Slide 1: 2020 Interim Results
2020 INTERIM RESULTS FOR THE SIX MONTHS ENDED JUNE 30, 2020 August 6, 2020 – 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: PCCW Group Response to COVID-19
PCCW Group Response to COVID-19 Employees Customers Technology Work remotely for all non- Core operations on the whole have Ensure network robustness in essential / non-business critical been uninterrupted response to increasing and functions and flexible work-hour changing customer usage In
Slide 5: Expanding Our Media and Solutions Businesses Regionally
Expanding Our Media and Solutions Businesses Regionally… 29 70 % 50 % 127 OTT markets OTT revenue PCCW Solutions Active PCCW Solutions outside of HK from outside of HK workforce based customers based outside of HK outside of HK in Forbes Global 2000 All data as of June 30, 2020 No.1 No.1 No.1 Fixed,
Slide 6: Financial Review
Financial Review Susanna Hui Group Chief Financial Officer 6
Slide 7: Financial Highlights
Financial Highlights (US$ million) H1’19 H1’20 % change Revenue 2,161 2,344 8% EBITDA 678 694 2% Revenue (US$ million) H1’19 H1’20 % change EBITDA (US$ million) H1’19 H1’20 % change HKT 1,937 1,872 (3)% HKT 735 711 (3)% Media 247 244 (1)% Media (22) 3 Now TV 174 163 (6)% Now TV 26 25 (3)% OTT 57 64
Slide 8: Resilient Financial Performance
Resilient Financial Performance Adjusted Funds Flow stable at US$292 million Interim Distribution of 30.10 HK cents per SSU HKT Revenue (US$ million) HKT EBITDA (US$ million) 1,937 1,872 172 735 711 124 497 458 283 263 Mobile Product Sales 1,332 TSS Revenue Mobile Services 1,309 +2% yoy TSS 491 487
Slide 9: Steady Performance Aided by Cost Controls
Steady Performance Aided by Cost Controls Now TV Revenue (US$ million) Now TV EBITDA (US$ million) 174 163 26 25 15 10 159 153 Others Subscription H1’19 H1’20 H1’19 H1’20 15% 16% EBITDA Margin Revenue softened by live sports suspension and commercial activities shutdown Maintained EBITDA with margin
Slide 10: Sustained Growth Momentum
Sustained Growth Momentum OTT Revenue (US$ million) OTT EBITDA (US$ million) 64 + 14% yoy 57 8 13 (10) +26% yoy (30) 56 44 H1’19 H1’20 Music and Others Video H1’19 H1’20 Video segment recorded impressive growth; now represents 86% of total revenue 40 Enlarged revenue base and disciplined spending Vi
Slide 11: Higher Advertising Revenue on Improved Ratings
Higher Advertising Revenue on Improved Ratings ViuTV Revenue (US$ million) ViuTV EBITDA (US$ million) 17 + 2% yoy 16 3 4 +19% yoy (12) 14 (18) 12 Others 340 H1’19 H1’20 Advertising H1’19 H1’20 Expanded viewership fueled 19% growth in advertising revenue Expanded revenue and cost control helped despi
Slide 12: Value Creation on Media Assets
Value Creation on Media Assets Transfer NowTV Business to HKT Strategic Review of OTT Business PCCW Strategic review to support future growth Crystalize value of NowTV Cash proceeds of US$250m to reduce debt Evaluating various alternatives including separate Accretive and enhances financial po
Slide 13: Driving Growth through Regional Expansion
Driving Growth through Regional Expansion Solutions Revenue (US$ million) Solutions EBITDA (US$ million) 244 +11% yoy 220 38 29 143 185 +30% yoy 39 39 Recurring 77 Project based 59 (1) (10) H1’19 H1’20 EBITDA H1’19 H1’20 Margin Revenue growth of 11% primarily driven by projects in 17% 12% Total Sout
Slide 14: Opex Focus in Challenging Conditions
Opex Focus in Challenging Conditions Core Operating Expenses (US$ million) 414 30 374 Core opex to revenue ratio declined to 18% 32 112 102 Core opex savings of 10% year-on-year Cost control measures Solutions 311 Reduce discretionary spending on Media 272 publicity & promotion HKT Others Optimize r
