220		Associate
	UUPON Inc.	Taiwan	Information technology service and general advertisement service		97,598		97,598		5,400		15		7,159		(28,412	)		(4,273	)	Associate
	Alliance Digital Tech Co., Ltd.	Taiwan	Development of mobile payments and information processing service		60,000		60,000		6,000		14		5,080		—			—		Associate
	Chunghwa PChome Fund I Co., Ltd.	Taiwan	Investment, venture capital, investment advisor, management consultant and other consultancy service		200,000		200,000		20,000		50		195,316		(7,315	)		(3,657	)	Associate
	Cornerstone Ventures Co., Ltd.	Taiwan	Investment, venture capital, investment advisor, management consultant and other consultancy service		4,900		4,900		490		49		5,131		762			374		Associate
Senao International Co., Ltd.	Senao Networks, Inc.	Taiwan	Telecommunication facilities manufactures and sales		202,758		202,758		16,579		34		920,063		318,401			107,597		Associate
	Senao International (Samoa) Holding Ltd.	Samoa Islands	International investment		2,333,620		2,416,645		77,775		100		371,212		(41,664	)		(41,664	)	Subsidiary (Note 6)
	UUPON Inc.	Taiwan	Information technology service and general advertisement service		24,000		24,000		2,400		7		3,314		(28,412	)		(1,901	)	Associate
	Youth Co., Ltd.	Taiwan	Sale of information and communication technologies products		364,950		364,950		8,462		93		198,089		(1,878	)		(8,114	)	Subsidiary (Note 6)
	Aval Technologies Co., Ltd.	Taiwan	Sale of information and communication technologies products		89,550		60,000		9,843		100		100,617		1,132			1,134		Subsidiary (Note 6)
	SENYOUNG Insurance Agent Co., Ltd.	Taiwan	Property and liability insurance agency		59,000		59,000		5,900		100		66,307		15,613			15,623		Subsidiary (Note 6)
Light Era Development Co., Ltd.	Taoyuan Asia Silicon Valley Innovation Co., Ltd.	Taiwan	Development of real estate		—		7,500		750		—		—		(5,466	)		(3,280	)	Subsidiary (Notes 4 and 6)
CHIEF Telecom Inc.	Unigate Telecom Inc.	Taiwan	Telecommunications and internet service		2,000		2,000		200		100		859		(28	)		(28	)	Subsidiary (Note 6)
	Chief International Corp.	Samoa Islands	Telecommunications and internet service		6,068		6,068		200		100		73,551		8,530			8,530		Subsidiary (Note 6)
Chunghwa Telecom Singapore Pte., Ltd.	ST-2 Satellite Ventures Pte., Ltd.	Singapore	Operation of ST-2 telecommunications satellite		409,061		409,061		18,102		38		575,355		232,479			88,342		Associate
Chunghwa Investment Co., Ltd.	Chunghwa Precision Test Tech. Co., Ltd.	Taiwan	Production and sale of semiconductor testing components and printed circuit board		178,608		178,608		11,230		34		2,151,251		459,440			157,423		Subsidiary (Note 6)
	CHIEF Telecom Inc.	Taiwan	Network integration, internet data center (“IDC”), communications integration and cloud application services		19,064		19,064		2,078		3		81,360		400,029			11,785		Associate (Note 6)
	Senao International Co., Ltd.	Taiwan	Selling and maintaining mobile phones and its peripheral products		49,731		49,731		1,001		—		42,994		303,357			1,117		Associate (Note 6)

(Continued)

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CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

NAMES, LOCATIONS, AND OTHER INFORMATION OF INVESTEES IN WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE (EXCLUDING INVESTMENT IN MAINLAND CHINA)

NINE MONTHS ENDED SEPTEMBER 30, 2019

(Amounts in Thousands of New Taiwan Dollars)

Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount				Balance as of September 30, 2019						Net Income (Loss) of the Investee			Recognized Gain (Loss) (Notes 1, 2 and 3)			Note
				September 30, 2019		December 31, 2018		Shares (Thousands)		Percentage of Ownership (%)		Carrying Value (Note 3)
Chunghwa Precision Test Tech. Co., Ltd.	Chunghwa Precision Test Tech USA Corporation	United States	Design and after-sale services of semiconductor testing components and printed circuit board	$	12,636	$	12,636		400		100	$	21,536	$	(3,117	)	$	(3,117	)	Subsidiary (Note 6)
	CHPT Japan Co., Ltd.	Japan	Related services of electronic parts, machinery processed products and printed circuit board		2,008		2,008		1		100		2,471		71			71		Subsidiary (Note 6)
	Chunghwa Precision Test Tech. International, Ltd.	Samoa Islands	Wholesale and retail of electronic materials, and investment		116,790		54,450		1,700		100		96,374		(7,645	)		(7,645	)	Subsidiary (Note 6)
Prime Asia Investments Group,	Chunghwa Hsingta Co., Ltd.	Hong Kong	Investment		375,274		375,274		1		100		190,456		32			32		Subsidiary (Note 6)
Ltd. (B.V.I.)	MeWorks Limited (HK)	Hong Kong	Investment		10,000		10,000		—		20		—		—			—		Associate
Senao International (Samoa) Holding Ltd.	Senao International HK Limited	Hong Kong	International investment		2,328,754		2,393,646		80,440		100		350,525		(41,909	)		(41,909	)	Subsidiary (Note 6)
Youth Co., Ltd.	ISPOT Co., Ltd.	Taiwan	Sale of information and communication technologies products		53,021		53,021		—		100		9,271		31			(113	)	Subsidiary (Note 6)
	Youyi Co., Ltd.	Taiwan	Maintenance of information and communication technologies products		21,354		21,354		—		100		17,249		352			184		Subsidiary (Note 6)
Aval Technologies Co., Ltd.	Wiin Technology Co., Ltd.	Taiwan	Sale of information and communication technologies products		29,550		—		2,955		100		29,550		—			—		Subsidiary (Note 6)
CHYP Multimedia Marketing & Communications Co., Ltd	Click Force Marketing Company	Taiwan	Advertisement services		44,607		44,607		1,078		49		36,173		(4	)		(1,703	)	Associate

Note 1: The amounts were based on reviewed financial statements.

Note 2: Recognized gain (loss) of investees includes amortization of differences between the investment cost and net value and elimination of unrealized transactions.

Note 3: Recognized gain (loss) and carrying value of the investees did not include the adjustment of the difference between the accounting treatment on standalone basis and consolidated basis as a result of the application of IFRS 15.

Note 4: The liquidation of Taoyuan Asia Silicon Valley Innovation Co., Ltd. was completed in September 2019.

Note 5: Investment in mainland China is included in Table 7.

Note 6: The amount was eliminated upon consolidation.

(Concluded)

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TABLE 7

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

INVESTMENT IN MAINLAND CHINA

NINE MONTHS ENDED SEPTEMBER 30, 2019

(Amounts in Thousands of New Taiwan Dollars)

