Slide 1: 2016 Interim Results
2016 Interim Results For the six months ended June 30, 2016 August 11, 2016 - 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 Global Enterprise with Strong Foundations in Hong Kong
A Growing Global Enterprise with Strong Foundations in Hong Kong 10mn 690 20% 50 consumers served active customers in of revenue generated employee globally Forbes Global 2000 outside of Hong Kong nationalities #1 #1 #1 #1 Hong Kong Fixed Voice, Hong Kong Hong Kong Leading Pan- Broadband & Mobile Pa
Slide 5: Macro Trends Impacting our Business
Macro Trends Impacting our Business Mobile-centric, Content and services - Customers drive Explosion of data Market uncertainty, emerging digital world anytime and anywhere Enterprises growth new business models Digital Enterprises Digital Consumers Digital Devices Enterprises going through digital
Slide 6: Our Strategy is Aligned across the Core Businesses
Our Strategy is Aligned across the Core Businesses 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 6
Slide 7: PCCW Leverages Digital Technologies for Enterprises
PCCW Leverages Digital Technologies for Enterprises to Enhance Customer Experience and Business Value Digital Enterprises Process Digitisation Enterprise Cloud Applications Social-Media Listening PCCW Solutions created a fully PCCW Solutions, supported by PCCW Solutions implemented a digital members
Slide 8: PCCW Provides Flexible Options and Personalised Experiences for Digital Natives
PCCW Provides Flexible Options and Personalised Digital Consumers Experiences for Digital Natives Next-generation Digital Convenient, Secure Mobile Payment Personalised Media Experience Shopping Experience Tap & Go was developed by HKT Jointly developed by HKT and PCCW Solutions is assisting a as a
Slide 9: PCCW Provides Integrated IoT Solutions and Actionable Insights
PCCW Provides Integrated IoT Solutions and Actionable Insights Digital Devices Smart Living Smart Parking Big-Data Analytics Platform HKT offers its customers PCCW Solutions has PCCW Solutions worked with solutions to be able to developed a mobile application HKT in building a big data remotely mana
Slide 10: Financial Review
Financial Review Susanna Hui Group Chief Financial Officer 10
Slide 11: Financial Highlights
Financial Highlights Core Business* Consolidated (US$ million) H1’15 H1’16 % change H1’15 H1’16 % change Revenue 2,305 2,360 + 2% 2,318 2,375 + 2% EBITDA 742 735 - 1% 729 719 - 1% Profit 150 133 - 11% 137 111 - 19% (Attributable to Equity Holders) * Core business includes HKT, Media and Solutions Bu
Slide 12: Steady Results Across Mobile and TSS
Steady Results Across Mobile and TSS Adjusted Funds Flow up 5% to US$263 million Interim Distribution of 27.09 HK cents per SSU HKT Revenue (US$ million) HKT EBITDA (US$ million) 2,404 +3% yoy +2% yoy 2,101 811 2,048 740 752 1061 Mobile Mobile 775 812 +5% yoy 350 295 313 +6% yoy Mobile Local Data 46
Slide 13: Maintain Market Leadership with Most Extensive Offering of High Quality Content
Maintain Market Leadership with Most Extensive Offering of High Quality Content NowTV Revenue (US$ million) NowTV EBITDA (US$ million) 194 183 178 - 2% yoy 14 24 10 36 169 170 168 26 24 - 11% yoy Others Subscription H1’15 H2’15 H1’16 H1’15 H2’15 H1’16 Steady subscription revenue driven by net gain o
Slide 14: Leading OTT Provider of Premium Asian Content
Leading OTT Provider of Premium Asian Content OTT Revenue (US$ million) OTT EBITDA (US$ million) 34 35 + 64% yoy (2) (5) (14) 21 H1’15 H2’15 H1’16 H1’15 H2’15 H1’16 Viu service 40available in 16 markets including 55 new Upfront investments in branding, content launches in Hong Kong and across SE Asi
Slide 15: Encouraging Response from Viewers and Advertisers to ViuTV
Encouraging Response from Viewers and Advertisers to ViuTV ViuTV Revenue (US$ million) ViuTV EBITDA (US$ million) (1) (4) (9) 7 N/A N/A 340 H1’15 H2’15 H1’16 H1’15 H2’15 H1’16 Positive initial response from advertisers Upfront investments in branding, content and viewers since official launch and pe
Slide 16: Progressive Revenue with Stable Margin
Progressive Revenue with Stable Margin Solutions Revenue (US$ million) Solutions EBITDA (US$ million) 56 269 +6% yoy +3% yoy 192 204 32 28 33 130 115 115 21 +2% yoy 21 139 28 Recurring 77 89 +14% yoy 11 12 +6% yoy Project based H1’15 H2’15 H1’16 H1’15 H2’15 H1’16 EBITDA Stable base of recurring reve
