China Telecom Corp. Ltd. Class A · SSE:601728
China Telecom Corp. Ltd. Class A — H1 2011 Earnings Presentation
29 slides from China Telecom Corp. Ltd. Class A's earnings presentation, Aug 23, 2011
Slide 1: Interim Results 2011
Interim Results 2011 China Telecom Corporation Limited 1 23 August 2011 | 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: Presentation by
Presentation by Mr. Wang Xiaochu Chairman & CEO Mr. Shang Bing Madam Wu Andi Executive Vice President & CFO 3 3
Slide 4: Agenda
Agenda 1 Overview 2 Financial Performance 4 4
Slide 5: Overview
Overview 5
Slide 6: Highlights
Highlights • Effective scale development progressively enhancing profitability • Robust 3G momentum driving fast mobile expansion • Strengthened broadband capability further sharpening leading edges • Proactively nurturing innovative businesses to create new core competence 6 6
Slide 7: Solid Results
Solid Results 1H2010 1H2011 Change Operating Revenue (RMB Mil) 107,552 120,110 11.7% Operating Revenue (Excl. Mobile 105,485 113,727 7.8% Terminal Sales) (RMB Mil) EBITDA (RMB Mil) 45,759 48,501 6.0% EBITDA Margin 42.5% 40.4% -2.1pp Net Profit (RMB Mil) 8,811 9,710 10.2% EPS (RMB) 0.109 0.120 10.2%
Slide 8: Revenue Breakdown
Revenue Breakdown RMB Mil 1H2010 1H2011 Change Mobile 25,094 37,785 50.6% Voice 14,102 18,002 27.7% Data 8,668 13,137 51.6% Others 2,324 6,646 186.0% Wireline 82,458 82,325 -0.2% Voice , 32,915 26,462 -19.6% Data 46,514 52,370 12.6% Internet Access 26,739 30,212 13.0% VAS & Integrated Information Se
Slide 9: Revenue Growth Drivers
Revenue Growth Drivers -6.0pp +5.9pp +3.6pp +8.2pp RMB Mil Overall 120,110 Revenue +11.7% 8,791 107,552 3,900 -6,453 6,320 1H2010 Wireline Wireline Mobile Mobile 1H2011 Voice Data & Voice Data & Others Others 9 9
Slide 10: Remarkable Progress in Optimizing Revenue Structure
Remarkable Progress in Optimizing Revenue Structure Full Services Revenue Structure  Robust growth across strategic businesses (mobile, wireline data & others) • Revenue/total revenue: 78.0% (Ç 8.6pp yoy)  Mobile business as a key growth driver: 10.2% 16.5% 13.1% Ç 8.2pp • Revenue/total revenue: 3
Slide 11: Fast Mobile Expansion Revealing Scale Benefit
Fast Mobile Expansion Revealing Scale Benefit Subscribers Mil  World’s largest CDMA mobile operator  Fast expanding mobile business achieving 108.37 scale & enhancing overall profitability 74.52 • 1H2011 subs net add: 17.85 mil 12.0% 9.5% • Mobile ARPU: RMB52.2 • Subs market share: 12.0% (Ç 2.5pp
Slide 12: 3G Traction Driving Fast Mobile Expansion
3G Traction Driving Fast Mobile Expansion 3G Subscribers Mil 19.9% 13.6% Â Leverage 3G migration opportunity to promote 9.6% 21.54 3G scale development via innovative mobile Internet products & proliferating 3G terminal 9.25 devices 12.29 7.18 5.11 Â Promote data traffic operation management by 3.11
Slide 13: Rapid Mobile Data Development
Rapid Mobile Data Development Mobile Data Revenue  Self-operated business RMB Mil 13,137 • Enhance centralized efficient operation of product centers for differentiated services 8,668 42.2% • Strengthen bundled sales (iMusic, 189 mailbox & eSurfing apps store…) to increase penetration & 38.1% activ
Slide 14: Alleviating Wireline Risk
Alleviating Wireline Risk Revenue Wireline Subscribers RMB Mil Access Lines in Services (Mil) 2010.12 2011.6 Household 110.2 109.1 Government & Enterprise 34.0 35.4 82,458 82,325 Public Telephone 14.5 14.3 PAS 16.4 13.4 Total 175.1 172.2 49,543 55 863 55,863 Broadband Subs (Mil) 63.5 70.1 Voice Usag
Slide 15: Wireline Broadband Sustaining Leading Edges
Wireline Broadband Sustaining Leading Edges Broadband Access Revenue RMB Mil 29,755 Â Leverage flexible tariff package & network edge to drive broadband scale development 26,302 amid increasing competition • Differentiated development strategies Low-end: market share grasping Main-stream: bandwidth
Slide 16: Robust Wireline VAS & Integrated Information Services
