Pccw Limited · HKEX:8
Pccw — Investor Presentation (November 2013)
36 slides from Pccw's investor presentation, November 2013
Slide 1: Investor Presentation November 2013 - Hong Kong
Click to edit Master title style Investor Presentation November 2013 - Hong Kong
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation may contain “forward-looking statements” that are not historical in nature. These forward-looking statements, which include, without limitation, statements regarding PCCW's future results of operations, financial condition or business prospects, are based
Slide 3: A Successful Combination – Solid Telecom Business with Media & Solutions Growth Businesses
A Successful Combination – Solid Telecom Business with Media & Solutions Growth Businesses (US$ million) FY12 Revenue 3,246 FY12 EBITDA 998 Market Value (as at Oct 31, 2013) 3,263 (100%) Core Businesses (100%) (74.5%) Media Solutions Growth PCPD FY12 Revenue 152 FY12 Revenue 360 FY12 Revenue 318 FY1
Slide 4: Media Business
Media Business 3
Slide 5: Positioned for Next Growth Phase
Positioned for Next Growth Phase (US$ million) Media Revenue Media EBITDA 81 360 347 306 63 162 167 30 28 29 23% 17% 17% 17% EBITDA 10% Margin FY 2010 FY 2011 FY 2012 H1'12 H1'13 FY 2010 FY 2011 FY 2012 H1'12 H1'13 • Media revenue up 3% in H1’13 underpinned by improved • Steady EBITDA and margin pay
Slide 6: Market Leader in Pay TV
Market Leader in Pay TV now TV continues to excel with good customer up-take; total installed base reached over 1.2M. Growth to accelerate as the new BPL season kicks off in H2’2013. 2007 2008 2009 2010 2011 2012 2013 5
Slide 7: Early BPL Monetization & Service Differentiation Set Stage for Growth
Early BPL Monetization & Service Differentiation Set Stage for Growth Early monetization of BPL: Commencing January’13, the price of premium packages including sports has increased from $258+ to $428+ Early bird offer has brought forward momentum of new subscribers and existing subscribers upg
Slide 8: Clear Leadership Across All Key Content Categories
Clear Leadership Across All Key Content Categories Unrivalled World-Class Strongest MOVIE Line-up SPORTS content Bringing Home-Theatre Excitement Exclusive Exclusive Most KIDS & EDUCATION Channels A Significant Producer of & On-demand Learning Content in Town LOCAL Content - Providing 23 self-produc
Slide 9: Strategic Alliance with Mainland Partners
Strategic Alliance with Mainland Partners Top rated Strategic alliance with key partners to build Drama Gems from Hai-run Media Group exclusive content asset of dramas, Chinese movie channel with movies, lifestyle and entertainment Huayi Brothers, We Pictures programs to satisfy Hong Kong, & Edko
Slide 10: Continual Expansion of International Distribution
Continual Expansion of International Distribution Business expansion outside the local market continues. now TV programming also made available to pay TV viewers of StarHub in Singapore. Launch Markets Partners Channels/Content Telekom Malaysia Berhad - TM’s Hypp Nov-12 Malaysia TV is Malaysia's l
Slide 11: Embracing New Media Technologies
Embracing New Media Technologies Embracing new media technology for revenue and subscriber growth: now subscribers enjoy TV everywhere service with enriched content and features: 42 live streaming channels and services Over 3,000 hours of on-demand videos Launched now FREE TV app with 3 fr
Slide 12: Solutions Business
Solutions Business 1 “a PCCW’
Slide 13: Delivering its Growth Potential
