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2014 Annual Results For the year ended December 31, 2014

February 11, 2015 - Forward-Looking Statements

This presentation may contain “forward-looking statements” that are not historical in nature. These forward-looking statements, which include, without limitation, statements regarding PCCW's future results of operations, financial condition or business prospects, are based on the current beliefs, assumptions, expectations, estimates, and projections of the directors and management of PCCW about the business, the industry and the markets in which PCCW operates. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond PCCW's control and are difficult to predict. Actual results could differ materially from those expressed, implied or forecasted in these forward-looking statements for a variety of factors.

1 Overview

BG Srinivas

Group Managing Director

2 Healthy Financial Performance

Consolidated Performance (US$ million) 2013 2014 % change

Revenue 3,502 4,266 + 22%

EBITDA 1,030 1,326 + 29%

Profit Attributable to Equity Holders 242 424 + 76%

The Board has recommended a final dividend of 13.21 HK cents per share, subject to approval of shareholders

3 Trends in Motion – A Digital Global World

Telecom to move away from ‘basic communications pipe’

It will be an increasingly mobile-centric world

Consumers are looking to • Consume content – anytime and anywhere • Quality of experience

Enterprises will increasingly engage with their customers digitally

Businesses will have to deal with massive quantities of complex data

Market uncertainty, new business models, technology disruptions and cyber security will impact all businesses

4 Aspiration – A Global Leader in Digital Lifestyle World

“Globalize our IT Services, provide Digital Platforms to Enterprises, Expand the reach of our Media Content and Distribution on OTT, and Enhance our Local and Global Connectivity to deliver Digital Lifestyle and Experience.”

● World-class communications ● Value-added services and networks ● IP/assets for global markets ● Customer experience

● Expand content creation and ● Extend OTT service with focus co-production on Entertainment and Music ● Establish global distribution ● Global partnerships platform

● Differentiate with Industry- specific ● Roll out Digital Platform and solutions Services ● Targeted acquisitions to expand ● Enhance Digital Transformational business globally capabilities

5

Media – Strategic Direction

Leading Asian Digital Media and Entertainment Service Provider

Build on Hong Kong Leadership Position

Expand Content Creation and Co-production

Expand Global Partnerships

Build and Extend OTT Platform with focus on Entertainment and Music

6 Solutions – Strategic Direction

“We will Enable our Customers to Transform their Businesses into Digital Enterprises.”

Integrate Software & Services Integrate software and services to build Digital Platforms and Solutions

Build Up Intellectual Property & Software Assets Develop and acquire industry-specific and innovative technologies to deliver solutions for global customers

Expand into New Markets

Extend Industry Expertise in Broaden Technology & Sales New Geo focus - US and Mainland Partnerships Western Europe

7 Smart Workforce

Employer of Choice

Building a Global Developing Leaders Recognizing and Connecting with Brand and Nurturing Talent Rewarding Performance Employees

• Build awareness of • Enhance development • Strengthen recognition • Participative work PCCW as a global programs for top leaders and performance based culture that welcomes company pay culture and practices and respects employee • Build cross functional ideas and suggestions • Establish ties with top expertise, establish • Build global reward colleges and universities tailored development structure taking into • Deploy multiple to attract strong talent by and exposure for growth account local market communication participating in research practices channels initiatives, seminars, development programs • Increase visibility for high performing employees

8 Financial Review

Susanna Hui

Group Chief Financial Officer

9 Solid Growth on Core Business And the Return of CSL

(US$ million) Core Business* PCPD

Revenue EBITDA

4,226 1,347

3,416 1,042 3,094 985

Core 32% 32% EBITDA 31% Margin

152 86 40 13 (12) (21)

2012 2013 2014 2012 2013 2014

• Revenue grew across all core business segments • Growth in EBITDA was underpinned by the strong contribution from the HKT business and continued growth in the Solutions business * Core business includes HKT, Media and Solutions Businesses

10 Track Record of Sustainable Profitability

Profit Attributable to Equity Holders

(US$ million) Earnings Per Share : Core Business 424 45.14 HK cents PCPD (2013: 25.98 HK cents)

176

242 213 9 7

248 206 233

2012 2013 2014

11 Solid Performance Mobile and Broadband Leading Growth

• Adjusted Funds Flow up 16% yoy to US$430 million • PCCW to receive a total distribution of approx. US$271 million from HKT for FY14

