Pccw Limited · HKEX:8
Pccw — Investor Presentation (March 2014)
38 slides from Pccw's investor presentation, March 2014
Slide 1: Investor Presentation March 2014 - Hong Kong
Click to edit Master title style Investor Presentation March 2014 - 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) FY13 Revenue 3,502 FY13 EBITDA 1,030 Market Value (as at Mar 18, 2014) 3,683 (100%) Core Businesses (100%) (74.5%) Media Solutions Growth PCPD FY13 Revenue 86 FY13 Revenue 387 FY13 Revenue 380 bu
Slide 4: Media Business
Media Business 3
Slide 5: Strengthening Leadership Position
Strengthening Leadership Position (US$ million) Media Revenue Media EBITDA 387 81 360 347 63 65 23% EBITDA 17% 17% Margin 2011 2012 2013 2011 2012 2013 • Media revenue up 8% underpinned by pay TV subscription revenue growth • EBITDA increased by 3% with margin remaining steady at 17% • Encouraging t
Slide 6: Market Leadership in Pay TV – Growth Accelerates
Market Leadership in Pay TV – Growth Accelerates Market leadership reinforced with accelerated growth in Continued Growth Drivers subscriber base and ARPU in FY2013 riding on BPL, comprehensive content offerings and service innovations • Sports: Good uptake of Premium Sports Packages Installed Base
Slide 7: BPL Drives Customer Uptake and ARPU
BPL Drives Customer Uptake and ARPU Continually Expanding Content Variety & Creating Valuable User Experiences • Encouraging up-take of Premium Sports Package including BPL and other world-class sports content, contributed to business growth • 64 live matches of 2014 FIFA World Cup and Winter Olympi
Slide 8: Using Technology to Create Valuable User Experiences
Using Technology to Create Valuable User Experiences We use technology better to satisfy audience needs For example, horse racing coverage on now668 offers unique VOD features not available via traditional broadcast • Time-shift - allows for instant replay of races • Video on Demand - archive of rac
Slide 9: Quality Self-Productions and Content Partnerships Create Market Excitement
Quality Self-Productions and Content Partnerships Create Market Excitement • High quality self-produced programs of local • Strategic alliance with key partners further sharpened entertainment and lifestyle engage local communities our competitive edge. nowMango, the joint venture and also appeal to
Slide 10: Continuing to Tap New Market Segments
Continuing to Tap New Market Segments Pay-Per-View Movie Rental Service Launch of New Kids App Gaining Popularity “nowPlayer Junior” • Hollywood first-run blockbusters from major • nowPlayer Junior offers a totally child-safe studios Disney, NBC Universal, Paramount environment and parental play tim
Slide 11: Continual Expansion of International Distribution
Continual Expansion of International Distribution Continued to grow new markets through partnership with more leading Pay TV operators in Asia and North America • Solid growth in both subscriber take-up and revenue in these international markets • Anticipate further growth in overseas markets where
Slide 12: Free TV Preparation Underway
Free TV Preparation Underway Free TV license to HKTVE Granted In-Principle On 15 Oct 2013 Sports • Finalizing license terms with government • Continuing to request fair access to broadcast spectrum • Target to launch Cantonese language channel within 12 months after formal license grant • Preparatio
Slide 13: IT Solutions Business
IT Solutions Business PCCW Solutions’ Powerbese” POWER Logistics” essa ane aveN (@@mpass AE BE Yn Hit Bs 2 POCW solutions company 2 POCW solutions cc 12 “a PCCW’
Slide 14: Sustainable Growth Strategy
