A New Era forSUNDAY Communications Limited

2003 Annual ResultsApril 1, 2004

Business Overview

Presenter: Bruce Hicks

Group Managing Director

SUNDAY+

• Well managed• Profitable• SUNDAY =

• Efficiency• Quality• Creativity

• Fully financed and ready for 3G

• Net profit of HK$27 million• 3G partnership with Huawei• Fully financed for future operations

SUNDAY – A New Era+

• Industry professionals• Consistent vision and strategy• Strong implementation

Well Managed+

• Achieved despite difficult environment• HK$27 million net profit• EBITDA up 47% to HK$315 million• EBITDA margin improved from 16% to 25%

Profitable – Our Focus for 2003+

• Subscriber numbers up 9% to 660,000• Churn improved from 5.4% to 5.0%• Post paid ARPU down 6.3% to HK$201• Mobile services revenue down 6% to HK$1,150

million

Profitable – Our Focus for 2003+

• Benefit of changes in 2002• Raised efficiency• Operating costs ex depreciation down 22% to

HK$619 million through major savings in:– Sales commission– Cell site rental– Leased lines– Salary and related

Efficiency+

• Raised quality standards in:– Coverage– Sales and marketing– Customer care

High Quality+

• Last 3 years 25% increase in cell sites• Coverage now among the best• Gaining public recognition

High Quality - Coverage+

• FMCG approach• Organized teams around customer segments• More training• Employing more quality assurance monitoring

High Quality – Sales and Marketing+

• New management system• More training• Superstar hotline and other initiatives

High Quality – Customer Care+

• Segmentation• Innovative Services

Creativity – SUNDAY’s Response+

• Segmenting by:– Demographics– Usage– Special Interest

• Requires organizational change• Now organised around four segments

– Youth– Ethnic– Corporate / business– Mass market

– Each segment a separate business unit

Creativity – Segmentation+

• LBS for Business

• LBS for logistics and field services

• LBS for Mass

• Family Watch

• SARS updates

• LBS for Youth

• Interactive LBS game

• SUNDAY Wireless roaming services

• 55% growth in revenues from data services

Creativity – Innovative Services+

• Efficiency• Quality• Creativity

2004 – Focus on Revenues+

• Ready in 4Q 2004• Huawei partnership• Financing provided• Flexibility to roll out 3G at right time• Manage costs of roll out

2004 - Ready for 3G+

• Build on existing progress in China:– Operations Center in Shenzhen – Partnership with Huawei– Expanding CEPA opportunities

2004+ – Beyond Hong Kong+

• Well managed• Profitable• SUNDAY=

• Efficiency• Quality• Creativity

• Fully financed and ready for 3G

Conclusion+

Financial Overview

Presenter: Janet FungGroup Director, Finance

Consolidated Profit & Loss Statement+

(HK$ million except for profit per share)

2001 2002 2003

Turnover- mobile services 1,165 1,218 1,150 (68) -6%- sales of mobile phones & accessories 243 115 109 (6) -5%- others 14 9 1 (8)

Total turnover 1,422 1,342 1,260 (82) -6%

Cost of inventories sold and services provided (469) (334) (330) 4 -1%

Gross profit 953 1,008 930 (78) -8%

Other revenues 3 2 4 2 Operating expenses (854) (796) (619) 177 -22%

EBITDA 102 214 315 101 47%

Depreciation (265) (256) (233) 23 Finance costs, net of interest income (49) (56) (50) 6 Share of losses of joint venture 0 (19) (5) 14

Profit / (loss) for the year (212) (117) 27 144

Profit / (loss) per share (in cents) (7.1) (3.9) 0.9 4.8

Gross profit margin 67% 75% 74%

EBITDA % on total turnover 7% 16% 25%

Operating expenses % on mobile services revenue 73% 65% 54%

2003 vs 2002Changed by

Turned from net loss to net profit of $27 million Improved by $144 million from 2002

27

-117

-212-300

-200

-100

0

100

2001 2002 2003

( HK$ million )

Net Profit+

315

102

214

0

200

400

2001 2002 2003

( HK$ million )

EBITDA improved by $101 million (47%) EBITDA margin improved from 16% to 25%

EBITDA+

6% drop in mobile services revenue - SARS and price war 5% drop in handset sales mainly - handset subsidy