(US$ million) HKT Revenue HKT EBITDA

3,695 Mobile TSS 1,313 Others 2,927 1,147 2,703 1,013 403 432 391 983 Broadband 113 96 828 862 Network Mobile 776 + 6% Local Data 944 Local Telephony 440 447 927 436 912 International TSS Others International 673 860 898 Others + 4% Eliminations 395 340 346 88 88 72 (56) (61) (77) (25) (27) (34) 2012 2013 2014 2012 2013 2014 HKT 2013 2014 YoY EBITDA 36% 35% 36% Pro-forma * Growth US$ million Margin Mobile Revenue 1,072 1,147 + 7% Mobile EBITDA 376 403 + 7% 12 * Pro-forma to include the proportionate share of CSL FY13 results Steady Pay TV Performance Investing in Digital Growth

(US$ million) Media Revenue Media EBITDA

414 65 387 63 58 360 42 2 40 2 37 Core Media Business 61 63 61 372 + 7% New Initiatives 323 347 + 7%

(3) 2012 2013 2014 2012 2013 2014 Core Media Business 19% 18% 17% • Revenue continue to rise by 7% underpinned EBITDA Margin by consecutive years of solid subscription and • Core Media business EBITDA and margin advertising revenue growth in our Core Media reflected full-year impact of BPL costs business • Investments for new initiatives including • Growth in new media revenue (e.g. MOOV) upgraded MOOV platform, expansion of now player and preparation for free TV business

13 Stable Base Recurring Revenue Continued Growth Momentum

(US$ million) Solutions Revenue Solutions EBITDA

432 80 380 67 318 207 56 33 155 24 119 16 Recurring Project Based 199 225 225 47 40 43

2012 2013 2014 2012 2013 2014 EBITDA 18% 18% 18% • Solid recurring revenue base Margin • Strong growth in project based revenue • EBITDA grew by 20% to US$80M driven by successful execution of projects • Margin maintained at 18% • Overall data center occupancy rate remained high at 85% 2010 2011 2012 2013 2014 Revenue + 14% + 8% + 12% + 20% + 14% 14 EBITDA + 42% + 35% + 14% + 20% + 20% Opex Growth Driven by Enlarged Mobile Business Unlocking Synergies in the Coming Periods

(US$ million) Core Operating Expenses Core Opex to Revenue Ratio 947 26 733 98 22% 21% 22% TSS 675 Mobile 29 28 96 351 With CSL Media 89 165 Solutions 149 Others

394 432 463 2012 2013 2014 15 11 9 2012 2013 2014

• Opex grew by 29% in 2014 and the opex to revenue ratio was 22% • Increase in opex primarily at HKT, largely due to enlarged Mobile business and one-off CSL integration expenses

15 Financial Performance

(US$ million) 2013 2014 Revenue 3,502 4,266 + 22% Cost of sales (1,681) (1,942) Operating expenses (791) (998) Depreciation & Amortization (586) (808) Gain on disposal of property, plant and equipment 1 – Net other gains 88 348 Net finance costs (132) (171) Associates and JVs 18 7 Profit before income tax 419 702 + 68% Income tax (27) (103) Effective tax rate 6% 15% Profit for the year 392 599 + 53% Non-controlling interests (150) (175) Profit attributable to equity holders of the Company 242 424 + 76%

EBITDA 1,030 1,326 + 29% Earnings per share (in HK cents) 25.98 45.14

16 Demand-Driven Core Capex

(US$ million)

TSS 410 Mobile Media 43 • HKT’s increase in capex 333 21 Solutions due to CSL integration 290 32 Others 14 26 123 • Increase in Solutions capex 15 40 46 mainly for data center HKT expansion 324 (78%) • Maintain 10% capex to 198 202 191 revenue ratio guidance

23 27 32 2012 2013 2014

Core Business Capex to Revenue Ratio: 9.4% 9.8% 9.7%

1717 Solid Financial Position

Gross Debt (1) (US$ million)

5,379

3,853 3,403

4,724 (HKT)(HKT) 3,093 3,157 (HKT) (HKT)

2012 2013 2014

Gross Debt / EBITDA(2) 3.4x 3.7x 3.6x (4) Net Debt / EBITDA(3) 2.8x 3.1x 2.9x (5)

Cash Balance (US$ million) 584 706 1,018

(1) Gross debt refers to the principal amount of short-term and long-term borrowings (2) Based on gross debt as at period end divided by EBITDA for the 12-month period (3) Based on net debt as at period end divided by EBITDA for the 12-month period (4) Based on gross debt as at period end divided by PCCW FY13 EBITDA and CSL FY13 EBITDA (5) Based on net debt as at period end divided by PCCW FY13 EBITDA and CSL FY13 EBITDA 1818 Debt Maturity Profile

