Jan NilssonVice Chairman and President

4904 (TWSE)

2010 1H Investor Update2010 1H Investor Update

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Disclaimer

This presentation contains forward-looking statements. These forward-looking statements are subject to risks, uncertainties and assumptions, some of which are beyond our control. Actual results may differ materially from those expressed or implied by these forward-looking statements. Because of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this presentation might not occur in the way we expect, or at all. You should not place undue reliance on any forward-looking information.

In preparing the information herein, FET have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was provided to FET or which was otherwise reviewed by FET. Neither FET nor its advisors have made any representation or warranty as to the accuracy or completeness of such information and nor do they assume any undertaking to supplement such information as further information becomes available or in light of changing circumstances. None of FET, nor any of their respective affiliates, advisers or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection with this presentation. Neither this presentation nor any of its contents may be reproduced to a third party without the prior written consent of FET.

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AgendaAgenda

I.I. Market OverviewMarket Overview

II.II. 2010 YTD Performance2010 YTD Performance

III.III. Business UpdateBusiness Update

IV.IV. Management HighlightManagement Highlight

4

�� NCC statistics shows that NCC statistics shows that during 2Q 2010during 2Q 2010

�� Market mobile subscribers: Market mobile subscribers: ��������5.7% 5.7% YoYYoY

�� Total outgoing minutes: Total outgoing minutes: ��������11.3% 11.3% YoYYoY

�� Total mobile revenue: Total mobile revenue: ��������2.1% 2.1% YoYYoY

�� Competition of voice bucket plans is intensifyingCompetition of voice bucket plans is intensifying

�� Higher subsidies with Higher subsidies with smartphonessmartphones (especially (especially iPhoneiPhone) )

erode operatorserode operators’’ profitsprofits

�� Flat data rate plans are dominatingFlat data rate plans are dominating

MarketMarket

PhenomenonPhenomenon

RegulatoryRegulatory

EnvironmentEnvironment

�� Among 7 NCC commissioners, 4 new commissioners Among 7 NCC commissioners, 4 new commissioners

including Chairperson Su were from academic and including Chairperson Su were from academic and

government background and just ongovernment background and just on--board on Aug 1board on Aug 1

Taiwan Wireless MarketTaiwan Wireless MarketOverviewOverview

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AgendaAgenda

I.I. Market OverviewMarket Overview

II.II. 2010 YTD Performance2010 YTD Performance

III.III. Business UpdateBusiness Update

IV.IV. Management HighlightManagement Highlight

6

('000)

3,482 3,670

1,410 1,307 1,225 1,200

1,348 1,354 1,368 1,372

3,576 3,705

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2009 1Q'10 2Q'10 Jul'10

3G Postpaid 2G Postpaid Prepaid

Minutes (mn)

1,4051,3811,3831,335 1,3551,3331,218

1000

1200

1400

1600

1800

Jan-10

Feb-10

Mar-10

Apr-10

May-10

Jun-10

Jul-10Source: company factsheets

Operational PerformanceOperational PerformanceGaining MomentumGaining Momentum

Increasing Total Minutes of UseIncreasing Total Minutes of Use

Increasing Total SubscribersIncreasing Total Subscribers

6,240

22%

78%

6,237 6,263 6,276

Improved Postpaid ARPUImproved Postpaid ARPU

NT$

851832841825 821809785

750

850

950

Jan-

10

Feb-

10

Mar-

10

Apr-

10

May-

10

Jun-

10

Jul-

10

7

(k subs)

677687 691

704 711

738

762

787

600

650

700

750

800

850

Y2009Jan-

10

Feb-

10

Mar-

10

Apr-

10

May-

10

Jun-

10

Jul-

10

Non-Voice Service* Subscriber GrowthNon-Voice Service* Subscriber Growth

Strong growth Strong growth

momentummomentum

Source: Company Data; * Non-voice Service includes smartphone related non-voice plans and datacard, broadband, GPS related products

NonNon--Voice PerformanceVoice PerformanceUptake of NonUptake of Non--Voice Service SubscribersVoice Service Subscribers

