hutchison telecommunications hong kong holdings limited (stock code: 215) 2012 … › en › ir ›...

1 August 2012

Hutchison Telecommunications Hong Kong Holdings Limited (Stock Code: 215)

2012 Interim Results Presentation

Disclaimer

1

These materials have been prepared by Hutchison Telecommunications Hong Kong Holdings Limited (HTHKH) solely for use at thispresentation and have not been independently verified. No representations or warranties, express or implied, are made as to, and no relianceshould be placed on, the fairness, accuracy, completeness or correctness of the information or opinions presented or contained in thesematerials.

It is not the intention to provide, and you may not rely on these materials as providing, a complete or comprehensive analysis of the financial ortrading positions or prospects of HTHKH. None of HTHKH or any of their respective directors, officers, employees, agents, affiliates, advisersor representatives accepts any liability whatsoever in negligence or otherwise for any loss howsoever arising from any information or opinionspresented or contained in these materials or otherwise arising in connection with these materials. The information presented or contained inthese materials is subject to change without notice and its accuracy is not guaranteed.

These materials are for information purposes only and do not constitute or form part of any invitation or offer to acquire, purchase or subscribefor securities and none of them shall form the basis of or be relied upon in connection with any contract, commitment or investment decision inrelation thereto.

These materials contain forward-looking statements. Statements that are not historical facts, including statements about the beliefs andexpectations of HTHKH, are forward-looking statements. These statements are based on current plans, estimates and projections, and unduereliance should not be placed on them. Forward-looking statements speak only as of the date they are made, and HTHKH has no obligation toupdate any of them publicly in light of new information or future events. Forward-looking statements involve inherent risks, uncertainties andassumptions. HTHKH caution that if these risks or uncertainties ever materialize or the assumptions prove incorrect, or if a number ofimportant factors occur or do not occur, actual results of HTHKH may differ materially from those expressed or implied in any forward-lookingstatement.

While non-generally accepted accounting principles (GAAP) measures such as EBITDA (earnings before interest, taxation, depreciation andamortisation and share of results of jointly controlled entities) are often used by companies as an indicator of operating performance, they arenot expressly permitted measures under the GAAP or the International Financial Reporting Standards (IFRS) and may not be comparable tosimilarly titled measures for other companies. Accordingly, such non-GAAP measures should not be considered as an alternative to operatingincome as an indicator of the operating performance of HTHKH, and its subsidiaries or as an alternative to cash flows from operating activitiesas a measure of liquidity. The use of non-GAAP measures is provided solely to enhance the overall understanding of the current financialperformance of HTHKH, and its subsidiaries. Additionally, because HTHKH has historically reported certain non-GAAP results to investors,HTHKH considers the inclusion of non-GAAP measures provides consistency in its financial reporting.

