Chunghwa Telecom Co., Ltd (CHT -0.52%)
Q4 2020 Earnings Call
Feb 4, 2021, 3:00 a.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Good afternoon, ladies and gentlemen. Welcome to Chunghwa Telecom conference call for the company's fourth quarter 2020 operating results. [Operator Instructions]. For information, this conference call is now being broadcasted live over the Internet. Webcast replay will be available within an hour after the conference is finished. Please visit CHT IR website, www.cht.com.tw/ir under the IR Calendar section. Now I'd like to turn it over to Ms. Angela Tsai, the Director of Investor Relations. Ms. Tsai. Please go ahead.
Angela Tsai -- Senior Manager
Thank you. This is Angela Tsai, the Director of Investor Relations for Chunghwa Telecom. Welcome to our fourth quarter 2020 results conference call. Joining me on the call today are Harrison Kuo, our President; and Vincent Chen, our Chief Financial Officer. During today's call, management will begin by providing an overview of our business during the quarter, followed by a discussion of operational and financial highlights. And then we will move on to the Q&A session. On slide two, please note our safe harbor statement. And now I will turn the call over to President Kuo. President Kuo, please go ahead.
Shui-Yi Kuo -- President & General Manager
Thank you, Angela, and hello, everyone. Welcome to our fourth quarter 2020 earnings call. Let's begin on slide four. In the fourth quarter of 2020, mobile competition was relatively stable and that the operators were more focused on 5G migration. We are pleased that the number of 5G sign-ups exceed our annual target more quickly than we had expected. And the iPhone 12 launch continued to push up the adoption of high-priced 5G plans. We observed that 88% of iPhone 12 subscribers choose plans of -- or above. In addition, construction of our 5G base station is ahead of schedule. By the end of 2020, we managed to establish over 4,500 base station nationwide and expect to exceed 10,000 base station by the end of 2021.
In terms of 5G vertical application, we participated in the world's first 5G millimeter wave enterprise private network for semiconductor industry, which launched in -- during the fourth quarter, marking another milestone of our efforts to develop 5G smart manufacturing. We intended to leverage the government's 5G subsidies to substantially accelerate 5G network construction from five years to three years, which we will elaborate later on. Now I will provide key highlights from the fourth quarter of 2020. For our broadband business, we are pleased to see continued ARPU uplift as a result of ongoing increase in higher price plan adoption. Subscriber migration to our broadband of 300 megabits per second or higher continue to increase by approximately 69% year-over-year, contributing to year-over-year broadband revenue growth for the 11 months in a row.
The number of home Wi-Fi devices also increased 373% year-over-year. Now allow me to walk you through each of our business lines. Turning to slide five, you can see an update of our mobile services business. In the fourth quarter of 2020, we continue to maintain our leading position in the mobile market as the subscriber market share, excluding IoT SIMs, reached to a 36% and the revenue market share increased to 38.4%. We are pleased to see our post payment subscriber net adds maintained positive for four consecutive quarters. Marking a whole year, attributable to effective 4G subscriber retention and 5G migration, which we believe will continue to support our mobile business in a healthy trajectory. We have seen a upset in 4G -- our 5G continued to enhance the contribution of higher price plans. And we aim to accumulate two million 5G subscribers this year. We remain optimistic about our mobile performance and multi development in 2021. Please turn to slide six for an update on our broadband business in the fourth quarter.
During the quarter, our broadband ARPU increased by 3% year-over-year, which reflects our success in migrating subscribers to adopt higher speed services and other benefits from stay-at-home opportunities in the new normal. The number of subscribers that sign-up for connection space of 300 megabits per second or higher increased by 69% year-over-year, while VPN secure revenue contributions from enterprise customers grew as well. Thus, we are confident that we will maintain the overall upward trend in our broadband business despite the ongoing decline in the number of low-speed subscribers quarter-over-quarter. Going forward, we will focus on developing data-driven subscription enhancement, home-centric application and high speed migration to expand our household and market share.
Slide seven demonstrates our MOD business performance. In the fourth quarter of 2020, our MOD/IPTV platform continued to be the largest video platform in Taiwan. And our business remained relatively resilient under the headwind of COVID-19 pandemic, which today major -- and sporting events and movie releases. Subscription momentum decelerated as a result. However, MOD ARPU slightly increased quarter-over-quarter as subscribers of OTT services such as Netflix continue to grow. In addition, we continue to see upsell in our tiered price channel packages and digital convergence packages. Going forward, we will continue to differentiate our products by enriching 4K content as well as AI and VR services, along with the oriented games, which had been delayed and is expected to take place in 2021. We also plan to enhance revenue by promoting core sales on the platform to further enhance ARPU. Please turn to slide eight for an update on our ICT business.