16%

14%15%

10%

11%

12%

13%

14%

15%

16%

17%

18%

FET TWM CHT

2010 2Q Non-Voice % of Service Rev2010 2Q Non-Voice % of Service Rev

#1: FET keeps its leading position in non-voice

market

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32% 36%51% 55% 61% 65%

64% 49% 47% 45% 39% 35%68%

53%

0%

20%

40%

60%

80%

100%

Y2004

Y2005

Y2006

Y2007

Y2008

Y2009

1H'10

Non-SMS rev % to data rev SMS rev % to data rev

NonNon--Voice PerformanceVoice PerformanceMain Growth Driver Main Growth Driver -- Wireless BroadbandWireless Broadband

SMS % of Non-Voice RevSMS % of Non-Voice Rev Non-SMS Rev Breakdown in 1H’10Non-SMS Rev Breakdown in 1H’10

Non-SMS portion getting bigger

Source: Company data

13.1% 10.5% 9.5%

2.4% 1.7%

23.6%

0%

10%

20%

30%

40%

Wireless

Broadband

Trans-

mission

Mobile

Advertising

Music e-

Commerce

Social

Ntwrking

Major growth from:� Wireless broadband (����44%YoY)� Music (���� 9%YoY)

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Consolidated Financial AchievementConsolidated Financial Achievement2010 YTD vs. 2010 Annual 2010 YTD vs. 2010 Annual FF’’cstcst

Source: FET consolidated financials, which doesn’t not included NCIC numbers. FET & NCIC P&L will be consolidated from Aug 17, 2010.(1) EPS was based on current outstanding shares of 3,258,501K

56%62,06534,682�Total Revenue

57%54,97031,345�Service Revenue

57%22,62112,897�EBITDA

-36.4%37.2%�EBITDA%

-43.0%44.7%�Service EBITDA %

55%9,2745,083�Net Income

$1.56

2010 YTD(Jan-Jul)

Achievement%2010

ForecastItem

(Unit: NT$ Million, except for EPS & margin)

$2.85 55%�EPS(1)

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As of 2010 Q1As of 2010 Q1

Consolidated FinancialConsolidated Financial20201010 YTDYTD Financial StatsFinancial Stats

As of July 2010As of July 2010

Cash & Cash EquivalentsAvailable-for-Sale Financial Assets & _DerivativesTotal BorrowingNet Debt*Shareholders’ Equity

Capital SurplusCapital Surplus Legal ReserveLegal Reserve UnUn--appropriated Earnings fm Prior Yearsappropriated Earnings fm Prior Years UnUn--appropriated Earnings fm 2009appropriated Earnings fm 2009--20102010

Debt/Capitalization Ratio Gross (%)Gross (%) Net (%)Net (%)

Free Cashflows – YTDCash-based Capex – YTD

EPS(NT$) – YTD

ROAROE* Net Debt = Total Borrowing - Cash and Cash Equivalent - Available-for-Sale Financial Assets & Derivatives Source: FET Consolidated financials

(NT$ mm unless otherwise stated)

16,2752,926

902────68,28319,48719,487

9,9909,990238238

5,0835,083

11..33% % ────────7,1644,741

$1.56

9.8%12.4%

12,9952,930

902────74,69919,48719,487

9,0679,0671,0331,033

11,55011,550

11..22% % ────────3,7392,145

$0.71

10.5%12.6%

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AgendaAgenda

I.I. Market OverviewMarket Overview

II.II. 2010 YTD Performance2010 YTD Performance

III.III. Business UpdateBusiness Update

IV.IV. Management HighlightManagement Highlight

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�� Smartphone users account for Smartphone users account for 7.7%7.7% of of total postpaid substotal postpaid subs

�� More than 20%More than 20% of new handset takers of new handset takers choose choose smartphonessmartphones

�� Smartphone userSmartphone user’’s ARPU is s ARPU is 50+% 50+% higherhigher than nonthan non--smartphonesmartphone usersusers’’(vs. (vs. iPhoneiPhone useruser’’s APRU is s APRU is 2x2x))

�� Smartphone userSmartphone user’’s nons non--voice voice spending = spending = 22%22% (vs. average = (vs. average = 16%16%) )

