To all of our shareholders, 

## Letter to Shareholders 

2010 was an exciting year for the telecommunications and technology industry globally and in Taiwan. Consumers and businesses are adopting new technologies at an increasingly fast pace, and are continually looking to trusted tech and telecom providers for reliable, secure and instanta- neous access to their contacts, data and media. 

We made significant progress in our initiatives to expand our fiber customer base, broaden our value-added service (VAS) line-up, and strengthen our MOD offering. During the year, we successfully broadened our offering to include more than just telecommunications services; our leadership positions in mobile, fixed line and broadband in Taiwan have provided us a platform for our new initiatives that include our corporate information communications technology (ICT) offering, convergence services, as well as our cloud computing solutions for corporates. 

In 2010, our total consolidated revenue for the full year increased by 2.1% year-over-year to NT$202.4 billion, of which 44.0% was from the mobile business, 34.9% was from the domestic fixed business, 12.1% was from the internet business, 7.7% was from the international fixed business, and the remainder was from our other business segment. Our Company’s revenue growth in 2010 was derived primarily from an increase in mobile VAS, handset sales and internet services. For 2010, EBITDA decreased by 1.4% to NT$91.4 billion and operating profit increased by 1.7% to NT$57.36 billion, reflecting the mandated National Communications Commission (NCC) tariff reduction and the higher handset subsidies, which is a necessary expense for our company as we maintain and build our market share. 

## • Mobile 

We extended our leading mobile market position with our value-added services, and our mobile internet offering in particular was a major driver of 2010 performance. Total mobile revenue for 2010 amounted to NT$89.04 billion, representing a year-on-year increase of 2.9%, mainly due to growth in mobile VAS revenue, which grew by more than 30% in 2010 over 2009. Mobile internet net customer growth of over 380,000 subscribers in 2010 brought our total subscriber count to more than 809,000 at the end of the year. Our dedicated mobile internet customer base is invaluable; as many of you may know from your own experiences, once you become accustomed to the increased productivity and convenience that comes with fast, reliable mobile broadband access, it is hard to imagine life without it. We also gained mindshare with our customers with our enriched content, and Hami is our key VAS brand in this space. We now have more than 2,000 Hami Apps, which are available via the Android platform. Through our Hami bookstore, we have built a significant presence in Taiwan’s e-bookstore industry. Our Hami books are a strong customer draw, and this initiative is building a particularly dedicated customer base. 

New waves of smartphones are spurring broader and deeper mobile internet and data usage, and our comprehensive device lineup allows us to serve our wide-ranging customer base aptly 