243115 109

14 9 1

1,165 1,218 1,150

0

700

1400

2001 2002 2003

Mobile services Mobile phones & accessories Others

( HK$ million )

5%

Mobile

Services

- 6%

Mobile Services

Turnover+

4% drop in mobile services gross profit Improved mobile services gross margin from 82% to 83%

948 997 954

7 9 0

2-24

-2

-200

0

200

400

600

800

1000

2001 2002 2003

( HK$ million )

Mobile services Mobile phones & accessories Others

- 4%

Mobile Services

5%

Gross Profit+

Mobile Services

HK mobile market size – 7.2 million or 106% penetration rate SUNDAY subscribers (excluding MVNO) increased by 9%

419,000 414,000 417,000

189,000243,000

132,000

0

350,000

700,000

2001 2002 2003

Postpaid PrepaidTotal growth rate

Postpaid growth rate

Prepaid growth rate

29%

9%

1%

43%

9%

- 1%

603,000

660,000

551,000

Subscriber Numbers+

5.0%

5.4%

8.3%

0%

6%

12%

2001 2002 2003

Churn rate dropped to 3.6% in December 2003 2003 average churn rate was 5.0%

Churn - Postpaid+

As a % of Opening Subscriber Numbers

Average ARPU was HK$201 Data was around 7% of ARPU in December 2003

$219

$209

$201

$180

$230

2001 2002 2003

Postpaid ARPU – Net of Discounts & Incentives+

619

796854

54%

65%

73%

0

500

1000

2001 2002 200340%

60%

80%

Operating expensesOperating expenses as % of mobile services revenue

(HK$ million)

Consistently Improving Operating Efficiency+

Reduction of $177 million or 22%

2002 - $796 million * 2003 - $619 million

Network costs Salaries & related costs

Advertising, promotion & other selling costs Commission

Rental & related costs Others

60

(8%)61 (7%)

86 (11%)

243 (31%)

304 (38%)

42 (5%)

46 (7%)

45

(7%)

270 (44%)

152 (25%)

41 (7%)

65 (10%)

-34 (11%)

-15 (25%)

-15 (25%)

-21 (24%)

-91 (37%)

-1 (2%)

* Include $26M restructuring costs

Operating Expenses+

510 502

224

801

173

0

500

1,000

Dec 2001 Dec 2002 Dec 2003

Hong Kong Shenzhen

Headcount – Hong Kong and Shenzhen+

Consolidated Balance Sheet+

(HK$ million)

Prepayment for 3G licence fees 192 142 92 Fixed assets & others 1,309 1,219 1,103 Non-current assets 1,501 1,361 1,195

Current assets 435 450 537 Current liabilities (584) (590) (608)

Net current (liabilities)/assets (149) (140) (71)

1,352 1,221 1,124

Financed by:

Share capital 299 299 299 Reserves 489 372 399

Shareholders' equity 788 671 698

Long-term bank and vendor loans 557 547 425

Other long term liabilities 7 3 1

1,352 1,221 1,124

Dec-01 Dec-02 Dec-03

Cash and Credit Facilities+

(HK$ million)

Cash and bank balance (a) 208 173 314

Revolving facilities available for drawdown 481 329 -

Total 689 502 314

Bank and vendor loans repayable in2003 238 119 - 2004 - $221 million old loans repaid in Jan 04 547 547 221 2004 - Huawei loan - - 75 2005 - Huawei loan - - 175 2006 - Huawei loan - - 250

Total (b) 785 666 721

Net debt (b) - (a) 577 493 407

Net debt to equity ratio 86% 72% 58%

Dec-02 Jun-03 Dec-03

Consolidated Cash Flow+

(HK$ million)

Operating activities (89) 129 242

Investing activities- Payment of 3G Licence (250) - - - Purchase of fixed assets (147) (69) (73) - Other investing activities (44) (40) (54)

(441) (109) (127)

Financing- Cash drawdown of revolving facilities - 179 253 - Repayment of long term loans (43) (195) (315) - Other financing activities (6) (2) -

(49) (18) (62)

Net Cash Inflow /(Outflow) (579) 2 53

2001 2002 2003

50 50

72

118

110

9

0

50

100

150

2001 2002 2003

( HK$ million )

Capital Expenditure 3G Licence capitalised portion

Fixed Assets Additions+

SUNDAYfeels better!