Investee	Main Businesses and Products	Total Amount of Paid-in Capital		Investment Type (Note 1)		Accumulated Outflow of Investment from Taiwan as of January 1, 2019		Investment Flows				Accumulated Outflow of Investment from Taiwan as of September 30, 2019		Net Income (Loss) of the Investee			% Ownership of Direct or Indirect Investment		Investment Gain (Loss) (Note 2)			Carrying Value as of September 30, 2019		Accumulated Inward Remittance of Earnings as of September 30, 2019		Note
								Outflow		Inflow
Senao Trading (Fujian) Co., Ltd.	Sale of information and communication technologies products	$	1,073,170		2	$	1,073,170	$	—	$	—	$	1,073,170	$	1,435			100	$	1,435		$	—	$	—	Notes 7 and 11
Senao International Trading (Shanghai) Co., Ltd.	Sale of information and communication technologies products		955,838		2		955,838		—		—		955,838		(21,799	)		100		(21,799	)		56,400		—	Note 11
Senao International Trading (Shanghai) Co., Ltd. (Note 12)	Maintenance of information and communication technologies products		26,053		2		87,540		—		61,487		26,053		—			100		—			—		—	Notes 8 and 11
Senao International Trading (Jiangsu) Co., Ltd.	Sale of information and communication technologies products		263,736		2		263,736		—		—		263,736		310			100		310			—		—	Notes 9 and 11
Chunghwa Telecom (China) Co., Ltd.	Integrated information and communication solution services for enterprise clients, and intelligent energy network service		177,176		2		177,176		—		—		177,176		(4,918	)		100		(4,918	)		46,110		—	Note 11
Jiangsu Zhenghua Information Technology Company, LLC	Providing intelligent energy saving solution and intelligent buildings services		189,410		2		142,057		—		—		142,057		—			75		—			—		—	Notes 10 and 11
Shanghai Taihua Electronic Technology Limited	Design of printed circuit board and related consultation service		51,233		2		51,233		—		—		51,233		(7,962	)		100		(7,962	)		30,808		—	Note 11
Shanghai Chief Telecom Co., Ltd.	Telecommunications and internet service		10,150		1		4,973		—		—		4,973		4,395			49		2,154			9,786		—	Note 11

(Continued)

- 89 -

Investee	Accumulated Investment in Mainland China as of September 30, 2019		Investment Amounts Authorized by Investment Commission, MOEA		Upper Limit on Investment Stipulated by Investment Commission, MOEA
SENAO and its subsidiaries (Note 3)	$	2,318,797	$	2,318,797	$	3,451,035
Chunghwa Telecom (China) Co., Ltd. (Note 4)		177,176		177,176		225,889,780
Jiangsu Zhenghua Information Technology Company, LLC (Note 4)		142,057		142,057		225,889,780
Shanghai Taihua Electronic Technology Limited (Note 5)		51,233		97,965		3,768,613
Shanghai Chief Telecom Co., Ltd. (Note 6)		4,973		4,973		1,633,309

Note 1: Investments are divided into three categories as follows:

a. Direct investment.

b. Investments through a holding company registered in a third region.

c. Others.

Note 2: The amounts were calculated based on the investee’s reviewed financial statements.

Note 3: Senao International Co., Ltd. and its subsidiaries were calculated based on the consolidated net assets value of Senao International Co., Ltd.

Note 4: Chunghwa Telecom (China) Co., Ltd. and Jiangsu Zhenghua Information Technology Company, LLC were calculated based on the consolidated net assets value of Chunghwa Telecom Co., Ltd.

Note 5: Shanghai Taihua Electronic Technology Limited was calculated based on the consolidated net assets value of Chunghwa Precision Test Tech. Co., Ltd.

Note 6: Shanghai Chief Telecom Co., Ltd. was calculated based on the consolidated net assets value of CHIEF Telecom Inc.

Note 7: The liquidation of Senao Trading (Fujian) Co., Ltd. was completed in May 2019.

Note 8: The liquidation of Senao International Trading (Shanghai) Co., Ltd. was completed in March 2018.

Note 9: The liquidation of Senao International Trading (Jiangsu) Co., Ltd. was completed in March 2019.

Note 10: The liquidation of Jiangsu Zhenhua Information Technology Company, LLC. was completed in December 2018.

Note 11: The amount was eliminated upon consolidation.

Note 12: The English name is the same as the above entity; however the Chinese name included in the respective Articles of Incorporations is different from the above entity.

