Slide 1: Annual Results for the Year Ended December 31, 2016
TRANSFORMING 2016 LIVES IN THE DIGITAL WORLD ANNUAL RESULTS FOR THE YEAR ENDED DECEMBER 31, 2016 January 16, 2017 – 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: Overview
Overview BG Srinivas Group Managing Director 3
Slide 4: A Growing Enterprise with Strong Foundations in Hong Kong
A Growing Enterprise with Strong Foundations in Hong Kong 12mn+ 690 50 40 consumers served active enterprise employee countries with globally customers in nationalities operations1 Forbes Global 2000 #1 #1 #1 #1 Hong Kong Fixed Voice, Hong Kong Hong Kong Leading Pan- Broadband & Mobile Pay TV IT Ser
Slide 5: Consolidated Market Leadership and Stronger Synergies
Consolidated Market Leadership … Digital and business Digital media transformation experience for services for consumers enterprises Transforming Lives in the Digital World Integrated communications solutions for enterprises and consumers … and Leveraged Stronger Synergies 5
Slide 6: Transforming Lives in the Digital World
Transforming Lives in the Digital World Digital Enterprises Digital Consumers Digital Devices Enterprises going through digital Consumers will be leading enterprises Industrial equipment and consumer transformation on the digital curve appliances becoming smart and Analytics-based insights help to d
Slide 7: Financial Review
Financial Review Susanna Hui Group Chief Financial Officer 7
Slide 8: Financial Highlights
Financial Highlights Core Business* Consolidated (US$ million) 2015 2016 % change 2015 2016 % change Media 432 468 + 8% Solutions 461 490 + 6% HKT 3,798 3,900 + 3% (Excl. Mobile Handset Sales) Revenue 4,365 4,460 + 2% (Excl. Mobile Handset Sales) Revenue 5,019 4,899 - 2% 5,040 4,921 - 2% EBITDA 1,55
Slide 9: Solid Results Underpinned by Broadband and Successful CSL Integration
Solid Results Underpinned by Broadband and Successful CSL Integration Adjusted Funds Flow up 14% to US$600 million PCCW to receive a total distribution of approx. US$379 million from HKT for FY16 HKT Revenue (US$ million) HKT EBITDA (US$ million) Mobile 4,452 4,339 -3% yoy 1,626 +5% yoy TSS 1,551 Ot
Slide 10: Stable Revenue Amidst Intensified Competition and Soft Economic Conditions
Stable Revenue Amidst Intensified Competition and Soft Economic Conditions Now TV Revenue (US$ million) Now TV EBITDA (US$ million) 372 377 372 - 1% yoy 42 38 39 330 339 333 61 62 53 - 16% yoy Others Subscription 2014 2015 2016 2014 2015 2016 EBITDA Revenue softened slightly due to aggressive renewa
Slide 11: High Growth OTT Business Attaining Regional Recognition
High Growth OTT Business Attaining Regional Recognition OTT Revenue (US$ million) OTT EBITDA (US$ million) 75 + 35% yoy (2) (7) 55 (30) 42 2014 2015 2016 2014 2015 2016 Comprises OTT video and music service Negative EBITDA of US$30 million due to Overall OTT revenue grew by 35% driven by the swift r
Slide 12: Building on an Encouraging Start
Building on an Encouraging Start ViuTV Revenue (US$ million) ViuTV EBITDA (US$ million) 21 (1) (5) (24) N/A N/A 340 2014 2015 2016 2014 2015 2016 Represented 9 months of operations Negative EBITDA of US$24 million due to startup Will officially launch ViuTVsix, our English investments in branding, c
Slide 13: Scaling Revenue at Improving Margins
Scaling Revenue at Improving Margins Solutions Revenue (US$ million) Solutions EBITDA (US$ million) 461 490 +6% yoy +11% yoy 432 98 88 80 245 272 +11% yoy 225 57 +16% yoy 49 47 207 216 218 +1% yoy 39 41 +5% yoy Recurring 33 Project based 2014 2015 2016 2014 2015 2016 EBITDA Revenue up by 6% driven b
Slide 14: Delivered Cost Synergies from CSL Integration whilst Investing for Future Growth
Delivered Cost Synergies from CSL Integration whilst Investing for Future Growth Core Operating Expenses (US$ million) 1,039 - 1% yoy 1,028 947 30 18 26 131 175 Maintain overall stable opex to revenue ratio 98 Solutions HKT cost efficiency improved with CSL 379 329 Media 351 integration synergies fu
Slide 15: Financial Performance
Financial Performance (US$ million) FY14 FY15 FY16 YoY Better/(Worse) Revenue 4,266 5,040 4,921 (2)% Cost of Sales (1,942) (2,431) (2,275) Operating Expenses (998) (1,086) (1,079) Depreciation (437) (275) (227) 17% Amortisation (371) (503) (631) (26)% Net Other Gains 348 17 4 Net Finance Costs (171)
Slide 16: Completion of CSL Integration whilst Investing to Support Business Growth
Completion of CSL Integration whilst Investing to Support Business Growth Core Capex (US$ million) 447 - 8% yoy Within 10% capex to revenue ratio guidance 410 30 412 15 28 HKT’s capex reflected completion of 32 30 12 successful CSL integration 43 25 21 Media capex to upgrade broadcasting 178 equipme
