Executing on our J-Curve Growth FY18 Interim Results Presentation for six months ended 28 February 2018 Presentation by Co-Owners: William Yeung, Co-Owner & Chief Executive Officer NiQ Lai, Co-Owner & Chief Operating Officer 19 April 2018 1
Disclaimer These materials have been prepared by HKBN Ltd. (the “Company”) solely for use at this presentation and have not been independently verified. No representations or warranties, express or implied, are made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions presented or contained in these materials. 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 or trading positions or prospects of the Company. None of the Company or any of their respective directors, officers, employees, agents, affiliates, advisers or representatives accepts any liability whatsoever in negligence or otherwise for any loss howsoever arising from any information or opinions presented or contained in these materials or otherwise arising in connection with these materials. The information presented or contained in these materials is subject to change without notice and its accuracy is not guaranteed. Statements that are not historical facts, including statements about the beliefs and expectations of the Company, are forward-looking statements. These statements are based on current plans, estimates and projections, and undue reliance should not be placed on them. Forward-looking statements speak only as of the date they are made, and the Company has no obligation to update any of them publicly in light of new information or future events. Forward-looking statements involve inherent risks, uncertainties and assumptions. The Company cautions that if these risks or uncertainties ever materialize or the assumptions prove incorrect, or if a number of important factors occur or do not occur, actual results of the Company may differ materially from those expressed or implied in any forward-looking statement. This document does not constitute, and should not be construed as constituting or forming part of, any advertisement of, or any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for any shares of the Company or of any of its controlled entities or affiliates, in any jurisdiction. Neither this document, nor any part of it, shall form the basis of or may be relied upon in connection with, any contract, investment decision or commitment whatsoever, nor does it constitute a recommendation regarding the shares or securities of the Company. 2
Agenda • Business Review • William Yeung, Co-Owner & CEO • Operations & Financial Review • NiQ Lai, Co-Owner & COO • Q&A 3
Business Review William Yeung Co-Owner & CEO 4
Executive Summary • Harvesting! – Revenue, EBITDA, and DPS year-on-year growth of 22%, 23% and 18% – DPS at 26 cents in 1H FY18 • Residential Business: – Quad-play strategy in full swing with 17% YoY growth in residential revenue – Residential ARPU grew from $166 in 1H FY17 to $173 in 1H FY18 • Enterprise Solutions Business: – Solid growth in 1H FY18 with 19% YoY revenue growth to HK$679 mn 5
On Track for “Invest and Harvest” Roadmap* Co-Ownership III KPI period for cumulative HK$2.1 to DPS HK$0.40 DPS HK$0.45 HK$2.4 AFF^ FY16 Actual FY17 Actual FY18 FY19 FY20 Broadband + Fixed Invest Harvest Harvest Harvest Harvest Voice • Content Overlay Invest Invest Harvest Harvest Harvest • Mobile Overlay N/A Invest Invest Harvest Harvest Integrate Integrate Enterprise Solutions Harvest Harvest Harvest NWT NWT * First shown in HKBN FY17 interim announcement ^ AFF refer to FY18-20 total Cumulative Adjusted Available Cash per Share for Distribution 6
Industry Reference Points Financials in HK$mn, unless otherwise stated HKBN Interim Results HKT Annual Results 1H FY18 FY17 YoY FY18 1H FY17 Reported Figures Reported Figures YoY % % 1,868 +22% Total Revenue 33,258 -2% Total Revenue 1,781 +18% Service Revenue # 31,499 +1% Service Revenue ^ 594 +23% Total EBITDA 12,997 +2% Total EBITDA 26 Distribution per Share 64.87 Dividend Per Share (6 months +18% +5% Stapled Unit (HK cents) (full year) (HK cents) interim) “HKT” refers to HKT Trust and HKT Limited, stock code 6823 listed on the Hong Kong Main Board stock exchange * Sources from HKT FY17 annual report ^ Include service revenue only (HKT: total TSS revenue + mobile service s revenue ) # Include service revenue only (HKBN: total revenue minus product revenue) 7
