**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**
 
**

**FORM 20-F**

 

**
 
**

**(Mark One)**

**or**

 

**For the fiscal year ended December 31, 2010**

**or**

 

**For the transition period from              to            **

**or**

 

**Date of event requiring this shell company report**

**Commission file number 001-31731**

 

**
 
**

**ChunghwaTelecom Co., Ltd.**

**(Exact Name of Registrant as Specified in Its Charter)**

 

**
 
**

**Taiwan, Republic of China**

**(Jurisdiction of Incorporation or Organization)**

**21-3 Hsinyi Road,Section 1, Taipei, Taiwan, Republic of China**

**(Address of Principal Executive Offices)**

**Fufu Shen**

**21-3 Hsinyi Road, Section 1, Taipei,**

**Taiwan, Republic of China**

**Tel: +886 2 2344-5488**

**Fax: +886 2 3393-8188**

**(Name, Telephone, email and/or Facsimile number and Address of Company Contact Person)**

 

**
 
**

**Securitiesregistered or to be registered pursuant to Section 12(b) of the Act:**

 

**Securities registered or to beregistered pursuant to Section 12(g) of the Act:**

**None**

**Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:**

**None**

 

**
 
**

Indicate thenumber of outstanding shares of each of the Issuer’s classes of capital or common stock as of the close of the period covered by the annual report. 

**7,757,446,545 Common Shares**

Indicate by check mark if the registrant is awell-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  x    No   ̈

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reportspursuant to Section 13 or 15(d) of the Securities Exchange Act of1934.    Yes   ̈    No  x

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of theSecurities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90days.    Yes  x    No   ̈

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every InteractiveData File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post suchfiles).    Yes   ̈    No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. Seedefinition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one): 

 

Indicate by check mark which basis of accounting the registrant has used to prepare the financialstatements included in this filing: 

 

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17   ̈    Item 18  x

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).    Yes   ̈    No  x

 

 

 

 

**CHUNGHWA TELECOM CO., LTD.**

**FORM 20-F ANNUAL REPORT**

**FISCAL YEAR ENDED DECEMBER 31, 2010**

**TABLE OF CONTENTS**

 

 
      **Page** 
SUPPLEMENTAL INFORMATION
   1  
FORWARD-LOOKING STATEMENTS IN THIS ANNUAL REPORT MAY NOT BE REALIZED
   1  
PART I
   2  
ITEM 1.
  
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
   2  
ITEM 2.
  
OFFER STATISTICS AND EXPECTED TIMETABLE
   2  
ITEM 3.
  
KEY INFORMATION
   2  
ITEM 4.
  
INFORMATION ON THE COMPANY
   15  
ITEM 4A.
  
UNRESOLVED STAFF COMMENTS
   64  
ITEM 5.
  
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
   64  
ITEM 6.
  
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
   88  
ITEM 7.
  
MAJOR STOCKHOLDERS AND RELATED PARTY TRANSACTIONS
   97  
ITEM 8.
  
FINANCIAL INFORMATION
   98  
ITEM 9.
  
THE OFFER AND LISTING
   99  
ITEM 10.
  
ADDITIONAL INFORMATION
   102  
ITEM 11.
  
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   117  
ITEM 12.
  
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
   119  
PART II 
   122  
ITEM 13.
  
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
   122  
ITEM 14.
  
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
   122  
ITEM 15.
  
CONTROLS AND PROCEDURES
   122  
ITEM 16A.
  
AUDIT COMMITTEE FINANCIAL EXPERT
   125  
ITEM 16B.
  
CODE OF ETHICS
   125  
ITEM 16C.
  
PRINCIPAL ACCOUNTANT FEES AND SERVICES
   125  
ITEM 16D.
  
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
   126  
ITEM 16E.
  
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
   126  
ITEM 16F.
  
CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
   126  
ITEM 16G.
  
CORPORATE GOVERNANCE
   126  
PART III 
   129  
ITEM 17.
  
FINANCIAL STATEMENTS 
   129  
ITEM 18.
  
FINANCIAL STATEMENTS
   129  
ITEM 19.
  