Slide 17: Prudent Capital Management to Support Business Growth
Prudent Capital Management to Support Business Growth As of As of Dec 2015 Dec 2016 Gross Cash Undrawn Gross Cash Undrawn Debt (1) Balance Facilities Debt (1) Balance (3) Facilities US$ million HKT 4,724 483 709 4,974 427 774 PCCW 753 246 954 918 129 770 PCPD -- 233 200 60 112 140 Total 5,477 962 1,
Slide 18: Debt Maturity Profile
Debt Maturity Profile As of December 31, 2016 PCCW Bank Loans 283 PCCW Bonds PCPD Bank Loans New HKT Bank Loans HKT Bonds 1,204 235 927 100 750 426 500 500 (US$ million) 60 154 300 213 300 2016 2017 2018 2019 2020 2021 2022 2023 2025 2026 2027 2030 HKT took advantage of a favorable market window pos
Slide 19: Balanced and Sustainable Dividends Paid to Shareholders
Balanced and Sustainable Dividends Paid to Shareholders 28.33 +13% yoy 25.00 Yield: 6.19% 19.06 20.20 20.20 15.90 20.17 17.04 Final 13.85 13.21 Dividend 13.55 Final Dividend 10.60 Interim 20.17 HK cents Dividend 6.35 6.99 7.96 8.16 (HK cents) 5.30 5.51 2011 2012 2013 2014 2015 2016 Full-year Dividen
Slide 20: Media Business
Media” Media Business
Slide 21: Media Business Continues to Expand Regionally Across Multiple Platforms
Media Business Continues to Expand Regionally Across Multiple Platforms • Popular content made available across different platforms, devices and monetisation windows • First window of Korean Drama for high quality experience on Now TV and Viu OTT; second window on ViuTV with further localisation thr
Slide 22: Pay TV Business
Pay TV Business 22
Slide 23: Maintained Market Leadership in Hong Kong Pay TV with Stable Subscription Base
Maintained Market Leadership in Hong Kong Pay TV with Stable Subscription Base HK$ Installed Base In Thousands 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 23
Slide 24: Now TV Continued Market Leadership
Now TV Continued Market Leadership High Quality, Reliable Sports Viewing Experience • Active renewal of sports customers solidified subscriber base despite competition • Continued to deliver all live Premier League matches with superior quality via IPTV, providing a stable and reliable platform • In
Slide 25: Service Enhancements for Better Customer Experience
Service Enhancements for Better Customer Experience Continue to Strengthen Cross Platform and Non-Linear Content Offering • Enriched amount and genres of content available and introduced new user interface (UI) on the Now One set top box to provide an enhanced experience • Number of video on demand
Slide 26: OTT Business
Ovivu OTT Business
Slide 27: The Leading OTT Player in Asia
The Leading OTT Player in Asia An Expanding Global Service Focus on Content with appeal to Asian Audience 10M+ Paying Subscribers Established Viu as Market Leader in Asia 18 Markets Jordan Bahrain Continued expansion into South East Asia, Middle Egypt Kuwait Qatar Bangladesh Hong Kong UAE In
Slide 28: Localised and Original Content with Asian Focus Complements Strong Regional Portfolio
Localised and Original Content with Asian Focus Complements Strong Regional Portfolio Comprehensive Regional Content Viu Originals Access to 18M minutes of video from Korea, Japan, China, Further enhance stickiness among fans with self produced, India, Southeast Asia etc, available in 40 languages
Slide 29: Strong Partner Network Supports Go-To-Market Strategy
Strong Partner Network Supports Go-To-Market Strategy TELCO PARTNERSHIPS IN THE REGION DEVICE PARTNERSHIPS IN INDIA Drives Subscription Increases Viewership and Traffic Partnered with more than 30 major telcos in the region Viu is integrated with Samsung My Viu is one of the most preferred and
Slide 30: High Reach to Target Audience on Social Media Across Asia
High Reach to Target Audience on Social Media Across Asia with Exclusive O2O Experience for Fans Strong Reach and Cost Efficiency To Engage With Users The First & Exclusive International OTT Video Service To Via Social Media Platform Present At 2016 KBS Drama Awards Show in Seoul • Over 65m monthly
Slide 31: Showing High Engagement and Traction
Showing High Engagement and Traction Viu Premium Service Downloads Acc. Video Min (Billion) More than 8 million downloads Acc. Video Views (Million) 400 Accumulated VV mins Accumulated VV 386M 7 Millions Hours Consumed 350 6 Each user, on average, consumed 1.2 to 1.6 hours of content per day 6Bn acr
Slide 32: Free TV Business
© viuv Free TV Business
Slide 33: ViuTV Offers Fresh Choice for Viewers and Advertisers
