34 slides from China Telecom Corp. Ltd. Class A's earnings presentation, Mar 20, 2012
Slide 1: Annual Results 2011
Annual Results 2011 China Telecom Corporation Limited 20 Mar 2012 | 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: Presentation by management
Presentation by Mr. Wang Xiaochu Chairman & CEO Mr. Yang Jie President & COO Madam Wu Andi Executive Vice President & CFO 3
Slide 4: Agenda
Agenda 1. Overview 2. Business Review 3. Financial Performance 4
Slide 5: 1. Overview
1. Overview 2. Business Review 3. Financial Performance 5
Slide 6: Highlights
Highlights Robust full services development optimizing business structure & enhancing profitability 3G traction driving fast mobile expansion & revealing scale benefit Broadband upgrade fostering subscriber growth & value To achieve breakthrough in scale development via dual-leadership in innovation
Slide 7: Solid Results
Solid Results 2010 2011 Change (restated) Operating Revenue (RMB Mil) 219,367 244,943 11.7% Operating Revenue 213,719 231,010 8.1% (Excl. Mobile Terminal Sales) (RMB Mil) EBITDA (RMB Mil) 88,490 94,266 6.5% EBITDA Margin 41.4% 40.8% -0.6pp Net Profit (RMB Mil) 14,850 16,404 10.5% Adjusted Net Profit
Slide 8: Revenue Growth Drivers
Revenue Growth Drivers Overall RMB Mil Revenue +11.7% -5.8pp +4.4pp +4.4pp +8.7pp 244,943 19,026 219,367 9,722 -12,734 9,562 2010 Wireline Wireline Data Mobile Voice Mobile Data 2011 Voice & Others & Others 8
Slide 9: Remarkable Progress on Optimizing Revenue Structure
Remarkable Progress on Optimizing Revenue Structure Full Services Revenue Structure Laying a solid foundation for long-term sustainable growth 11.4% 18.0% 13.2% 9.2pp Robust growth continued across mobile & 15.8% wireline data services Growth businesses accounted Growth businesses revenue/total
Slide 10: Rapid Mobile Expansion Enhancing Overall Profitability
Rapid Mobile Expansion Enhancing Overall Profitability Mobile & 3G Subscribers World’s largest CDMA mobile operator with fast Mil 126.47 expanding mobile subscriber base revealing scale 90.52 36.29 benefit 12.29 56.09 Mobile subs: 126 mil (incl. 36 mil 3G subs) 4.07 Mobile ARPU: RMB52.4 ( 3.3%
Slide 11: Launching iPhone to Promote Further Development Breakthrough
Launching iPhone to Promote Further Development Breakthrough Benefits of launching iPhone: Customer-focused tariff plans to enhance user experience & Enhancing branding image & promoting further corporate value breakthrough in high-end market Accelerating revenue growth & driving mobile iPhone t
Slide 12: Accelerating Strategic Investment to Foster Broadband Sustainable Growth
Accelerating Strategic Investment to Foster Broadband Sustainable Growth Foster broadband CAPEX Enhance business core competence RMB Mil development Accelerating “Broadband China, Fibre Cities” project to 54,000 satisfy customer access bandwidth upgrade demand & lay 49,551 a solid foundation for fut
Slide 13: Kick-off Mobile Network Acquisition to Enhance Value
Kick-off Mobile Network Acquisition to Enhance Value Leasing Fee & Mobile Network Depreciation of Parent Co. Kick-off 19.0 RMB Bil Acquisition price: Subject to negotiation with the Parent Co. 13.3 with reference to the appraised value pursuant to the terms as set out in the network lease agreemen
Slide 14: Stable Dividend
Stable Dividend Dividend Per Share HKD The Board of Directors recommends to the shareholders a final dividend of 0.085 0.085 HKD0.085 per share for 2011 The Company is actively preparing & accumulating funds for the planned acquisition of mobile network from parent company in 2012 With due regards t
Slide 15: Seizing the Golden Opportunities for Value Enhancement
Seizing the Golden Opportunities for Value Enhancement Strengthening Core Competence Golden opportunities: + Fabulous mobile Internet applications Enhancing Corporate Value Fast proliferating smartphones Rapidly developing “Cloud” applications Scale operation To expand Explicit & effective strategic
Slide 16: 2. Business Review
1. Overview 2. Business Review 3. Financial Performance 16
Slide 17: Revenue Breakdown
Revenue Breakdown RMB Mil 2010 2011 Change Mobile 53,953 82,701 53.3% Service Revenue 47,722 68,248 43.0% Voice 28,906 38,628 33.6% Data 18,816 29,620 57.4% Others 6,231 14,453 132.0% Wireline 165,414 162,242 -1.9% Voice 62,498 49,764 -20.4% Data 95,648 105,647 10.5% Internet Access 54,965 61,691 12
Slide 18: 3G Traction Driving Mobile Scale Expansion
3G Traction Driving Mobile Scale Expansion 3G Net Add Promote mobile service as a stand-alone product while leveraging integrated operation strengths Mil 24.00 Proliferating 3G terminals & accelerated adoption of smart devices with improved price-performance factor EVDO handsets: ≈500 models; sale
Slide 19: Strong Mobile Data Momentum
Strong Mobile Data Momentum Mobile Data Revenue RMB Mil 29,620 Leverage rapidly proliferating mobile Internet contents & applications to increase users’ 18,816 penetration & activity level to drive mobile data 43.4% traffic 39.4% Establish mobile Internet alliance & cultivate all-party- win eco-sy
