PCCW Aktie

Ladies and gentlemen, welcome to the PCCW 2025 Annual Results Announcement. Presenting today are Ms. Susanna Hui, Acting Group Managing Director and Group CFO; and Mr. Michael Wong, Head of Investor Relations. Over to Susanna, please.

Thank you. Despite global trade uncertainties and cautious consumer sentiment, the Hong Kong economy recovered steadily throughout 2025. And against this market backdrop, PCCW delivered a resilient performance supported by disciplined execution on our side and continuous scaling of our core businesses.

Reflecting on our key achievements during the year, our regional video streaming platform, Viu, remains the undisputed #1 Asian player in the greater Southeast Asian markets with paid subscribers reaching 16.8 million and new growth initiatives, including Viu Shorts, gearing the business up for sustainable growth. ViuTV continued to deepen engagement, expanding its reach among younger viewers with a strengthened and expanded talent roster and an exciting lineup of group concerts planned for the coming year.

As for HKT, we announced results yesterday, and we remain committed to offering the best-in-class digital infrastructure to support enterprises and enhance customer experience as they embrace AI-enabled technologies.

Looking at the financial highlights for 2025. In terms of revenue, PCCW delivered a 7% increase in terms of top line to over USD 5.16 billion with EBITDA increasing 3% year-on-year to USD 1.704 billion. We have OTT business recording improved performance with 5% revenue growth as well as over 50% increase in EBITDA, benefiting from the expanding economies of scale, improving operating efficiency and a prudent content strategy.

Our domestic TV business, ViuTV and MakerVille performance was also steady, say, for the timing differences of the lineup of concerts in 2024 and 2025, which led to a slight reduction in terms of revenue and EBITDA, details of which will be covered later.

And in terms of the HKT business, we announced results yesterday, and there was a 5% solid growth in terms of revenue, 4% growth in EBITDA and a 4% growth in terms of AFF and dividend, which translates to a dividend income upstream to PCCW of approximately USD 415 million.

So on the back of this performance, we are pleased to report that the Board has declared a final dividend of HKD 0.2848 per share, bringing the total full year dividend to HKD 0.3825 per share, representing a pass-through ratio of 91.5% of the HKT dividend upstream to PCCW. Whilst PCCW continued to benefit from HKT's solid growth and distribution upstream, PCCW will adopt a very disciplined dividend policy, prioritizing financial strength and sustainable shareholders' return in the long run.

And the following slide is a slide on our ESG. Basically, on the social responsibility side, we continue to strengthen our community engagement through our media platform as well as our efforts in terms of supporting a broader range of underprivileged and vulnerable members in the community via various programs, workshop and services.

In terms of environmental stewardship, we have exceeded our 2025 environmental targets while also contributing to Hong Kong's ongoing push in terms of sustainable development, including the citywide deployment of Smart Charge EV bays. Our progress in this area has been recognized with an A rating in the MSCI ESG ratings ever since 2019.

Let us now turn to the performance of our core business. On the OTT side, we would share with you some more statistics and KPIs. Despite intense competition from the regional and global players in the market, Viu reinforced its leading market position with further growth of 1.3 million subscriber base to 16.8 million paid subs as a result of our deepened telco partnerships, particularly in larger markets like Thailand and Indonesia.

During the year, we were also able to enhance monetization by refining our pricing strategy on our direct-to-consumer premium packages. As a result, subscription revenue grew by 13% year-on-year. And going forward, we will continue to prioritize high-growth markets to capture the benefits of economies of scale.

In terms of advertising revenue on our regional platform, despite the tighter ad spending, we were able to expand monetization opportunities as the AVOD penetration on connected TVs continue to rise. We also secured premium advertiser-funded projects, for example, an ad integrated variety show with Samsung in Indonesia, continues to strengthen our position as a premium ad solutions provider and also allowing us to command higher rates in this area. These efforts, together with prudent content investment and also improving operating efficiency, led to a substantial increase of 56% in terms of EBITDA and a margin improvement of 8 percentage points from 16% to 24%.