Strong Growth Momentum in 1H FY18 Financials in HK$mn, unless otherwise stated EBITDA Revenue Adjusted Free Cash Flow (AFCF) +16% +3% +3% +19% 3,232 1,006 1,041 979 2,784 +22% +23% +12% +3% 2,341 453 +24% 1,868 594 406 392 1,535 481 237 191 FY15 FY16 FY17 1H FY17 1H FY18 FY15 FY16 FY17 1H FY17 1H FY18 FY15 FY16 FY17 1H FY17 1H FY18 Revenue AFCF EBITDA All financial figures are rounded to nearest HK$ million 8
Harvesting Residential Business: Growth in Service Revenue and ARPU Service Revenue grew by 17% YoY to HK$1,101mn Residential Broadband Subscriptions Residential ARPU 1 878 -1% +2% 872 871 +0% $ 173 +4% $ 167 $ 166 857 +1% 38% 37% 37% 37% Aug-16 Feb-17 Aug-17 Feb-18 1H FY17 2H FY17 1H FY18 Residential Broadband Subscriptions ('000) Residential ARPU Residential Broadband Market Share Note: 1) Residential ARPU refers to historical full base residential ARPU for the period. 2) Acquisition and renewal contract ARPU refers to ARPU of the new acquisition and renewal subscriptions for the specific month. Such ARPU was $192 in February 2017, $194 in August 2017 and $183 in February 2018. 3) Market share is calculated by dividing the number of residential broadband subscriptions by the total number of residential broadband subscriptions recorded by the Office of the Communications Authority (OFCA) at the same point in time. The latest available OFCA statistics in broadband services for residential business is as of 31 December 2017. 9 4) In FY17 annual report, residential ARPU in FY17 is $168
Attack Roaming with a Disruptive Offer HK$198/ mth 5GB Local Data 5GB Global Data (~ US$25/mth) Optional Premium Roaming Feature for China Usage at HK$30/500MB only https://youtu.be/kS79OTrjEWc 10
Strong OTT Overlay with myTV SUPER Partnership Per TVB, myTV SUPER achieved breakeven in Dec 2017 and expects positive earning contribution in FY18 * myTV SUPER OTT Feb-17 Aug-17 Feb-18 (on accumulative basis) No. of boxes ordered 358k 526k 730k myTV SUPER Apps Launched 82k 165k (bundle with HKBN mobile plan) in FY17 1H * Source from Television Broadcasts Limited FY17 annual results announcement on 21 March 2018 11
Sustaining Growth Momentum in Mobile Business • Residential mobile registered subscriptions increased from 218k in FY17 to 313k in 1H FY18 Residential Mobile FY17 FY18 1H Registered 218k 313k Activated Subscriptions 147k 222k • Mobile ARPU increased in 1H FY18 after introduction of high- tier tariff plans FY17 FY18 1H Mobile (without broadband services) $119 $142 Mobile (with broadband services) $268 $311 12
Enterprise Solutions Business: Sustaining Strong Growth Momentum • Focus on winning more BIG projects while maintaining the SME market expansion momentum Enterprise Customers Enterprise ARPU 56 1,526 54 +4% +3% +6% 51 +1% 1,480 1,467 Feb-17 Aug-17 Feb-18 1H FY17 2H FY17 1H FY18 Enterprise Customers ('000) Enterprise ARPU 13 Note: 1) Enterprise ARPU refers to historical full base enterprise ARPU for the period. 2) In FY17 annual report, Enterprise ARPU in FY17 is $1,463
Enterprise Solutions Business: Sustaining Strong Growth Momentum Financials in HK$mn, unless otherwise stated • Strong growth after full integration of NWT in 1H FY17 Service Revenue grew by 19% YoY to HK$679mn Enterprise Solutions Service Revenue 679 +6% 639 +12% 569 NWT acquisition completed Apr-16 1H FY17 2H FY17 1H FY18 Revenue 14
Enterprise Solutions Recent Showcases HK$42mn Contract Sum over Multiple Years A rapidly growing financial company with soaring ambition A leading medical corporation offering health care solutions in more than 60 countries A global travel agency providing online ticketing service A multinational internet company running one of the largest search engine in the world 15
Intensified ATTACK on WTT • Target to roll out in 19 Wharf buildings, 13 of which already launched service • Leverage on our mobile and roaming offers • Acquired New World Telecom at ~20 cents on gross book value Print Advertisement Coffee Jacket Lift Door Sticker Outdoor Billboard Moving Billboard 16
Operations & Financial Review NiQ Lai Co-Owner & COO 17
Co-Ownership Culture Co-Ownership I Co-Ownership II Co-Ownership III • • 2018 J-Curve Harvest 2015 Initial Public Offering • 2012 Management • • 3 years aspiration goal 2016 HKBN + ex-NWT Buyout (FY18-FY20) Integration • 87 managerial grade • • Open to approximately Over 310 Point 3x up Co- above Co-Owners 660 supervisors & above Owners in HK & GZ 18
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