i -CABLE CABLE Communications Limited Limited Communications - - PowerPoint PPT Presentation

2015 Interim Results

5 August 2015

i-CABLE i i-

• CABLE

CABLE

Communications Communications Limited Limited

• 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

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

Results Highlights

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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

• 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

Subscription Services

i-CABLE Communications Limited

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Television

• Our Pay TV licence will expire in May 2017 & we have submitted our

application for renewal. The Communications Authority has kicked

• ff a public consultation on 22 July, which will end on 21 August
• 2 public hearings on 28 July & 13 August respectively

Subscription Services

i-CABLE Communications Limited

Television

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2015 HK$M 1H 2H 1H vs 1H14 Turnover 648 618 570

• 12%

Opex before dep’n (577) (655) (597) 3% EBITDA 71 (37) (27) n/a Depreciation (68) (68) (68) 1% Operating Profit / (Loss) 3 (105) (96) n/a EBITDA Margin 11%

• 6%
• 5%

Operating Margin 1%

• 17%
• 17%

2014

i-CABLE Communications Limited 5 i-CABLE Communications Limited

• Margin hurt by competition with lower subscription & advertising

income

Programming

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News News

• 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 ITTF World Cup Table Tennis Fed Cup & Davis Cup UCI Track Cycling World Cup I & II

HD Sports HD Sports

Programming

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i-CABLE Communications Limited

Programming

Entertainment Entertainment

Programming

i-CABLE Communications Limited

50% 27% 15% 7% 0% 10% 20% 30% 40% 50% 60% HKC Now TV TVBNV bbTV

Viewership

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• 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

Source: Nielsen All Individuals aged 4+ All Day All Time

58% 27% 27% 15% CABLE TV Now TV* TVBNV^ bbTV

Viewing Share Among Pay TV Operators

* 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

50% 1% 13% 7%

1H13 1H14 1H15

TV Services Watched Yesterday

i-CABLE Communications Limited 54% 26% 18% 3%

Source: 2014 Nielsen Media Index (Jan – Dec 2014) Weighted by Population

50 100 150 200 250 300 350 400 450 500 550 600 650 700

CABLE TV Now TV TVBNV bbTV 640 628

Aged 12-64 (‘000)

164 48

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Customers

969,000 1,002,000 179,000 186,000 105,000 110,000

June 2015 December 2014

Television Broadband Telephony

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

Subscription Services

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Internet & Multimedia

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2015 HK$M 1H 2H 1H vs 1H14 Turnover 180 184 174

• 4%

Opex before dep’n (107) (102) (103)

• 4%

EBITDA 73 83 71

• 4%

Depreciation (45) (44) (43)

• 4%

Operating Profit 29 39 28

• 3%

EBITDA Margin 41% 45% 41% Operating Margin 16% 21% 16% 2014

• Broadband competition was severe, resulted in lower revenue &
• perating margin

Consolidated Results

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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% Capex 81 107 79

• 3%

2014

• Intense competition weakened our operating results
• New product initiatives & investments are necessary to

strengthen our customer base & boost revenue across segments

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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

• nwards

• 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

Sundream Motion Pictures

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Operating Expenses

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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% 2014

• Lower programming cost compared to 2nd half 2014 due to the

absence of special programme, however, programming rights fee continued to escalate

• In April, the Government decided not to renew the free TV licence
• f 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

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Outlook

i-CABLE Communications Limited

i-CABLE Communications Limited HKSE Stock Code: 1097.HK

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