Pccw Limited · HKEX:8
Pccw — Investor Presentation (April 2016)
53 slides from Pccw's investor presentation, April 2016
Slide 1: Investor Presentation April 2016 - Hong Kong
Click to edit Master title style Investor Presentation April 2016 - 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: Solid Telecom Business, Media & Solutions Businesses – Growth Focus
Solid Telecom Business Media & Solutions Businesses – Growth Focus (US$ million) FY15 Revenue 5,040 FY15 EBITDA 1,523 Market Value (as at April 18, 2016) 5,100 Core Businesses (100%) (100%) (70.80%) Media Solutions PCPD Growth FY15 Revenue 21 FY15 Revenue 432 FY15 Revenue 461 FY15 EBITDA (33) busine
Slide 4: PCCW Plays a Central Role in Helping our Customers through this Digital Journey
PCCW Plays a Central Role in Helping our Customers through this Digital Journey Business transformation Digital OTT platform - stay services to support our connected and consume customers growth ambitions content on the go Integrated cloud software and Best big screen experience Enterprise s
Slide 5: Telecom Business
Telecom Business H K Tricre Tooerve
Slide 6: Fruitful Results Across Business Segments
Fruitful Results Across Business Segments • Adjusted Funds Flow up 22% yoy to US$525 million • PCCW to receive a total distribution of approx. US$331 million from HKT for FY15 (US$ million) HKT Revenue HKT EBITDA 4,452 Mobile TSS 1,551 Others 3,695 1,313 1,836 645 2,927 1,013 403 1,147 Mobile 113 43
Slide 7: Leading Mobile Operation Extracting Significant Cost Efficiencies
Leading Mobile Operation Extracting Significant Cost Efficiencies (US$ million) Mobile Revenue Mobile EBITDA 1,836 645 1,147 403 Mobile 1,182 Services 637 432 Handset 884 654 113 396 Sales 336 263 96 108 5 7 8 2013 2014 2015 2013 2014 2015 Mobile • Strong leadership position with customer base of 4.
Slide 8: Adjusted Funds Flow
Adjusted Funds Flow (US$ million) 2013 2014 2015 YoY EBITDA 1,013 1,313 1,551 + 18% Less cash outflows in respect of: Customer acquisition costs and licence fees (205) (359) (426) Capital expenditures (254) (322) (389) Adjusted Funds Flow before tax paid, net finance costs 554 632 736 + 16% paid and
Slide 9: Stable Fixed-line Business
Stable Fixed-line Business Solid Customer Base Maintained Since 2004 (’000) Business Lines Residential Lines 2,587 2,590 2,603 2,588 2,590 2,636 2,646 2,651 2,654 2,654 2,567 2,564 1,408 1,408 1,408 1,409 1,409 1,405 1,423 1,400 1,407 1,407 1,406 1,407 1,144 1,164 1,180 1,183 1,195 1,182 1,183 1,228
Slide 10: Consolidated Position in Broadband
Consolidated Position in Broadband Consolidated Broadband Market Position and Kept Churn Around 1% (‘000) Wholesale 1,567 1,567 1,567 1,572 Business 1,518 Consumer 1,367 126 130 136 144 1,302 1,297 119 1,237 115 1,117 113 114 107 953 99 796 88 74 1,363 1,410 1,408 1,404 1,405 1,146 1,215 1,060 1,126
Slide 11: Continued Growth of Fiber Customers
Continued Growth of Fiber Customers Fiber-To-The-Home (FTTH) service continued to attract new customers and existing customers for service upgrade 568K customers enjoying genuine FTTH service as of Dec 2015, grew 13% vs. Dec 2014 537 568 (‘000) 504 462 419 362 304 226 144 57 Growing genuine FT
Slide 12: Best in Class Fiber Network
Best in Class Fiber Network COVERAGE SPEED Territory-wide Fiber-To-The-Home (FTTH) World’s First ultra fast residential 10,000Mbps Broadband service 10G PON service HKT’s Fiber Network is Ready in Terms of Both Coverage and Speed 11
Slide 13: Fiber-Rich Broadband Infrastructure
Fiber-Rich Broadband Infrastructure Single network to support different applications, such as ultra high speed Internet access, Over-The-Top (OTT) video content, IPTV broadcast and VoD services Content Delivery Network (CDN) IPTV Headend Fiber-rich Broadband Network xDSL Up to 100M OTT Content Pro
Slide 14: Netvigator's Internet Traffic Growth
Netvigator’s Internet Traffic Growth Internet traffic (excl. IPTV) has grown steadily in past years In 2015, the Average Monthly Data Usage per Line has increased 50% YoY reaching 175 GBytes 13
Slide 15: Overall Video Traffic
Overall Video Traffic Average IPTV traffic added an additional 145 GBytes on top of the Internet traffic Total video traffic (IPTV + Internet Video) amounted to 73% of total broadband traffic 14
Slide 16: Sustained Strong Performance in Mobile Business