Business Performance

HighlightsHoH Growth

� HK$ 6,730m

� HK$ 801m

Consolidated turnover

� HK$ 568m

� 6.05 HK cents

� HK$ 1,446mConsolidated EBITDA

Consolidated EBIT

Net profit 1

Interim dividend per share

3

1 Net profit attributable to shareholders

12%

16%

17%

15%

17%

Turnover

1,630 1,653

Consolidated turnover

Mobile business turnover Fixed-line business turnover

4

3,973 4,144 4,221

310

1,874

2,509

0

2,000

4,000

6,000

FY2010 1H FY2011 1H FY2012 1HH

K$ m

FY 20101H

FY 20111H

FY 20121H

2,5212,679 2,732

310

1,874

2,509

0

2,000

4,000

FY2010 1H FY2011 1H FY2012 1H

HK

$ m

Hardware revenue

Service revenue

FY 20101H

FY 20111H

FY 20121H

1,000

1,500

2,000

FY2010 1H FY2011 1H FY2012 1H

HK

$ m

1,6301,653

1,725

FY 20101H

FY 20111H

FY 20121H

Hardware revenue

Service revenue

Mobile

Quality customer base

� >90% postpaid customers under 3G/4G

� Solid customer profile

6

3,642

2,014

All percentages represent compound annual growth rate

* Include HK and Macau

3G & 4G

2G

Total subscribers*

1,275 988 770

1,777 2,365 2,872

0

2,000

4,000

FY2010 1H FY2011 1H FY2012 1H

’000

3,0523,353

FY 20101H

FY 20111H

FY 20121H

443 326 195

1,451 1,642 1,795

0

1,200

2,400

FY2010 1H FY2011 1H FY2012 1H

’000

1,9681,894 1,990

Postpaid subscribers*

FY 20101H

FY 20111H

FY 20121H

Smart device trendsetter

7

1,5191,761

2,014

� Smart device penetration ↑

� Internal upward migration focus

259

Note: Smart devices refer mainly to devices using iPhone OS,

Android and Blackberry based platforms as well as dongle.

Smart device penetration

3G and 4G smart device

3G non-smart device

2G

444 325 195

1,043 877

800

408765 995

0

1,200

2,400

FY2010 1H FY2011 1H FY2011 1H

Hong K

ong a

nd M

acau

Postp

aid

Sub

’000

1,8951,967

1,990

FY 20101H

FY 20121H

FY 20111H

30%

49%

58%

0%

30%

60%

28%

47%

55%

0%

30%

60%

0

1,000

2,000

FY2010 1H FY2011 2H FY2012 1H

% to

3G

+4G

postp

aid

sub

Hong K

ong a

nd M

acau

Sm

art d

evic

e S

ub

’000

Smart device ownership

FY 20101H

FY 20121H

FY 20111H

HK only

HK + Macau

408

765

995

Blended Postpaid ARPU*

214

238

256

150

225

300

FY2010 1H FY2011 1H FY2012 1H

HK

$ / m

onth

FY 20101H

FY 20111H

FY 20121H

ARPU

� Blended postpaid ARPU ↑ 8%

8

3G+4G Postpaid ARPU*

222

245253

150

225

300

FY2010 1H FY2011 1H FY2012 1H

HK

$ / m

onth

FY 20101H

FY 20111H

FY 20121H


Churn

� Low and stable

9

Postpaid Churn*

1.7% 1.7%1.8%

0.0%

1.0%

2.0%

FY2010 1H FY2011 1H FY2012 1H

Perc

enta

ge (%

)

FY 20101H

FY 20111H

FY 20121H


10

Largest amount of available spectrum

2100

900

1800

2600*

2300

Frequency Band

Total available bandwidth: 144.4MHz* Shared through a JV under Genius Brand Limited

Support: 2G + 3GBandwidth: 26.6MHz

2G LTE23.2MHz

3G34.6MHz

TDD-LTE30.0MHz

FDD-LTE30.0MHz

11

• An additional layer on existing 3G network

• 4G coverage target to match 3G network by end of 2012

• 1800MHz band re-farm and TDD-LTE 2300MHz band rollout to follow

Unveil a new 4G era

Fixed-line

13

Reaching out to Asia and beyond

� Global connectivity

� International platform

14

Well-positioned in local carrier and business markets

Mobile Backhaul

• 4G-driven growth

Corporate & Business

• Finance & government focus

Cloud computing & Data centre

• Collaborate with leading ICT specialists

• World-class facilities

School

• Cloud support to educational institutions

15

Invest in consumer market

• Invest for long term

• Competition easing

• New broadband offerings

Profitability

Profitability

17

� Earnings upsurge by 15%

361

494

568

0

400

800

2010 1H 2011 1H 2012 1H

HK

$ m

FY 20101H

FY 20111H

FY 20121H

Net profit

7.50

10.25

11.79

0

5

10

15

2010 1H 2011 1H 2012 1HH

K c

ent

FY 20101H

FY 20111H

FY 20121H

Earnings per share

5.16

6.05

0.00

5.00

10.00

FY2011 1H FY2012 1H

HK

cents

FY 2011FY 2010

Dividend

18

� Solid 75% annual payout

+17%

Dividend per share

1 Total dividend per share being sum of interim and final dividend per share

FY 20111H

FY 20121H

Financial Overview

20

Financial Highlights

FY 2011 FY 20121H 1H

(HK$m) (HK$m)Turnover 6,018 6,730 Cost of inventories sold (1,792) (2,369) Staff costs (307) (346) Customer acquisition costs (569) (331) Depreciation and amortisation (561) (645) Other operating expenses (2,107) (2,238)

