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

i - i -CABLE i -CABLE CABLE Communications Limited Limited Communications 2010 Interim Results 10 August 2010

2010 FIFA World Cup • World Cup a major draw card to rebuild business momentum • World Cup has jump-started business growth to build up to the opening of Barclays Premier League & UEFA Champions League, the most popular football leagues in the world today • The best HD picture quality in town also thrilled our subscribers • Selected games & highlights shown i-CABLE Communications Limited on Digital Free TV 2

2010 FIFA World Cup Netherland vs Brazil Argentina vs Germany Date 02 July 10 (Fri) 03 Jul 10 (Sat) Kickoff Time 22:00 22:00 1.6M 1.5M Number of Audience People aged 15-59 People aged 15-59 Target Group 76 minutes 78 minutes Average Viewing Duration Conducted by Oracle Added Value i-CABLE Communications Limited July 2010 3

Exclusive Prized Content • Barclays Premier League � Exclusive live coverage of 380 matches � HD – 5 channels & over 300 live matches � SD – 6 regular channels & all 380 live matches � HD BPL Pack: $80 p.m. X 24-month contract BPL Pack: $50 p.m. X 24-month contract � Triple audio available in key matches i-CABLE Communications Limited � Broadcast English ancillary programs including weekly highlights, magazine programs and half-hour preview programs � New media online clips on www.i-CABLE.com 4

Exclusive Prized Content • UEFA Champions League (HD) • UEFA Europa League (HD) • German Bundesliga (HD) • Asian Games (HD) i-CABLE Communications Limited 5

Original Programming • Most watched pay TV in all major program genres* • Expand HDTV offerings planned • Breaking free of the de facto monopoly of artistes & popular singers * CSM Media Research 28 Dec 2009 – 4 Jul 2010 i-CABLE Communications Limited 6 6

Viewership Among all individuals aged 4+ Among i-CABLE 4+ subs 10% 10% 9% 8% i-CABLE 7% Other Terrestrial & Satellite TV 6% i-CABLE 6% 14% 5% 38% 43% 4% NOW TV 6% 3% 2% 2% TVB Jade HD+SD 1% TVBPV i-CABLE Communications Limited Other Pay TV 1% HKBN 0% Jan - Jun 2010 • Over 80% viewership from self-produced channels Source: CSM Media Research 1 Jan 2010 – 30 Jun 2010 7

Pay TV Net Additions 86,000 32,000 39,000 1,000,000 1,086,000 770,000 738,000 600,000 561,000 i-CABLE Communications Limited 1H02 1H06 1H10 • The largest half yearly net gain ever • Over 70% of new subscribers take the BPL Pack • Net gain in F&B and commercial accounts ~2X 2006’s • Churn rate less than 30% of previous World Cups 8

Subscribers December 2009 June 2010 152,000 147,000 249,000 234,000 1,000,000 1,086,000 i-CABLE Communications Limited Pay TV Broadband Voice • Pay TV subscriber base expanded by 9% • Broadband subscribers shrank as cross poaching continues in a saturating market 9

Pay TV 2009 2010 HK$M 1H 2H 1H vs 1H09 Turnover 595 633 725 22% Opex before dep’n (508) (602) (748) 47% EBITDA 87 30 (23) N/A Depreciation (86) (76) (79) - 8% Operating Profit/(Loss) 1 (46) (102) N/A EBITDA Margin 15% 5% -3% Operating Margin 0% -7% -14% i-CABLE Communications Limited • Recognition of recurrent revenue from long term subscriber commitments lags seriously the substantial non-recurrent programming costs booked in the period, resulting in a large operating loss 10

Internet & Multimedia 2009 2010 HK$M 1H 2H 1H vs 1H09 Turnover 266 257 231 - 13% Opex before dep’n (136) (137) (133) - 3% EBITDA 129 120 98 - 24% Depreciation (49) (38) (44) - 10% Operating Profit 81 82 55 - 32% EBITDA Margin 49% 47% 43% Operating Margin 30% 32% 24% i-CABLE Communications Limited • Competition heightened in the period • Taking proactive steps to improve bandwidth, service & quality • Technology upgrade substantially completed for Hong Kong Island to enhance competitiveness 11

Consolidated Results 2009 2010 HK$M 1H 2H 1H vs 1H09 Turnover 862 893 962 12% Opex before dep’n (722) (819) (944) 31% EBITDA 139 74 18 - 87% Depreciation (139) (119) (126) - 9% Operating Profit/(Loss) 1 (45) (108) N/A Share of profit less losses of associates 1 (1) (39) N/A Net interest income & others (2) (1) 1 N/A Loss before taxation (0) (47) (146) N/A Taxation 6 2 1 - 86% i-CABLE Communications Limited Net Profit/(Loss) 5 (45) (145) N/A • Top tier programs boosted subscription & airtime revenue • Mismatch of revenue & opex recognition distorted 1H10 P&L • Provision for a non-recurring loss on film investments • HK$539M net cash 12

Operating Expenses 2009 2010 HK$M 1H 2H 1H vs 1H09 Programming 379 440 546 44% Network 121 124 119 - 2% Selling, CS, G&A 202 223 250 24% Cost of Sales 21 32 29 41% Sub-total 722 819 944 31% Depreciation 139 119 126 - 9% Total 861 938 1,070 24% i-CABLE Communications Limited • Higher programming, marketing & acquisition costs primarily due to special events including World Cup & Winter Olympics 13

New Opportunities • DOCSIS 3.0 Broadband Network � Enhance competitive position � Substantially completed Hong Kong Island � Available to 18% homes today � Target to complete 50% by December 2010 • Free TV Licence Application � Develop a new revenue stream, leveraging on existing content production capability & infrastructure i-CABLE Communications Limited � Has begun pre-mobilization to enable service to reach 95% households within 6 months from licence award 14 14

New Opportunities Fantastic TV HKTVE (PCCW) CTI $1,052M in the initial 6 years $1,007M in the initial 6 years Programming: $394M Total Investment Programming: $968M $600M in the first 3 years Network: $150M Network: $39M Other Opex: $478M Service Roll-out To reach 95% households Takes 48 months to reach Takes 45 months to reach from Licence within 6 months 90% households 66% households Award 12 Channels 1 Cantonese Channel (increase to 20 channels within Service 1 Cantonese Channel 1 English Channel 3 years & 30 within 6 years of launch) Daily Broadcast 24 hours 24 hours 12-24 hours Hours i-CABLE Communications Limited Compliance with No (disqualified persons and Statutory Yes Yes unqualified voting controllers) Requirements Compliance with Positive Yes No No Programming Over 70% locally produced 1-3 hours locally produced programs programs per day Prime-Time Not mentioned Programs Substantially all are first-run 1.5 hours first-run programs programs per day 15 15

Outlook • As economy recovery began to take hold during 1H10, our investments have started to pay off as attractive content drove strong subscriber & revenue growth • Continue to persevere our strategy of investing in content & infrastructure for future growth & success • Cost pressure will continue in the face of competition. Will continue to drive subscriber & revenue growth to meet the cost pressure i-CABLE Communications Limited 16 16

Q&A 17 17 i-CABLE Communications Limited

i-CABLE Communications Limited HKSE Stock Code: 1097.HK U.S. Over-The-Counter Symbol: ICABY 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.