Overall ICT project revenue increased by 49.9% year-over-year in the fourth quarter due to revenue recognition of large government ICT projects. Our emerging ICT service revenues increased year-over-year as well. IDC revenue increased by a 75.6% year-over-year due to the completion of large projects. Cloud revenue increased 28.6% year-over-year as we see the revenue increase in both projects and international public cloud services. Cybersecurity revenue increased 23.8% year-over-year, with a significant contribution from financial-related budgets. As ICT project revenue accounted for a greater portion of our total revenue year-over-year, we will continue to enhance ICT technologies and be more selective in selecting projects to further enhance project margin and profitability.
At this time, I would like to turn the call over to Vincent, who will review our financial results.
Y. S. Chen -- Chief Financial Officer & Senior Executive Vice President
Thank you, President. Good afternoon, everyone. I will now discuss our fourth quarter financial results. Please turn to slide 10, which provides highlights from our income statement. For the fourth quarter of 2020 on a year-over-year basis operations' increased by 5.7%, and our net income increased by 5.8%. In addition, our EBITDA margin decreased to 33.44% in the fourth quarter from 33.94% in the prior year period. Please turn to slide 11 for a breakdown of driving by business segment. In the fourth quarter of 2020, total revenue increased by 7.7% year-over-year, mainly due to the increase in ICT project revenue, Internet-related revenue and handset sales revenue, which offset the decrease in revenues from voice and mobile services as a result of market competition and voice IP substitution.
Moving on to slide 12. Our operating costs and expenses in the fourth quarter increased by TWD5.1 billion or 11.3% year-over-year, mainly due to higher ICT project costs and cost of goods sold. slide 13 shows that cash flows from operating activities for the fourth quarter of 2020 increased by TWD3.82 billion or 16.2% compared to the prior year period. This was mainly driven by an increase of accounts payable. As of December 31, 2020, the balance of cash and cash equivalents was TWD30.44 billion, a decrease of TWD3.61 billion or 10.6% relative to 2019. The decline was primarily attributable to the transaction fee payments from the 5G frequency spectrum auction. On page 14, you may find a table that compares our financial results versus forecast.
As you can see, for Q4 2020, our performance measures, including income from operations, net income, EPS, EBITDA and EBITDA margin all exceeded our forecast. Revenue met guidance attributed to higher handset sales and ICT project revenues. Moving now to slide 15. Please see our consolidated guidance for 2021. Looking ahead, total revenue for 2021 is expected to increase by 0.8% to 1% compared to 2020. The increase in revenue is expected to be driven by increases in mobile communications venue, Internet and handset sales. Operating costs and expenses for 2021 are expected to increase by between 0.4% to 0.5% as a result of the increase in cost of goods sold and depreciation expense in 5G equivalent and the amortization expense for 5G concession. Given these projections, we expect 2.5% year-over-year decrease to 2% year-over-year increase in EPS.
Lastly, please turn to slide 16. Our capex spending in 2020 was TWD23.3 billion, which was lower than the budgeted amount of TWD30.7 billion. In spite of the capex increase of 5G network construction, the actual spending decreased, owing to price negotiations with vendors during the procurement and internal optimization review process as well as changes in projects, which include some spending to the first to 2021. For 2021, we are budgeting TWD43.1 billion in capex including spending on business forecasts in 2021, such as accelerating the construction of 5G motor, IDC and Submarine Cable as well as deferred items from 2020. Thank you for your time.
Now we would like to hand the call over to President Kuo for highlights of our strategy in 2021. President Kuo, please.
Shui-Yi Kuo -- President & General Manager
Please turn to slide 17. Now I would like to highlight some key items as part of our 2021 development strategy. As mentioned earlier, in 2021, we will accelerate 5G network development to ensure our network speed and quality remains ahead of our peers, thereby boosting our 5G subscriber base, while increasing overall mobile service revenue. For fixed broadband business, we will continue our success in fixed broadband migration to enhance fixed broadband revenue in the always broadband connected environment. To grow overall ICT business, we will focus on 5G enterprise private network opportunities and strengthen our partnership to develop smart applications by leveraging government incentives used to encourage nation forward-looking development. To expand new services and market share, we aim to grow ICT ecosystems by acquiring, building and our collaboration with industry partners, particularly in the realm of Cybersecurity, IDC, Cloud Computing and IoT applications.