Robust Wireline VAS & Integrated Information Services Revenue RMB Mil  Strengthen “cloud” & IT service capabilities 15,207 • To leverage ICT, IDC service strengths & high 13,713 speed data network edges to accelerate growth of businesses such as mobile payment, e-commerce, industry applications • T
Slide 17: Investing for Sustainable Growth
Investing for Sustainable Growth CAPEX Foster broadband Enhance core RMB Mil business development competence 50,000 Â Commenced “Broadband China, Fiber Cities” project 43,037 • Broadband & Internet investment accounted for 71.0% of total CAPEX, fuelling broadband development & sharpening edge • 2011
Slide 18: Leverage Mobile Internet to Promote Robust Growth
Leverage Mobile Internet to Promote Robust Growth Superior strengths ready to profit from explosive data growth Robust broadband development via Fast mobile subs & data effective bundling & integrated revenue growth services Integrated & Fast expansion of comprehensive Rapidly Explicit & compelling
Slide 19: Initiatives to Achieve Leap Development
To Achieve Leap Development Capitalizing on Strategic Opportunity Foundation Scale development breakthrough establishment leveraging innovation • Most comprehensive & in- • Strengthen data traffic operation • Mobile Internet as a growth depth nationwide 3G management leveraging 3G traction driver ne
Slide 20: Financial Performance
Financial Performance 20
Slide 21: Key Financial Information
Key Financial Information RMB Mil 1H2010 1H2011 Change Operating Revenue 107,552 120,110 11.7% Operating Expenses 93,997 105,717 12.5% Depreciation & Amortization 25,839 25,412 -1.7% Network Operations & Support 22,812 25,490 11.7% Incl: Mobile Network Leasing 6,365 8,696 36.6% Personnel 17,196 19,2
Slide 22: Effective Cost Management Driving Sustainable Growth
Effective Cost Management Driving Sustainable Growth Operating Expenses as a % of Rational Planning & Resources Allocation Operating Revenue Fuelling Scale Expansion  Cash operating expenses trended up to support 87.4% 88.0% scale expansion, but remained relatively steady as % of Operating Revenue
Slide 23: 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 transformation Infrastructure businesses to boost network servicing capability 14.6% & Others 14.5% Broadband & Internet Ç 7.0pp yoy 3.
Slide 24: Solid Financial Strength
Solid Financial Strength Total Debt / Total Capitalization Net Debt / EBITDA* 27.5% 0.66 19 6% 19.6% 0.30 1H2010 1H2011 1H2010 1H2011 Improve Capability in Resources Deployment & Rationalize Capital Structure to Well-prepare for CDMA Network Acquisition * Note: Net Debt / Simple Annualized 1H2011 EB
Slide 25: Optimize Resources Deployment to Promote Profitable Growth
Optimize Resources Deployment to Promote Profitable Growth Flexible & Dynamic Budget Control to Maximize Return Proactive & effective • Prompt response to market demand by flexibly deploying resources on key businesses, including mobile, industry applications & broadband deployment of sales initiati
Slide 26: Strengthen Competitiveness via Deepened Transformation & Mechanism Innovation
Strengthen Competitiveness via Deepened Transformation & Mechanism Innovation holders’ Value Change management: Promote mindset of “Pursue market potential instead of budget goal” to expand revenue & market share Structural reform: Establish Business Innovation Department to coordinate new product c
Slide 27: Thank You!
Thank You! For further information & enquiries, please contact our Investor Relations Department at ir@chinatelecom-h.com 27
Slide 28: Appendix 1
Extracted from unaudited consolidated statement of comprehensive Appendix 1 income for the six-month ended 30 Jun 2011 (incl. upfront connection fees) RMB Mil 1H2010 1H2011 Operating Revenue 107,817 120,208 Upfront Connection Fees 265 98 Operating Expenses (93,997) (105,717) Net Finance Costs (1,855
Slide 29: Appendix 2
Extracted from unaudited consolidated statement of financial Appendix 2 position as at 30 Jun 2011 (incl. upfront connection fees) RMB Mil 2010.12.31 2011.6.30 Current Assets 55,245 61,021 Non-current Assets 352,110 345,334 Total Assets 407,355 406,355 Current Liabilities , 126,923 123,764 Non-curre