As at February 11, 2015 HKT Bank Loans PCCW Bank Loans HKT US$ Bonds PCCW US$ Bonds (US$ million) 315 Cash Undrawn US$ million Balance * Facilities 1,500 HKT 463 842 711 500 500 PCCW 239 632 500 559 300 300 PCPD 316 200 154 38 Total 1,018 1,674 2015 2016 2017 2018 2019 2020 2022 2023 2030 Target after Refinancing (US$ million) 315 1,500 Refinancing Plan Refinancing Plan 500 500 500 559 711 300 300 154 38 2015 2016 2017 2018 2019 2020 2022 2023 2030

• Proactively extended the maturity profile to 2030 through issuance of a 15-year, zero coupon US$300 million bond by HKT, allowing us to lock in long-term funding at attractive cost • Refinancing plan to extend maturity to 6 years • Current liquidity of US$1.7 billion in undrawn facilities across the entire group • Effective interest rate further improved from 3% to 2.7% in 2014

* Cash balance as at December 31, 2014 1919 Sustainable Dividend Policy

Final Dividend Interim Dividend (HK cents)

13.85 13.21 • Maintain full-year dividend at 13.55 20.20 HK cents per share

6.99 6.35 5.51

2012 2013 2014 DPS (HK cents)

Interim 5.51 6.35 6.99

Final 13.55 13.85 13.21

Total 19.06 20.20 20.20 Payout Ratio 87% 81% 78% (Core NPAT)

20 Business Review

BG Srinivas

Group Managing Director

21 Media Business

22 Steady Pay TV Performance Investing in Digital Growth

(US$ million) Media Revenue Media EBITDA

414 65 387 63 58 360 42 2 40 2 37 Core Media Business 61 63 61 372 New Initiatives 323 347

(3) 2012 2013 2014 2012 2013 2014

• Revenue continue to rise by 7% underpinned • Core Media business EBITDA and margin by consecutive years of solid subscription and reflected full-year impact of BPL costs advertising revenue growth in our Core Media • Investments for new initiatives including business upgraded MOOV platform, expansion of now • Growth in new media revenue (e.g. MOOV) player and preparation for free TV business

23 Continued Market Leadership in Pay TV

. now TV continued to grow customer base whilst increasing ARPU through consistent up-selling of its wide range of content and services 195 187 191

174 174 Thousands 171 171 172 173 169 169 167 169 165 1285 1237 1269 153 1204 1165 1183 1140 1088 1028 1039 992 1001 125 953 927 882 818

H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 2007 2008 2009 2010 2011 2012 2013 2014 Installed Base Installed base ARPU (HK$/ month)

24 Content and Brand Leadership (1)

News Leadership: now TV has established itself as a leading local HK news provider

• Independent study shows overall rating of 68.80, a significant 5.13 points increase

• Downloads of now TV apps topped both Apple and Android stores #

• Total now TV app downloads have now reached 4 million

2014 TV Programme Appreciation Index Survey (3rd Stage), conducted by Public Opinion Programme, HKU

Total Channel Apr-14 Jul-14 Oct-14 Compared with previous rating

1 now TV 64.84 63.67 68.80 +5.13 2 Cable TV 67.69 66.97 67.37 +0.40 3 TVB 68.36 65.07 63.23 -1.84 4M app download 4 ATV 58.78 58.95 59.08 +0.13 Users enjoy now TV contents via now apps in HK

# HK - overall free app - No. 1 : iOS: 4-6 Oct / Android: 9-11 Oct HK - news free app - No. 1 : iOS: 4-8 Oct, 15-18 Oct / Android: 30 Sep - 4 Nov 25 Content and Brand Leadership (2)

Increasing Entertainment Production:

Successful First TV Drama Series Production

衛子夫 (The Virtuous Queen of Han) • Co-production with Huace Film & TV • Reached more than 38 million TV viewers in China* with total online accumulated hits of over 2.38 billion since first broadcast • Distributed widely in Overseas Markets incl. Taiwan, Malaysia, Singapore, Vietnam, Thailand, Cambodia, the Philippines, Sri Lanka, Japan, , Australia, New Zealand and North America

New Productions in the Pipeline 舉世無雙 • Co-production of a new TV drama series with Ciwen Media (慈文傳媒) • A 40-episode ancient Chinese drama series on the romance of the Emperor Taizong of Tang (唐太宗李世民) and the Empress Zhangsun (長孫皇后). Production will start in 2Q 2015 at Hengdian World Studios (橫店影視城) • We will continue to scale up our production pipeline which will allow us to differentiate now TV’s service offering