To capture business opportunities from overseas partners, we will continue to invest in submarine construction as we hope to build Submarine Cable double rings in the Asia Pacific region and become the APAC region's submarine cable center. Finally, slide 18, illustrates our awards and recognitions from the fourth quarter. Highlighting our extension in brand value corporate governance and sustainable sustainability as well as our strength in mobile, IDC and cloud services. Also worth noting Chungwa was the first operator to receive validations of Azure Expert Managed Services Provider and AWS Managed Services Provider, further demonstrating our cloud service capabilities and the potential business opportunities. Thank you for your time. Now we would like to open up the line for questions.
Questions and Answers:
Operator
[Operator Instructions] Our first question is coming from Neale Anderson from HSBC. Go ahead please.
Neale Anderson -- HSBC -- Analyst
Hi there, good afternoon. Two questions, please. The first is on the ICT business. And I would like to ask when you can give details on the revenue contribution from ICT and the margin contribution. If that's not possible now, would it be possible to discuss the margin trends in this part of the business? The second question relates to the capex which is obviously quite high this year due to some rollover on 5G. Can you give us some indication of how much you expect that to come down again next year and how much is sort of one-offs? And related to that, how much do you expect to spend on millimeter wave rollout, which has been slower in other countries due to the lack of millimeter wave ecosystem, handsets, etc.? Thank you.
Shui-Yi Kuo -- President & General Manager
Okay. Thank you for your question. Our fourth quarter margin and the EBITDA margin was TWD19.89 billion [Phonetic] an increase of 6.1% from the same period last year, mainly due to the increase in income from operations and amortization costs. one of the reasons for the increase in income from operations is the increase in fixed broadband ARPU, which reflects our success in migrating subscribers to adopt higher speed service. Another reason is that more large ICT project as compared to last year. Our large ICT project recognized in the fourth quarter last year. So the margin was a bit of a higher than last year. And then the second question is about the capex.
Y. S. Chen -- Chief Financial Officer & Senior Executive Vice President
Okay. If I may, let me add to the -- answer to the first question. So regarding the ICT margin, so the margin depends on the size of the ICT project. So on average, the margin is about 15% plus in 2020. But is the flagship project, the margin will be lower. And for the second question, which is with respect to capex. For our capex, as you can see in 2021, right, actually, the capex is expected to be TWD43.1 billion. We believe the peak of our capex will be the highest in 2020 -- sorry, in 2021. And it will turn down in the following year. So I'm not sure I answered your question.
Neale Anderson -- HSBC -- Analyst
That's great. Thank you. Do you have any comment on the millimeter wave deployment, please?
Y. S. Chen -- Chief Financial Officer & Senior Executive Vice President
Okay. So first off, we think 5G is a game changer for the industry. So actually, we invest in quite a lot in the 5G base station. Also, we enter the Taiwanese policy to shorten our 5G base station construction from five years to three years. So we expect the capex of mobile segment will continue for the next two or three years, and the amount will be quite steady.
Shui-Yi Kuo -- President & General Manager
And millimeter wave 5G stations will be deployed based on the private companies [Phonetic] so we don't disclose this amount of the base station numbers. Thank you.
Y. S. Chen -- Chief Financial Officer & Senior Executive Vice President
Thank you very much.
Shui-Yi Kuo -- President & General Manager
Thank you.
Operator
The next question is coming from Benjie from Bank of America. Go ahead please.
Benjie -- Bank of America -- Analyst
Thank you for taking the question. First question, is it possible to share your first -- what is the total number of 5G subscribers that the company had as of the end of July 2020? And just to confirm in the presentation, you mentioned that Chunghwa intends to add another two million 5G customers for 2021, is that correct? That's my first question. Second question is going back to the capex budget, we noticed that there is a significant capex savings in year 2020 because you said, you have a budget of TWD30 billion, now you only spend TWD23 billion in 2020, but at the same time, the capex budget jumps significantly in 2021.
Could you walk us through of TWD43 billion capex budget for 2021? How much of that capex budget access so-called move from 2020 to 2021, and how much is entirely so-called new projects that we have started? And also within that, the capex budget for internet jumped six times year-on-year, what are the specific projects that lead to such a big jump in terms of the capex allocated for internet business? That's the second question. And then last question is actually, going back to the 5G businesses, could you share with us this right now or confirm that for all -- of Chunghwa's 5G customers, when they sign or when they switch from non-5G to 5G, Chunghwa is getting an auto uplift from both customers? Thank you.
