In June 2010, we became a 18.2% stockholder of CQi Energy Infocom Inc. (CQi), which engages mainly in  intelligent energy network management services.  In September 2010, we established Chunghwa Precision Test Tech. USA Corporation (CHPT(US)), that  engages in the testing service of semi-conductor components and printed circuit boards.  In March 2011, we established a wholly owned subsidiary Chunghwa Telecom (China) Co., Ltd., which  engages mainly in selling computer software, network equipment and communication materials, and providing  installation, design and maintenance services.  Going forward, we may consider making other equity investments and acquisitions that we believe  are complementary to our business and strategic goals. Our future investment will be aimed at expanding  our business scale and scope, making better use of our research and development resources and operational  experience and increasing our revenues through investing in core telecom businesses as well as value-added  services. We expect to target the markets of our overseas investments from Southeast Asia to China while  carefully evaluating the risks involved.  We are committed to maximizing stockholder value and intend to maintain our high dividend payout policy.  Following our privatization, we have more flexibility to implement capital management initiatives, including  possible repurchases of our outstanding common shares and increases in our leverage through debt financing.  We bought back 192,000,000 shares between February 10, 2006 and April 7, 2006 and cancelled those shares  on June 30, 2006. We bought back 121,075,000 shares between August 29, 2007 and October 25, 2007 and  cancelled those shares on December 29, 2007 and February 21, 2008, respectively.  In 2007, we effected a capital reduction plan by a transfer of capital surplus in the amount of NT$9.7 billion  to capital stock. Subsequently, capital stock was reduced by NT$9.7 billion and a liability for the actual amount  of cash to be distributed to stockholders of NT$9.6 billion was recorded. The difference between the reduction  in capital stock and the distribution amount represents treasury stock of NT$0.1 billion, which was concurrently  cancelled. Such cash payment to stockholders was made on January 9, 2008. We effected an additional capital  reduction plan in 2008 by transferring NT$19.1 billion from capital surplus to capital stock and the same amount  was later reduced from capital stock. The cash payment of NT$19.1 billion was made on March 20, 2009 to  our stockholders. We effected an additional capital reduction plan in 2009 by transferring capital surplus in the  amount of NT$9.7 billion to capital stock and the same amount was later reduced from capital stock. The cash  payment of NT$9.7 billion was made on February 8, 2010 to our stockholders. We effected an additional capital  reduction plan in 2010 by reducing 20% capital stock in the amount of NT$19.4 billion. The cash payment of  NT$19.4 billion was made on January 25, 2011 to our stockholders.  Our core business segments are our domestic fixed communications business, mobile communications  business, internet business and international fixed communications business.  The provision of domestic fixed communications services is one of our principal business activities.  Our domestic fixed communications business includes local and domestic long distance telephone services,  broadband access services, local and domestic long distance leased line services, multimedia on demand services,  and domestic other services. We are the largest provider of local and domestic long distance telephone services  in Taiwan. We also provide interconnection with our fixed line network to other mobile and fixed line operators.  Since June 2001, three new operators have begun offering fixed line services. Our revenues from domestic fixed  communications services were NT$73.1 billion, or 36.2% of our revenues, in 2008, NT$71.5 billion or 36.0% of  our revenues in 2009 and NT$70.7 billion (US$2.4 billion), or 34.9% of our revenues in 2010. Owing primarily  to the expansion of our mobile communications services and the general trend of a continued decline in fixed line  voice traffic, we expect that revenues from our domestic fixed communications business as a percentage of our  total revenues will continue to decline.  B. Business Overview  Our Principal Lines of Business  Domestic Fixed Communications Business  Maintain focus on maximizing stockholder value  PART I 24