Hong Kong Broadband Network We Dream, We Achieve 4 th Annual FTTH Council AP Conference

Transcription

1 Hong Kong Broadband Network We Dream, We Achieve 4 th Annual FTTH Council AP Conference Melbourne, Australia NiQ Lai, CFO and Head of Staff Engagement 20 May : Awarded FTNS License 2009: Hong Kong s leading FTTX provider

2 Disclaimer This presentation contains forward-looking statements and information that involve risks, uncertainties and assumptions. Forward-looking statements are all statements that concern plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements that are other than statements of historical fact, including, but not limited to, those that are identified by the use of words such as "anticipates,'' "believes,'' "estimates,'' "expects,'' "intends,'' "plans,'' "predicts,'' "projects'' and similar expressions. Risks and uncertainties that could affect us include, without limitation: changes in technology; changes in the regulatory environment in which we operate, or changes in the rules and polices that government regulators apply to our businesses; increased competition in the local or international telecommunications, Internet access or pay-tv markets; the benefits we expect to receive from our continuing capital expenditure on our network; our ability to both maintain growth and successfully introduce new products and services; and the continued development and stability of the technological infrastructure we use to provide our telecommunications and Internet services. Should one or more of such risks and uncertainties materialize, or should any underlying assumption prove incorrect, actual outcomes may vary materially from those indicated in the applicable forward-looking statements. Any forward-looking statement or information contained in this presentation speaks only as of the date the statement was made. We are not required to update any such statement or information to either reflect events or circumstances that occur after the date the statement or information is made or to account for unanticipated events.

3 A Profitable and High Growth FTTX Business Model FTNS license awarded in 2000 HKBN is Hong Kong s leading FTTB/H provider today Harvesting positive free cash flow since FY07 Second largest and fastest growing broadband provider in Hong Kong Senior notes liability reduced from US$125 mn at issue in Jan 2005 to US$72 mn currently

4 New Entrant A Very Different Perspective on Life Gigabit to the Home After the Technology crash in 2000, CTEL has built a 1.5 mn homes pass FTTX network capable of up to 1Gbps symmetric to the home for US$130 per home pass Bandwidth is King Commoditization of bandwidth (FTTH) rather than extending economic life of copper (xdsl) Disruptive to the Market Make competition irrelevant, i.e. fiber versus xdsl = broadband versus dial-up.

5 We Dream

6 Vision Statement, Nov Extracts Core Purpose Core & Aspirational Values To experience the emotion of competition, winning, and crushing competitors To experience the joy of advancing and applying telecommunications technology for the benefit of the public To fulfill the desire of Self-Actualization and to become everything that one is capable of becoming" Core Value: Continuous strive for the best as a way of life We are People s Leader and Pioneer Direct and Action oriented Aspirational Value: Integrity We only work with smart, capable, competent and demanding people BHAG* Be the largest IP provider in Hong Kong by 2016 * Big, Hairy, Audacious Goal 6

7 Vision Statement, Nov Conclusion My children would say Dad, I love to have you as my Father 7

8 HKBN s bb1000 Demo 8

9 Best Value, Highest Productivity Company Technology Brand List Price * Premium Pricing HKBN (HK) PCCW (HK) Fibre based FTTx Copper based xdsl bb100 Netvigator US$$34 US$32 NTT (JPN) Fibre based FTTx FLET'S Hikari Premium US$49 Verizon (USA) Fibre based FTTx Fios US$144 Best Value Company HKBN * Approximate tariffs as of 6 th Nov 08. Prices vary with promotion Download / Upload Speed Cost per Mbps 100Mbps / 100Mbps US$$0.17 PCCW NTT Verizon 6Mbps / 0.6 Mbps 100Mbps / 100Mbps 50Mbps / 20 Mbps US$4.78 US$0.25 US$2.06 Highest Productivity Technology Fibre based FTTx Download / Upload Speed 100Mbps / 100Mbps Download 5G DVD 8.53 mins Upload 2G photos uncompress ed 3.41 mins Getting your work efficiently? Spending more time with your family? Copper based xdsl 6Mbps / 0.6 Mbps 2.37 hrs 8.89 hrs Based on 80% of advertised bandwidth * Only HKBN guarantees 80% of advertised speed

10 Fuelling Word-of-Month (WOM) bb100 Fibre Boots for HKBN gamers Legal Movie Downloads for All broadband users in Hong Kong but time capped at 20 minutes

11 Consumer Education Program Copper Deselling Largest network is still providing broadband on old phone lines Kung-Fu Fighting Ants to show ADSL asymmetric limitations Alexander Bell visits Broadband Hell to explain that the copper telephone line designed a 100 years ago 11

12 We Achieve

13 HK s Fastest Growing Broadband Provider For the 12 months to 28 Feb 2009, HKBN added 71,000 subscriptions, surpassing 65,000 1 added by the incumbent for 12 months to 31 Dec HKBN with 350,000 subscriptions, is now the clear 2 nd largest carrier, distancing from i-cable at 267,000 2 and HGC at 260, Sources: 1. PCCW FY08 Results Announcement 2. i-cable FY08 Annual Report 3. Hutchison Telecom Hong Kong Holdings Limited Listing by Introduction

14 Our Growing Triple-Play Subscriptions Consistent Growth Trend Subscriptions (' FY04 FY05 FY06 FY07 FY08 1H FY09 At Period End Broadband Voice Digital TV

15 Our Raising Broadband Blended ARPU* Total Broadband Blended Average (HK$/ From Free Trials for bb Rising ARPU + Subscription Growth is evidence of FTTX advantage to Premium Pricing for bb FY04 FY05 FY06 FY07 FY08 Note: * For acquisition and contract renewal

16 Harvesting the Free Cash Flow Positive Free Cash Flow since FY HK$ mn FY04 FY05 FY06 FY07 FY08 EBITDA Total Capex

17 Internet evolution drives symmetric bandwidth demand 2000: Passive Audience One-way text-centric search and download 2009: Active Participant Two-way multimedia social networking. YouTube.com upload limit raised to 1GB from 100MB and has introduced HD higher quality videos. Susan Boyle video generated >50 million views in less than 3 weeks.

18 YouTube: Standard Vs HD Demo

19 How does HKBN ride the Bandwidth Wave At ~ 50% share, HKBN is HK s leading FTTX provider. Source: Fibre to the home continues its global march, FTTH Council, 12 Feb 2009

20 The Symmetric Upload Advantage HKBN s local uplink is 3x downlink traffic Upload Download Source: HKBN s Local Weekly Bandwidth Utilization weekly statistics 5 12 May 2009

21 80% Bandwidth Guarantee For our bb25-bb100 services, we offer a Service Level Agreement guarantee at 80% of advertised symmetric bandwidth or two times your money back.

22 Engagement: Our Talents Mini-CEO management structure empowers mix of innovation and control. 70% of top 33 senior managers have or are in the process of completing post graduate qualifications. Within the Group, there are currently 14 candidates sitting emba courses 400 applicants received for our CXO of the Future Management Trainee Program. 18-month program requirements include passing CFA Level 1, run a 21 km half marathon and read 36 management books.

23 Conclusion: We Dream, We Achieve Fibre is proving to be the right choice Harvesting the benefits of our Fibre investments started in Continue to invest and develop our Talents and our service culture. Leverage our proven competitive advantage via expansion of network coverage. Big, Hairy, Audacious Goal (BHAG) To be the largest IP provider in Hong Kong by 2016

24 Thank You