Y. S. Chen -- Chief Financial Officer & Senior Executive Vice President
Okay. Okay. Our total number of 5G subscribers is far beyond our annual target last year. And we anticipate we will accumulate over two million numbers of our customers at the end of this year.
Benjie -- Bank of America -- Analyst
So the two million is kind of like, we expect we will have two million new customers this year or will have two million 5G customers by end of this year, if I may clarify? Thank you.
Y. S. Chen -- Chief Financial Officer & Senior Executive Vice President
2 million is the total accumulated number -- the total accumulated number.
Benjie -- Bank of America -- Analyst
Okay. Thank you.
Y. S. Chen -- Chief Financial Officer & Senior Executive Vice President
Operator, Thank you. So for capex question, so actually, we did a very good job at afternoon the OK. the capex, the equipment 5G base station. So basically, we save a lot of money. And for the amount of the deferred items, I would say the number is reliable, yes, because we need to respond to the government's policy in the pandemic. So that's why some of the items are deferred to 2021. And for 2021, right? Oo for our mobile services, most of the capex is on the 5G. And for the internet business segment, the capex is mainly for the ITC, cloud services and FTTx.
Fu-Fu Shen -- Assistant Vice President & Director of Investor Relations
So basically, we're talking about the Internet capex. As I mentioned about it, are there any specific projects responsible for this? Of course, we are actually identifying some special project. But sometimes, this is a nondisclosure kind of -- we cannot really disclose that what about the most of the project but we actually identified, so we think it's highly likely to happen. So that's why we included it in the budget, OK? I think that's the reason. And this marine cable and our internet data center, we see this kind of international kind of opportunity how likely happen in this year. So that's why we are budgeting a little more lower for this year. I think there's explains the reason for that, OK, for Internet session.
Benjie -- Bank of America -- Analyst
And the ARPU uplift?
Fu-Fu Shen -- Assistant Vice President & Director of Investor Relations
Yes. I think we talked about your last question. How -- Will they switch from non-5G to 5G, of course, 90% of our customers -- 5G customers, it's from 4G to 5G, yes, that's the situation. cause we are the leading mobile operator in this market.
Benjie -- Bank of America -- Analyst
But for those customers, I guess my question is, when they switch from non 5G to 5G package, are we -- I mean, the company getting a higher so-called monthly phone bill from those customers when they upgrade them to 5G? Or essentially, they are paying us the same amount of money even after they switch to 5G?
Fu-Fu Shen -- Assistant Vice President & Director of Investor Relations
You see, from our presentation, you must notice that this year, we actually -- our postpaid customers actually receive the uplift of the ARPU. I think this is mainly from two sources, OK? First of all, the 4G, the second is the 5G. The 5G is because we have managed to have 5G -- 4G migrate to 5G, we have the uplift of the -- ARPU uplift, OK, that's one part. For 4G, we have a lot of people, a lot of customer because 13 months ago, we had this Mother's Day, and the civil service, that kind of a package we managed --more than 90% of the customization. We have small ARPU uplift. I think that's the major reason for that. So that's why we have a pretty good revenue ARPU uplift for postpaid customers this year -- last year, I should say, that 2020.
Benjie -- Bank of America -- Analyst
If I may just ask a small follow-up question. Also in the presentation, the company mentioned that we have decided to squeeze our 5G rollout from five years to three years. our broad product and specific change in terms of the operating environment that we see out there and that promise that OK, we need to speed up our network rollout, instead of taking five years, we should just finish it within three years? Thank you.
Fu-Fu Shen -- Assistant Vice President & Director of Investor Relations
Of course, to acquire the government -- the 5G, we need to accelerate the lower deployment for sure, cause this is a big money and -- but this doesn't really change the whole situation because we would like to be the leading mobile operator in Taiwan. I think this is all -- we maintain our -- this kind of leading position for either in 5G era, so this doesn't change in terms of the operation, I believe, environment. So I think that -- I hope this answers your question.
Benjie -- Bank of America -- Analyst
Thank you.
Operator
Thank you. The next question is coming from Jack Hsu, SinoPac Security. Go ahead please.
Jack Hsu -- SinoPac Security -- Analyst
Hi, thanks for giving me the chance to ask question. I got three questions. My question is about -- we have -- thanks for the company give us guidance about the capex. But I'm interested because in the 2020, our capex achieved the achievement rate maybe around 70% to 80%. So in the 2021, we forecast the achievement rate will be almost same that was in '20 or maybe higher? And this is my first question. So should I continue my question? Or just one question by one question?