Slide 17: Prudent Cost Management
Prudent Cost Management (US$ million) Core Operating Expenses 537 541 +1% yoy 502 20 10 17 Opex kept relatively flat as a result of prudent 57 82 74 cost management Solutions 212 167 189 HKT opex reduction due to continued release of Media Mobile cost synergies from CSL integration TSS Reinvestment
Slide 18: Financial Performance
Financial Performance (US$ million) H1’15 H2’15 H1’16 YoY Better/(Worse) Revenue 2,318 2,722 2,375 +2% Cost of Sales (1,029) (1,402) (1,089) Operating Expenses (560) (526) (567) Depreciation & Amortization (376) (402) (411) (9)% Net Other Gains / (Losses) 8 9 (7) Net Finance Costs (93) (105) (77) +1
Slide 19: Investing for Better Customer Experience & to Support Business Growth
Investing for Better Customer Experience & to Support Business Growth Core Capex (US$ million) 253 Within 10% capex to revenue ratio guidance 17 +5% yoy 23 1 HKT’s capex primarily to support mobile 194 203 10 network integration process 13 2 14 7 Media capex to upgrade broadcasting 7 102 74 equipmen
Slide 20: Disciplined Capital Management
Disciplined Capital Management As of As of Dec 2015 Jun 2016 Gross Cash Undrawn Gross Cash Undrawn Debt (1) Balance Facilities Debt (1) Balance Facilities US$ million HKT 4,724 483 709 4,729 387 809 PCCW 753 246 954 867 120 821 PCPD -- 233 200 60 216 140 Total 5,477 962 1,863 5,656 723 1,770 Gross D
Slide 21: Debt Maturity Profile
Debt Maturity Profile As of July 2016 PCCW Bank Loans 283 PCCW Bonds PCPD Bank Loans New HKT Bank Loans HKT Bonds 1,204 184 100 650 750 493 453 500 500 (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 post Br
Slide 22: Balanced and Sustainable Dividends Paid to Shareholders
Balanced and Sustainable Dividends Paid to Shareholders 25.00 19.06 20.20 20.20 15.90 17.04 Final 13.85 13.21 +2.5% yoy Dividend 13.55 10.60 Interim Dividend 7.96 8.16 5.30 5.51 6.35 6.99 (HK cents) 2011 2012 2013 2014 2015 2016 Full-year Dividend YoY Growth 4% 20% 6% -- 24% Dividend Yield * 5.37% 5
Slide 23: Media Business
Media™ Media Business
Slide 24: We have Transformed our Business into the Leading Digital Media & Entertainment Service Provider
We have Transformed our Business into the Leading Digital Media & Entertainment Service Provider in Asia Asia’s leading OTT Video Service Launched end of Indonesia Oct India Malaysia Expand OTT platform Singapore regionally & internationally Hong Kong and become the leader in HK’s New Free TV Channe
Slide 25: Pay TV Business
Pay TV Business 25
Slide 26: Market Leadership in Hong Kong Pay TV
Market Leadership in Hong Kong Pay TV We continue to maintain market leadership by providing the Most Comprehensive Content, Enhanced Quality and Customer Experience, despite increased competition Installed Base In Thousands 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 26
Slide 27: Compelling Content Available Across All Platforms
Compelling Content Available Across All Platforms Hong Kong’s largest Pay TV provider with over 180 Top Class Channels covering live Sports, Movies, Dramas, Entertainment, Knowledge and Kids contents Hong Kong’s Home of Sports The ONLY Platform in Hong Kong with Three Most Popular World Class Footba
Slide 28: Now One and New User Interface UX3
Now One and New User Interface UX3 The new user interface enables customers to access rich content offerings with greater ease, bringing the best home entertainment from Now TV My Now, On Demand, and an all new TV Guide help Now TV customers discover programs they love, and enjoy more of what they w
Slide 29: OTT Business
Ovivu OTT Business
Slide 30: Continued International Expansion
Continued International Expansion Asia’s leading player serving more than 10 million paying subscribers in 16 markets Viu Premium Service has been launched in a total of 5 markets within 7 months • Hong Kong (Oct 2015), Singapore, Malaysia, India, Indonesia (Jan to May 2016) Freemium Model 10M Subsc
Slide 31: Viu Recognised as the Leading Pan-Regional OTT Service by the Industry
Viu Recognised as the Leading Pan-Regional OTT Service by the Industry Download-to-View Unique & Distinctive Asian Content Proposition Award-Winning OTT Service and Innovative Features Multi-s creen & Cros s Device S ync S eamles s s treaming for regions with low bandwidth Asia Pacific Telco Digit