ViuTV Offers Fresh Choice for Viewers and Advertisers Home of Factual Entertainment • ViuTV establishes a clear and distinguished brand image* of being “innovative” and “expert in reality show “, since launch on April 6, 2016 • Self-produced reality programs “Travel with Rivals” & “G1 Fight Club”, l
Slide 34: Further Strengthening Program Line-Up for 2017
Further Strengthening Program Line-Up for 2017 Enhance Program Line-Up in 2017 • ViuTV will provide an additional 400 hours of locally produced programs, including local drama production • Create an open music platform with various live concerts & award presentation shows, weekly music Self-produce
Slide 35: IT Solutions Business
PCCW Solutions IT Solutions Business
Slide 36: Stable and Sustainable Growth
Stable and Sustainable Growth Digital Transformation Industry Diversification Infrastructure Territory Expansion Helping our customers Diversified our industry Expanded our data centre Maintained market through the digital journey, expertise infrastructure to a network leadership in Hong Kon
Slide 37: Solidify Stronghold and Expand for Growth
Solidify Stronghold and Expand for Growth #1 #7 Hong Kong China & HK IT Services IT Services DEEPEN FOUNDATION GENERATE GROWTH ERP and Technical Services Industry-Specific Solutions Digital and IoT Platform Industry and Service Solutions (Public Sector / BFSI, TMT, Hospitality) Cloud & SaaS Offering
Slide 38: Revenue by Industry & Services
Revenue by Industry & Services FY2016 Revenue by Industry FY2016 Revenue by Services Others Business Process BFSI Telecom Enterprise Retail & Outsourcing Applications Manufacturing 5% 3% 5% 7% Technical Travel & Services 23% Hospitality 35% 28% 10% 8% High-Tech 16% & Media 28% Application 32% Develo
Slide 39: Industry Specific Solutions
Industry Specific Solutions Solutions Value Travel & Hong Kong International Airport (“HKIA”) Hospitality Provide solutions for airport system works including trunked mobile radio system, CCTV, access control Support and facilitate HKIA on daily communications, collaboration, security control an
Slide 40: Industry Specific Solutions
Industry Specific Solutions Solutions Value A Leading Internet and eCommerce Service Provider Data centre services for hosting customer’s eCommerce Satisfy a rapidly growing eBusiness company with high service level systems, doubling the capacity after less than one year and capacity requirement
Slide 41: Cloud, Digital and Data Centre Solutions
Cloud, Digital and Data Centre Solutions VIDEO ANALYTICS PATIENT-CENTRIC HIGH POWER DATA CENTRE AND BIG DATA INTEGRATED PLATFORM HOSTING SERVICE Using video analytic and big data Enabled a medical group to digitally Provide private data halls with high IT technology, PCCW Solutions transform their c
Slide 42: Global Data Centre Capabilities
Global Data Centre Capabilities D-Infinitum is a global data centre hub providing a full suite of multi-site co- Key Features: location, value added services, global hosting and connectivity to enterprises globally, addressing enterprises’ growing demand for cost-effective data centre Covers more
Slide 43: Quality Certification
Quality Certification Maturity Level 5 of CMMI for ISO9001 for Quality ISO20000 for IT Service ISO27001 for Information Application Development and Management System Management System Security Management System Management Locations: Locations: Locations: Locations: Hong Kong, China and Hong Kong, Ch
Slide 44: Strategic Partnerships & Alliances
Strategic Partnerships & Alliances Partners Partner Awards Go-to-market Expanding EBS implementation services, HCM Cloud and Siebel implementations to different Oracle’s Hong Kong/Taiwan Regional vertical industries in mainland China Partner of the Year 2016 Selected project management, data war
Slide 45: Territory Expansion in Greater China and South East Asia
Territory Expansion in Greater China and South East Asia Greater China Continue to expand business in Mainland China from key accounts and broaden vertical capabilities, including media, travel, retail, logistics and manufacturing Geographically diversified on the Northern, Eastern, and Southern
Slide 46: Market Recognition
Market Recognition Hong Kong China Platform-as-a-Service Provider Valuable e-Business IT Outsourcing & Managed Organization Services Provider IT Solution Excellence – China Top 10 IT Services Provider Infinitum™ Social Media China Top 10 Financial Solutions Analytics Solution Provider
Slide 47: Summary
Summary PCCW consolidated its market leadership in Hong Kong across all of its core business lines: Media, IT Services and Telecom Services Media and IT Services Businesses will build on its regional expansion plans to drive further growth Capital will continue to be allocated prudently to deliver s