i - i -CABLE i -CABLE CABLE Communications Limited Limited Communications 2012 Interim Results 7 August 2012
Results Highlights • 2012 is a period of consolidation fortifying hard-earned inroads amidst looming economic uncertainties and a challenging operating environment • Competitive pressure remained high across business segments affecting our overall performance • Across the main product lines, negative subscriber growth was reported & rising costs eroded flat turnover to result in larger losses i-CABLE Communications Limited 2
Subscription Services Television • Keen competition from both within and outside the Pay TV market remained a major factor behind the attritions. Other causes included customers’ changing viewing habits and ever-increasing range of entertainment choices. Staying ahead of competition has become more challenging than ever • Substantial increases in premium and general programming costs, rising costs of sales, costly investments in service and system i-CABLE Communications Limited upgrades and the consolidation of our TV customer growth affected the Group's performance and slackened the pace of our return to profitability 3
Television 2011 2012 HK$M 1H 2H 1H vs 1H11 Turnover 874 875 855 - 2% Opex before dep’n 822 858 836 2% EBITDA 51 17 20 - 62% Depreciation (74) (90) (79) 7% Operating Loss (22) (72) (59) 167% EBITDA Margin 6% 2% 2% Operating Margin -3% -8% -7% i-CABLE Communications Limited • Lower turnover mainly attributable to a decrease in higher yield subscriptions as well as network related project income • Higher operating costs primarily due to the higher cost of major soccer leagues in the new season 4
London 2012 Olympics • Official Broadcaster of the London 2012 Olympics • Full range of media rights covering pay TV, new media and free TV • Cross-platform coverage designed to bring the excitement of the Games covering 26 sports and spanning 17 days to Hong Kong citizens via home i-CABLE Communications Limited TV, computer screen and mobile device 5
London 2012 Olympics • Over 1,600 programming hours in multiple TV formats, of which over 900 hours were live broadcasts � Licensed to free-to-air to enrich viewers’ choice and address those who had access to analogue TV only • 9 Olympic channels (5SD + 4HD) � Olympic One (CH61 / hd201) i-CABLE Communications Limited � Olympic Two (CH62 / hd202) � Olympic Soccer Channel (CH63/ hd203) � Olympic Three (CH64) � Olympic 3D Channel (hd204) � CABLE No. 1 (CH01) 6
London 2012 Olympics Olympics in 3D Live Olympics in 3D Live • First time extensive live broadcasts of the Olympics in 3D TV • Over 10 hours of games programming everyday totaling more than 200 hours over 17 days with professional commentary in English � Opening & Closing Ceremony i-CABLE Communications Limited � Swimming � Artistic Gymnastics � Diving � Basketball � Synchronized Swimming � Rowing 7
Cross-Platform Coverage New Media New Media • Free public access, viewers can watch it at any time, from anywhere & through multiple devices � http://2012.i-cable.com � “joemud?” mobile app • Progress of other competitions, footage archives, interviews of athletes & i-CABLE Communications Limited coaches and news clips are also available on the website 8
Cross-Platform Coverage CABLE TV On Mobile CABLE TV On Mobile • Designated subscribers can watch programmes anytime, anywhere at no additional fee • Available in both iOS & Android • 6 streaming channels providing round- the-clock services � Live News i-CABLE Communications Limited � Finance Information � Entertainment News � Olympic One � Olympic Soccer � Olympic Three 9
Cross-Platform Opportunities Outdoor & Advertising Outdoor & Advertising • Hong Kong Cable News Express, the exclusive commercial airtime sales distributor & content provider of MTR’s Newsline Express recorded growth in advertising revenue • Extended to Kwun Tong Line, in addition to MTR East Rail, West Rail & Ma On Shan Lines i-CABLE Communications Limited 10
Exclusive Sports Programmes 11 i-CABLE Communications Limited
Flagship Programming 12 i-CABLE Communications Limited
Flagship Programming 13 i-CABLE Communications Limited