Slide 15: Measured Capex to Support Future Growth
Measured Capex to Support Future Growth Core Capex (US$ million) 210 Capex to revenue ratio was 8.3% 31 177 Mobile capex steady as 5G rollout and critical 8 15 infrastructure enhancements substituted prior 8 spending on 4G TSS capex shrank reflecting the maturity of fiber backbone investments made t
Slide 16: Healthy Liquidity
Healthy Liquidity As of As of Dec 2019 Jun 2020 Gross Cash Undrawn Gross Cash Undrawn Debt Balance (5) Facilities Debt Balance (5) Facilities US$ million HKT 5,220 372 1,178 5,324 299 1,087 PCCW 817 197 961 999 153 869 Total 6,037 569 2,139 6,323 452 1,956 Core Gross Debt (1) / EBITDA (3) 3.77x 3.97
Slide 17: Debt Maturity Profile
Debt Maturity Profile (US$ million) HKT As of June 30, 2020 1,144 432 HKT Bank Loans 750 500 551 500 500 HKT Bonds 290 300 144 213 1 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 32 PCCW & PCPD 300 PCCW Bank Loans PCCW Bonds 507 PCPD Bank Loans 630 PCPD Bonds 19 150 104 93 41 11 100 2020 20
Slide 18: Delivering Sustainable Returns to Shareholders
Delivering Sustainable Returns to Shareholders Special Interim Dividend 31.24 32.18 28.33 29.75 85 PCPD shares 25.00 (potential for additional 23 shares) for every 1,000 PCCW shares Final 20.20 Dividend 22.33 23.00 Per Share 20.17 21.18 17.04 Interim 13.21 Dividend Per Share Interim Cash Dividend (H
Slide 19: Media Business
Media” Media Business
Slide 20: Pay TV Business
Pay TV Business 20
Slide 21: Demonstrated Resilience in H1 2020
Demonstrated Resilience in H1 2020 • Revenue impacted by suspension of EURO & live sports and softness in commercial sector due to COVID-19 pandemic. Business performance expected to improve in the second half as live sports resume • Stable EBITDA at US$25M as a result of improved operational effici
Slide 22: Stay Home. Stay Entertained. Increased Engagement.
Stay Home. Stay Entertained. Increased Engagement. Viewership grew in 2020 H1 as a result of Stay-Home Stay-Entertained campaign Stay-Home Stay-Entertained Campaign • Supported public to stay home with free trial viewing of 9,000+ hours of entertainment via Now E OTT platform including news, movies,
Slide 23: Live Sports Return
Live Sports Return Business momentum is expected to improve as live sports resume in second half Soccer Snooker Golf Motorsports Tennis Badminton From Jun From Jun From Jun From Jul From Aug From Sep 23
Slide 24: OTT Business
Ovivu OTT Business
Slide 25: Viu Tops OTT Users and Engagement in SE Asia
Viu Tops OTT Users and Engagement in SE Asia Average Monthly Time on App (GSEA)* Proven Resilience with Robust Dual Monetization Engine Other top 5 players 46% DUAL Growth Driven by premium subscription & +59% +41% REVENUE MODEL Revenue growth YoY high user engagement despite soft ad market Before C
Slide 26: A Regional Leader in OTT Video Entertainment
A Regional Leader in OTT Video Entertainment All data and information below has been provided and verified by App Annie. 1 Netflix Netflix Netflix 2 Viu Viu Viu 3 V – Live Broadcasting TrueID YouTube Kids 4 WeTV iflix AIS PLAY 5 iQIYI iWant TV WeTV 6 HBO GO Singapore YouTube Kids iWant TV 7 Amazon P
Slide 27: Expanded User Base and Engagement
Expanded User Base and Engagement Over 36.1 Million 3.2 Billion Monthly Active Users Video Views 36.1 3.2 29.9 2.6 H1'19 * H1'20 H1'19 * H1'20 • MAU grew 21% y-o-y and reached 36.1 million in H1 • VV grew 23% y-o-y and reached 3.2 Billion in H1 2020 2020 • More content placed behind pay-wall to fost
Slide 28: Growing Content Portfolio
Growing Content Portfolio Continued Leadership in Further expand user base with cross-market impact and Pan-Regional Asian Content performance of Viu Originals Continued partnership with 5 main Korean broadcasters with longer exclusivity, enhanced features and functionalities Data-driven content dec