Slide 32: High User Engagement of Viu Premium Service
High User Engagement of Viu Premium Service Downloads: more than 1.6million downloads in HK; 600,000+ in Singapore Video Views showing high engagement and traction: Viu Premium Service Hours Consumed Acc. Video Views (Million) Acc. Video Min (Billion) 200 3.0 across Hong Kong, Singapore, Malaysia, I
Slide 33: Free TV Business
© viuv Free TV Business
Slide 34: Launch of HK's New Free TV Channel
Launch of HK’s New Free TV Channel ViuTV (Channel 99) was successfully launched on 6 April 2016 Upcoming Programs With more than 4,000 hours of quality and entertaining programs: Factual Entertainment and Variety, Drama, Kids, Art and Culture, Finance, Sports, News and Current Affairs Original
Slide 35: IT Solutions Business
PCCW Solutions’ IT Solutions Business
Slide 36: Enabling our Customers to Become Digital Enterprises
Enabling our Customers to Become Digital Enterprises #1 #7 Hong Kong China & HK IT Services IT Services DEEPEN FOUNDATION GENERATE GROWTH ERP and Technical Services Industry-Specific Solutions Industry and Service Solutions Digital and IoT Platform (Public Sector / BFSI, TMT, Hospitality) Cloud & Sa
Slide 37: Revenue by Industry & Services
Revenue by Industry & Services H1’16 Revenue by Industry H1’16 Revenue by Services Others Business Process BFSI Telecom Enterprise Retail & Outsourcing Applications Manufacturing 4% 6% 6% Technical Travel & 7% 30% Services 23% 26% Hospitality 10% High-Tech 8% & Media 18% 27% 35% Application Developm
Slide 38: Growth Drivers
Growth Drivers Strategic Industry Specific Digital & Cloud & SaaS Territory Partnerships & Solutions IoT Platform Offerings Expansion Alliances 38
Slide 39: Industry Specific Solutions
Industry Specific Solutions Solutions Value Travel & Hong Kong Civil Aviation Department (CAD) Provision of 24x7 on-site technical services on safety-critical Offering a safe, stable, reliable and high-quality technical and Hospitality Air Traffic Control (ATC) Equipment / Facilities maintenance sup
Slide 40: Industry Specific Solutions
Industry Specific Solutions Solutions Value Television Broadcasts Limited & TVB International (TVB & TVBI) To implement up-to-date financial system which gains a deeper financial Provision of SAP ERP S/4 HANA version to replace in-house insight across the enterprise High Tech & tailor-made financial
Slide 41: Digital and IoT Platform – Smart Parking
Digital and IoT Platform – Smart Parking Login Available Routing Res ervation Car P arks S hopping & Res ervation Res ervation P arking Receipt P ayment QR Code Confirmation 41
Slide 42: Cloud & Digital Solutions
Cloud & Digital Solutions Social Media Analytics Big Data Solution RFID Smart Solution Intelligent Shopping Using the advanced analytic Built on cloud infrastructure, our Our Smart RFID Solution can be Combining the latest technologies technology, our Social Media scalable Big Data Solution enables
Slide 43: D-Infinitum Extends Data Centre Global Reach
D-Infinitum Extends Data Centre Global Reach Key Features: • Combines 115 locations across over 50 cities globally • One-stop-shop for data centre services, global hosting and network connectivity • Allows multi-location deployment with multiple jurisdictions and currencies under one single master a
Slide 44: Key Business Development Initiatives in Mainland China
Key Business Development Initiatives in Mainland China Emerging Services Portfolio Digital Services: Customer experience and analytics for retail sector Infinitum™ Cloud Suite: Cloud business applications for mid-sized enterprises AV Solutions: Technical services for hospitality, travel, trans
Slide 45: Strategic Partners & Alliances
Strategic Partners & Alliances Enterprise Software Infrastructure Enterprise Application and Infrastructure Services Systems & Cloud Solutions Solution Software Cloud Analytics Cyber-Security Banking Solutions Solutions Solution Partners 45
Slide 46: Summary
Summary PCCW Group is uniquely positioned to anticipate and address the needs of the digital ecosystem by leveraging our core capabilities We generate shareholder value by combining the individual strengths of HKT, Media and Solutions and delivering integrated solutions to enterprises and consumers