Our content diversity, including Korean, Chinese and local productions powered by our advanced viewer analytics continue to drive viewer engagement. During the year, over 200 new titles were added with the blockbuster Taxi Driver Season 3 winning over 30 million views and ranking #1 by video minutes across 6 of our Southeast Asian markets. These high-impact releases have generated healthy subscription acquisition as well as viewer engagement, enable us to maintain clear differentiation and lead across key operating metrics in terms of monthly active users and streaming minutes, both ranking only second to Netflix.

Looking ahead to 2026, we have exciting new growth engines in place. Firstly, it's basically our first-of-its-kind Viu and HBO Max streaming bundle, which combined premium Asian and Hollywood content, which is now available in 5 of our Southeast Asian markets, and we expect that this will be able to help expand our market penetration going forward. In January this year, we also launched Viu Shorts tap into the very fast-growing micro drama format, which represents a very cost-efficient content, but we're able to unlock new advertising opportunities. Initial results of these Viu Shorts are extremely encouraging with viewership penetration of our base exceeding 11% within the first 3 weeks.

Now let us turn to our domestic free TV ViuTV. We continue to be committed to delivering high-quality and locally relevant content. We have developed a very strong digital engagement with our viewers, evidenced by our 3.6% growth in terms of digital membership to an impressive 3.4 million and a close to 7% surge in terms of weekday prime time viewing. The digital viewing is important in expanding our digital advertising inventory for advertisers versus the traditional linear TV.

Compared to our competitors, we have greater share of the highly engaged younger audience with 38% of our viewers under the age of 44. And this, together with our integrated capabilities in content production, artists representation and events management and organization offer strong appeal to advertisers in terms of end-to-end solutions, particularly in areas such as finance, F&B, beauty and fitness. As a result, advertising revenue for our Free TV reported a growth of 2% amidst the persistently weak retail environment and tightened advertising budget in Hong Kong.

Looking ahead into 2026, we have put in place a very strong content slate from captivating new dramas produced by reputable production houses, new IP launches to the return of fan favorite reality shows and drama shows. This strong lineup will extend our momentum, strengthen our advertiser appeal and drive sponsorship and advertising revenue in the coming 2026.

Taking a look at our talent management business by MakerVille, we have made great strides in terms of elevating the international profile of our established artists, featuring Marf, which is a member of our Collar girl group in the Coldplay concert this year; and Edan Lui, one of the members in our Mirror boy group in the popular Korean drama Taxi Driver Season 3. At the same time, we continue to strengthen our talent pipeline, and we recently debuted ZPOT, a dynamic new group of 7 very young and handsome emerging artists discovered through our talent show, King Maker Season 6.

In terms of live concerts and events, in 2025, we organized 28 shows across 11 concert series. We have strategically focused on promoting solo as well as subgroup mini group performances in order to showcase individual artists and amplify their appeal. For 2026, a stronger comeback of our group concerts has been planned, and this strong lineup of events and a strongly expanded talent roster will continue to drive revenue and boost opportunity in the coming year.

And on this note, I will pass to Marco to discuss our financial section. Marco?

Thank you, Susanna. Let me take you through a review of the financials for 2025. As was announced yesterday, HKT's total revenue grew by 5% to USD 4.69 billion, with the key drivers being accelerated demand from enterprises for our digital transformation solutions, which contributed to a significant 8% growth in enterprise revenue as well as 3% growth in broadband revenue, driven by sustained demand for our high-bandwidth low latency fiber services.

There was also a strong 5% growth in mobile services revenue, underpinned by continued growth in roaming, expansion of the postpaid customer base and 5G upgrade as well as growing demand for enterprise solutions, including 5G deployment. And there was also finally a 30% growth in mobile handsets, primarily from new flagship handsets launched in the second half.

As you see on the right-hand side of the chart, EBITDA also grew with mobile registering a 5% EBITDA growth and TSS EBITDA also reporting a 2% growth, benefiting from enhanced operating efficiency across the group. This resulted in an overall 4% EBITDA growth, leading to EBITDA of USD 1.83 billion, with the service EBITDA margin improving slightly to 43.1%. Adjusted funds flow registered 4% growth correspondingly, reaching USD 795 million. And the Board approved a full year total distribution of HKD 0.8177 per SSU.