Slide 29: Free TV Business
© viuv Free TV Business
Slide 30: Viewership Growth Fueled Advertising Revenue
Viewership Growth Fueled Advertising Revenue ViuTV (CH99) Upcoming Programs • Advertising revenue increased by 19% Y-o-Y attributable • Continue producing and releasing quality scripted and to the continuous growth in viewership and client base non-scripted content to continue expanding the • Increa
Slide 31: IT Solutions Business
PCCW Solutions’ IT Solutions Business
Slide 32: COVID-19 Impact to Business
COVID-19 Impact to Business Business Impact • COVID-19 has significantly impacted most of the sectors, heavily affecting hospitality, travel and retail especially • Some public tenders in Hong Kong delayed, as the government focuses its effort in combating the virus • Enterprises are more conservati
Slide 33: Driving Enterprise Digital Transformation and Accelerating Growth through IP Creation
Driving Enterprise Digital Transformation and Accelerating Growth through IP Creation Telecom Property Financial Services Digital Business Enablement Integrated Smart Mall Platform Integration Platform as a Service System Implemented the LoRaWAN-based (iPaaS) Enabled a telecom service provider to pl
Slide 34: Revenue by Industry & Services
Revenue by Industry & Services H1’20 Revenue by Industry H1’20 Revenue by Services Retail & Others Business Process Enterprise Manufacturing BFSI Outsourcing Applications Travel & 1% 1% Telecom 3% 13% Transportation 4% Technical 11% Services 21% 31% High-Tech & Media 10% 27% 18% 24% 36% Public Secto
Slide 35: Industry Case Studies
Industry Case Studies Communications, Media and High-Tech Travel & Transportation Public StarHub Airport Authority Hong Kong 28 Government Agencies in Singapore Solutions Strategic technology partner to operate Implement intrusion detection surveillance Awarded new and renewal contracts for St
Slide 36: Industry Case Studies
Industry Case Studies Retail, Manufacturing and Logistics Hospitality Banking, Financial Services & Insurance Tien Li Offshore Wind Technology International Theme Park Hong Kong Exchange & Clearing Limited Solutions Strategic IT outsourcing partner to Design and implement theme park show Desig
Slide 37: World-class Data Center Services
World-class Data Center Services • Phase 1 of the new data center in Fo Tan is fully sold, while one-third of the capacity of Phase 2 has been pre-sold. Phase 2 is on track to be completed by the end of 2020. • Maintained high utilization rate across all data center facilities in Hong Kong and mainl
Slide 38: International Business Expansion
International Business Expansion Growing our teams and expanding business in Singapore, Malaysia, the Philippines and Indonesia, in line with our strategic direction to become a leading regional player Extending our IP-based solutions developed from Hong Kong to the telecom, public sector, and t
Slide 39: Market Recognition
Market Recognition Market Leadership Marketing Excellence 2020 Asia-Pacific Stevie Awards Largest IT Services Provider • Bronze Stevie® Award in in Hong Kong Innovation in the Use of Video • Bronze Stevie® Award in Source: Gartner “Market Share: IT Services, Worldwide 2019,” Dean Blackmore et al, 13
Slide 40: Summary
Summary HKT will continue to prudently invest in deploying 5G services and developing innovative applications for consumer and enterprises in Hong Kong PCCW Media will provide the best entertainment to our viewers across our free, pay and OTT platforms in Hong Kong and continue to expand our presenc