PART I Enhancing position in our leading markets . Revenues from our mobile communications and  internet services have increased from 55.4% of revenues in 2008 to 56.1% in 2010. We expect our mobile  communications, internet, broadband value-added and information and communication technologies services  to continue to be the key drivers of our future growth. With our leading market share, we enjoy substantial  economies of scale in equipment procurement as well as the marketing of our products and services.  We have the capital resources and technology to enhance our leading position in the growing mobile  communications and internet services markets.  Strong capital structure . We believe we have greater financial resources than other telecommunications  operators in Taiwan. In particular, our relatively low debt-to-equity capital structure, together with our high levels  of cash and operating cash flows, provides us with the flexibility and resources to invest in capital intensive and  growing businesses. In particular, we continue to invest in broadband internet protocol networks, fiber-optic  networks, and 3G mobile communications networks and services. We also have begun making investments in or  acquiring other companies which provide complementary telecommunications and internet-related services to  further expand our business and offer new products and services.  Advanced network technology . Since 2003, we have developed and upgraded our existing infrastructure  for both mobile and fixed line networks. We developed a high-speed internet protocol backbone network,  expanded the coverage of our ADSL network and deployed a 3G network. In 2008, we launched a long-term next  generation network construction project that will upgrade our local fixed line networks to high-speed packet- based digital networks with FTTx technologies, including FTTC/N, FTTB and FTTH, in order to provide high  speed internet, VoIP, MOD and high definition television, or HDTV, services. We have also upgraded our 3G  network to HSPA and HSPA+. In 2011, we will expand HSPA/HSPA+ coverage to provide better mobile internet  services with speeds of up to 21 Mbps. Our investment in network infrastructure places us in a position to capture  a significant share of the internet and high-speed data transmission market.  Research and development expertise . As of March 31, 2011, we employ over 2,128 research professionals  and engineers whose principal focus is to develop advanced network services and operations support systems  and to build selected core technologies. In 2010, our research and development expenses accounted for 1.6% of  our revenues under R.O.C. GAAP. We believe our focus on research and development will allow us to efficiently  develop and deploy new technologies and services ahead of our competitors.  Business Strategy  Our key strategic objectives are to maintain our position as a leading integrated telecommunications  services provider in Taiwan and to enhance our leadership position in growing markets, such as the mobile  services and internet services markets, including fixed/mobile broadband access services and value-added  services.  Taiwan has one of the highest fixed line penetration rates in Asia and has also experienced rapid adoption  of wireless communications and internet services, including broadband access services. We believe that  telecommunications services will evolve over the coming years, driven by a number of technological innovations,  including cloud computing and mobile broadband and Internet of Things. We also believe that the convergence of  communications technologies will provide a significant competitive advantage to integrated telecommunications  service providers that are able to design and construct sophisticated and scalable networks capable of serving as  a common platform for a broad range of services.  19