Shui-Yi Kuo -- President & General Manager
Okay. Thanks Jack, just for your questions. So although in 2020, the attribution rate is on -- between 70% and 80%. But actually, we have done every construction we are supposed to do, OK? So basically, the remaining portion is basically Alan, I mean that deferred items, actually, we can save capex through that procurement and our bargaining ability, so that's why we did our attribution rate at 70% to 80%. So in 2020, I think we still optimize our procurement and our review process, so I cannot say whether attribution rate will be at one number this year or next year, but we will do whatever we are supposed to do to deploy our 5G construction and like the submarine cable, we will do whatever we are supposed to do. Yes, thank you.
Y. S. Chen -- Chief Financial Officer & Senior Executive Vice President
Everyone points that because of some spending deferred from 2020 to 2021, it's good that the deferred items in our total capex spending will move to maybe 85% to 90% of our guidelines.
Fu-Fu Shen -- Assistant Vice President & Director of Investor Relations
And let me add one thing. One thing worth noting that our reporting actually is on a cash basis, OK? It's not all accrued, the presentation. So probably, it's a little bit different.
Jack Hsu -- SinoPac Security -- Analyst
Okay. Thank you. And my second question is about the 5G base station target, because we have just mentioned in the end of the 2021, and hope will almost 10,000 5G base stations around Taiwan. And the other disease target will need to be at maybe almost 40,000 at the end of the 2024 or 2023. Yes. But coding our plan, and it seems we will ahead of the and this is guidance. So could you give us some color about our strategy for our 5G base station, the deployment strategy? Thank you.
Shui-Yi Kuo -- President & General Manager
Yes. Well, we accelerated the base station construction period. And as I mentioned earlier, that we will accelerate from five years to three years, and we will construct over more than one -- more than 10,000 base stations at the end of this year. And we do not disclose the total numbers of base station beyond the end of this year. Thank you.
Jack Hsu -- SinoPac Security -- Analyst
Okay, thank you sir. Because I got the information from the news, and the news has -- the company's guidelines will -- to maybe -- until the 2023 maybe will cover over 90% of the Taiwan. And so according to the historical data, and it seems the -- has been built over 30,000 base stations, 4G base stations around Taiwan, so we forecast that the company will have almost said numbers 5G base stations, maybe at the end of the 2023? Thank you.
Shui-Yi Kuo -- President & General Manager
Yes. Yes, we anticipate that after the construction of other 18,000 5G base stations, it will achieve a population coverage rate of 90%. I'm sure if I answer your question.
Jack Hsu -- SinoPac Security -- Analyst
Okay, thank you sir. And my third question is about -- I'm interested about our ARPU, about especially the mobile ARPU because the mobile ARPU, in the end of -- at the end of last year, maybe just around 420 -- around $420. But comparison, in comparison with our care plan, on the web, and it seems only we have three A, this is Terry plan is below the $400. But I mention because the majority, it seems the majority of our tariff plan is about $499. And so right now, we try to that our 4G customers transfer to 5G, and we have good data now, but when we see the mobile ARPU, it seems something interested and we cannot match the our plan and the 5G subscriber growth. So can you give us about some details about our mobile ARPU? Thank you.
Shui-Yi Kuo -- President & General Manager
I answered your question about the mobile ARPU. And of our postpaid mobile subscribers, net adds maintained positive for the whole year in the last year. And we see upsell among 4G users while 5G continue to strengthen adoption of higher-priced plans, including iPhone users. We aim to strengthen our mobile service revenue and originally, expect it to be bottomed up in 2021, OK.
It's the first. However, in 2020, our mobile service revenue decreased year-over-year, mainly due to the decrease of international revenue resulting from COVID-19 impact starting from quarter two last year. So factually, in all this, we do expect our mobile service revenue will increase year-over-year in quarter two this year. And the trend we expect, we are likely to continue. And I add one point that the branded ARPU is lower because it includes IoT numbers. Thank you.
Jack Hsu -- SinoPac Security -- Analyst
Okay. Just one follow-up question. And so could you give us about some information about the percentage of the IoT part of percentage in the mobile ARPU? Yes because this is our growing segment in our business, and it also has confusion. So could you give us some detail about the percentage of the ARPU, I mean the IoT ARPU? Thank yo u.
