Hutchison Telecommunications Hong Kong Holdings Limited · HKEX:215

Hutchison Telecommunications Hong Kong — FY2016 Earnings Presentation

25 slides from Hutchison Telecommunications Hong Kong's earnings presentation, Feb 28, 2017

  1. Slide 1: 2016 Annual Results Presentation

    2016 Annual Results Presentation 28 February 2017

  2. Slide 2: Disclaimer

    Disclaimer Potential investors and shareholders (the “Potential Investors and Shareholders”) of Hutchison Telecommunications Hong Kong Holdings Limited (“the Company”) are reminded that information contained in this Presentation comprises extracts of operational data and financial information of the

  3. Slide 3: Business Performance

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  4. Slide 4: Challenging 2016 and achievements made

    Challenging 2016 and achievements made Key Challenges • Weakening economy • Intensified competition • Disruptive mobile pricing • Lesser demand in handsets, roaming and IDD • Increasing spectrum and network costs Our efforts and achievements • Customer base grew to 3.2m • Significant mobile churn re

  5. Slide 5: Highlights

    Highlights • Group service revenue at $12,024 million, with net service revenue stable at $7,640 million • Mobile local net service revenue remains stable with local net ARPU improved by 4% • Stable consolidated opex and capex • Consolidated EBITDA reports at $2,465 million • Consolidated EBIT repor

  6. Slide 6: Mobile

    Mobile Our customers benefit from HTHKH’s style of innovation via advanced mobile networks and services delivered in customer-centric fashion. 5

  7. Slide 7: Mobile business

    Mobile business Favourable/ 2016 2015 (Unfavourable) HK$ million HK$ million Change Total revenue 8,332 18,477 -55% - Net service revenue 3,946 4,106 -4% - Hardware revenue 4,386 14,371 -69% Net customer service margin 3,656 3,823 -4% Net customer service margin % 93% 93% - Standalone handset sales

  8. Slide 8: Mobile Service Revenue

    Mobile Service Revenue Total mobile service revenue 5,000 4,106 3,946 HK$ millions 2,500 0 2015 2016 Mobile local service revenue Mobile roaming service revenue 4,000 1,000 831 3,275 3,224 722 HK$ millions HK$ millions 2,000 500 0 0 2015 2016 2015 2016 7

  9. Slide 9: Mobile KPIs

    Mobile KPIs Total customers in Hong Kong and Macau Postpaid Churn 4,000 2015 2016 3,222 0.0% 3,031 +6% Postpaid Percentage (%) 1,486 Prepaid 2,000 1,484 1.0% 1,547 1,736 1.3% 0 2015 2016 2.0% 1.8% Blended data usage per 3G+4G customers Blended local postpaid net ARPU and net AMPU 2,000 240 1,714 +5%

  10. Slide 10: Fixed-line

    Fixed-line HTHKH enables customers with international, corporate, data centre and residential broadband services via an extensive fibre-optic network. 9

  11. Slide 11: Fixed-line business – financial highlights

    Fixed-line business – financial highlights Favourable/ 2016 2015 (Unfavourable) HK$ million HK$ million Change Revenue 4,127 3,973 +4% Operating expenses (2,875) (2,699) -7% Opex as % of revenue 70% 68% -2% points EBIT DA 1,252 1,274 -2% EBITDA margin % 30% 32% -2% points Depreciation and amortisati

  12. Slide 12: Fixed-line business

    Fixed-line business Others1: 3% (2015: 3%) • 87% fixed-line revenue contributed Residential 13% from non-residential market (2015: 14%) Corporate and International and • 4% YoY growth Local Carrier 53% Business 31% (2015: 53%) (2015: 30%) Total Fixed-line revenue 2016 : HK$4,127 million (2015 : HK$3

  13. Slide 13: Fixed-line international and local carrier market

    53% Fixed-line international and local carrier market International and local carrier Revenue • Strong growth (+4%) supported by the increase in data consumption 2,600 2,197 2,106 HK$ millions • Supported by trends such as OTT and IoT 1,192 1,253 1,300 914 944 0 2015 2016 Data IDD 12

  14. Slide 14: Fixed-line corporate and business market

    31% Fixed-line corporate and business market • +10% YoY growth driven by strong Corporate and Business Revenue growth in data • Extensive Network (4.9k FTTB commercial 1,400 1,300 buildings, 25k Wi-Fi hotspots) 1,180 242 HK$ millions 255 • Accredited service provider of SDNet/2 with stringent requir

  15. Slide 15: Fixed-line residential market

    13% Fixed-line residential market Residential Market Revenue • Over 1.8m fibre homepass and 9.3k residential buildings passed with FTTB 600 • Stable broadband subscribers base with 90%+ on 100Mbps or higher HK$ millions • Strong value proposition with 1GB FTTH in 300 558 518 offer and multi-play inf

  16. Slide 16: Financial Overview

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  17. Slide 17: Consolidated financial highlights

    Consolidated financial highlights Favourable/ 2016 2015 (Unfavourable) HK$ million HK$ million Change Consolidated service revenue 7,640 7,674 - Consolidated hardware revenue 4,384 14,368 -69% Consolidated revenue 12,024 22,042 -45% Consolidated service EBITDA 2,392 2,483 -4% Consolidated hardware E

  18. Slide 18: Consolidated cost items

    Consolidated cost items • Higher customer acquisition cost due to Consolidated cost items increased selling activities for future revenue 8,000 6,549 +2% 6,669 • Higher depreciation and amortisation from HK$ millions 1,358 21% 1,421 21% 384 6% 437 7% spectrum renewal of 2100MHz and 830 13% 896 13% 4

  19. Slide 19: Capex investment

    Capex investment Consolidated Capex 1,500 30% % to service revenue 1,059 1,098 HK$ millions 750 15% 14% 14% 0 0% 2015 2016 Mobile Capex Fixed-line Capex 800 26% 800 30% % to service revenue % to service revenue 574 589 485 509 HK$ millions HK$ millions 400 13% 400 15% 14% 15% 12% 12%15.5% 0 0% 0 0%

  20. Slide 20: Consolidated financial position

    Consolidated financial position Net debt Net debt/LTM EBITDA 5,000 40% 2.0 4,230 1.7 Net debt to net total capital % HK$ millions 2,941 26% 1.1 2,500 20% 1.0 20% 0 0% 0.0 As at As at As at As at 31 Dec 2015 31 Dec 2016 31 Dec 2015 31 Dec 2016 Net debt to net total capital ratio Note: increase in net

  21. Slide 21: Outlook

    Outlook [27] Hutchison telecom HB tong kong Holdings

  22. Slide 22: Strategies to meet the Challenges

    Strategies to meet the Challenges Customer • Invest in customer loyalty • Reward customers for relationship and business Experience • Segmental and delightful customer service More • Variety of products tailored to specific needs • Innovative roaming and prepaid products Revenue • Integrated solutio

  23. Slide 23: Spectrum

    Spectrum HTHKH constructively responded to OFCA’s 1st public consultation on spectrum reassignment. While we are still studying the 2nd consultation paper, our initial position is still to support 80% of spectrum for renewal and 20% for auction. We suggest : OFCA’s proposed spectrum prices are extre

  24. Slide 24: Q&A

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  25. Slide 25: Thank You

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