33 slides from China Telecom Corp. Ltd. Class A's earnings presentation, Mar 18, 2015
Slide 1: 2014 Annual Results
2014 Annual Results China Telecom Corporation Limited 18 Mar 2015 | www.chinatelecom-h.com
Slide 2: Forward-Looking Statements
Forward-Looking Statements Certain statements contained in this document may be viewed as “forward-looking statements” within the meaning of Section 27A of the U.S. Securities Act of 1933 (as amended) and Section 21E of the U.S. Securities Exchange Act of 1934 (as amended). Such forward-looking stat
Slide 3: Presented By
Presented By Mr. Wang Xiaochu Chairman & CEO Mr. Yang Jie President & COO Mr. Ke Ruiwen Executive Vice President 3 | 2014 Annual Results
Slide 4: Overview, Business Review, Financial Performance
1. Overview 2. Business Review 3. Financial Performance 4 | 2014 Annual Results
Slide 5: Highlights
Highlights Successfully managed various prominent external changes, leading 1 to persistent growth in revenue & profit with solid fundamental Industry-leading revenue growth fuelled by fast growing emerging 2 business To rapidly ramp up 4G business scale, leveraging the prime 3 opportunities of LTE
Slide 6: Maintained Solid Fundamental
Maintained Solid Fundamental … persistent growth in revenue & profit despite tax impact of VAT Reform & restrictive 4G hybrid network trial 2013 2014 Change Operating Revenue (RMB Mil) 321,584 324,394 0.9% Service Revenue (RMB Mil) 278,851 287,379 3.1% EBITDA (RMB Mil) 96,551 94,853 -1.8% EBITDA Mar
Slide 7: Robust Earnings Growth Excluding Tax Impact of VAT Reform
Robust Earnings Growth Excluding Tax Impact of VAT Reform Pro forma Adjustments to Eliminate Pro forma RMB Mil 2014 Tax Impact of VAT Reform 2014 + 14,013 Revenue 328,552 342,565 Operating (Output VAT from Jun to Dec) Revenue: Less: Business Tax (4,158) - 4,714 (8,872) 3.8% vs 2013 (Notional busin
Slide 8: Industry-leading Revenue Growth Fuelled by Fast Growing Emerging Business
Industry-leading Revenue Growth Fuelled by Fast Growing Emerging Business Service revenue growth of China Telecom in 2014 3.1% > -1.3% Telecommunications industry revenue growth in 2014* Emerging Business Data Traffic Operation, ICT & Revenue Internet Applications Revenue RMB Mil RMB Mil 83,742 34,4
Slide 9: LTE FDD Licensing Ignites 4G Scale & Profitable Development
LTE FDD Licensing Ignites 4G Scale & Profitable Development Network Advantages: 4G network will cover cities nationwide; in-depth coverage in 120 key cities (≈75% mobile data traffic of the Company) to achieve leading network quality & customer experience, leveraging one 4G hybrid network Conc
Slide 10: Step Up 4G Investment to Create Network Leadership
Step Up 4G Investment to Create Network Leadership 2014 CAPEX RMB Mil Controlled 4G investment pace with regard to RMB3.4 bil 107,800 4G hybrid network trial approval progress & saving from the adjusted CAPEX structure to ensure return budget of RMB80.3 bil Proactive investment in 4G auxiliary f
Slide 11: Tower Sharing: A Clear Value Driver
Tower Sharing: A Clear Value Driver Leverage the rich resources of TowerCo to promptly & effectively expand 4G network coverage & density, remedying the weakness of having relatively less base stations at 800MHz bandwidth; aim to create superior network edges & lower future CAPEX Unlock tower assets
Slide 12: Dividend
Dividend Dividend per share HKD The Board of Directors recommends to the 0.095 shareholders a final dividend of 0.095 HKD0.095 per share for 2014 0.085 Recommend a stable dividend for 2014 with due regards to shareholders’ return, profitability, cash flow & capital requirement for future developme
Slide 13: Deepen Reform & Accelerate Transformation to Enhance Value
Deepen Reform & Accelerate Transformation to Enhance Value Drive sustainable growth … Industrial Internet Internet Finance Cloud Internet Mobile of Things Payment ICT IDC Big Data Data Internet Traffic Applications Operation Comprehensive In-depth Reform Internet-oriented Transformation Create Diffe
Slide 14: Overview, Business Review, Financial Performance
1. Overview 2. Business Review 3. Financial Performance 14 | 2014 Annual Results
Slide 15: Revenue Breakdown
Revenue Breakdown … resilient revenue momentum despite tax impact of VAT Reform & change in sales model RMB Mil 2013 2014 Change Mobile 151,186 151,611 0.3% Service Revenue 113,751 120,268 5.7% Incl.: Voice 58,217 54,673 -6.1% Data 55,534 65,583 18.1% Sales of Terminals 37,435 31,343 -16.3% Wireline
Slide 16: Profitable Mobile Development
Profitable Mobile Development Mobile Service Revenue Mobile subs growth rebounded subsequent to RMB Mil 120,268 113,751 the launch of 4G hybrid network trial in selected cities in 2H14, resulting in a steady 54.8 subs base in 2014 (average mobile subs ≈7% 54.0 yoy) & 3G/4G net add 15.52 mil yoy
Slide 17: Rapidly Growing Mobile Data Traffic & Revenue
Rapidly Growing Mobile Data Traffic & Revenue Mobile Data Revenue 65,583 To leverage 4G & concerted 3G/4G RMB Mil 55,534 development to lift business scale 34,086 City areas: 4G mid-to-high-end 22,908 3G mid-to-low-end Rural areas: fully capitalize on 3G network edges to speed up market expans
Slide 18: Resilient Wireline Performance