�� Smartphone userSmartphone user’’s data usage is 17x s data usage is 17x of nonof non--smartphonesmartphone useruser’’s (vs. s (vs. iPhoneiPhoneuseruser’’s data usage is 50% higher than s data usage is 50% higher than avg. avg. smartphonesmartphone useruser’’s)s)

Some StatisticsSome StatisticsSome Statistics

Smartphone StatisticsSmartphone StatisticsSmartphoneSmartphone Take Up Drives Strong NonTake Up Drives Strong Non--Voice GrowthVoice Growth

Smartphone Penetration* (%)Smartphone Penetration* (%)Smartphone Penetration* (%)

(%)

5.9% 6.1% 6.4% 6.7%7.2% 7.5% 7.7%

0%

2%

4%

6%

8%

10%

Jan-10

Feb-10

Mar-10

Apr-10

May-10

Jun-10

Jul-10

* Smartphone penetration means smartphone users as % of total postpaid subs excl data only subs

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1H1H’’1010�� iPhoneiPhone 3G & 3GS3G & 3GS

Smartphone PortfolioSmartphone PortfolioFull Range of Full Range of SmartphonesSmartphones in 2Hin 2H’’1010

2H2H’’1010� FET to launch 10+ key smartphones in 2H 2010

� Among them, 5 has been launched

� More to come from makers such as…

� Acer, Samsung, Nokia, Motorola

� iPhone 4.0 to come in late September

HTC Aria (Liberty)HTC Aria (Liberty)Android 2.1Android 2.1

HTC HeroHTC HeroAndroid 2.1Android 2.1

Acer Liquid EAcer Liquid EAndroid 2.1Android 2.1

Nokia X6Nokia X6S60S60

Acer beTouch E400Acer beTouch E400Android 2.1Android 2.1

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31%

3%5%

17%17%

23%

0%

20%

40%

60%

Enter tain-

ment

Utilities(Tools)

Life Style

Games SocialNetwork-

ing

Finance/Business

31,097

35,80732,935

30,828

35,231

41,557

25,573

13,518

24,486

8,546

0

10,000

20,000

30,000

40,000

50,000

Oct-

09

Nov-

09

Dec-

09

Jan-

10

Feb-

10

Mar-

10

Apr-

10

May-

10

Jun-

10

Jul-

10

‘S Mart’ App Downloads‘‘S MartS Mart’’ App DownloadsApp Downloads Popular Downloaded Apps BreakdownPopular Downloaded Apps BreakdownPopular Downloaded Apps Breakdown

�Attract ~70% of non-FET users

�S Mart user downloads 4 apps/month (similar to iPhone’s 4.3 apps/month)

�Premium apps : Free apps = 3 : 2

Accumulated downloaded apps

> 300K

‘‘S MartS Mart’’ PerformancePerformanceThe most popular Chinese Language Android application storeThe most popular Chinese Language Android application store

With local relevance and variety of AppsWith local relevance and variety of Apps

Targeting to expand to the region in Q4 as App Targeting to expand to the region in Q4 as App ““Central KitchenCentral Kitchen””

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It contains more than 5,000 e-books from more than 40 publishers, running the whole gamut of genres from finance, travel, parenting, literature, comics – up to 11 broad categories of content-rich e-books and the prices are at least 30-50% cheaper than actual copies

These e-books are delivered on cloud cloud computing platformcomputing platform, which fully supports wireless devices (e.g. iPhone, Android smartphones and the computer, digital pen and tablet PC)

‘‘ee--Book TownBook Town’’ LaunchedLaunchedThe largest and widest selection of eThe largest and widest selection of e--books books

in Taiwanin Taiwan

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‘‘ee--Book TownBook Town’’ InitiativeInitiative

Debut in JulyDebut in July

Not limited to FET subscribers but to serve all

users through internet.