Sustained Strong Performance in Mobile Business ● Total customer base of 4.558M – Post-paid customer base of 3.127M ● Post-paid exit ARPU of HK$230 ● Mobile data represents 71% of total services revenue ● IDD and roaming represent 17% of total services revenue ● 80% of post-paid customers are smart
Slide 17: Cell Site Integration Extracting the Synergies
Cell Site Integration Extracting the Synergies Integrated Zone Total Site Count Number of Integrated Sites * Before vs. Total Site Count Site Integration Before Integration Before After After After Integration Progress Serving HKT Customers 2,482 2,165 +362 (15%) 2,527 (as of Dec 2015) Serving CSL C
Slide 18: Network Integration
Network Integration • Integrated billing system by 2017 Core offering the same user experience to both HKT/CSL customer base HLR/HSS MSC GGSN / PGW • Mid 2015 – Mid 2016: integrated MGW SGSN / MME core network with single VAS platform offering the same service experience RAN RNC • Mid 2014 – End 201
Slide 19: Leading the World in Mobile Broadband Development
Leading the World in Mobile Broadband Development Demo of 1Gbps in Nov 2015 1Gbps LTE-A 4CC CA 256 QAM, World Leading 4x4 MIMO Network Development Demo of 450Mbps in Apr 2015 450Mbps Launch of 150Mbps in Jun 2013 LTE-A 3CC CA 64 QAM, 2x2 MIMO Launch of 300Mbps in Dec 2014 300 Mbps LTE-A 2CC CA 150 M
Slide 20: Media Business
Media Business now ©viu ‘GmMoov 19 “a Pccw
Slide 21: Steady now TV Business
Steady now TV Business Continued Investment in OTT Business (US$ million) Media Revenue Media EBITDA 432 414 2 387 now TV 63 61 62 Business 372 + 7% 377 + 1% 347 OTT Business 40 42 55 + 6% + 32% (2) (7) 2013 2014 2015 now TV 2013 2014 2015 • Steady growth in subscription revenue of 3% on an expanded
Slide 22: Media – Strategic Direction
Media – Strategic Direction Expand OTT platform regionally and internationally with the aim to becoming the leader in Asian video Continue to amass highly popular content service worldwide regional and local content leveraging global partnerships, with service focus on localization and speed to mark
Slide 23: Market Leadership in Hong Kong Pay TV
Market Leadership in Hong Kong Pay TV 195 196 197 191 187 174 172 173 174 169 171 171 169 169 165 167 1285 1292 1304 1269 1237 153 1204 1165 1183 1140 1088 1028 1039 992 1001 125 953 927 882 818 Installed Base in Thousands H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 2007 2008 2009 2010 201
Slide 24: Most Comprehensive Premium Content Line-up
Most Comprehensive Premium Content Line-up nowTV leads market as the one place to get the latest current programs as well as the widest selection • Over 200 international partners • More than 80 EXCLUSIVE channels • Significant content delivered EXPRESS covering live Sports, Movies, - the MOST in Ho
Slide 25: Cutting Edge Technology to Become Centerpiece of Home Entertainment
Cutting Edge Technology to Become Centerpiece of Home Entertainment All-in-one set top box delivering the most complete set of features – the ONE choice POWERED BY consumers need to make Developed by Netvigator and now for best viewing experience ISP IPTV TRUE 4K OTT OS Introduction of next generati
Slide 26: Improving Customer Experience while Expanding Customer Reach
Improving Customer Experience while Expanding Customer Reach nowTV customers enjoy Best Content Anytime, Anywhere with On Demand and now Player IPTV on TV IPTV ANYTIME IPTV ANYWHERE Extend now TV’s successful content partnerships to pure OTT play to expand customer reach Growing range of subscriptio
Slide 27: Internationalization – Launched Viu across Asia
Internationalization – Launched Viu across Asia • Riding on the Media Group’s track record of OTT and IPTV experience, and its earlier investment into Vuclip, PCCW has launched an expanded premium video service branded as Viu • Viu offers the widest range of premium Asian content in 34 languages wit
Slide 28: Multi-screen OTT Video Platform with Premium Asian Content
Multi-screen OTT Video Platform with Premium Asian Content Premium & Most Popular Asian content Localization & Product features Instant access to regionally popular content – Fast-track Korean dramas & variety shows, Japanese, Localized Subtitles Taiwanese & Chinese dramas, Japanese As soon as 8 h
Slide 29: Freemium Model Supported by Leading Partners
Freemium Model Supported by Leading Partners Freemium Model to build Positive Customer Feedback Sustainable Viewing Habit & Gaining Traction Ad Supported Hong Kong - since Oct 2015 Advertising Partner : • 650,000+ downloads within 3 months Branded Advertisers : LG, LEGO, Chow Tai Fook, Tiffany & Co.