Sustainable Growth Strategy (US$ million) Solutions Revenue Solutions EBITDA 380 67 56 318 49 283 17% 18% 18% EBITDA Margin 2011 2012 2013 2011 2012 2013 • Impressive revenue growth of 20% driven by • EBITDA growth of 20% largely from the organic execution of projects, growing demand for data centre
Slide 15: Strong Revenue Growth / Competitive Differentiation
Strong Revenue Growth PCCW Solutions Competitive Differentiation Manpower & Expertise to 20% 13% Provide Full Spectrum of IT 2013 Services 2013 Organic World Class, Ultra Reliable Total Revenue Infrastructure Growth Growth Track Record in Designing, Building & Maintaining Mission Critical Projects I
Slide 16: Significant Contract Wins
Significant Contract Wins Project Based Wins • Sizable and leading to US$819m future recurring revenue +15% 1/3 DEC 2013 +25% (2012: US$713m) y-o-y Recurring Customers 2/3 From • Long term contracts Secured Orders Cloud A Healthy Base for Continued • High retention due to costs of Revenue Growth Com
Slide 17: Planning & Growing Resources to Meet Demand
Planning & Growing Resources to Meet Demand Building Additional data center Data Center Capacity Guangzhou To Meet Demand Hong Kong Total data center capacity of PCCW Solutions to be increased to 536,000 sq.ft. by 2014 Meeting High Quality, Tier 3+ Standard (Tier 4 is the Highest Standard) Expansion
Slide 18: Synergy Effect of Acquisitions
Synergy Effect of Acquisitions Expand Extend Capabilities Customer Base Acquisitions Vanda Core Banking and Banking and Finance China Finance Software Industries Compass SAP ERP / eCommerce / Retail and Manufacturing Solutions Database Solutions Industries Driving Business Drives New Beyond Existing
Slide 19: Diversified Customer Base
Diversified Customer Base New Customers Solid & Long Term Customers Banking & Finance Technology, Media & Communications Public Sector Transportation, Hospitality & Property Retail Manufacturing 18
Slide 20: Telecom Business
Telecom Business H K Trice Tooerve 19 “a PCCW’
Slide 21: A Solid Performance
A Solid Performance • Adjusted Funds Flow up 8.6% yoy to US$372 million • PCCW to receive a total distribution of approx. US$235 million from HKT for FY13 (US$ million) HKT Revenue HKT EBITDA Mobile 2,927 TSS 1,013 2,703 339 + 7% Others 983 2,542 316 950 109 + 16% 252 94 65 860 + 28% 538 673 Mobile
Slide 22: Stable Fixed-line Business
Stable Fixed-line Business Solid Customer Base Maintained Since 2004 (’000) Business Lines Residential Lines 1,407 1,407 1,408 1,406 1,407 1,408 1,408 1,409 1,423 1,400 1,144 1,164 1,180 1,183 1,195 1,182 1,183 1,228 1,238 1,242 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2121
Slide 23: Consolidated Position in Broadband
Consolidated Position in Broadband Consolidated broadband market position with churn rate of around 1% Industry dynamic has shifted from market share gain to value creation and ARPU growth Wholesale Business 1,540 1,567 1,567 1,567 1,518 Consumer 1,437 126 128 130 (‘000) 1,367 119 122 1,302 1,30
Slide 24: Wide Coverage of our Fiber Network
Wide Coverage of our Fiber Network FTTB-ready (86.6%)* 1.5M or above (supporting speeds of up to (98%) 100Mbps) FTTH-ready (79%)** (supporting speeds up to 1000Mbps) (as of January 2014) * FTTB-ready means FTTH service can be available within 29 days of receiving a service order, building management
Slide 25: 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 419K customers enjoying FTTH service as of Dec 2013, grew 38% vs. Dec 2012 419 (‘000) 362 304 226 144 57 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13
Slide 26: Mobile Business Continues to Perform
Mobile Business Continues to Perform Total customer base reached 1.654M, up 0.5% yoy Post-paid customer base reached 1.019M, up 0.6% yoy Post-paid exit ARPU increased 2% yoy to HK$210 from HK$206 Focus on SIM only connections Prepaid Post-paid (‘000) 1,005 1,013 1,017 1,019 925 917 923 945 5