5000+ listed eBooks from40+ Contracted publishers

Next StepsNext Steps

iPad & Android Tablets:4Q’10

Multimedia Books:1Q’11

10,000 listed eBooks: 2010 year end

Cross device (PC/iPhone/Android Phone)

Service

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Enter into Enter into ‘‘Digital MusicDigital Music’’ ArenaArenaFMLA FMLA -- FET and Music Labels Alliance FET and Music Labels Alliance

� Form a joint venture among FET, 7 music labels, and a service provider

� 7 major labels (Universal, Sony, Avex,

GoldTyphon, Linfair , HIM, Forward) , one service

provider (Otiga), and FET to establish a JV for

innovative digital music services, targeting end Q3

� Labels will support the JV to explore new

business models and innovative marketing

measures, including viral marketing among social

networks

� These innovative music services will not be limited

to FET subscribers but expand to serve all

Chinese pop music lovers

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� FET has successfully acquired 68% of the shares of NCIC via YCIC that it did not own through a tender offer during June 28, 2010 to Aug 16, 2010

� Combined with the originally owned 27%, FET now owns 95% of NCIC

� FET & NCIC P&L will be consolidated from Aug 17, 2010

NCIC Transaction HighlightNCIC Transaction HighlightThe Tender Offer has been completedThe Tender Offer has been completed

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45.2% 45.2% YoYYoY

(NT$mn)

5,2745,653

0

1,000

2,000

3,000

4,000

5,000

6,000

Jan-Jul'09 Jan-Jul'10

NCIC Operational PerformanceNCIC Operational PerformanceGrowing Revenue and EBITDAGrowing Revenue and EBITDA

EBITDAEBITDARevenueRevenue

498

7239.4%

12.8%

0

250

500

750

1000

Jan-Jul'09 Jan-Jul'10

(NT$mn)

0%

2%

4%

6%

8%

10%

12%

14%

16%

EBITDA EBITDA margin (%)

7.2% 7.2% YoYYoY

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� Position as a solution provider, not traffic provider

� Also provide transmission solutions for mobile environment

� 5 core competences to address enterprise market

� expecting double digit revenue growth for Y2010

� Continue to target on SME market

� Attract more voice + data new customers

� Use more flexible and customized FMC solutions to avoid price competition

Key DriversKey DriversFocus on Enterprise MarketFocus on Enterprise Market

One Single Numberconsolidate into 1 single

number for mobile/

PSTN /VoIP/IDD calls

Cross StraitCross strait cooperation

for more economic

roaming fee targeting on

cross strait businessmen

Information SecurityBuild up customized professional info security center for enterprises

The Internet of Thingsutilize GPRS, 3G, RFID technologies to provide location based services to connect things

Cloud Servicecreate the 1st green

energy IDC and IDC

farm in Taiwan

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� Launched cross strait economic roaming fee program

� Targeting on cross strait frequent travelers

� Save up to 80% compared to current roaming charge

� Easy to apply; no need to change SIM card

� Expanding the coverage from 5 provinces in June to

12 provinces

� To bring ‘S Mart’ to CMCC customers

� The only operator in Taiwan participated 2010 China

Internet Conference in Beijing in August, which

caught lots of attention for Taiwanese quality and

consumer oriented creative contents

� Expect to introduce ‘S Mart’ to 540 million customers

of CMCC in Q4 2010

� More to come in the near future….

CMCC Strategic Cooperation UpdateCMCC Strategic Cooperation UpdateBenefits kicking inBenefits kicking in

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AgendaAgenda

I.I. Market OverviewMarket Overview

II.II. 2010 YTD Performance2010 YTD Performance

III.III. Business UpdateBusiness Update

IV.IV. Management HighlightManagement Highlight

23

Management HighlightManagement HighlightDriving for Growth and SynergyDriving for Growth and Synergy

� Confident in delivering 2010 Full Year Forecast

� Core operations continue to improve substantially

� Offering a full range of smartphone and tablet portfolio to

generate rapid non-voice growth

� Leading in launching innovative services, S Mart, e-Book Town and digital music services, and bring them to greater China market

� Continue to work on integration of FET and NCIC to strengthen cost efficiency

� Utilizing flexible and customized FMC solutions to address enterprise market and push them to greater China market in the long run

� Maintaining close relationship with CMCC for strategic cooperation

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Q & AQ & A

Websites email

Investor Relations

IR@fareastone.com.tw

Investor Relations

IR@fareastone.com.tw

http://corporate.fetnet.net

http://www.fetnet.net

http://corporate.fetnet.net

http://www.fetnet.net

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