Delivering its Growth Potential (US$ million) Solutions Revenue Solutions EBITDA 318 56 283 49 261 36 179 28 145 22 17% 18% 14% 15% 16% EBITDA Margin FY 2010 FY 2011 FY 2012 H1'12 H1'13 FY 2010 FY 2011 FY 2012 H1'12 H1'13 • Impressive revenue growth of 24% in H1’13 driven by execution of projects, e
Slide 14: Diversified Customer Base
Diversified Customer Base Secured Order increased by 4% yoy to US$670m Banking and Finance Technology, Media & Communications Public Sector Transport & Hospitality Retail Manufacturing 13
Slide 15: Key Growth Drivers
Key Growth Drivers Organizations moving away from owning infrastructure and software license: Cloud Computing • Migrated the HKSAR Government’s entire financial system to a private cloud providing a centralized database and removing the need for hardware monitoring, software maintenance, first line
Slide 16: Key Growth Drivers
Key Growth Drivers Data Centre Increasing demand for premium data center hosting services Hosting • “Build to Demand” strategy; improves speed to market and return on investment • 75,000 sq. ft. GFA completed earlier this year • Confirmed to convert 166,000 sq. ft. GFA of an existing building to dat
Slide 17: Inorganic Growth Yielding Synergies
Inorganic Growth Yielding Synergies Compass Solutions Vanda China • Acquisition Date: May 2013 • Acquisition Date: Nov 2012 • 200+ SAP expertise and 300+ customer base in • Expert software company serving city retail and manufacturing sectors commercial banks and finance companies in China • Combini
Slide 18: Telecom Business
Telecom Business 17 “a PCCW’
Slide 19: A Steady Performance
A Steady Performance • AFF up 4% yoy to US$190 million in H1’13 • Interim distribution of 21 HK cents per SSU (US$ million) HKT Revenue HKT EBITDA Mobile 2,703 TSS 983 2,542 950 Others 929 94 2,375 316 46 65 252 219 776 728 676 Mobile 1,419 492 Local Data 436 1,246 479 436 174 44 57 Local Telephony
Slide 20: Stable Fixed-line Business
Stable Fixed-line Business Solid Customer Base Maintained Since 2004 (’000) Business Lines Residential Lines 1,543 1,408 1,409 1,400 1,407 1,407 1,408 1,406 1,407 1,408 1,423 1,236 1,144 1,164 1,180 1,183 1,195 1,182 1,183 1,228 1,238 1,242 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 H1 2013 1
Slide 21: Driving Further eye Penetration
Driving Further eye Penetration Rapid Growth of Higher ARPU eye Customer Base eye Strategy 286 270 eye strategy delivering results 242 (current penetration ~20% of 210 residential customers) Becoming the Infotainment and 167 Edutainment companion at home 120 Launch of eye 3 on Samsung Galaxy T
Slide 22: Comprehensive Business Solutions
Comprehensive Business Solutions Extending Office Communication Carrier-grade Cloud Service Providing Functionalities to include a Secure and World-class Service to Smartphones Enterprises in Hong Kong • Customers can enjoy business • Ubiquitous and fastest-in-town broadband communication services o
Slide 23: Continued Growth in Broadband
Continued Growth in Broadband Broadband continued to grow at a rate of 2% while churn maintained at 1% Industry dynamic has shifted from market share gain to value creation and ARPU growth (‘000) Wholesale Business 1,540 1,567 1,567 1,518 Consumer 1,437 126 128 1,367 119 122 1,275 1,302 1,305 1,
Slide 24: Wide Coverage of our Fiber Network
Wide Coverage of our Fiber Network FTTB-ready (85.6%)* 1.5M or above (supporting speeds of up to (98%) 100Mbps) FTTH-ready (75.5%)** (supporting speeds up to 1000Mbps) (as of July 2013) * FTTB-ready means FTTH service can be available within 29 days of receiving a service order, building management
Slide 25: Rapid Growth of Fiber Customers