Slide 30: Free TV Business
Free TV Business © viu~v
Slide 31: Free TV Service to Commence Broadcast
Free TV Service to Commence Broadcast • Free TV Investments • HK Television Entertainment Company Limited (“HKTVE 香港電視娛樂”) will begin the broadcasting of its (US$ million) Cantonese Channel (Channel 99) in April 2016 with a 2014 2015 wide variety of programs (1) • Upfront investments were incurred i
Slide 32: ViuTV On Track for Launch
ViuTV On Track for Launch • ViuTV * to launch its Cantonese free TV Channel on DTT (Channel 99) in April • Wide variety of genres to appeal to all audiences: Factual Entertainment and Variety, Drama, Kids, Art and Culture, Finance, Sports, News and Current Affairs • Factual Entertainment and Reality
Slide 33: IT Solutions Business
IT Solutions Business PCCW Solutions’ 32 "a" PCCW
Slide 34: Solid Growth in Revenue Accompanied by Margin Expansion
Solid Growth in Revenue Accompanied by Margin Expansion (US$ million) Solutions Revenue Solutions EBITDA 461 432 88 380 80 216 + 5% 67 207 39 155 33 24 Project Based Recurring 225 225 245 + 9% 47 49 43 2013 2014 2015 2013 2014 2015 EBITDA • Solid growth driven by increased revenue from data centre 1
Slide 35: Solutions – Strategic Direction
Solutions – Strategic Direction Invest in Industry Verticals 3 and New Geographies 2 Generate Growth 1 Deepen Foundation “Enabling our Industry-Specific Solutions Leadership in Public sector Customers to Digital and IoT Platform Enterprise – Industry Solutions Become (C&M, T&T, Hospitality) Cloud &
Slide 36: IT Services Market Leader
IT Services Market Leader • Market leadership in Hong Kong while expanding in the region • Building core strengths in key verticals including BFSI, Retail, Telecom, Hi-Tech & Media • Launched InfinitumTM, a cloud solutions suite of enterprise business applications, digital and analytics solutions No
Slide 37: Revenue by Industry & Services
Revenue by Industry & Services FY2015 Revenue FY2015by Industry FY2015 Revenue by Services Others Business Retail and 3% Process Manufacturing BFSI Outsourcing 7% 5% 6% Enterprise Applications Travel and 30% Telecom Technical Hospitality 31% Services 24% 9% High-Tech & Media 12% Application Developm
Slide 38: Growth Drivers
Growth Drivers Industry-Specific Solutions Digital & IoT Platform Cloud & SaaS Offerings Territory Expansion Strategic Partnership & Alliances 37
Slide 39: Industry-Specific Solutions
Industry-Specific Solutions Solutions Value Created A large casino in Macau • In-house audio (public announcement, • Provide one-stop shop technical solution Travel & music) for seamless and hassle free implementation Hospitality • Terrestrial Trunked Radio • Communal Aerial Broadcast Distribution •
Slide 40: Industry-Specific Solutions
Industry-Specific Solutions Solutions Value Created China Mobile • Improve efficiency of the operations by • Develop and implement integrated standardizing and streamlining business business support system processes by sharing information across Telecom the enterprise • Core business processes inclu
Slide 41: O2O Digital eCommerce Platform
O2O Digital eCommerce Platform Dedicated eCommerce platform ePayLink PowerLogistics Payment 3rd Party Logistics gateway Warehouse Omni channel Social listening PowerLogistics Live chat Digital & 3rd Party Logistics Customer analytics data analytics Delivery HOP! O2O Solutions P
Slide 42: Cloud & SaaS Offerings
Cloud & SaaS Offerings InfinitumTM, a cloud solutions suite, comprises a comprehensive range of enterprise business applications, and digital and analytics solutions, enabling enterprises to undertake their digital transformation journey ERP Customer Analytics Video Analytics Social Media Analytics