Slide 20: Stabilising Wireline Revenue
Stabilising Wireline Revenue Revenue RMB Mil Subscribers Access Lines in Services (Mil) 2010.12 2011.12 Household 110.2 108.0 172,599 Government & Enterprise 34.0 36.8 165,414 162,242 Public Telephone 14.5 13.9 PAS 16.4 10.9 94,167 Total 175.1 169.6 102,916 Broadband Subs (Mil) 63.5 76.8 112,478 78,
Slide 21: Fast Growing Wireline Broadband Service
Fast Growing Wireline Broadband Service Wireline Broadband Revenue RMB Mil Leverage network strengths to enhance customer 60,801 experience & value by promoting bandwidth upgrade with 54,127 a lower unit bandwidth pricing to bolster development & competitiveness 77.1 72.2 Wireline broadband sub gr
Slide 22: Robust Wireline VAS & Integrated Information Services
Robust Wireline VAS & Integrated Information Services Revenue RMB Mil Major Initiatives 29,763 28,312 Ex-PAS related revenue, Wireline VAS & Integrated Information Services revenue amounted to RMB29.1 bil, 8.0% vs 2010 IDC: Establish integrated sales initiatives & unified channels to provide one
Slide 23: 2012 Priorities
2012 Priorities Capitalising on the strategic positioning of “The Three New Roles” to reinforce capabilities of innovation, service, efficient centralisation and operation management to achieve leap development Scale breakthrough to To leverage the window opportunity of 3G migration and three- enhan
Slide 24: 3. Financial Performance
1. Overview 2. Business Review 3. Financial Performance 24
Slide 25: Key Financial Information
Key Financial Information 2010 2011 Change RMB Mil (restated) Operating Revenue 219,367 244,943 11.7% Operating Expenses 196,412 220,912 12.5% Depreciation & Amortization 52,215 51,224 -1.9% Network Operations & Support 47,432 52,912 11.6% Incl.: Mobile Network Leasing 13,320 19,011 42.7% Personnel
Slide 26: Key Impact of Adopting IFRS 1 Amendment
Key Impact of Adopting IFRS 1 Amendment Major Adjustment: Recognise the revalued amounts of property, plant & equipment and lease prepayments transferred or acquired during the Restructuring, the First Acquisition and the Second Acquisition as their deemed costs, and retrospectively adjust the depre
Slide 27: Effective Cost Initiatives Driving Sustainable Growth
Effective Cost Initiatives Driving Sustainable Growth Operating Expenses as % of Operating Revenue Rational Planning & Resources Allocation Fuelling Scale Expansion 89.5% 90.2% Depreciation & Depreciation & Amortization: 2.9pp, benefiting 20.9% 23.8% Amortization from prudent CAPEX control Network
Slide 28: Appropriate Increase in Marketing Initiatives to Secure Future Sustainable Growth
Appropriate Increase in Marketing Initiatives to Secure Future Sustainable Growth 2009 – 2011 2012 Mobile Subscribers Net Add Mil Leveraging the iPhone launch, an appropriate 36.0 34.4 increase in marketing initiatives to promote 28.2 further breakthrough in high-end market & to enhance revenue grow
Slide 29: Optimized CAPEX Structure Supporting Strategic Transformation
Optimized CAPEX Structure Supporting Strategic Transformation CAPEX Structure Strictly control investment in traditional wireline business & step up investment in growth businesses to boost network servicing capability 64.2% Broadband & Internet Broadband & Internet 2.6pp yoy 66.8% IT & Support
Slide 30: Solid Financial Strength
Solid Financial Strength Total Debt / Total Capitalization Net Debt / EBITDA Net Finance Costs RMB Mil 22.6% 3,600 0.52 16.6% 2,254 0.24 2010.12 2011.12 2010 2011 2010 2011 Improve capability in resources deployment & rationalize capital structure to well-prepare for CDMA network acquisition 30
Slide 31: Strengthen Innovation & Control to Drive Scale Development & Value
Strengthen Innovation & Control to Drive Scale Development & Value Resources Allocation Capital & Asset Scientifically deploy resources to Activate asset utilisation enhance scale development breakthrough & network quality Enhance centralised capital management Tilting initiatives toward key busines
Slide 32: Thank You!
Thank You! For further information & enquiries, please contact our Investor Relations Department at ir@chinatelecom-h.com
Slide 33: Appendix 1 Extracted statement of comprehensive income
Appendix 1 Extracted from audited consolidated statement of comprehensive income for the year ended 31 Dec 2011 (incl. upfront connection fees) 2010 2011 RMB Mil (restated) Operating Revenue 219,864 245,041 Upfront Connection Fees 497 98 Operating Expenses (196,412) (220,912) Net Finance Costs (3,60
Slide 34: Appendix 2 Extracted statement of financial position
Appendix 2 Extracted from audited consolidated statement of financial position as at 31 Dec 2011 (incl. upfront connection fees) 2010.12.31 2011.12.31 RMB Mil (restated) Current Assets 55,245 59,576 Non-current Assets 365,284 359,539 Total Assets 420,529 419,115 Current Liabilities 126,923 127,258 N