Slide 27: Enhanced 4G LTE Network
Enhanced 4G LTE Network Dec 2012 LTE2600 Coverage “Capacity Layer” LTE1800 Coverage “Coverage Layer” Dec 2013 Launch of 4G LTE 150Mbps Network • Offer a powerful dual-band 1800MHz 4G LTE Network Expansion to the entire MTR Lines and 2600MHz 4G LTE network that Urban lines • Island line provides comp
Slide 28: Market Conditions Necessitate SIM Only Plans
Market Conditions Necessitate SIM Only Plans 45% 52% 71% 55% 48% 29% 2011 2012 2013 Handset Plans * SIM Only Plans * * New activations Increased SIM Only connections help control handset subsidies and customer acquisition costs 2727
Slide 29: International – Sizeable and Growing Business
International – Sizeable and Growing Business Record revenue of US$860 million in 2013 Handled 6.3 billion voice minutes in 2013 Consistently top 10 carrier of IP traffic globally (US$ million) (billion minutes) Source: Renesys – Jan 28, 2014 2828
Slide 30: International – Global Network Coverage
International – Global Network Coverage • 81 PoPs across 30 countries • Interconnected with 134 networks globally • Wholesale and enterprise traffic terminating or originating to almost every country in the world Building a Platform to Sustain Growth 2929
Slide 31: Investing Prudently for Growth
Investing Prudently for Growth (US$ million) Core Operating Expenses Media, Solutions & Others • Opex grew by 9% in 2013 733 and the opex to revenue HKT ratio was 21% 660 675 116 • Increase in opex primarily at 113 113 HKT – a combined result of the expansion in business and inflationary pressure on
Slide 32: Demand-Driven Core Capex
Demand-Driven Core Capex (US$ million) Media, Solutions & Others HKT 333 • HKT capex focused on 290 demand driven spending for 73 41 fiber upgrades and to meet 241 increasing mobile data usage 36 • Increase in Media, Solutions & Others capex mainly for upgrade of equipment for 260 249 Media business
Slide 33: Solid Financial Position
Solid Financial Position Net Debt (1) (US$ million) 3,146 2,819 2,333 2,333 2,785 2,884 (HKT) (HKT) (HKT) (HKT) 2011 2012 2013 Net Debt / EBITDA(2) 2.4x 2.8x 3.1x (1) Net debt refers to the principal amount of short-term and long-term borrowings minus cash and cash equivalents and short-term deposit
Slide 34: Balanced Debt Maturity Profile and Mix
Balanced Debt Maturity Profile and Mix (US$ million) As at December 31, 2013 Bank Loans US$ Bonds Cash Undrawn US$ million Balance Facilities PCCW 322 225 HKT 273 609 PCPD 111 209 Total 706 1,043 1,014 396 500 500 500 489 300 154 2014 2015 2016 2017 2018 2022 2023 • Next debt repayment only due in 2
Slide 35: Shareholder Focused Dividend Policy
Shareholder Focused Dividend Policy Final Dividend Interim Dividend (HK cents) Yield: 5.4% (1) 5.1% (2) 5.6% (3) • Total dividend of 20.2 HK cents per share representing an increase of 6% and a payout 13.85 ratio of 78% 13.55 10.60 6.35 5.30 5.51 2011 2012 2013 DPS (HK cents) Interim 5.30 5.51 6.35
Slide 36: Appendix
Appendix 35
Slide 37: Summary P&L
Summary P&L (US$ million) 2012 2013 Revenue 3,246 3,502 + 8% Cost of sales (1,515) (1,681) Operating expenses (733) (791) Depreciation & Amortization (566) (586) Disposal (loss)/gain on property, plant and equipment (2) 1 Net other gains 48 88 Net finance costs (116) (132) Associates and JVs (3) 18
Slide 38: Adjusted Funds Flow
Adjusted Funds Flow (US$ million) 2011 2012 2013 YoY EBITDA 950 983 1,013 + 3.0% Less cash outflows in respect of: Customer acquisition costs and licence fees (181) (220) (205) Capital expenditures (201) (244) (254) Adjusted Funds Flow before tax paid, net finance costs 568 519 554 + 6.8% paid and c