34 slides from China Telecom Corp. Ltd. Class A's earnings presentation, Aug 27, 2009
Slide 1: 2009 Interim Results
2009 Interim Results China Telecom Corporation Limited 27 August 2009 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 sta
Slide 3: Management Team
Management Team Mr. Wang Xiaochu Chairman & CEO Madam Wu Andi Executive Vice President & CFO 3
Slide 4: Agenda
Agenda Overview Business Review Financial Performance 4
Slide 5: Overview
Overview
Slide 6: Highlights
Highlights Integrated operation “eSurfing” gaining of wireline, mobile & market traction Internet services accelerating mobile enhancing core growth competitiveness Stringent CAPEX 3G & full services control supporting edge ready to create strong free cash flow value 6
Slide 7: Results On Track as Planned
Results On Track as Planned 2008.12 2009.6 Change Access Lines in Services (Mil) 208.35 199.36 -8.99 Mobile Subs (Mil) 27.91 39.28 11.37 Broadband Subs (Mil) 44.27 49.05 4.78 1H2008 1H2009 Change Operating Revenue (RMB Mil) 89,351 102,554 14.8% EBITDA (RMB Mil) 44,268 43,339 -2.1% EBITDA Margin 49.5
Slide 8: IFRS-based Results (Incl. Connection Fees)
IFRS-based Results (Incl. Connection Fees) 1H2008 1H2009 Operating Revenue (RMB Mil) 90,379 103,146 EBITDA (RMB Mil) 45,296 43,931 EBITDA Margin 50.1% 42.6% Net Profit (RMB Mil) 12,634 9,004 EPS (RMB) 0.156 0.111 8
Slide 9: Revenue Growth Drivers
Revenue Growth Drivers -10.5pp +4.7pp +2.1pp +0.6pp RMB Mil 102,554 Overall Wireline revenue 3.1% Mobile Revenue 16,002 +14.8% 89,351 -9,425 1,875 548 4,203 Wireline Wireline Wireline VAS & Wireline 1H2008 Internet Integrated 1H2009 Voice Others Services* & Data Information Business** Services*** No
Slide 10: Resilient Wireline Performance Despite Intensified Challenges
Resilient Wireline Performance Despite Intensified Challenges Wireline Revenue Challenges RMB Mil 52.6% 43.5% } Wireline revenue 3.1% with wireline voice 89,351 revenue 18.7% mainly due to: +17.0% 86,552 Global economic downturn affecting most notably in 38,866 eastern coastal provinces & voice re
Slide 11: Accelerating Mobile Growth
Accelerating Mobile Growth Continuous Growth in Mobile Mobile Subs, Usage & Revenue Net Add Market Share 6,949 2009.1：12.0% 5,865 2009.6：28.7% 5,441 Service Revenue (RMB Mil) } “eSurfing” brand gaining market 330.7 traction MOU 308.5 (Minute) } Mobile net adds, usage & service 294.3 6.44 revenue con
Slide 12: Stringent CAPEX Control Supporting Strong Free Cash Flow
Stringent CAPEX Control Supporting Strong Free Cash Flow CAPEX Optimizing CAPEX structure to enhance investment return RMB Mil } To control full year CAPEX within budget (RMB39.2 bn) -19.0% } Supporting broadband development & enhancing -19.0% integrated service edge of “wireline + wireless” 48,410
Slide 13: 3G & Full Services Edge Ready to Win Mid-to-High End Customers
3G & Full Services Edge Ready to Win Mid-to-High End Customers A Leading 3G & Full Services Operator Compelling Applications } Enterprises: Mega-Eye, Integrated Office Administration, eSurfing Chat, Push-Mail… } Trendy youth: iMusic, eSurfing Live, Mobile Video… } Mass market: 189 eMail, Mobile Broa
Slide 14: Business Review
Business Review
Slide 15: Revenue Breakdown
Revenue Breakdown RMB Mil 1H2008 1H2009 Change Wireline 89,351 86,552 -3.1% Voice 50,485 41,060 -18.7% Internet Access 19,481 23,181 19.0% VAS & Integrated Information Services 11,984 13,859 15.6% Managed Data & Leased Line 5,025 5,528 10.0% Others 2,376 2,924 23.1% Mobile - 16,002 - Voice - 9,051 -
Slide 16: Revenue Structure
Revenue Structure 1H2009 Full Services Changes Revenue Structure } Optimized revenue structure 8.8% 6.8% Voice: 48.8% Non-voice: 51.2% Internet Access 22.6% } New revenue growth driver 40.0% VAS & Mobile revenue/Total revenue: Integrated 15.6% ( 3.4pp vs 4Q2008) Information Others Services 2.9% 13.5
Slide 17: Wireline Voice Services
Wireline Voice Services Access Lines in Services Major Initiatives Mil 2008.12 2009.6 Change } Government & Enterprise: Household 118.4 114.8 -3.0% Consolidating wireline voice usage via bundling & Government & Enterprise 27.8 30.8 10.8% package concessions Public Telephone 15.3 15.3 0.0% PAS 46.8 3
Slide 18: Wireline Broadband Services
Wireline Broadband Services Access Revenue A relatively low broadband household penetration in services area (15.3%) RMB Mil +18.2% with great development potential 22,745 19,248 Major Initiatives } Enhance government & enterprise broadband penetration via upgrading broadband access 1H2008 1H2009 sp
Slide 19: Wireline VAS & Integrated Information Services