(Concluded)

- 90 -

TABLE 8

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT TRANSACTIONS

NINE MONTHS ENDED SEPTEMBER 30, 2019

(Amounts 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)
2019		0	Chunghwa Telecom Co., Ltd.	Senao International Co., Ltd.	a	Accounts receivable	$	536,216		—		—
						Accrued custodial receipts		323,054		—		—
						Accounts payable		1,320,047		—		1
						Amounts collected for others		592,497		—		—
						Revenues		1,351,134		—		1
						Operating costs and expenses		673,236		—		—
				CHIEF Telecom Inc.	a	Accounts receivable		45,252		—		—
						Accounts payable		24,554		—		—
						Revenues		265,855		—		—
						Operating costs and expenses		84,616		—		—
				CHYP Multimedia Marketing &	a	Accounts payable		16,986		—		—
				Communications Co., Ltd.		Amounts collected for others		57,677		—		—
						Revenues		23,848		—		—
						Operating costs and expenses		60,310		—		—
				Chunghwa System Integration Co., Ltd.	a	Accounts receivable		39,866		—		—
						Accounts payable		298,260		—		—
						Operating costs and expenses		545,808		—		—
						Inventories		138,235		—		—
						Prepayments		98,465		—		—
						Property, plant and equipment		387,973		—		—
						Intangible assets		30,743		—		—
				Chunghwa Telecom Global Inc.	a	Accounts receivable		13,511		—		—
						Accounts payable		41,417		—		—
						Revenues		64,026		—		—
						Operating costs and expenses		285,556		—		—
				Donghwa Telecom Co., Ltd.	a	Accounts receivable		34,197		—		—
						Accounts payable		157,776		—		—
						Revenues		152,377		—		—
						Operating costs and expenses		466,730		—		—
				Spring House Entertainment Tech. Inc.	a	Amounts collected for others		15,974		—		—
						Revenues		12,089		—		—
				Chunghwa Telecom Japan Co., Ltd.	a	Revenues		20,071		—		—
						Operating costs and expenses		74,533		—		—
				Chunghwa Telecom Singapore Pte., Ltd.	a	Accounts receivable		35,801		—		—
						Accounts payable		79,291		—		—
						Revenues		216,386		—		—
						Operating costs and expenses		285,686		—		—
				Chunghwa Sochamp Technology Inc.	a	Accounts payable		18,445		—		—

(Continued)

- 91 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT TRANSACTIONS

NINE MONTHS ENDED SEPTEMBER 30, 2019

(Amounts 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)
				Honghwa International Co., Ltd.	a	Accounts receivable	$	48,724		—		—
						Accounts payable		865,375		—		—
						Revenues		73,808		—		—
						Operating costs and expenses		3,846,045		—		3
						Property, plant and equipment		14,188		—		—
				Smartfun Digital Co., Ltd.	a	Operating costs and expenses		11,682		—		—
				Chunghwa Telecom Thailand Co., Ltd.	a	Operating costs and expenses		23,685		—		—
				CHT Security Co., Ltd.	a	Accounts payable		25,286		—		—
						Revenues		14,411		—		—
						Operating costs and expenses		117,937		—		—
						Inventories		30,937		—		—
						Property, plant and equipment		19,943		—		—
						Intangible assets		11,258		—		—
						Other noncurrent assets		31,536		—		—
				Aval Technologies Co., Ltd.	a	Operating costs and expenses		37,474		—		—
						Customers’ deposits		11,088		—		—
				SENYOUNG Insurance Agent Co., Ltd.	a	Accounts payable		12,906		—		—
						Revenues		12,905		—		—
		1	Light Era Development Co., Ltd.	CHIEF Telecom Inc.	c	Revenues		72,248		—		—
		2	Chunghwa Telecom Singapore Pte., Ltd.	Donghwa Telecom Co., Ltd.	c	Prepayments		16,486		—		—
		3	CHIEF Telecom Inc.	Chunghwa Telecom Singapore Pte., Ltd.	c	Revenues		24,239		—		—
						Operating costs and expenses		13,617		—		—

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 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: For assets and liabilities, amount is shown as a percentage to consolidated total assets as of September 30, 2019, while revenues, costs and expenses are shown as a percentage to consolidated revenues for the nine months ended September 30, 2019.

Note 5: The amount was eliminated upon consolidation.

(Concluded)

- 92 -