Resilient Wireline Performance Wireline Revenue RMB Mil Leveraged fibre network & informatization service strengths to accelerate 170,398 172,783 development of growth businesses (wireline broadband, VAS & integrated information services) & effectively offset wireline voice revenue decline Furth
Slide 19: Solid Development in Wireline Broadband Amid Mounting Competition
Solid Development in Wireline Broadband Amid Mounting Competition Wireline Broadband Revenue Ranked industry No.1 in wireline broadband RMB Mil service satisfaction assessment, thanks to the 73,485 superior high-speed network & service quality 70,821 Accelerate end-to-end upgrade & promote 62.1
Slide 20: Comprehensive Development of Wireline VAS & Integrated Information Services
Comprehensive Development of Wireline VAS & Integrated Information Services Revenue Leveraging extensive network resources, RMB Mil 38,047 professional teams, brand franchise & 34,274 open cooperation to drive growth IDC/ Cloud: Strengthened efficiently-centralized operation of Cloud data centres
Slide 21: Actively Incubate & Unlock Internet Applications Value
Actively Incubate & Unlock Internet Applications Value Support YiChat Fast business development & serving as the key mobile Internet Fundamental business portal Business Established a new model of independent Internet business operation Development BestPay Created Number of users exceeded 100
Slide 22: 2015 Priorities To Enhance Scale & Return
2015 Priorities To Enhance Scale & Return Quality & Efficiency Reform & Innovation Open Cooperation Enhancement Optimize development model & accelerate scale development Achieve breakthrough in core products & forge differentiated competitive advantages Promote further Internet-oriented transformati
Slide 23: Overview, Business Review, Financial Performance
1. Overview 2. Business Review 3. Financial Performance 23 | 2014 Annual Results
Slide 24: Key Financial Information
Key Financial Information RMB Mil 2013 2014 Change Operating Revenue 321,584 324,394 0.9% Operating Expenses 294,116 295,886 0.6% Depreciation & Amortization 69,083 66,345 -4.0% Network Operations & Support 53,102 68,651 29.3% Personnel 46,723 50,653 8.4% SG&A 70,448 62,719 -11.0% Incl.: Mobile Hand
Slide 25: Stringent Cost Control to Boost Operating Efficiency
Stringent Cost Control to Boost Operating Efficiency 2013 2014 Change Operating Expenses as % of 91.5% 91.2% 0.3pp Operating Revenue Mainly benefitting from saving in the Depreciation & Amortization 21.5% 20.5% 1.0pp amortization of customers relationships Mainly due to network maintenance quality
Slide 26: Highly Effective Investment to Strengthen Network Edges & Return
Highly Effective Investment to Strengthen Network Edges & Return Mobile Network: CAPEX Structure 2014.12: ≈120k 4G base stations ( ≈60,000 yoy) & ≈60k indoor radio distribution systems in place 36.7% Mobile Network 38.4% Deployed in-depth 4G network coverage in a controlled pace in selected k
Slide 27: Healthy Financial Strength
Healthy Financial Strength … strong financial position & robust free cash flow well-supporting sustainable business development in scale Total Debt/ Total Capitalization Net Debt/ EBITDA Free Cash Flow RMB Mil 28.3% 0.95 12,466 11,137 26.8% 0.89 2013.12 2014.12 2013 2014 2013 2014 27 | 2014 Annual R
Slide 28: VAT Reform: Short-term Pain, Long-term Gain
VAT Reform: Short-term Pain, Long-term Gain Moderating monthly average pro forma impact on net profit of VAT Reform Jun 2014: ≈RMB900 mil* Monthly average for Jun – Dec 2014: ≈RMB540 mil* * Refer to slide 7 for the calculation explanation & assumptions of the above pro forma illustration Key mit
Slide 29: Fully Implement Reform Measures to Create Value & Efficiency
Fully Implement Reform Measures to Create Value & Efficiency Persistent in the systemic alignment of budgeting, Strengthen cost control & Maximize value for resources allocation & performance evaluation, innovate sales model to corporate, shareholders & emphasizing on scale improve cost efficiency d
Slide 30: Thank You!
Thank You! “No. 1 Overall Best “No. 1 Asia’s “No. 1 Asia’s Most Managed Company Best Managed Honored in Asia 2014” Company 2014” Company 2014” For further information & enquiries, please contact our Investor Relations Department at ir@chinatelecom-h.com or visit www.chinatelecom-h.com 30 | 2014 Annu
Slide 31: Appendix 1 - Comprehensive Income for Year Ended 31 Dec 2014
Extracted from audited consolidated statement of Appendix 1 - comprehensive income for year ended 31 Dec 2014 RMB Mil 2013 2014 Operating Revenue 321,584 324,394 Operating Expenses (294,116) (295,886) Net Finance Costs (5,153) (5,291) Investment Income, Share of Profit from Associates 773 40 Profit
Slide 32: Appendix 2 - Financial Position as at 31 Dec 2014
Extracted from audited consolidated statement of Appendix 2 - financial position as at 31 Dec 2014 RMB Mil 2013.12.31 2014.12.31 Current Assets 52,783 59,543 Non-current Assets 490,456 501,731 Total Assets 543,239 561,274 Current Liabilities 200,098 206,325 Non-current Liabilities 64,477 64,841 Tota
Slide 33: Appendix 3 - Selected Operating Metrics for 2014
Appendix 3 - Selected Operating Metrics for 2014 Subscriber (Mil) 2013.12 2014.12 Change Mobile Subs 185.58 185.62 0.04 Incl: 3G/4G Subs 103.11 118.63 15.52 Wireline Broadband Subs 100.10 106.95 6.85 Access Lines in Services 155.80 143.56 -12.24 Incl: Household 97.62 90.87 -6.75 Government & Enterpr