Wireline VAS & Integrated Information Services Revenue Major Initiatives RMB Mil +15.6% } Seizing changes in market informatization 13,859 demand & rapidly upgrading information 11,984 service capability & standard 16.0% 13.4% } Enriching the content of VAS & integrated information services 1H2008 1
Slide 20: Mobile Services
Mobile Services Revenue Breakdown Major Initiatives } Cross-sell to existing government & Others enterprise and household customers to 19.9% accelerate mobile subs growth VAS & Integrated Voice Information Services } Persist in mobile development strategy 15.1% 56.6% Internet of targeting mid-to-hig
Slide 21: Mobile VAS & Integrated Information Services
Mobile VAS & Integrated Information Services Color Ring Internet Access Major Initiatives Tone Subs Subs Mil Mil } Promoting new applications 4.0 19.6 development for “Internet handset” to stimulate mobile data & VAS sub & 2.3 usage growth 8.6 2008.12 2009.6 2008.12 2009.6 iMusic eSurfing Live SMS U
Slide 22: Integrated Operation to Enhance Value
Integrated Operation to Enhance Value Household Customers Government & Enterprise Customers Enhancing Customers’ & Avoid single product direct Shareholders’ Values } Offer multi broadband } Leverage core access packages; competitiveness of price competition to protect promote account integrated indu
Slide 23: Financial Performance
Financial Performance
Slide 24: Key Financial Information
Key Financial Information Strict cost management with appropriate increase of initiatives in high growth services like mobile to promote profitable scale development & integrated operation edge to enhance future profitable growth RMB Mil 1H2008 1H2009 Change Operating Revenue 89,351 102,554 14.8% Op
Slide 25: Cost Structure
Cost Structure Operating Expenses as a % of Operating Revenue Operating Expenses 80.2% 86.6% Reduced PAS depreciation resulting Depreciation & 25.4% from PAS asset Amortization impairment loss in 29.7% 2008 Addition of mobile network leasing fees & 19.6% increased initiatives on Network Operations &
Slide 26: Investing in Mobile for Future Profitable Growth
Investing in Mobile for Future Profitable Growth Fast growing mobile subs & revenue } Mobile subs: 39.28 mil } Mobile ARPU: RMB63.6 Sustainable Benefits } Mobile net add market share: 21.0% Mobile Sales & Appropriate increase Enhanced integration synergy Marketing in sales & marketing initiatives in
Slide 27: Optimized CAPEX Structure
Optimized CAPEX Structure } Optimized CAPEX structure to support CAPEX Structure strategic transformation RMB Mil Internet & Data 5.5% yoy 18,783 17,033 5.0% 3.6% IT & Support IT & Support 34.7% yoy 6.5% 4.7% Wireline Wireline Switches 34.4% yoy 10.2% Switches 13.8% 0.0% Local Local Transmis
Slide 28: Solid Financial Strength
Solid Financial Strength Strong free cash flow effectively supporting Company’s solid financial strength Total Debt/Total Capitalization Net Debt/EBITDA -3.4pp -0.14x 35.4% 1.11 32.0% 0.97* 2008.12 2009.6 2008.12 2009.6 Note: * Net Debt/Simple Annualized 1H2009 EBITDA 28
Slide 29: Robust Value Management
Robust Value Management Tilting resources allocation toward key services & strengthening measures of investment evaluation to enhance return Enhancing integration of wireline & mobile resources to improve asset utilization Enhancing Shareholders’ Strengthening centralized treasury management; timely
Slide 30: Solid Execution On Track to Achieve Targets
Solid Execution On Track to Achieve Targets 1H2009 2011 Operating Progress Targets (Previously (vs. 2008.12) Outlined*) Creating value via integrated operation Mobile sub bundling penetration 48% (+13pp) >45% OneHome subs/Household subs 26% (+6pp) >30% BizNavigator SME penetration 22% (+1pp) 30-40%
Slide 31: Thank You
Thank You For further information & enquiries, please contact our Investor Relations Department at ir@chinatelecom-h.com www.chinatelecom-h.com 31
Slide 32: Appendix 1
Extracted from unaudited consolidated statement of Appendix 1 comprehensive income for the 6 months ended 30 June 2009 [incl. upfront connection fees] 1H2008 RMB Mil (Restated)* 1H2009 Operating Revenue 90,379 103,146 Upfront Connection Fees 1,028 592 Operating Expenses (71,627) (88,827) Net Finance
Slide 33: Appendix 2
Extracted from unaudited consolidated statement of financial Appendix 2 position as at 30 June 2009 [incl. upfront connection fees] RMB Mil 2008.12.31 2009.6.30 Current Assets 55,499 49,252 Non-current Assets 384,838 373,118 Total Assets 440,337 422,370 Current Liabilities 176,790 171,854 Non-curren
Slide 34: Appendix 3
Detailed operating revenue breakdown for Appendix 3 the 6 months ended 30 June 2009 [incl. upfront connection fees] 1H2008 RMB Mil (Restated)* 1H2009 Wireline Revenue 90,379 87,144 Upfront Connection Fees 1,028 592 Voice 50,485 41,060 Local 31,289 25,269 DLD 11,314 9,430 ILD 1,351 1,082 Interconnect