HD Entertainment Programming i-CABLE Communications Limited 14
New Acquired Channels • Jiangsu Satellite TV 江蘇衛視 • Thrill 驚慄電影台 • TJTV i-CABLE Communications Limited 天津衛視 • Hubei TV 湖北衛視 15
Viewership 70% 61% 60% 52% 50% 40% 1H10 35% 2H10 29% 30% 1H11 2H11 1H12 20% 10% i-CABLE Communications Limited 10% 6% 4% 3% 0% HKC Now TV TVBPV bbTV Source: CSM Media Research All Day All Time (Individuals aged 4+) • CABLE TV viewership widened its lead 16
Customers Dec 2011 Jun 2012 135,000 149,000 Television Broadband Telephony 218,000 205,000 1,106,000 1,094,000 i-CABLE Communications Limited i-CABLE Communications Limited 17 17
Subscription Services Internet • Competition in the Broadband & Telephony sectors was fierce during the period and is not expected to ease in a saturated market • Fixed line services are being threatened by the phenomenal growth in mobile services • We would continue with network upgrades and enhancements to ensure a full range of offers catering for the respective needs of i-CABLE Communications Limited different customers including fibre-to-the-home services for top-end users, attractively priced packages for customers wanting high- speed connections and affordable plans for those requiring more casual uses only 18
Internet & Multimedia 2011 2012 HK$M 1H 2H 1H vs 1H11 Turnover 167 172 169 1% Opex before dep’n (98) (116) (111) 13% EBITDA 70 57 58 - 16% Depreciation (39) (48) (46) 17% Operating Profit 30 9 12 - 59% EBITDA Margin 42% 33% 35% Operating Margin 18% 5% 7% i-CABLE Communications Limited • Competitors’ aggressive pricing and the fast-growing mobile broadband users lead to lower subscribers and margin • Higher operating costs mainly due to higher cost for Telephony business upon the acquisition of i-CABLE Telecom Limited 19
Sundream Motion Pictures • Released 13 titles in the first half of 2012, with 9 titles in the pipeline • First time UEFA Champions League Final 3D Live in cinemas � Joint initiative with leading local cinema circuits including Broadway Circuit, Orange Sky Golden Harvest Entertainment, Multiplex i-CABLE Communications Limited Cinema & UA Cinema Circuit 20
Consolidated Results 2011 2012 HK$M 1H 2H 1H vs 1H11 Turnover 1,051 1,059 1,038 - 1% Opex before dep’n (983) (1,048) (1,010) 3% EBITDA 68 11 28 - 58% Depreciation (117) (142) (129) 10% Operating Loss (49) (131) (100) 105% Net interest income & others (2) (1) 2 N/A Loss before taxation (51) (132) (99) 93% Taxation (4) 7 2 N/A Net Loss (55) (125) (97) 77% i-CABLE Communications Limited • Competitive pressure remained high across business segments • Negative subscriber growth eroded flat turnovers and resulted in losses 21
Operating Expenses 2011 2012 HK$M 1H 2H 1H vs 1H11 Programming 637 668 657 3% Network 113 113 114 2% Selling, CS, G&A 189 220 186 - 2% Cost of Sales 45 47 52 17% Sub-total 983 1,048 1,010 3% Depreciation 117 142 129 10% Total 1,100 1,190 1,138 3% i-CABLE Communications Limited • Higher operating expenses due to increases in programming costs, rising costs of sales, costly investments in service and system upgrades 22
Outlook • Following our strong Pay TV customer growth in recent years, achieving similar growth in the foreseeable future would be very unlikely in a highly saturated and competitive TV market • We expect airtime sales to improve during the second half of the year when the major English & European football leagues will be back in action and consumer spending will normally go up during the festive days running up to the end of the year • High programming cost is expected to put pressure on the Group’s profitability in the second half but we would continue to invest in premier programming across our flagship platforms, HD capabilities expansion, i-CABLE Communications Limited territory-wide broadband upgrades, customer service improvements and new media initiatives to drive customer and revenue growths and unleash hidden revenue potential across platforms • There is no development on Fantastic TV’s application for domestic free TV licence 23
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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