China Telecom Corp. Ltd. Class A · SSE:601728
China Telecom Corp. Ltd. Class A — H1 2003 Earnings Presentation
32 slides from China Telecom Corp. Ltd. Class A's earnings presentation, Nov 20, 2003
Slide 1: 2003 Interim Report
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Slide 2: Disclaimer
Disclaimer 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 statements involve k
Slide 3: Management
Management Zhou ZhouDeqiang Deqiang Chairman Chairman&&CEO CEO Chang ChangXiaobing Xiaobing President President Wu WuAndi Andi EVP EVP&&CFO CFO Zhang ZhangJiping Jiping EVP EVP Li LiPing Ping EVP EVP&&Company CompanySecretary Secretary 3
Slide 4: Content
Content 2003 2003 Interim Interim Summary Summary Business BusinessReview Review Financial FinancialReview Review 4
Slide 5: 2003 Interim Summary
2003 2003 Interim Interim Summary Summary
Slide 6: First Half of 2003: Sustained Healthy Growth
First Half of 2003: Sustained Healthy Growth (1) RMB 9.26 bn Net Profit 9.2% RMB 23.06 bn EBITDA 10.2% RMB 39.54 bn Operating Revenues 7.2% Local Subs Broadband Subs 16.8% 210.7% 62.20 m 2.56 m 1 All growth rates in this chart are figures YoY 6
Slide 7: Wire-line Telephone Service Showed Great Growth Potential
Wire-line Telephone Service Showed Great Growth Potential (1) Accelerated Urbanisation(2) Increasing Disposable Income per Capita(2) RMB 48.1% 47.2% 7,161 46.4% 6,755 6,255 2000 2001 2002 2000 2001 2002 (2) Source: provincial statistics bureaus Sustained Subscriber Growth Million 62.20 56.86 48.48 2
Slide 8: Wire-line Telephone Service Showed Great Growth Potential (continued)
Wire-line Telephone Service Showed Great Growth Potential (continued) New Subs of Wireless Per-line Investment for Wireless Local Access Service Local Access Service Thousand RMB 2,176 -16.7% 1,200 1,000 1,008 750 1H2002 2H2002 1H2003 2002 1H2003 8
Slide 9: Broadband Internet Service Experienced Explosive Growth
Broadband Internet Service Experienced Explosive Growth Internet Service Revenue 2002 Broadband Household Penetration Rate(1) RMB: Million 59% 6.8% 5.5% 2,669 42% 4.5% 2,110 1,665 16% 3.9% 1H2002 2H2002 1H2003 Korea HK Singapore Our Service Regions Internet service’s contribution to operating revenu
Slide 10: Risk in Long Distance Service Moderated
Risk in Long Distance Service Moderated Traffic Volume Market Share Revenue Share of Long Distance 84% 31.5% 69% 63.4% 26.3% 59% 64% 23.3% 55% 21.9% 54% 52.6% 2001 1H2002 2H2002 1H2003 2000 2001 2002 1H2003 DLD IDD 10
Slide 11: First Half of 2003: Challenges & Opportunities
First Half of 2003: Challenges & Opportunities Strong drivers for growth • Steady wire-line service with great potential • Fast growing broadband service, Our strategies a major driver of growth • Market segmentation and • Burgeoning VAS a powerful distribution channel revenue growth contributor enh
Slide 12: Business Review
Business BusinessReview Review
Slide 13: 2003 Interim Results Overview
2003 Interim Results Overview Revenue Revenue Share 1H2002 8.3% 3.3% RMB: Million 1H2002 1H2003 % 10.4% Total 36,868 39,536 7.2% 47.5% 6.8% Among: Local 17,517 18,488 5.5% Data & Internet 2,511 3,643 45.1% 23.7% 1H2003 5.9% 7.0% DLD & IDD 8,749 8,653 -1.1% 9.3% 46.8% LL& Interconnection 3,827 3,662
Slide 14: Local Telephone Subscriber Growth
Local Telephone Subscriber Growth Local Subscribers New Local Subscribers Million Million 5.34 62.2 4.77 56.9 5.4 1.01 3.61 2.18 3.2 3.5 3.0 0.05 0.75 9.1 8.5 0.43 1.00 1.08 0.60 0.49 42.1 44.2 2.71 2.13 1.29 2002.12 2003.6 1H2002 2H2002 1H2003 Residential Enterprise Public Telephones Wireless Local
Slide 15: Local Voice Usage Growth
Local Voice Usage Growth Local Usage Usage Growth Under Pressure Pulses in billions 111.6 110.7 17.3% 16.8% 22.0 26.3 9.6% 85.3 88.7 3.9% 1H2002 1H2003 2002 1H2003 Local voice usage Growth rate of local voice usage Dial-up usage Growth rate of local subscribers 15
Slide 16: Data & Internet Services
Data & Internet Services Revenue of Data & Internet Revenue Share of Data & Internet RMB: Million 9.2% 45.1% 3,643 3,053 974 7.9% 2.4% 2,511 6.8% 943 2.4% 846 2.3% 2,110 2,669 4.5% 5.5% 6.8% 1,665 1H2002 2H2002 1H2003 1H2002 2H2002 1H2003 Internet Managed Data 16
Slide 17: Broadband Service Grew Rapidly