* Gross viewership based on ratings from the first week of telecast. Source: 28 Aug 14 China Prime Time Satellite TV Series Ratings from CSM 26 Continued Expansion of International Footprint

. Established important affiliate partnerships to distribute now TV channels across Asia and North America

. Latest addition to footprint  now Baogu movie channel launched in Taiwan on Taiwan Broadband Communications Cable TV service, reaching 800K subs

Territory Affiliates Malaysia Telekom Malaysia HyppTV Singapore StarHub Limited Thailand CTH Public Co. Ltd. Indonesia Big TV (First Media) USA Dish Network Corp Fairchild TV Telus Optik TV Canada Rogers Communications Bell Fibe TV Vietnam Viettel new Taiwan Taiwan Broadband Communications (TBC) now Baogu movies on TBC

27 Continued Expansion of MOOV Footprint

While maintaining its edge as HK’s leading and award-winning music service, Moov Mob –Ex 2015 Best App: Social (Gold) continues to expand into China: Best App: Creative Design (Gold) Marketing Excellence Award 2014 • Following a successful launch in Guangdong, MOOV is expanding its footprint to Fujian, Shanghai and Xinjiang via exclusive cooperation with BesTV

• MOOV continues to strengthen its breadth and depth of content for mainland China market including International repertoire, Kpop, and popular local Chinese music label.

28 IT Solutions Business

29 Continued Growth Momentum

(US$ million) Solutions Revenue Solutions EBITDA

432 80 380 67 318 207 56 33 155 24 119 Recurring 16 Project Based 225 225 199 47 40 43

2012 2013 2014 2012 2013 2014

• Strong growth in project based revenue • EBITDA grew by 20% to US$80M driven by successful execution of projects • Margin maintained at 18% • Overall data center occupancy rate remained high at 85%

30 IT Services Market Leader

• Market leadership in Hong Kong • Continue to win significant and long-term contracts from public sector and large enterprises

Notable Contract Wins in H2 2014

• Replace and upgrade the Hong Kong Vessel Traffic Services System for Marine Department

• Long-term infrastructure services for an healthcare organization • Core banking solution for Chengdu Rural Commercial Bank

Secured order of US$730 million as of December 31, 2014

31 Revenue by Industry and Services

FY2014 Revenue by Industry FY2014 Revenue by Services

Retail & Others Manufacturing 3% 5% Business Process BFSI Outsourcing 6% Enterprise 7% Applications Travel & Telecom 22% Hospitality 27% Technical 7% Services 23%

Hi-Tech and Media Cloud 18% Solutions & Application Infrastructure Development 25% Public Sector & (HK) Maintenance 34% 23%

32 Continued Investment in China

Strong penetration into the telecom and banking industries in China:

● Strong footprint in top telecom operators

● Expanded core banking to Auto finance and Peer-to-peer finance

Successfully replicate our expertise to diversified industries, including:

● Retail

● Manufacturing

● Media & Entertainment

● Healthcare

33 Data Center Expansion

● Officially unveiled 202,000 sq.ft., 16-storey Powerb@se MCX 10 MCX10 Data Center in Kwai Chung

 Uptime Institute Tier III Certificate

 LEED Platinum Certificate

● Expand the platform to deliver a full spectrum of IT services

● Drive innovative applications development and adoption

Data center via Enterprise Solutions Superstore Alliance (ESSA) platform and ESSA incubation program Guangzhou ● Provide cross-border data center service to facilitate Hong Kong MNCs to enter China, and Chinese companies to expand into overseas markets

34 Rich Solutions Portfolio

Industry-specific Software Assets

● Launched the international version of iVisionBanking suites:  VisionBanking Suite – the core banking solution tailored for banks  VisionFinance Suite for finance institutions

● Tianjin Great Wall Binyin Automotive Finance and Chengdu Rural Commercial Bank have deployed iVisionBanking

Cloud Solutions ● Full spectrum of cloud services – ranging from infrastructure, platform, software, content to process ● The only SAP certified provider of cloud and hosting services in Hong Kong and China ● Helped SOLERS upgrade existing SAP Business One system to SAP Business All-in-One cloud solution

35 Delivering the Digital Lifestyle

Offering a Wide Range of Asian Media and Entertainment Content across Multiple Digital Platforms

Digital Expertise and Capabilities to Enable Consumers Enterprises to Transform within a Digital World and Enterprises

Connecting Consumers and Enterprises in the Digital World through a World Class Local and Global Network

36