i - i -CABLE i -CABLE CABLE Communications Limited Limited Communications 2015 Interim Results 5 August 2015
Results Highlights • An abundant supply of free channels, pay channels & streaming content continued to expand the direct & indirect competition which further weakened the demand for our subscription content & thereby the Group’s Pay TV operating results • Need to continue to enrich our programmes to bring distinctive & premium content to our customers for the best viewing pleasure to attract & retain subscribers • Broadband competition was also severe, as rival operators gained i-CABLE Communications Limited market share from us with faster connectivity • New product initiatives & investments to strengthen our customer base & boost revenue across segments • Free TV licensing process underway 2
Subscription Services Television • We have seen early signs of revenue stabilization in Pay TV as a result of our efforts to drive up price point. Revenue, however, continued to shrink along with the contraction of customer base at a time when sales remained weak • Our teams are putting in place more effective customer management practices to retain loyal customers & enhance our service image i-CABLE Communications Limited • A new conditional access system for Pay TV services will be launched later this year. The new HD set top box will offer interactive & VOD services to enrich our customer experience. Our marketing & sales teams are putting the finishing touches on the service, which will tie in with the launch of HD News Channel 209 3
Subscription Services Television • Our Pay TV licence will expire in May 2017 & we have submitted our application for renewal. The Communications Authority has kicked off a public consultation on 22 July, which will end on 21 August • 2 public hearings on 28 July & 13 August respectively i-CABLE Communications Limited 4
Television 2014 2015 HK$M 1H 2H 1H vs 1H14 Turnover 648 618 570 - 12% Opex before dep’n (577) (655) (597) 3% n/a EBITDA 71 (37) (27) Depreciation (68) (68) (68) 1% Operating Profit / (Loss) 3 (105) (96) n/a EBITDA Margin 11% -6% -5% Operating Margin 1% -17% -17% i-CABLE Communications Limited i-CABLE Communications Limited • Margin hurt by competition with lower subscription & advertising income 5 5
Programming News News 6 i-CABLE Communications Limited
Programming HD Sports HD Sports • Major International sports events covering football, basketball, volleyball, badminton, tennis, table tennis & cycling � UEFA Champions League � European Qualifiers � J League � International Champions Cup � BWF World Badminton Championships � FIVB World Cup Volleyball � FIBA Americas Championships i-CABLE Communications Limited � ITTF World Cup Table Tennis � Fed Cup & Davis Cup � UCI Track Cycling World Cup I & II 7
Programming Entertainment Entertainment i-CABLE Communications Limited
Programming i-CABLE Communications Limited
Viewership Viewing Share Among Pay TV Operators TV Services Watched Yesterday Aged 12-64 (‘000) 58% 700 60% 54% 640 650 628 50% 50% 600 50% 550 500 1H13 1H14 1H15 40% 450 400 27% 27% 27% 30% 350 26% 300 250 15% 18% 20% 15% 164 200 13% 150 7% 7% 10% 100 3% 48 50 1% 0% 0 i-CABLE Communications Limited CABLE TV Now TV* TVBNV^ bbTV HKC Now TV TVBNV bbTV CABLE TV Now TV TVBNV bbTV Source: Nielsen Source: 2014 Nielsen Media Index (Jan – Dec 2014) All Individuals aged 4+ All Day All Time Weighted by Population * Excluded some individual TVBNV channels via Now TV platform on the top 50 channels list ^ Included some individual TVBNV channels via Now TV platform on the top 50 channels list • We remained as the most watched Pay TV service in Hong Kong • To attract & retain subscribers, we need to continue to enrich our programmes to bring distinctive & premium content to our customers for the best viewing pleasure 10
Customers December 2014 June 2015 105,000 110,000 Telephony 186,000 179,000 Broadband Television 1,002,000 969,000 i-CABLE Communications Limited 11
Subscription Services Internet & Multimedia • Broadband reported continuous growth in our mid-range price plans. However, the contraction of customer base had resulted in lower revenue & operating margin during the reporting period • Network enhancement to higher-speed broadband services is underway & expected to cover many more homes by next year. The faster & more reliable broadband service should facilitate our customer retention & acquisition, as well as upselling opportunities i-CABLE Communications Limited 12
Internet & Multimedia 2014 2015 HK$M 1H 2H 1H vs 1H14 Turnover 180 184 174 - 4% Opex before dep’n (107) (102) (103) - 4% - 4% EBITDA 73 83 71 Depreciation (45) (44) (43) - 4% Operating Profit 29 39 28 - 3% EBITDA Margin 41% 45% 41% Operating Margin 16% 21% 16% i-CABLE Communications Limited • Broadband competition was severe, resulted in lower revenue & operating margin 13
Consolidated Results 2014 2015 HK$M 1H 2H 1H vs 1H14 Turnover 843 823 760 - 10% Opex before dep’n (747) (831) (774) 4% EBITDA 95 (7) (15) n/a Depreciation (113) (113) (112) - 1% Operating Profit / (Loss) (18) (121) (127) 600% Finance Costs & Others (0) (0) (2) n/a Profit / (Loss) before taxation (18) (121) (129) 606% Taxation (5) 5 8 n/a Net Profit / (Loss) (23) (116) (121) 422% i-CABLE Communications Limited Capex 81 107 79 - 3% • Intense competition weakened our operating results • New product initiatives & investments are necessary to strengthen our customer base & boost revenue across segments 14
HKCNE • HKCNE has successfully won the multi-year contract for the advertising sales agency services for Newsline Express & it will continue to be the exclusive sales distributor & content provider of MTRC's "Newsline Express" from 2016 onwards i-CABLE Communications Limited 15
Sundream Motion Pictures • Sundream Motion Pictures continued with its proven track record of identifying quality productions & bringing them to the Hong Kong audience. During the reporting period, Sundream released a total of 10 films in Hong Kong & Macau • Sundream has put more focus on quality pictures with mainstream commercial appeal, like Selma & Midnight Diner on the acquisition side & on the production side, entertaining stories, like the coming Love Detective & My Wife is a Super Star i-CABLE Communications Limited 16
Operating Expenses 2014 2015 HK$M 1H 2H 1H vs 1H14 Programming 421 505 458 9% Network 111 110 102 - 8% Selling, CS, G&A 167 166 171 2% Cost of Sales 48 50 42 - 12% Sub-total 747 831 774 4% Depreciation 113 113 112 - 1% Total 861 944 887 3% i-CABLE Communications Limited • Lower programming cost compared to 2 nd half 2014 due to the absence of special programme, however, programming rights fee continued to escalate 17
Outlook • In April, the Government decided not to renew the free TV licence of ATV & its licence will expire on 1 April 2016. Off-air spectrum will be released concurrently & could be assigned to new licensees • We have been discussing licensing terms & conditions with the Communications Authority. Restructuring of the shareholding & control of Fantastic TV is underway i-CABLE Communications Limited 18
i-CABLE Communications Limited HKSE Stock Code: 1097.HK Disclaimer All information and data are provided for information purposes only. All opinions included herein constitute i-CABLE’s judgement as of the date hereof and are subject to change without notice. i-CABLE and its subsidiaries and affiliates hereby disclaim (i) all express, implied, and statutory warranties of any kind to user and/or any third party including warranties as to accuracy, timeliness, completeness, or fitness for any particular purpose; and (ii) any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the information and data contained herein.
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