Fu-Fu Shen -- Assistant Vice President & Director of Investor Relations
Basically, we -- I think currently in the entire market one of the -- to disclose the IoT customer number, but that is the -- the same from the -- our understanding, our IoT customer number already accounted for currently like high single-digit percentage, so I think it's -- this kind of diluted our ARPU level.
Jack Hsu -- SinoPac Security -- Analyst
Okay. Thank you. Thank you sir.
Operator
Thank you. The next question is coming from Amber Lee from Yuanta. Go ahead please.
Amber Lee -- Yuanta -- Analyst
Hi, two questions here. And sorry, I was firstly on the other calls, so apologies if my questions has been asked. First one, on your profitability of this year. I think it looks like EBITDA margin seems to be well improved from last year. However, the most significant improvement seems to be happening in the fourth quarter. So I'm just trying to get more ideas of how this improvement is from because throughout the years, your fourth quarter has always been the most difficult quarter for telecom companies as a whole, and yet you're guiding the highest quarterly EPS this year.
Shui-Yi Kuo -- President & General Manager
Thank you for your question. Yes, our fourth quarter EBITDA and our project ratio increased of about 6.1% from the same period of 2019, mainly due to increased income from operation because of the -- our fixed broadband revenue increase and our mobile service revenue -- our postpaid mobile service revenue increased over year-over-year. That's the main reason of the margin increased. Thank you.
Amber Lee -- Yuanta -- Analyst
Yes. But -- thank you. And that was for 2020, but how about this year? Because I believe you provide a breakdown for your guidance for this year? And it looks like again, in the fourth quarter this year, you still have a very good improvement in your margin and your quarterly EPS is the highest throughout the four quarters. So are there any specific reasons that's behind this profitability improvement for this year, fourth quarter?
Shui-Yi Kuo -- President & General Manager
Okay. So because normally in the fourth quarter, we have -- have more EBITDA margin because we have more completion of ICT projects where margin is lower relative to other projects. But for 2021, we expect EBITDA margin will be higher because we'll be more selective in securing our ICT projects. So that's why we are quite confident that EBITDA margin will be higher in 2021.
Amber Lee -- Yuanta -- Analyst
I guess it was mostly due to ICT projects.
Shui-Yi Kuo -- President & General Manager
Sorry?
Amber Lee -- Yuanta -- Analyst
It's mostly due to ICT projects?
Shui-Yi Kuo -- President & General Manager
You mean in 2021?
Amber Lee -- Yuanta -- Analyst
Yes, this year.
Shui-Yi Kuo -- President & General Manager
Okay. And we also believe our broadband services will be -- will continue the upturn, so that will also add or raise our EBITDA margin. So we believe our mobile services and our broadband services, the revenue will go up. Yeah, that will also increase and affect our EBITDA margin and also the ICT project. But we think since we are being more selective in acquiring good ICT project with higher NPV, s we think this is one of the main drivers for higher EBITDA margin in 2021.
Amber Lee -- Yuanta -- Analyst
Okay. Thank you. And my second question, as a follow-up from the other analysts, for the increased capex and internet sector, will we be able to see internet business sales growth to reflect on such level of investment growth? And since you talked about the capex as to support some potential business opportunity. Has the business opportunities been budgeted to your guidance for this year?
Shui-Yi Kuo -- President & General Manager
Okay. So we think the CaPEx, our Internet segment, right, as I just mentioned before, for our capex from this section, it's mainly from IDC and FTTx. So for the first one, IDC business, right, because we know to tighten crash. So I think this is a good opportunity and we also see large customers come from overseas than to use our IDC services. So we still believe the investment in this area is very promising. And secondly, because of the pandemic, so there's a booming of whole economy. And that's why we think the investment in FTTx will also pay off. And in fact, we need to see some improvement, and there's a raise in our revenue from these areas.
Amber Lee -- Yuanta -- Analyst
Okay. Very helpful. So all of the opportunities that you've seen has been budgeted through your guidance, revenue guidance for this year? Is it?
Shui-Yi Kuo -- President & General Manager
Okay. So for our revenue forecast, right? As you can see, we expect there will be like 1% growth or so because we believe that our mobile service and internet services will go up. And we also think that the sale of handsets will go up. Yes. So that's why we think the revenue will be a little bit better than this -- than last year. I hope I answered your question.
Amber Lee -- Yuanta -- Analyst
Okay, very helpful. Thank you so much.
Operator
[Operator Instructions] The next question is coming from Jack Hsu, SinoPac Securities. Go ahead please.
