william yeung - hk broadband network - bbwf 2011 keynote day 3
TRANSCRIPT
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FTTH deployment in Hong Kong: Successful story of a forerunner
Mr. William Yeung, CEO
Hong Kong Broadband Network Limited
29 Sept 2011
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We offer 1Gbps for EUR18/month
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Agenda
1. Successful Model
2. Critical Drivers
3. Sustainable Business
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Successful Business Model1. Outperform Competitors on Financial Performance
1H FY2011 Results HKBN PCCW i-Cable HTHK
(HK$mn)
Revenue 826 12,186 1,051 6,018
EBITDA 303 3,775 68 1,243
Net Profit 168 824 (55) 494
Total Assets 2,284 36,162 2,232 19,521
Equity 1,760 (3,216) 1,693 10,076
EBITDA Margin 36.7% 31.0% 6.5% 20.7%
Net Margin 20.3% 6.8% -5.2% 8.2%
Return on Total Assets 14.7% 4.6% -4.9% 5.1%
Return on Equity 19.0% -ve Equity -6.5% 9.8%
Source: Interim Reports by City Telecom (Parent Company of HKBN), PCCW, i-Cable and HTHK
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Successful Business Model2. Consistent Organic Growth
FY05 FY06 FY07 FY08 FY09 FY101H FY11
(Proforma)*
Change from
FY05 to 1H
FY11(x)
Broadband '000 229 220 247 316 391 526 551 2.4x
Voice '000 294 281 308 329 382 431 449 1.5x
IPTV '000 109 116 128 156 170 153 159 1.5x
Total subscriptions ('000) '000 632 617 683 801 943 1,110 1,159 1.8x
Turnover HK$ mn 1,137 1,160 1,141 1,303 1,478 1,575 1,652 1.5x
EBITDA HK$ mn 66 245 354 378 508 469 606 9.2x
Profit After Tax HK$ mn (206) (92) 29 125 213 217 335 2.6x
* Financials based on 2 times of 1H FY11
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Successful Business Model3. From the 4th Player to the 2nd Largest Player
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Source: PCCW, CTI, i-Cable and HTHK Interim and Annual Reports, JP Morgan’s HTHK report “Hutchison Telecom Hong Kong
Holdings Ltd” dated 12 Aug 2009, and Company information
Note:
1.HTHK no longer discloses broadband subscribers as of 31 Dec 2009, hence, all subsequent data is estimation only
2.Shadow area represents Company estimation only
0
300,000
600,000
900,000
1,200,000
1,500,000
1,800,000
2006 2008 2010 2012 2014 2016
HKBN
PCCW
HGC
i-Cable
Others
Broadband Subscribers (‘000)
?(Note 2)
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Only 34%
FTTH/B
penetration
High Growth for Fibre
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Drivers for Success
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Three “must-have” criteria for compelling “Return on investment” (ROI)
1. Recession resilient
2. Dense Population
3. Pro-competition landscape
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Drivers for Success1. Recession resilient
FY05 FY06 FY07 FY08 FY09 FY101H FY11
(Proforma)*
Change from
FY05 to 1H
FY11(x)
Broadband '000 229 220 247 316 391 526 551 2.4x
Voice '000 294 281 308 329 382 431 449 1.5x
IPTV '000 109 116 128 156 170 153 159 1.5x
Total subscriptions ('000) '000 632 617 683 801 943 1,110 1,159 1.8x
Turnover HK$ mn 1,137 1,160 1,141 1,303 1,478 1,575 1,652 1.5x
EBITDA HK$ mn 66 245 354 378 508 469 606 9.2x
Profit After Tax HK$ mn (206) (92) 29 125 213 217 335 2.6x
* Financials based on 2 times of 1H FY11
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Drivers for Success
Source: IMF 2010 data and Company Information/Estimates
Country
GDP/
Capita
(2010, US$)
Pop
(million)
Area
(mi2)
Density
(mi2)
CAPEX per
Home
passed
(US$)
HK 31,591 7 428 16,355 200
US 47,284 311 3,717,813 841,000 to
4,000Japan 42,820 128 145,868 877
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2. Dense Population
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Drivers for Success
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3. Pro-competition landscape
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Sustainable Business Model
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Japan’s Fibre vs Copper Trends
Source: Japan’s Ministry of Internal Affairs and Communications
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Sub
scri
be
rs m
illi
ion Copper (xDSL + CATV)
Fibre (FTTH)
1. World Trend…. We are not alone!
US Verizon’s Fibre vs Copper Trends
Source: Verizon FY09 / FY10 Annual Report
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1.0
2.0
3.0
4.0
5.0
6.0
7.0
FY06 FY07 FY08 FY09
Su
bsc
rib
ers
mil
lio
n
Copper (xDSL)
Fibre (FiOS FTTH)
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Sustainable Business Model
2. Talents as Unique and Ultimate Edge
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3Es
• Entrepreneurship
• Execution
• Engagement
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Sustainable Business Model
2. Talents as Unique and Ultimate Edge
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• Entrepreneurship
Management compensation tightly pegged with KPI
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Sustainable Business Model
2. Talents as Unique and Ultimate Edge
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• Execution
Pledge Ceremony for 3,000+ talents in Hong Kong and Guangzhou
– launch of customer acquisition campaign for 100Mbps at EUR9/mth
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Sustainable Business Model
2. Talents as Unique and Ultimate Edge
• Engagement
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“Japan Study Mission Trip” 2009 “Awesome Germany Trip” 2010
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Sustainable Business Model
2. Talents as Unique and Ultimate Edge
• Engagement
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“Get Everybody Moving (G.E.M.) Sparkling G.E.M. Evening” 2011
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Sustainable Business Model
2. Talents as Unique and Ultimate Edge
• Engagement
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“CxO of the Future” 2011 Management “Reading Day”
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Going Forward
– Continue to monetize our “Dumb” Pipe• Free TV business venture• Multimedia production center• And more …...
– “Partnership” with players in the ecosystem( contact me at [email protected] )
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2020
Thank You