CONTENTS 1 Corporate Profile 3 Statement from the Chairman 4 Statement from the Group Managing Director 8 PCCW in Numbers 10 Significant Events in 2020 12 Awards 15 Board of Directors 21 Corporate Governance Report 38 Management’s Discussion and Analysis 51 Financial Information 236 Investor Relations CORPORATE PROFILE PCCW Limited is a global company headquartered in Hong Kong which holds interests in telecommunications, media, IT solutions, property development and investment, and other businesses. The Company holds a majority stake in the HKT Trust and HKT Limited, Hong Kong’s premier telecommunications service provider and leading operator of fixed-line, broadband, mobile communication and media entertainment services. HKT delivers end-to-end integrated solutions employing emerging technologies to assist enterprises in transforming their businesses. HKT has also built a digital ecosystem integrating its loyalty program, eCommerce, travel, insurance, FinTech and HealthTech services to deepen its relationship with customers. PCCW owns a fully integrated multimedia and entertainment group in Hong Kong engaged in the provision of OTT video service locally and in other places in the region. Through HK Television Entertainment Company Limited, PCCW also operates a domestic free TV service in Hong Kong. Also wholly-owned by the Group, PCCW Solutions is a leading IT and business process outsourcing provider in Hong Kong, mainland China and Southeast Asia. In addition, PCCW holds a stake in Pacific Century Premium Developments Limited and other overseas investments. Employing over 22,900 staff, PCCW maintains a presence in Hong Kong, mainland China as well as other parts of the world. PCCW shares are listed on The Stock Exchange of Hong Kong Limited (SEHK: 0008) and traded in the form of American Depositary Receipts (ADRs) on the OTC Markets Group Inc. in the U.S. (Ticker: PCCWY). To learn more about our core businesses, please turn over the page. PCCW annual report 2020 1 CORPORATE PROFILE (CONTINUED) HKT is Hong Kong’s leading operator in fixed-line, broadband, mobile communication and media entertainment services, and the sole genuine quadruple-play services provider in Hong Kong. HKT is Hong Kong’s largest broadband service provider with its fiber network and WTTx technology covering almost 95% of homes. CSL Mobile operates a true 5G network enabling a differentiated user experience through the csl and 1O1O mobile service brands. The 5G network is backed by HKT’s substantial holding of 5G spectrum across all bands and a robust and extensive fiber backhaul infrastructure. HKT also delivers end-to-end integrated solutions leveraging the latest technologies to assist enterprises in transforming their businesses. Its international operating division, PCCW Global, operates a Tier-1 global Internet backbone network driven by the Console Connect Software Defined Interconnection platform. Our network has 127 points of presence across 81 cities and encompasses over 60 cable systems worldwide. Now TV, the leading pay-TV service in Hong Kong, offers a wide range of local and international content through linear TV channels, on demand service and mobile apps. HKT has also built a digital ecosystem integrating its loyalty program, eCommerce, travel, insurance, FinTech and HealthTech services to deepen its relationship with customers. PCCW owns a fully integrated multimedia and entertainment group in Hong Kong engaged in the provision of OTT services with original and premium regional and international branded content, as well as a free TV service. Viu is a leading pan-regional OTT video service available in 16 markets across Asia, the Middle East and South Africa. Offering both an ad-supported tier and a premium subscription tier, Viu delivers premium branded content in local and regional languages with subtitles across genres, in addition to Viu Original productions. PCCW also operates the popular digital music streaming service MOOV in Hong Kong. Through HK Television Entertainment Company Limited, domestic free TV service ViuTV offers original-format factual entertainment, dramas, news, children and sports programs on its Cantonese channel 99 and English language channel 96 (ViuTVsix). PCCW Solutions is a leading IT services company in Hong Kong, mainland China and Southeast Asia. It focuses on developing IP-based solutions and providing end-to-end IT and business process outsourcing services to assist large enterprises and the public sector in going digital, revolutionizing their business operations and achieving cost efficiency. PCCW Solutions helps customers achieve their business goals with a wide range of offerings including cloud computing, systems development and solutions integration, data center hosting and managed services, eCommerce and IoT solutions. PCCW Solutions is actively expanding its presence and capabilities in Southeast Asia to support clients in the region. 