Jack Hsu -- SinoPac Securities -- Analyst
Thank you for giving me another chance to ask question. The one question is about, we have the project with construction company means Tinker. And it seems we have -- the construction has done --finished their construction in India, so could you give us some details about the profit in our income segment in the fourth quarter in 2020? Thank you.
Y. S. Chen -- Chief Financial Officer & Senior Executive Vice President
For this open development project, actually, the profit is about $1.26 billion.
Jack Hsu -- SinoPac Securities -- Analyst
Okay. So good. Okay. Just one follow-up question. So we'll still -- will there be another -- this kind of income, will happen in the 2021? Thank you.
Y. S. Chen -- Chief Financial Officer & Senior Executive Vice President
Yes.
Jack Hsu -- SinoPac Securities -- Analyst
Sorry sir? Excuse me?
Y. S. Chen -- Chief Financial Officer & Senior Executive Vice President
Okay. So for the rental income, right?
Jack Hsu -- SinoPac Securities -- Analyst
Yes, yes.
Y. S. Chen -- Chief Financial Officer & Senior Executive Vice President
You mean the -- Indian project?
Jack Hsu -- SinoPac Securities -- Analyst
Yes, I mean, another -- this kind of income that happened in the 2021. We don't put too much expectation in the second line in the 2021?
Y. S. Chen -- Chief Financial Officer & Senior Executive Vice President
Yes. So, the gains on disposal of PPE, but we don't have other significant items in this category. By 2021, we will continue our asset -- exercise, but we cannot give a very specific number for now.
Jack Hsu -- SinoPac Securities -- Analyst
Okay. So is that -- is it possible to also get another gain in the 2021 or we don't put too much expectation on this item in the 2021?
Y. S. Chen -- Chief Financial Officer & Senior Executive Vice President
So at this point, we cannot give any details for this question.
Jack Hsu -- SinoPac Securities -- Analyst
Okay. Thank you sir, it's very helpful.
Operator
Thank you. The next question is coming from Billy Lee, Credit Suisse. Go ahead please.
Billy Lee -- Credit Suisse -- Analyst
Thank you management for the opportunity. I have got few quick questions. The first question is, could you help us understand your EBITDA outperformance relative to your guidance, while your revenue is actually below your guidance. So what was the area of cost saving that you did in 2020? So that's the first question. And the second question is regarding ICT growth. Obviously, in 2020, it was a big growth relative to last year, and could you help us understand the visibility of ICT growth going into 2021? And last question is around CaPEx. For CaPEx, earlier you talk about the entire 5G cycle shortened from five years to three years. And does that imply the CaPEx intensity beyond 2021, i.e. 2022 and 2023 will be high? Will it be as elevated as 2021 as well? Thank you.
Shui-Yi Kuo -- President & General Manager
Yes. As I mentioned earlier, that our fourth quarter EBITDA -- well, our EBITDA was an increase of about 6.1% from the same period of 2019, mainly due to the increase of our core business, and that means from our fixed broadband increase -- fixed broadband revenue increase and our postpaid mobile service revenue increased year-over-year. That's the main reason of our profit ratio increase. And our ICT growth in 2020, because we recognize a large project in the fourth quarter last year. So the ICT revenue is -- it will be a big than this year.
The ICT revenue were a little bit less than last year, but we anticipate that the ICT profit will increase year-over-year because we were more selective, the ICT projects, as Vincent mentioned earlier. And about the CaPEx spending, because we want to accelerate the 5G service deployment as quick as possible because we see the 5G will boom in the upcoming this year, so the total CaPEx in 2021, we anticipate that it will be the highest amount of the company. And then the CaPEx, there will be a decrease in 2022 and 2023. And that's what we want to mention that the CaPEx spending this year will be the highest.
Billy Lee -- Credit Suisse -- Analyst
Great. Thank you.
Operator
Thank you. The next question is coming from Sara Wang from Morgan Stanley. Go ahead please.
Sara Wang -- Morgan Stanley -- Analyst
Thank you. So I have two questions. So first is still on the ICT. So would you please give us some examples on, say, for some major projects that we like or any -- what like clients, what kind of demand we are doing with the ICT projects? And also on the ICT projects, do we have roughly how much percent, say revenue or profit that ICT projects contribute? And then second question is on like [Indecipherable] on the CaPEx. So we try to accelerate 5G rollout in 2021. So what kind of metrics do we see that is, say, like either revenue opportunity or the adoption rate is better-than-expected to like so that we decide to accelerate the overall 5G rollout plan? Thank you.
