William Yeung - HK Broadband Network - BBWF 2011 Keynote Day 3

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Transcript of William Yeung - HK Broadband Network - BBWF 2011 Keynote Day 3

  • FTTH deployment in Hong Kong: Successful story of a forerunner

    Mr. William Yeung, CEO

    Hong Kong Broadband Network Limited

    29 Sept 2011

  • We offer 1Gbps for EUR18/month

    222

  • Agenda

    1. Successful Model

    2. Critical Drivers

    3. Sustainable Business

    33

  • Successful Business Model1. Outperform Competitors on Financial Performance

    1H FY2011 Results HKBN PCCW i-Cable HTHK

    (HK$mn)

    Revenue 826 12,186 1,051 6,018

    EBITDA 303 3,775 68 1,243

    Net Profit 168 824 (55) 494

    Total Assets 2,284 36,162 2,232 19,521

    Equity 1,760 (3,216) 1,693 10,076

    EBITDA Margin 36.7% 31.0% 6.5% 20.7%

    Net Margin 20.3% 6.8% -5.2% 8.2%

    Return on Total Assets 14.7% 4.6% -4.9% 5.1%

    Return on Equity 19.0% -ve Equity -6.5% 9.8%Source: Interim Reports by City Telecom (Parent Company of HKBN), PCCW, i-Cable and HTHK

    44

  • Successful Business Model2. Consistent Organic Growth

    FY05 FY06 FY07 FY08 FY09 FY101H FY11

    (Proforma)*

    Change from

    FY05 to 1H

    FY11(x)

    Broadband '000 229 220 247 316 391 526 551 2.4x

    Voice '000 294 281 308 329 382 431 449 1.5x

    IPTV '000 109 116 128 156 170 153 159 1.5x

    Total subscriptions ('000) '000 632 617 683 801 943 1,110 1,159 1.8x

    Turnover HK$ mn 1,137 1,160 1,141 1,303 1,478 1,575 1,652 1.5x

    EBITDA HK$ mn 66 245 354 378 508 469 606 9.2x

    Profit After Tax HK$ mn (206) (92) 29 125 213 217 335 2.6x

    * Financials based on 2 times of 1H FY11

    55

  • Successful Business Model3. From the 4th Player to the 2nd Largest Player

    6

    Source: PCCW, CTI, i-Cable and HTHK Interim and Annual Reports, JP Morgans HTHK report Hutchison Telecom Hong KongHoldings Ltd dated 12 Aug 2009, and Company information

    Note:

    1.HTHK no longer discloses broadband subscribers as of 31 Dec 2009, hence, all subsequent data is estimation only

    2.Shadow area represents Company estimation only

    0

    300,000

    600,000

    900,000

    1,200,000

    1,500,000

    1,800,000

    2006 2008 2010 2012 2014 2016

    HKBN

    PCCW

    HGC

    i-Cable

    Others

    Broadband Subscribers (000)

    ?(Note 2)

    6

  • 7Only 34%

    FTTH/B

    penetration

    High Growth for Fibre

  • Drivers for Success

    8

    Three must-have criteria for compelling Return on investment (ROI)

    1. Recession resilient

    2. Dense Population

    3. Pro-competition landscape

    8

  • Drivers for Success1. Recession resilient

    FY05 FY06 FY07 FY08 FY09 FY101H FY11

    (Proforma)*

    Change from

    FY05 to 1H

    FY11(x)

    Broadband '000 229 220 247 316 391 526 551 2.4x

    Voice '000 294 281 308 329 382 431 449 1.5x

    IPTV '000 109 116 128 156 170 153 159 1.5x

    Total subscriptions ('000) '000 632 617 683 801 943 1,110 1,159 1.8x

    Turnover HK$ mn 1,137 1,160 1,141 1,303 1,478 1,575 1,652 1.5x

    EBITDA HK$ mn 66 245 354 378 508 469 606 9.2x

    Profit After Tax HK$ mn (206) (92) 29 125 213 217 335 2.6x

    * Financials based on 2 times of 1H FY11

    99

  • Drivers for Success

    Source: IMF 2010 data and Company Information/Estimates

    Country

    GDP/

    Capita

    (2010, US$)

    Pop

    (million)

    Area

    (mi2)

    Density

    (mi2)

    CAPEX per

    Home

    passed

    (US$)

    HK 31,591 7 428 16,355 200

    US 47,284 311 3,717,813 841,000 to

    4,000Japan 42,820 128 145,868 877

    10

    2. Dense Population

    10

  • Drivers for Success

    11

    3. Pro-competition landscape

    11

  • Sustainable Business Model

    12

    Japans Fibre vs Copper Trends

    Source: Japans Ministry of Internal Affairs and Communications

    -

    2.0

    4.0

    6.0

    8.0

    10.0

    12.0

    14.0

    16.0

    18.0

    20.0

    De

    c-0

    5

    Feb

    -06

    Ap

    r-0

    6

    Jun

    -06

    Au

    g-0

    6

    Oct

    -06

    De

    c-0

    6

    Feb

    -07

    Ap

    r-0

    7

    Jun

    -07

    Au

    g-0

    7

    Oct

    -07

    De

    c-0

    7

    Feb

    -08

    Ap

    r-0

    8

    Jun

    -08

    Au

    g-0

    8

    Oct

    -08

    De

    c-0

    8

    Feb

    -09

    Ap

    r-0

    9

    Jun

    -09

    Au

    g-0

    9

    Oct

    -09

    De

    c-0

    9

    Sub

    scri

    be

    rs m

    illi

    ion Copper (xDSL + CATV)

    Fibre (FTTH)

    1. World Trend. We are not alone!

    US Verizons Fibre vs Copper Trends

    Source: Verizon FY09 / FY10 Annual Report

    -

    1.0

    2.0

    3.0

    4.0

    5.0

    6.0

    7.0

    FY06 FY07 FY08 FY09

    Su

    bsc

    rib

    ers

    mil

    lio

    n

    Copper (xDSL)

    Fibre (FiOS FTTH)

    1212

  • Sustainable Business Model

    2. Talents as Unique and Ultimate Edge

    1313

    3Es

    Entrepreneurship

    Execution

    Engagement

  • Sustainable Business Model

    2. Talents as Unique and Ultimate Edge

    1414

    Entrepreneurship

    Management compensation tightly pegged with KPI

  • Sustainable Business Model

    2. Talents as Unique and Ultimate Edge

    1515

    Execution

    Pledge Ceremony for 3,000+ talents in Hong Kong and Guangzhou

    launch of customer acquisition campaign for 100Mbps at EUR9/mth

  • Sustainable Business Model

    2. Talents as Unique and Ultimate Edge

    Engagement

    1616

    Japan Study Mission Trip 2009 Awesome Germany Trip 2010

  • Sustainable Business Model

    2. Talents as Unique and Ultimate Edge

    Engagement

    1717

    Get Everybody Moving (G.E.M.) Sparkling G.E.M. Evening 2011

  • Sustainable Business Model

    2. Talents as Unique and Ultimate Edge

    Engagement

    1818

    CxO of the Future 2011 Management Reading Day

  • Going Forward

    Continue to monetize our Dumb Pipe Free TV business venture Multimedia production center And more ...

    Partnership with players in the ecosystem( contact me at william@hkbn.com.hk )

    1919

  • 2020

    Thank You