i-cable communications limited · television • new entrants have announced aggressive plans for...
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ii--CABLE Communications LimitedCABLE Communications Limited
2015 Final Results25 February 2016
Results Highlights
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• As Hong Kong’s economy dipped & competition intensified, both airtime
& subscription sales were affected
• This has made it harder to turn around the Group’s financial performance
in the near future
• We are however encouraged to see early signs of subscription revenue
stabilisation towards the end of 2015, as a result of our efforts to drive up
price points despite contraction of subscriber base
• However, it is still too early to tell when subscription revenues might
bottom out
• We will continue to make smart investments in HD channels, network
infrastructures & content to enhance our services & brand
Subscription Services
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Television
• New entrants have announced aggressive plans for Hong Kong.
Although it remains to be seen how successful they would be with
customers & revenues, their aggressive acquisition of key sports rights
has already pushed rights fees to new highs, posing questions of longer
term sustainability
• We are putting finishing touches on FanHub, an enhanced Pay TV
service set to launch in Q1 2016. FanHub offers interactive features
such as Live TV, Catchup TV & VOD to enrich our customer viewing
experience
• Hong Kong Cable News Express won MTR Corporation’s multi-year
contract, to continue as the exclusive content provider & advertising
sales agency of MTRC’s “In-train TV”
% chg.
HK$M 1H 2H FY 1H 2H FY YoY
Turnover 648 618 1,266 570 560 1,130 -11%
Opex before dep’n (577) (655) (1,232) (597) (579) (1,176) -5%
EBITDA 71 (37) 34 (27) (19) (46) n/a
Depreciation (68) (68) (136) (68) (69) (137) 1%
Operating Profit / (Loss) 3 (105) (101) (96) (88) (183) 81%
EBITDA Margin 11% -6% 3% -5% -3% -4%
Operating Margin 1% -17% -8% -17% -16% -16%
2014 2015
• Competition & abundant supply of content continued to put pressure
on subscription revenue & advertising income
TV Services
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Programming
• Our news platform was upgraded
to HD capabilities on 31
December 2015, giving audience
the pleasure of an elevated level
of refined, colorful & high quality
viewing experience through
channel HD209
• Newsroom facilities are well
equipped for virtual reality &
graphics application. The
adoption of large touch screen
also enabled more interactions
between anchors & the audience
HD News
Programming
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HD Sports
• The Group has secured broadcast rights for soccer leagues including
German Bundesliga, Australian League, Japan League & European
Champions League, as well as for world-class non-soccer events
including woman’s volleyball, table tennis, cycling & badminton
Programming
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HD Entertainment
• Our movie & entertainment platforms continued to outperform the
competition during the year
• We continued to focus on local market flavor & strived to bring distinct &
premium content to our viewers
Programming
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HD Entertainment
50%
27%
15%
7%
0%
10%
20%
30%
40%
50%
60%
HKC Now TV TVBNV bbTVSource: Nielsen (Jan – Dec 2015)
All Individuals aged 4+
All Day All Time
55%
CABLE TV Now TV* TVBNV^ bbTV
Viewing Share Among Pay TV Operators
* Excluded All TVBNV channels via Now TV STB
^ Included All TVBNV channels via Now TV STB
26%
18%
1%
Viewership
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Source: Nielsen (Jan – Dec 2015)
CABLE TV subs aged 4+
All Day All Time
CABLE TV TVB Jade (Analog+SD+HD)
Other Terrestrial & Satellite TV
38%42%
16%5%
TV Share Among CABLE TV subs aged 4+
Other Pay TV
42%
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Customers
951,000969,000
171,000179,000
100,000105,000
December 2015June 2015
Television
Broadband
Telephony
Subscription Services
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Internet & MultimediaInternet & Multimedia
• Broadband reported growth in our mid-range price plans as well as a
moderate increase in various subscription price points. However, we
were unable to contain the contraction of customer base, which had
resulted in lower revenue overall & operating margin
• Network enhancement to higher-speed broadband services GPON is
progressing on track & is expected to cover many more homes in 2016.
The faster & more reliable broadband service should boost our customer
base & competitiveness
% chg.
HK$M 1H 2H FY 1H 2H FY YoY
Turnover 180 184 365 174 175 348 - 5%
Opex before dep’n (107) (102) (209) (103) (102) (205) - 2%
EBITDA 73 83 156 71 73 143 - 8%
Depreciation (45) (44) (89) (43) (40) (83) - 6%
Operating Profit 29 39 67 28 32 60 - 11%
EBITDA Margin 41% 45% 43% 41% 42% 41%
Operating Margin 16% 21% 19% 16% 18% 17%
2014 2015
Internet & Multimedia
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• Moderate increase in various subscription price points helped to
maintain reasonable operating margin
2015 % chg.
HK$M 1H 2H FY 1H 2H FY YoY
Turnover 843 823 1,666 760 750 1,510 - 9%
Opex before dep’n (747) (831) (1,578) (774) (755) (1,529) - 3%
EBITDA 95 (7) 88 (15) (4) (19) n/a
Depreciation (113) (113) (227) (112) (111) (223) - 2%
Operating Loss (18) (121) (139) (127) (115) (242) 75%
Finance costs & others (0) (0) (1) (2) (2) (4)
Loss before taxation (18) (121) (139) (129) (117) (247) 77%
Taxation (5) 5 (0) 8 6 14 n/a
Net Loss (23) (116) (139) (121) (112) (233) 67%
Capex 81 107 188 79 129 207 10%
20152014
Consolidated Results
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• Driving up revenue price points for both TV & broadband helped
stabilise the impact of the contraction of customer base
• Sundream has continued to bring the
best to our audience either by
acquisition or production
• During the year, Sundream
theatrically released 20 films in Hong
Kong & Macau
Sundream Motion Pictures
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• Lower operating costs due to lower cost of sales & network related
cost
Operating Expenses
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2014 2015
HK$M FY FY % chg.
Programming 925 901 - 3%
Network 221 201 - 9%
Selling, CS, G&A 334 342 3%
Cost of Sales 99 85 - 14%
Sub-total 1,578 1,529 - 3%
Depreciation 227 223 - 2%
Total 1,804 1,752 - 3%
Outlook
• We expect another challenging year in 2016, with the arrival of new free
& pay TV competition
• We will continue to make smart investments in HD channels, network
infrastructures & content to enhance our services & brand. Our teams
have been working on the implementation of ISO certification for after-
sales operations incl. customer service hotline, customer care, account
management, installation & technical maintenance & expect to obtain the
certificate in Q1 2016
• Our current Pay TV licence expires in May 2017. An application for
licence renewal was submitted in May 2015. We expect Communications
Authority’s recommendations by 31 May 2016, after rounds of
submissions as well as public hearings & consultations in the past year
• We are also working closely with Communication Authority in respect of
Fantastic’s Free TV licence application
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i-CABLE Communications LimitedHKSE Stock Code: 1097.HK
Disclaimer
All information & data are provided for information purposes only. All opinions
included herein constitute i-CABLE’s judgement as of the date hereof & are
subject to change without notice. i-CABLE & its subsidiaries & affiliates hereby
disclaim (i) all express, implied, & 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; & (ii) any liability whatsoever for any loss
howsoever arising from or in reliance upon the whole or any part of the
information & data contained herein.