Operating profit 682 801 Interest income 2 5 Interest and other finance costs (57) (77) Share of results of jointly controlled entities 1 (2)

Profit before taxation 628 727 Taxation (28) (23)

Profit for the period 600 704

Attributable to:Shareholders of the Company 494 568 Non-controlling interests 106 136

600 704

Turnover – mobile business

21

� Service revenue sustainable growth

� Hardware revenue benefited from popularity of smart devices

Mobile service revenue Mobile hardware revenue

2,521

2,679 2,732

1,500

2,250

3,000

FY2010 1H FY2011 1H FY2012 1H

HK

$ m

FY 20101H

FY 20111H

FY 20121H

310

1,874

2,509

0

1,000

2,000

3,000

FY2010 1H FY2011 1H FY2012 1H

HK

$ m

FY 20101H

FY 20111H

FY 20121H

Quality customer base

22

1,5191,761

2,014


1,188 953 768

1,519 2,014 2,449

0

2,000

4,000

FY2010 1H FY2011 1H FY2012 1H

’000

2,7072,967 3,217

3G+4G: +22%

HK Total Subscribers

FY 20101H

FY 20111H

FY 20121H

3G & 4G

2G

406 312 193

1,343 1,500 1,638

0

1,200

2,400

FY2010 1H FY2011 1H FY2012 1H

’000

1,8121,749 1,831

3G+4G: +9%

HK Postpaid Subscribers

FY 20101H

FY 20111H

FY 20121H

87 35 2

258 351 423

0

250

500

FY2010 1H FY2011 1H FY2012 1H

’000

386345

425

3G: +21%

Macau Total Subscribers

FY 20101H

FY 20111H

FY 20121H

3G: +11%

37 14 2

108 142 157

0

100

200

FY2010 1H FY2011 1H FY2012 1H

’000

156145 159

Macau Postpaid subscribers

FY 20101H

FY 20111H

FY 20121H

Turnover – mobile service revenue

23

FY 2011 1H

Carrier 48%

Corporate & Business 26%

Residential20%

FY 2012 1H

Total service revenue: HK$2,679m

Total service revenue: HK$2,732m

� 58% data revenue

Carrier [48]%

Residential[20]%

Others1

[6]%

Corporate &

Business [26]%

Local voice 28%

Roaming voice 14%

Roaming data 9%

Local data 49%

Total Data Revenue: 58%

Local voice

31%

Local data

45%

Roaming voice 17%

Total Data Revenue: 52%

Mobile data revenue

24

� Robust roaming data growth

Roaming data

142

189

249

0

150

300

FY2010 1H FY2011 1H FY2012 1H

HK

$ m

Local data

924

1,202

1,342

0

750

1,500

FY2010 1H FY2011 1H FY2012 1H

HK

$ m

FY 20101H

FY 20111H

FY 20121H

FY 20101H

FY 20111H

FY 20121H

+32%+21%


Carrier 53%

Others1

5%

Residential 17%

Corporate & Business

25%

Carrier 51%

Others1

6%

Residential 18%

Corporate & Business 25%

Turnover - Fixed-line business

251 Others include revenue from interconnection charges and data centers

FY 2011 1H

FY 2012 1H

Total revenue: HK$1,653m

Total revenue: HK$1,725m

� Steady growth and cushion against volatility

26

Key cost items

1 Excluding revenue from sale of telecommunications hardware

Cost of inventories sold Staff costs

34.8%

7.6%

1,792

2,871

2,369

29.8%

38.9%35.2%

0%

20%

40%

60%

0

1,500

3,000

FY2011 1H FY2011 2H FY2012 1H

% to

turn

ove

r

HK

$ m

FY 20111H

FY 20112H

FY 20121H

Depreciation and amortisation

561 618 645

13.5% 14.3%15.3%

0%

10%

20%

30%

0

400

800