Turning to our core businesses. On the OTT side, we saw Viu's subscription revenue growing significantly by 13% on the back of expanding subscribers as well as refined pricing strategy, which was moderated by softer advertising revenue amidst restrained ad spend. As a result, OTT revenue achieved 5% year-on-year growth to USD 331 million.

On the EBITDA side, you'll see that OTT surged by 56%, benefiting from diversified content offerings alongside growing economies of scale in high-growth markets. This led to an EBITDA margin improvement of 8 percentage points to 24%.

On the Free TV and related business side, while advertising revenue reported a 2% growth, total revenue, including events, recorded a slight drop of 2% to USD 133 million from USD 136 million last year. This reflected fewer concerts in 2025 against the previous year as well as a strategic focus on subgroup and solo artistes' performance to help amplify individual performance profile. And we expect upcoming group concerts and an expanded talent roster to fuel revenue growth this year.

On the EBITDA side, this softened to USD 20 million, as mentioned, due to the fewer and smaller scale concerts in 2025. We expect the profitability to rebound in '26 with the strong event and content lineup.

On the OpEx side, total OpEx decreased by 3% to USD 696 million, driven by cost optimization across the group with the OpEx to revenue ratio improving from 14.9% to 13.5%. And this was helped by OTT enhanced operating efficiency as well as marketing effectiveness by integrating advanced analytic tools.

On the HKT side, they also achieved 4% OpEx savings, driven in large part by AI adoption to improve workflow as well as the group's continued effort in streamlining business structures, network as well as IT platform rationalization.

Looking at the CapEx side, total CapEx dropped by 6% to USD 282 million with the revenue ratio further improving from 6.2% to 5.5%. On the mobile CapEx side, this fell by 4%, reflecting the efficiency gains from capacity upgrades and network maintenance following the completion of the territory-wide 5G coverage rollout.

On the TSS side, CapEx also fell by 2%, reflecting the already extensive fiber coverage to support growing demand for FMI solutions from both public as well as private enterprises as well as investments in subsea cables.

On the media side, CapEx spending decreased year-on-year to USD 11 million following the completion of the initial phase of its new production studio facilities. If we look at the capital structure, starting with debt maturity, you'll see the top chart shows HKT. As mentioned in yesterday's results announcement, we have strong liquidity totaling USD 2.8 billion, comprising of cash of USD 300 million as well as USD 2.5 billion in bank lines.

And in terms of refinancing the bond that's coming for maturity in July 2026, this gives us more flexibility in terms of when to tap the fixed income market. And as you can see at the bottom of the chart, you'll see PCCW's debt profile. There is no significant debt coming due in 2026.

Across the group, we continue to maintain a balanced mix of short term as well as longer maturity borrowings and bonds. The ratio of fixed to floating rate debt is approximately 53:47. The effective interest rate was approximately 3.9% and average debt maturity is around 3 years.

Overall, the group's liquidity is strong, and we are well supported by banks at around USD 3.9 billion, which comprises undrawn facilities of USD 2.5 billion for HKT and approximately USD 1 billion for PCCW as at year-end as well as overall cash of almost USD 400 million on a group basis. If you look at actual consolidated net debt as at December year-end, this increased by USD 150 million, primarily to fund large-scale long-term enterprise projects. But if you assume, as we announced yesterday, the use of proceeds for the further sale of 9% in our FiberCo business by HKT, the pro forma net debt-to-EBITDA ratio would improve to 4.1x. And with that, that's the end of my presentation. Thank you.

This takes us to the end of the analyst briefing. Thank you, everyone, for joining us today.

Ladies and gentlemen, welcome to PCCW 2025 Interim Results Announcement. Presenting today are Ms. Susanna Hui, Acting Group Managing Director and Group Chief Financial Officer; and Mr. Marco Wong, Head of Investor Relations. Over to Susanna, please.

Good afternoon. Thank you for joining the PCCW 2025 interim results today. Despite a very challenging macro environment in the first half of 2025, PCCW remain very focused on delivering high-quality services to our customers and achieving profitable growth across all of our businesses.