Slide 43: China Expansion
China Expansion Industry Focus ● Telecommunication, Hi-Tech, Media ● Retail, Manufacturing, Logistics ● Banking, Financial Services & Insurance Data Center ● Offer cross-border, comprehensive data center solutions & services ● Continue expansion to adjacent cities in Guangdong province Cloud ● Launc
Slide 44: Strategic Partnership & Alliances
Strategic Partnership & Alliances Enterprise Software Infrastructure Systems and Enterprise Application and Cloud Solutions Infrastructure Services Solution Software Cloud Analytics Solutions Cyber-Security Solution Partner 43
Slide 45: In Summary
In Summary Continue to embrace the changes brought by the increasing digital lifestyle of consumers and digital transformation of enterprises by innovating and building our offerings to meet the future needs of our customers in the medium to long term Media will maintain leadership in the pay-TV mar
Slide 46: Financial Overview
Financial Overview 45 "a" PCCW
Slide 47: Healthy Financial Performance
Healthy Financial Performance (US$ million) Consolidated Core Business* 2014 2015 % change 2014 2015 % change Revenue 4,266 5,040 + 18% 4,226 5,019 + 19% EBITDA 1,326 1,523 + 15% 1,347 1,556 + 16% Profit Excluding one-time gain on disposal Attributable to Equity Holders 200 271 + 36% 248 304 + 23% *
Slide 48: Summary P&L
Summary P&L (US$ million) 2014 2015 Revenue 4,266 5,040 Cost of sales (1,942) (2,431) Operating expenses (998) (1,086) Depreciation & Amortization (808) (778) Net other gains 348 17 Net finance costs (171) (198) Associates and JVs 7 5 Profit before income tax 702 569 Income tax (103) (57) Effective
Slide 49: Opex – Extraction of CSL Synergies – Investment in New Initiatives
Opex – Extraction of CSL Synergies – Investment in New Initiatives (US$ million) Core Operating Expenses Mobile Opex to Revenue Ratio 1,039 947 30 38.3% Solutions 26 131 30.6% 98 20.7% Media 733 HKT 29 96 Others 2013 2014 2015 837 909 617 TSS Opex to Revenue Ratio (9) (14) (31) 17.5% 18.1% 18.7% 201
Slide 50: Investing for Better Customer Experience & Business Growth
Investing for Better Customer Experience & Business Growth (US$ million) Core Capex • Maintain 10% capex to 447 revenue ratio guidance 410 15 30 • HKT’s increase in capex Solutions 333 43 mainly due to mobile Media 21 network integration and HKT 32 Others 26 coverage improvement • Increase in Media
Slide 51: Solid Financial Position
Solid Financial Position Gross Debt (1) (US$ million) 5,379 5,477 3,853 4,724 4,724 (HKT) (HKT) (HKT) (HKT) (HKT) 3,157 (HKT) Dec 2013 Dec 2014 Dec 2015 Gross Debt / EBITDA(2) 3.74x 3.63x (3) 3.60x (1) Gross debt refers to the principal amount of short-term and long-term borrowings (2) Based on gros
Slide 52: Debt Maturity Profile
Debt Maturity Profile As of February 2016 (US$ million) Undrawn Cash Committed HKT Bank Loans US$ million Balance * Facilities HKT Bonds PCCW Bank Loans HKT 483 551 PCCW Bonds PCCW 246 935 283 PCPD 233 200 Total 962 1,686 1,500 1,500 New Issues in 2015 70 500 500 596 300 100 493 213 372 250 300 2016
Slide 53: Balanced and Sustainable Dividends Paid to Shareholders
Balanced and Sustainable Dividends Paid to Shareholders Final Dividend 5-year Average Interim Dividend Yield: 4.97% (HK cents) 25.00 Yield: 4.95% * 20.20 20.20 19.06 15.90 17.04 13.85 13.21 13.55 10.60 6.35 6.99 7.96 5.30 5.51 2011 2012 2013 2014 2015 YoY Growth 4% 20% 6% — 24% Dividend Yield * 5.37