Shui-Yi Kuo -- President & General Manager
Okay. For the first question, regarding ICT project. So in 2020 the revenue from ICT accounts for about 13% of our total revenue, consolidated -- income statement. And so for example, the large projects, right? So they are like something --and also the solar energy projects in Zhongshan. Yes. So I hope I answered your question.
Operator
Okay.
Fu-Fu Shen -- Assistant Vice President & Director of Investor Relations
No, wait. I'm sorry. Basically, we have a different project from the public sector or private sector from the government sector, it's kind of the various different note. I think the reason I mentioned about is from the government that's a large, large projects, but we also partner with the other partners to take some projects in the private sector, so it's kind of versatile, different kind of projects.
Y. S. Chen -- Chief Financial Officer & Senior Executive Vice President
I add one point that we anticipate that the -- as soon as we deploy our base station, there will be more customers to use the 5G services. So that's why we want to accelerate the CaPEx spending on our 5G base station deployment. And the second one is that a result for the government from 5G subsidies, that will help us to accelerate the construction. Okay, the second one. And the third one that we -- about the -- the third one is what I want to mention is about the new applications of the 5G services. We want to team up with our partners from various verticals to develop 5G services via [B2B] business model.
We will focus on include smart manufacturing, smart transportation and smart agriculture, smart healthcare, and autonomous driving, et cetera. They these applications will be applied in different verticals. So we want to deploy these new applications as small as possible, that will be healthy for our telecom industry and our Taiwan economy.
Shui-Yi Kuo -- President & General Manager
Okay, got it. Thank you.
Operator
Thank you. The next question is coming from Somar from Fidelity. Go ahead please.
Somar -- Fidelity -- Analyst
Hello. I think any.
Operator
Yes, go ahead please.
Somar -- Fidelity -- Analyst
Hello? Oh, OK, thanks for the opportunity. Just quickly two questions. So I'm still struggling to understand why your projecting higher EBITDA margin. You previously mentioned this is driven by ICT projects, right? But ICT project margins should be lower, the margin should be lower than your core telecom business. Why is it right tend why it can't be the reason for higher margin? Or is it actually driven by further cost cutting? Could you clarify that point? That's my first question.
Fu-Fu Shen -- Assistant Vice President & Director of Investor Relations
I think in the last year, we have several government projects, which is a large project, accounted for large revenue portion which has lower margin compared with the overall ICT projects. This year, we don't have this kind of project, much less, so the margin will be higher. Okay.
Somar -- Fidelity -- Analyst
Okay. Okay. That's clear. Thank you. And then the second question is, so based on your guidance, I guess you're projecting depreciation and amortization expenses to rise by about 5% year-over-year, despite a large increase in CaPEx, right? And then could you help me understand why? Because did you change the depreciation method or is any of the government subsidies you could potentially get actually factored into your projection? Thank you.
Shui-Yi Kuo -- President & General Manager
Yes. We don't change our depreciation policy. And for the D&A expenses, because for 5G deployment, we only started July last year, so it's only for half of the year. Okay. Yes. But -- OK. Yes, but my simple question is, your CaPEx is projected to increase by a loss right, year-over-year? And also in terms of amortization of spectrum, obviously in 2020, you only recognized for the latter half of that year, I mean, for six months versus this year, you're going to have to recognize it for throughout the year for 12 months, right? But what you're saying is it will result in a near 5% increase in depreciation and amortization expenses without sort of changing any of your accounting standards?
Somar -- Fidelity -- Analyst
Thank you.
Operator
Thank you. Ladies and gentlemen, if there is no further questions, I will turn it back over to President Kuo. Go ahead, please.
Shui-Yi Kuo -- President & General Manager
Thank you for your participation. Happy Chinese New Year. Bye bye.
Operator
[Operator Closing Remarks].
Duration: 69 minutes
Call participants:
Angela Tsai -- Senior Manager
Shui-Yi Kuo -- President & General Manager
Y. S. Chen -- Chief Financial Officer & Senior Executive Vice President
Fu-Fu Shen -- Assistant Vice President & Director of Investor Relations
Neale Anderson -- HSBC -- Analyst
Benjie -- Bank of America -- Analyst
Jack Hsu -- SinoPac Security -- Analyst
Amber Lee -- Yuanta -- Analyst
Jack Hsu -- SinoPac Securities -- Analyst
Billy Lee -- Credit Suisse -- Analyst
Sara Wang -- Morgan Stanley -- Analyst
Somar -- Fidelity -- Analyst