2 PCCW annual report 2020 STATEMENT FROM THE CHAIRMAN The persistent pandemic in 2020 which dramatically The hospitality businesses of Pacific Century Premium changed people’s way of life also tested our resilience as Developments (PCPD) experienced a slowdown last a provider of multitudinous services to consumers and year. PCPD will stay alert to the evolving situation and businesses. PCCW upholds the belief that we must adjust its business and investment strategies where consistently deliver reliable, top-notch services necessary. to customers, both in Hong Kong and overseas. I am pleased to report that the Group has in the The economic outlook in 2021 remains highly past year staunchly assisted our customers and the uncertain in view of the lingering pandemic and the community at large in navigating these troubled times. fraught geopolitical environment, but we are hopeful that the vaccines may inject some vitality back into Our media business endeavored to keep viewers the local economy in the year ahead. With our strong entertained and informed, especially as more people fundamentals and a diverse business portfolio, heeded public health advice to stay home. The Group’s PCCW is fully prepared to capitalize on the opportunities regional video streaming service Viu attracted new that may arise upon the rebound of the economy. audiences with more and better programming including In the meantime, the Group will utilize our resources original productions, further cementing its leading optimally to generate value for our shareholders, position in the OTT entertainment market. as well as supporting our employees, customers, Local free TV service ViuTV rolled out timely news and the community as we ride out the storm together. updates and a popular lineup of content, contributing to an appreciable increase in viewership in 2020. PCCW Solutions reported steady business performance despite COVID-19, with satisfactory progress in its ongoing regional expansion and the award of major IT projects in Hong Kong and other markets serving public sector and enterprise customers’ digital transformation needs. HKT met the surge in demand for broadband and mobile connectivity among the public and the commercial segment with our dependable networks. Richard Li The debut of our 5G mobile network earlier last year Chairman marked a new era of communications and opened up February 5, 2021 opportunities for consumer and business applications. HKT also introduced a telemedicine platform which was particularly timely given the new norms of remote working and social distancing. PCCW annual report 2020 3 STATEMENT FROM THE GROUP MANAGING DIRECTOR These are unprecedented times – global economic With COVID-19 keeping people at home, the demand output has contracted and Hong Kong is grappling to for quality entertainment soared last year. Viu recorded recover from the recession due to impacts of COVID-19. growth of its monthly active users (MAUs) to 45.0 million During these challenging times, PCCW has ensured in Hong Kong, Southeast Asia and the Middle East at the uninterrupted business continuity and extended quality end of 2020, from 34.9 million a year ago. More notably, services to our enterprise clients and consumers in the paid subscriber base expanded by 47% in the same Hong Kong and in the region. At the same time, period, demonstrating the success of our multi-pronged we have put in place measures and practices to monetization strategy. Advertising revenue for Viu also support a safe working environment for our employees. increased despite overall softer advertising spend across We have continued to make prudent investments to the region. launch new products and services, and to enhance market presence. In Hong Kong, domestic free TV service ViuTV achieved healthy increases in its audience reach and average TV I am pleased to report that the Group delivered a ratings during prime time and for its drama time belt. steady performance across its core businesses of The growth last year was supported by a number of telecommunications, media and IT services for the notable and popular scripted and non-scripted shows, year ended December 31, 2020. I would like to thank all which helped drive advertising revenue growth in 2020 our employees who have worked together as a team in despite overall market decline. In particular, there was an extremely challenging year to make this happen. increased demand for news updates as well as our In what follows, I outline the achievements and major acclaimed self-produced drama series. activities of the different segments in the past year. ViuTV’s