Broadband Service Grew Rapidly Broadband Subscribers ADSL Per-line Investment & ARPU Thousand RMB 2,562 1,300 -27% 950 210.7% 1,379 824 -8% 2002.6 2002.12 2003.6 2002 1H2003 ADSL per-line investment Growth rate of ARPU for ADSL 17
Slide 18: Risk in Long Distance Service Moderated
Risk in Long Distance Service Moderated DLD Traffic Volume DLD Revenue Minutes in billions RMB: Million 55% -2.3% 54% 52.6% 7,148 7,217 6,985 16.8% 17.3 19.1 16.3 1H2002 2H2002 1H2003 1H2002 2H2002 1H2003 Market share in terms of traffic volume 18
Slide 19: International Long Distance Service
International Long Distance Service IDD Traffic Volume IDD Revenue Minutes in millions RMB: Million 69% 63.4% 4.2% 59% 1,684 1,668 1,601 16.7% 610 715 712 1H2002 2H2002 1H2003 1H2002 2H2002 1H2003 Market share in terms of traffic volume 19
Slide 20: Leased Line & Interconnection
Leased Line & Interconnection Revenue form Interconnection Revenue from Leased Line Service RMB: Million RMB: Million 2,272 2,253 2,091 -9.4% 1,217 1,289 1,555 1,540 1,409 1,391 874 964 881 1H2002 2H2002 1H2003 1H2002 2H2002 1H2003 Net interconnection revenue Interconnection expenses 20
Slide 21: Operating Strategies & Distribution Channels
Operating Strategies & Distribution Channels Strategies for New Products Customer Development Acquisition & Retention Distribution Channels & IT System CTG-MBOSS Construction Usage-focused Pricing Strategies Marketing Strategies 21
Slide 22: Operating Strategies & Distribution Channels (continued)
Operating Strategies & Distribution Channels (continued) 0 0 0 CUSTOMER 1 0 CE NT 1A-5A ER Key Accounts High Value Business Sub. Strategy Sub.&Project Bu s i n e s Community s Key Account Su Low-end Manager b Business Sub. Business New Ho Agents t Sub. Rural l Buildings& Strategy Key i Low-end n Bus
Slide 23: Financial Review
Financial FinancialReview Review 23
Slide 24: Healthy Growth of Revenue & Net Profit
Healthy Growth of Revenue & Net Profit RMB: Billion Revenue EBITDA Net Profit % 7.2% 10.2 9.2% 39.536 23.057 9.260 36.868 20.928 8.483 1H2002 1H2003 1H2002 1H2003 1H2002 1H2003 24
Slide 25: Disciplined Operating Expenses & Improved Profitability
Disciplined Operating Expenses & Improved Profitability Operating Expenses & Cash Opex & EBITDA Margin Operating Profit Margin RMB: Billion 30.9% RMB: Billion 58.3% 29.6% 56.8% 27.338 16.479 25.970 15.940 1H2002 1H2003 1H2002 1H2003 Operating Expenses Cash Opex Operating Profit Margin EBITDA Margin
Slide 26: Cost Structure More Rationalized
Cost Structure More Rationalized Operating Expenses Operating Expenses Share 1H2002 5.4% 13.1% RMB: Million 1H2002 1H2003 38.6% Total 25,970 27,338 5.3% 12.2% Depreciation & 10,030 10,859 8.3% Amortisation Network Operations & 7,973 6,551 -17.8% 30.7% Support 1H2003 4.8% SG&A 3,170 3,527 11.3% 18.6%
Slide 27: Network Operations & Support, SG&A
Network Operations & Support, SG&A Network O&S SG&A RMB: Million RMB: Million % 11.3 35,27 -17.8% 3,170 7,973 955 427 -6.2% 6,551 2,743 2,572 1H2002 1H2003 1H2003 1H2002 Advertisement & Promotion Others 27
Slide 28: Capital Expenditure
Capital Expenditure Capital Expenditure RMB: Billion 40.0 28.9 25.0 9.6 2001 2002 2003E 1H2003 28
Slide 29: Solid Capital Structure
Solid Capital Structure RMB: Million 2002.12 2003.6 Short Term Debt 21,394 18,597 Long Term Debt 4,853 4,937 Total Debt 26,247 23,534 Shareholders’ Equity 125,008 133,595 Total Capitalization 151,255 157,129 Cash & Cash Equivalents 16,423 17,835 Net Debt 9,824 5,699 Total Debt / Total Capitalization
Slide 30: Thank You!
THANK YOU!
Slide 31: Extract from unaudited consolidated statement of income — Appendix I
Extract from unaudited consolidated statement of income for the 6 months ended 30 June 2003 — Appendix I (RMB million) 1H2002 1H2003 Operating Revenues 36,868 39,536 Operating Expenses 25,970 27,338 Depreciation and amortisation 10,030 10,859 Network operations and support 7,973 6,551 SG&A 3,170 3,5
Slide 32: Extract from unaudited consolidated balance sheet — Appendix II
Extract from unaudited consolidated balance sheet at 30 June 2003 — Appendix II (RMB million) Audited Unaudited at 31 Decem ber 2002 at 30 June 2003 Cash and Cash Equivalents 16,425 17,835 Other Current Assets 10,077 10,736 Non-current Assets 184,350 183,078 Total Assets 210,852 211,649 Current Liab