Within our Media business, Viu maintained its market leadership with paid subscribers reaching 13.8 million and is on track to reaching positive cash flow. Viu TV unlocked new opportunities and elevated the global presence for our roster of talented in-house artists. As for HKT, we are very committed to leveraging our leading digital infrastructure and comprehensive deployment of AI to serve our customers better, unleash the advantages of digital transformation for enterprises as well as transform HKT's own business workflows.

If you look at the financial highlights, PCCW delivered solid financial performance with revenue rising by 7% to over $2.4 billion and EBITDA increasing by 6% to USD 771 million. Whilst HKT posted robust results with 4% growth in revenue and 3% growth in EBITDA as well as a 3% growth in AFF and distributions, demonstrating continued resilience.

Our OTT regional service also recorded an impressive 10% growth in top line and a 51% improvement in terms of the EBITDA. On the domestic TV side, the Viu TV revenue and the related businesses retreated in the first half due to the timing of the concerts and events with margin remaining stable. We expect that performance will rebound in the second half on the back of numerous popular shows and concerts scheduled in Q3 and Q4.

On the back of this performance, the Board has declared an interim dividend of HKD 0.0977 per share. Whilst PCCW continues to benefit from HKT's steady growth and distribution upstream, we, as a Board, will continue to adopt a very prudent dividend policy to prioritize financial strength for sustainable growth as well as striving to provide stable returns for shareholders.

Turning to our OTT business. The regional business continues to hold #1 position amongst the Asian players and maintain its differentiation against the large global platforms. In terms of key operating metrics, we sustained our ranking with strong performance in terms of the MAU, monthly active users as well as paid subscribers. These achievements demonstrated the appeal of our carefully curated content portfolio, localized strategy as well as strong partnership ecosystem.

To deepen penetration and enhance viewer experience, during the first 6 months, we added new titles of 150, which are diversified across Chinese, Korean as well as locally viewed original content with a lot of travelability across the entire region. And to extend our reach, we also expanded our partnership ecosystem. We deepened partnership with local carriers by offering premium packages, integrating with their applications and media platforms as well as broadening cooperation to include content co-production, for example, with Telkomsel in Indonesia on a few original scripted drama series.

We believe that these initiatives allow us to effectively optimize resource allocation and increase exposure for our content, resulting in paid subscriber growth of 19% year-on-year during the first half. In terms of the advertising business, we also expanded the monetization opportunities despite the relatively soft advertising spend that we saw from the region.

In particular, during the first half, the AVOD tier on connected TV gained traction, which enable advertisers to extend their reach to the mass affluent segment. As a result of these efforts, we saw total subscription and advertising revenue grow by 27%, leading to EBITDA margin improving significantly to 29%, providing a pathway to achieve positive cash flow in the coming months.

The following slide shows the content. We continue to be very focused in terms of striking a balance between the Korean content as well as the Chinese content and the local content for prudent return. During the first half, we doubled the number of Chinese titles on our platform in response to the rising popularity on top of the -- obviously, the crowd pleasing Korean shows.

We also released 7 View originals with cross-market appeal that received positive audience response. In the first half, we saw very strong expectations built up from our content lineup. And we do think that in the second half, we will be able to achieve top viewership on a lot of the content, especially on the Taxi Driver Season 3, which achieved very good results from the previous 2 seasons.

Next slide is the domestic Viu TV business. We have been consistently delivering captivating content across various formats. And in particular, during the first 6 months, we saw digital membership grow by more than 4% to reach 3.3 million and viewing time also rose by more than 4%, reflecting our relatively younger audience segment.

In terms of advertising revenue, we achieved stable advertising revenue in the first half despite the soft consumer spending in Hong Kong. Content pipeline for the rest of the year includes proven hits of drama and game shows as well as our iconic program, King Maker VI, which we believe will contribute to stronger sponsorship and advertising revenues in H2.

Our talent management business on a roster of nearly 70 talented artists achieved mileage in the first half in terms of elevating our artists' international exposure. Many of our talents collaborated with top-tier artists on global stage, including the recent Coldplay's World Tour concert in Hong Kong, participated by one of our artists, Marf as well as a variety of international productions.