Rapid Growth of Fiber Customers Fiber-To-The-Home (FTTH) Service continued to attract new customers and existing customers for service upgrade 362K customers enjoying FTTH service as of Jun 2013, grew 60% vs. Jun 2012 Growing fiber customer base creates future upgrade opportunity to higher spe
Slide 26: Mobile Business Acquires More High-end Customers
Mobile Business Acquires More High-end Customers Total customer base reached 1.652M, up 3% yoy Post-paid customer base reached 1.017M, up 1% yoy Post-paid exit ARPU increased 13% yoy to HK$209 from HK$185 Focus on SIM only connections Post-paid 1,605 1,645 1,652 1,535 Prepaid 1,422 1,469 1,4
Slide 27: A Comprehensive Wireless Experience
A Comprehensive Wireless Experience Ultra-fast mobile experience through integrated 4G LTE and Wi-Fi networks Launch of 4G LTE 150Mbps Network • Offer a dual-band 1800MHz and 2600MHz 4G LTE network that provides comprehensive outdoor and indoor coverage • Enhanced 4G LTE network up to 150Mbps offeri
Slide 28: Increased Focus on SIM Only Plans
Increased Focus on SIM Only Plans Focus new activations on SIM only connections to grow post-paid base: Many new smartphones in the market but no true “hero” handset in 1st half 2013 Helps control handset subsidies and customer acquisition costs 2727
Slide 29: Investing Prudently for Growth
Investing Prudently for Growth (US$ million) Core Operating Expenses Media, Solutions & Others • Opex grew by 8% in H1’13 and the opex to revenue ratio HKT was 22% 660 675 • Increase in opex primarily at 594 HKT – a combined result of 113 113 the expansion in business, in 103 particular the Internat
Slide 30: Demand-Driven Core Capex
Demand-Driven Core Capex (US$ million) Media, Solutions & Others • HKT capex focused on HKT demand driven spending for 290 fibre upgrades and increasing 41 mobile data usage 241 228 • Only light capex spending 21 36 required for the Media and Solutions businesses 153 • Moderate increase in Solutions
Slide 31: Sound Financial Position
Sound Financial Position Net Debt (1) (US$ million) 3,485 3,029 2,819 2,333 2,785 2,879 (HKT) (HKT) (HKT) FY 2010 FY 2011 FY 2012 H1'13 Net Debt / EBITDA(2) 3.7x 2.4x 2.8x 3.0x (1) Net debt refers to the principal amount of short-term and long-term borrowings minus cash and cash equivalents and cert
Slide 32: Optimal Financing Structure
Optimal Financing Structure (US$ million) As at June 30, 2013 Bank Loans US$ Bonds PCCW Level 706 Repaid in July 2013 395 PCCW Level 500 500 500 457 500 300 154 2013 2014 2015 2016 2017 2018 2022 2023 • Next debt repayment only due in 2015 • Ample liquidity of US$673 million for HKT, US$211 million
Slide 33: Shareholder Focused Dividend Policy
Shareholder Focused Dividend Policy Final Dividend Interim Dividend (HK cents) Yield: 5.4% (1) 5.1% (2) • Maintain minimum dividend for 3 years at 2010 level (US$143 million) 13.55 10.60 • 2013 interim dividend per share of 6.35 HK cents, 6.35 representing an increase of 5.30 5.51 15% over the same
Slide 34: Appendix
Appendix 33
Slide 35: Summary P&L
Summary P&L (US$ million) FY 2011 FY 2012 H1’12 H1’13 Revenue 3,159 3,246 1,526 1,707 + 12% Cost of sales (1,461) (1,515) (677) (813) Operating expenses (725) (733) (357) (388) Depreciation & Amortization (506) (566) (273) (291) Disposal (loss)/gain on property, plant and equipment - (2) - 1 Net oth
Slide 36: Adjusted Funds Flow
Adjusted Funds Flow (US$ million) FY 2011 FY 2012 H1’12 H2’12 H1’13 YoY EBITDA 950 983 479 504 492 +3% Less cash outflows in respect of: Customer acquisition costs and licence fees (181) (220) (97) (123) (91) Capital expenditures (201) (244) (107) (137) (127) Adjusted Funds Flow before tax paid, net