FY2011 1H FY2011 2H FY2012 1H

% to

turn

ove

r 1

HK

$ m

FY 20111H

FY 20112H

FY 20121H

307 339 346

7.4% 7.8% 8.2%

0%

5%

10%

15%

0

250

500

FY2011 1H FY2011 2H FY2012 1H

% to

turn

ove

r 1

HK

$ m

FY 20111H

FY 20112H

FY 20121H

Customer acquisition costs

569 587

331

13.7% 13.6%

7.8%

0%

10%

20%

30%

0

400

800

FY2011 1H FY2011 2H FY2012 1H

% to

turn

ove

r 1

HK

$ m

FY 20111H

FY 20112H

FY 20121H

27

Other operating expenses

� Cautious and well-controlled


65.0%

65.3% 64.9%

Other operating expenses

2,107 2,224 2,238

50.8% 51.4% 53.0%

0.0%

50.0%

100.0%

0

1,500

3,000

FY2011 1H FY2011 2H FY2012 1H

% to

turn

ove

r 1

HK

$ m

FY 20111H

FY 20112H

FY 20121H

28

Capex investment


Capex and % of service revenue (Mobile)

251 259 272

10.0% 9.7% 10.0%

-4%

4%

12%

20%

0

200

400

FY2010 1H FY2011 1H FY2012 1H

% to

servic

e re

venue

HK

$ m

15.5%

� Selective

- 2G refarm and TDD-LTE

- FTTH homepass

13.6%

Capex and % of service revenue

488 464

567

12.3%11.2%

13.4%

0%

8%

16%

24%

0

400

800

FY2010 1H FY2011 1H FY2012 1H

% to

servic

e re

venue

HK

$ m

FY 20101H

FY 20111H

FY 20121H

FY 20101H

FY 20111H

FY 20121H

Capex and % of service revenue (Fixed-line)

238205

295

14.6%12.4%

17.1%

0%

10%

20%

30%

0

200

400

FY2010 1H FY2011 1H FY2012 1H

% to

servic

e re

venue

HK

$ m

FY 20101H

FY 20111H

FY 20121H

Liquidity

29

� Strong FCF before spectrum acquisition

1 Free cashflow being cashflow from operating activities less cashflow

used in investing activities before payment of spectrum utilisation fee

Free cashflow (FCF) 1

862

1,084

803

0

600

1,200

FY2010 1H FY2011 1H FY2012 1H

HK

$ m

FY 20101H

FY 20121H

FY 20111H

Strong financial position

30

� Leverage ratio = 1.3

� Gearing ratio = 33%

� Refinancing completed

- HK$5.5b facility matured in

June 2015

Net debt

Net debt/ LTM EBITDA

3,709 3,671 3,551

0

2,000

4,000

6,000

FY2011 1H FY2011 2H FY2012 1H

HK

$ m

FY 20111H

FY 20112H

FY 20121H

0.0

1.0

2.0

3.0

FY2011 1H FY2011 2H FY2012 1H

1.6x 1.4x

FY 20111H

FY 20112H

FY 20121H

1.3x

Outlook

Connect to the Future

33

• Well-positioned in data era• Internal upward migration• Smart device penetration

Mobile Market

Leadership

Mobile

• Selective investment• 4G network expansion• 2G spectrum re-farm

Network Excellence

• Diversified and exclusive contents and applications• Innovative initiatives - 3iChat, SMS data usage alert• Largest number of retail outlets

Customer Focus

34

• Strengthen ties with international carriers • Build international interconnection platforms• 4G stimulates further mobile backhaul demand

Carrier &International

Market

Fixed-line

• Partner with prominent ICT leaders• Data centre and cloud computing focus

Corporate & Business Market

• Growing FTTH coverage• Increase internal upward migration

Residential Market

Thank You

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