2015 Interim Results Presentation - Hutchison Telecommunications

Hutchison Telecommunications
Hong Kong Holdings Limited
(Stock code: 215)
2015 Interim Results Presentation
4 August 2015
Disclaimer
These materials have been prepared by Hutchison Telecommunications Hong Kong Holdings Limited (HTHKH) solely for use at this presentation and have not
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are forward-looking statements. These statements are based on current plans, estimates and projections, and undue reliance should not be placed on them.
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materialize or the assumptions prove incorrect, or if a number of important factors occur or do not occur, actual results of HTHKH may differ materially from
those expressed or implied in any forward-looking statement.
While non-generally accepted accounting principles (GAAP) measures such as EBITDA (earnings before interest, taxation, depreciation and amortisation and
share of results of joint ventures) are often used by companies as an indicator of operating performance, they are not expressly permitted measures under the
GAAP or the International Financial Reporting Standards (IFRS) and may not be comparable to similarly titled measures for other companies. Accordingly, such
non-GAAP measures should not be considered as an alternative to operating income as an indicator of the operating performance of HTHKH and its
subsidiaries or as an alternative to cash flows from operating activities as a measure of liquidity. The use of non-GAAP measures is provided solely to enhance
the overall understanding of the current financial performance of HTHKH and its subsidiaries. Additionally, because HTHKH has historically reported certain nonGAAP results to investors, HTHKH considers the inclusion of non-GAAP measures provides consistency in its financial reporting.
1
Business Performance
Highlights
2015 1H
HK$ millions
2014 1H
HK$ millions
Change %
Consolidated Turnover
11,020
6,227
+77%
Consolidated EBITDA
1,456
1,181
+23%
Consolidated EBIT
789
527
+50%
Net Profit(1)
508
323
+57%
Earnings per Share
10.54
HK cents
6.70
HK cents
+57%
Interim Dividend per Share
5.20
HK cents
4.25
HK cents
+22%
Note 1: Net profit attributable to shareholders
3
Outlook

Balanced integrated telecom operator benefited from mobile and fixed-line contributions

Mobile business


Focus on margin and profitability

Upgrade customers to high speed plans
Fixed-line business

Focus on network solution offerings in corporate market

Gradual improvement in carrier and residential market

Disciplined control on operating and capital expenditure

Major enhancement projects in the pipeline:

TDD spectrum development

Wi-Fi coverage expansion

TDD/FDD LTE Advanced network development

Focus on optimising synergies between mobile and fixed-line

Sustainable and clear dividend policy
4
Mobile
10
Mobile Business
Local net customer service revenue margin
after deducting CAC
Mobile revenue
1,600
9,242
416
+108%
5,000
4,438
381
6,734
1,377
HK$ millions
HK$ millions
10,000
+5%
1,444
800
1,709
2,348
0
2,092
0
2014 1H
2015 1H
2014 1H
2015 1H
Bundled revenue
Standalone revenue
Service revenue
6
Mobile KPIs
Blended local postpaid ARPU and net AMPU
210
194
202
Postpaid Churn
209
158
151
140
137
145
Percentage (%)
HK$ / month
3.0%
132
124
70
0
Note 3:
1.9%
1.8%
0.0%
2014 2014 2015
2H
1H
Local net AMPU(3)
Note 2:
2.0%
1.0%
1H
Note 1:
2.3%
2014 2014 2015
1H
2H
1H
Local net ARPU(2)
2014 2014 2015
1H
2H
2014 1H
2014 2H
2015 1H
1H
Local gross ARPU(1)
Local postpaid gross ARPU is defined as monthly average spending per postpaid user including a customer’s contribution to handset, or other devices, in a bundled service and hardware plan
excluding roaming revenue in 6-month period.
Local postpaid net ARPU is defined as local postpaid gross ARPU excluding customer’s contribution to handset, or other devices, in a bundled service and hardware plan as well as revenue
and expenses related to handset under the non-subsidised handset business model in a 6-month period. Prior period figures have been adjusted to conform to current period presentation.
Local postpaid net AMPU represents average net margin per user. Local postpaid net AMPU equals local postpaid net ARPU less direct variable costs (including interconnection charges) in a
6-month period. Prior period figures have been adjusted to conform to current period presentation.
7
Quality customer base
Data user penetration*
Total customers*
2,200
3,588
3,197
‘000
2,869
1,100
1,752 1,836
1,537 1,660
1,327 1,542
0
% to 3G+4G LTE postpaid
customers
100%
75%
59%
65%
50%
0%
2014 1H
2014 2H
2015 1H
2014 1H
2014 2H
2015 1H
prepaid
postpaid
* Include HK and Macau
8
Fixed-line
Fixed-line business
2014 1H
2015 1H
Total revenue:
HK2,013 million
Total revenue:
HK1,984 million
Others(1)
3%
Others(1)
3%
Residential
15%
Corporate
and
Business
28%
Residential
15%
International
and
Local Carrier
54%
Corporate
and
Business
29%
1
International
and
Local Carrier
53%
“Others” include revenue from interconnection charges and others
10
Corporate and Business Market
•
•
4% increase from growing
demand of data connectivity
Corporate and Business revenue
600
Solution based offerings
including data centre services
Serving mainly financial
institutions, government
authorities, corporate, retail,
SME & education sectors
581
560
126
128
HK$ millions
•
29%
300
455
432
Contribution to fixed-line revenue
0
2014 1H
2015 1H
Voice revenue
Data revenue
11
International and Local Carrier Market
• International service leveraging
submarine cable facilities
• Local backhaul services to
mobile operators
International and local carrier revenue
1,200
HK$ millions
• 2% drop mainly from voice
1,077
508
1,052
451
53%
600
569
601
Contribution to fixed-line revenue
0
2014 1H
2015 1H
Voice revenue
Data revenue
12
Residential Market
•
6% decrease due to competitive
pricing in certain segments
•
Continue to capture fast-speed
market share
•
1GB FTTH in offer plus cloud based
VAS
•
15%
Contribution to fixed-line revenue
Plan to increase homepass to >2m
by 2017 (>80% coverage)
13
Financial
Overview
Financial Highlights - Consolidated
2015 1H
HK$m
Turnover
2014 1H
HK$m
2015 1H
vs
2014 1H
11,020
6,227
77%
1,456
38%
1,181
29%
23%
9%
EBIT
789
527
50%
Profit for the period
600
362
66%
Profit attributable to shareholders
508
323
57%
10.54
6.70
57%
5.20
4.25
22%
EBITDA
Consolidated EBITDA margin (%) (EBITDA / service revenue)
Earnings per share (HK cents)
Interim Dividend per share (HK cents)
15
Turnover
Consolidated turnover
11,020
416
HK$ millions
12,000
Mobile hardware bundled sales revenue
6,000
6,227
381
1,709
6,734
4,137
3,870
Mobile hardware standalone handset sales revenue
Consolidated Service revenue
Service revenue (before elimination)
0
2014 1H
Mobile business turnover
2015 1H
Fixed-line business turnover
2,500
9,242
416
5,500
0
4,438
381
1,709
6,734
2,348
2,092
2014 1H
2015 1H
HK$ millions
HK$ millions
11,000
2,013
1,984
1,250
0
2014 1H
2015 1H
16
Key cost items
Key cost items
Cost of inventories sold
4,000
8,000
3,640
HK$ millions
HK$ millions
6,975
+239%
4,000
2,060
0
65.0%
2014 1H
2015 1H
654
18%
347
361
9%
10%
2,278
63%
2,000
0
2014 1H
-11%
3,256
667
187
386
20%
2,016
62%
6%
12%
2015 1H
Depreciation and amortisation
Staff costs
Customer acquisition costs
Other operating expenses
17
EBITDA/EBIT Margin
Consolidated EBIT
Consolidated EBITDA
HK$ millions
29%
33%
20%
1,181
1,456
10%
0
0%
2014 1H
EBITDA
20%
16%
30%
28%
1,000
20%
1,200
40%
2015 1H
EBITDA margin
Service EBITDA margin
HK$ millions
38%
2,000
13%
12%
600
10%
789
527
0
2014 1H
EBIT
2015 1H
0%
EBIT margin
Service EBIT margin
18
Profitability
Earnings per share
Net profit*
15.00
800
400
323
+57%
HK cents
HK$ millions
10.54
508
10.00
+57%
6.70
5.00
0
0.00
2014 1H
2015 1H
2014 1H
2015 1H
* Net profit after tax and non-controlling interests
19
Capex investment
Consolidated Capex
14%
420
353
10%
9%
250
7%
0
0%
2014 1H
2015 1H
Mobile Capex
Fixed-line Capex
0
HK$ millions
9%
2014 1H
8%
8%
2015 1H
0%
20%
200
193
10%
10%
150
0
10%
2014 1H
2015 1H
% to service
revenue
160
% to service
revenue
220
150
300
16%
HK$ millions
300
% to service
revenue
HK$ millions
500
0%
capex over service revenue
20
Financial position
Net debt/ LTM EBITDA
Net debt
5,000
40%
HK$ millions
Net debt to net total
capital %
3,794
3,593
2,810
2,500
25%
23%
As at
30 Jun 2014
As at
31 Dec 2014
As at
30 Jun 2015
1.6x
1.3x
1.0x
20%
1.0
0%
0.0
19%
0
2.0
As at
30 Jun 2014
As at
31 Dec 2014
As at
30 Jun 2015
Net debt to net total capital ratio
21
Dividend and Liquidity
Dividend per share
EBITDA less CAPEX
10.00
8.70
1,103
HK cents
HK$ millions
1,500
1,000
761
720
500
5.20
5.00
4.25
0.00
0
2014 1H
2014 2H
2015 1H
2014 1H
2014 2H
2015 1H
22
Q&A
Thank You