With respect to our concerts and events, despite a limited schedule during the first half as compared to first half of 2024, we are seeing momentum in H2 with very strong lineup of popular concert series planned in Q3 and Q4. In addition, we are diversifying revenue streams to include theater plays for live entertainment presence. And some of our acclaimed content, including music shows, dramas and movies continue to push the frontier to different platforms and markets.

With that, I would pass to Marco for the financial section. Marco?

Thanks, Susanna. As you can see on the first slide is a summary of the HKT financial performance for the first half, which was released yesterday. I won't go into the details of the financials, but summarize a few key points. As you can see, HKT's total revenue as well as services revenue both grew 4% to USD 2.2 billion and USD 2.09 billion, respectively.

The main drivers being accelerated demand from enterprises for our digital transformation solutions, sustained demand for our high-speed fiber services, as well as the growth in mobile services revenue from 5G as well as roaming revenue.

On the right-hand side of the chart, you'll see that EBITDA also grew with mobile registering a 5% EBITDA growth with TSS growing by 3%. This, together with enhanced operating efficiency resulted in an overall EBITDA growth of 3% to USD 818 million, and the overall EBITDA margin was stable at 37%.

Adjusted funds flow also increased by 3%, reaching HKD 328 million. And as a result, the interim distribution per SSU was HKD 0.3380. Turning to the Viu regional OTT business. This saw significant revenue growth of 27% in subscription and advertising, but this was partially offset by softer syndication and event revenue, particularly in the Middle East market.

Nevertheless, overall OTT revenue grew by 10% to USD 153 million. And with our optimized content offering as well as our growing scale, this drove an impressive growth of 51% in EBITDA, with the EBITDA margin expanding by 8 percentage points to 29%. With the strategic scaling of the business as well as continued disciplined content portfolio curation, we believe the OTT business is on track to reaching positive cash flow.

On the Free TV side, with the more limited number of concerts and events scheduled in the first half, the free TV business revenue retreated to USD 44 million compared to USD 62 million last year, although advertising revenue was stable despite weaker consumer spending and the subdued retail market in Hong Kong. As a result, the EBITDA decreased to USD 6 million.

However, in the second half, with the lineup of hits as well as iconic shows, together with concerts scheduled in the third quarter and fourth quarter, we expect revenue and profitability to return.

On the OpEx side, you'll see that there was improvement with OpEx decreasing by 5% to USD 376 million, with the ratio improving significantly from 17.4% to 15.5%. This was contributed by OTT's OpEx savings through the enhancement of publicity promotion efficiency due to its rising brand recognition. And as we discussed yesterday, HKT also delivered 4% OpEx savings from AI adoption as well as streamlining business structures, network as well as the IT platform.

On the CapEx side, this continued to fall, dropping by 3% to USD 142 million, with the ratio further improving from 6.5% to 5.8%. This was driven by mobile CapEx being lowered as well as TSS CapEx being lowered at HKT as well as the completion of the initial phase of the new production facilities at the media business. This led to the spending there at decreasing year-on-year to USD 3 million.

In terms of capital structure, as you can see on the debt maturity profile, you'll see that HKT, as mentioned in yesterday's results, gross debt dropped to $5.57 billion from $5.94 billion 12 months ago following the deleveraging that we completed in December 2024. In terms of the bond that's maturing in 2026, we already have strong liquidity of USD 2.3 billion, comprising of cash as well as bank lines that are sufficient for refinancing when it comes due.

At the bottom of the slide, you'll see PCCW. There's no imminent debt due in 2025 and just a small amount in 2026. You'll see that we've maintained a balanced mix of bank borrowings as well as bonds with the ratio being of fixed to floating debt being kept at approximately 55-45 resulting in an effective interest rate of 4.1%. Although with this mix of fixed floating debt, we expect the effective rate of interest to fall further if the current lower HIBOR persists. And we saw the maturity kept at around 3.1 years.

In terms of the liquidity, we continue to enjoy strong support from banks with total facilities of $2.8 billion, comprising of $2.05 billion at HKT and $800 million at BCW as of the June year-end. And overall, the group's cash was USD 300 million on a consolidated basis. The net debt-to-EBITDA ratio has improved to 4.17x compared to 4.2x at the same time last year.

And with that, that ends the presentation today.

That's the end of the analyst briefing. Thank you very much.