EXHIBITS
   129  
 
i 

**SUPPLEMENTAL INFORMATION**

All references to “we,” “us,” “our” and “our company” in this annual report are to ChunghwaTelecom Co., Ltd. and our consolidated subsidiaries, unless the context otherwise requires. All references to “shares” and “common shares” are to our common shares, par value NT$10 per share, and to “ADSs” are to ourAmerican depositary shares, each of which represents ten of our common shares. The ADSs are issued under the deposit agreement, as amended, supplemented or modified from time to time, originally dated as of July 17, 2003, among Chunghwa TelecomCo., Ltd. and the Bank of New York, and amended and restated on November 14, 2007, among Chunghwa Telecom Co., Ltd. and JP Morgan Chase Bank, as depository, and the holders and beneficial owners of American Depositary Receipts issuedthereunder. All references to “Taiwan” are to the island of Taiwan and other areas under the effective control of the Republic of China. All references to “the government” or “the Republic of China government” are tothe government of the Republic of China. All references to the “Ministry of Transportation and Communications” are to the Ministry of Transportation and Communications of the Republic of China. All references to the “Securities andFutures Bureau” are to the Securities and Futures Bureau of the Republic of China or its predecessors, as applicable. “R.O.C. GAAP” means the generally accepted accounting principles of the Republic of China, and “U.S. GAAP”means the generally accepted accounting principles of the United States. Any discrepancies in any table between totals and sums of the amounts listed are due to rounding. Unless otherwise indicated, or the context otherwise requires, references inthis annual report to financial and operational data for a particular year refer to the fiscal year of our company ending December 31 of that year. 

When we refer to our “privatization” or our being “privatized” in this annual report, we mean our status as a non-state-owned entity after the government reduced its ownership of ouroutstanding common shares, including our common shares owned by entities majority-owned by the government, to less than 50%. We were privatized in August 2005. 

We publish our consolidated financial statements in New Taiwan dollars, the lawful currency of the Republic of China. In this annual report, “NT$” and “NT dollars” mean New Taiwandollars, “$,” “US$” and “U.S. dollars” mean United States dollars. 

**FORWARD-LOOKING STATEMENTS IN THIS ANNUAL REPORT MAY NOT BE REALIZED**

This annual report contains forward-looking statements, including statements regarding: 

 
 • 
our business and operating strategy; 

 
 • 
our network expansion plans; 

 
 • 
our business, operations and prospects; 

 
 • 
our financial condition and results of operations; 

 
 • 
our dividend policy; 

 
 • 
the telecommunications industry regulatory environment in Taiwan; and 

 
 • 
future developments in the telecommunications industry in Taiwan. 

These forward-looking statements are generally indicated by the use of forward-looking terminology such as “believe,”“expect,” “anticipate,” “estimate,” “plan,” “aim,” “seek,” “project,” “may,” “will” or other similar words that express an indication of actions or results ofactions that may or are expected to occur in the future. These statements reflect our current views with respect to future events and are subject to risks, uncertainties and assumptions, many of which are beyond our control. You should not placeundue reliance on these statements, which apply only as of the date of this annual report. These forward-looking statements are based on our own information and on information from other sources we believe to be reliable. Actual results may differmaterially from those expressed or implied by these forward-looking statements. Factors that could cause differences include, but are not limited to, those discussed under “Item 3. Key Information—D. Risk Factors.” In light of theserisks, uncertainties and assumptions, the forward-looking events discussed in this annual report might not occur and our actual results could differ materially from those anticipated in these forward-looking statements. We undertake no obligation toupdate or revise any forward-looking statements whether as a result of new information, future events or otherwise. 

 
1 

**PART I**

 
**ITEM 1.****IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS**
Not applicable. 

 
**ITEM 2.****OFFER STATISTICS AND EXPECTED TIMETABLE**
Not applicable. 

 
**ITEM 3.****KEY INFORMATION**
We wereprivatized as a result of a secondary ADS offering and concurrent domestic auction of our common shares on August 12, 2005. The privatization has enabled us to develop our business and respond to changing market conditions more rapidly andefficiently. 

**A. Selected Financial Data**

The selected income statement data and cash flow data for the years ended December 31, 2008, 2009 and 2010, and the selected balance sheet data as of December 31, 2009 and 2010 set forth beloware derived from our audited consolidated financial statements included elsewhere in this annual report and should be read in conjunction with, and are qualified in their entirety by reference to, our consolidated financial statements and therelated notes. The selected income statement and cash flow data for the years ended December 31, 2006 and 2007, and the selected balance sheet data as of December 31, 2006, 2007 and 2008 set forth below, are derived from our auditedconsolidated financial statements not included in this annual report. The consolidated financial statements have been prepared and presented in accordance with accounting principles generally accepted in the Republic of China, or R.O.C. GAAP, whichdiffer in some material respects from accounting principles generally accepted in the United States of America, or U.S. GAAP, as further explained under note 36 to our consolidated financial statements included herein. 

 
   **Year Ended December 31,**    **2006(1)**  **2007(1)**  **2008(1)**  **2009**  **2010**    **NT$**  **NT$**  **NT$**  **NT$**  **NT$**  **US$**    **(in billions, except for percentages and per share and per pro**