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2013 Interim Results For the six months ended June 30, 2013

August 6, 2013 - Hong Kong

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.

Forward-Looking Statements

Overview

George Chan

Group Managing Director

2

3

Solid Financial Performance

The Board has declared an interim dividend of 6.35 HK cents per share

(US$ million)

Consolidated Performance

H1’12 H1’13 % change

Revenue 1,526 1,707 + 12%

EBITDA 492 506 + 3%

Profit Attributable to Equity Holders 107 110 + 2%

4

Shareholder Focused Dividend Policy

• Maintain minimum dividend

for 3 years at 2010 level

(US$143 million)

• 2013 interim dividend per

share of 6.35 HK cents,

representing an increase of

15% over the same period

last year

Interim 5.30 5.51 6.35

Final 10.60 13.55

Total 15.90 19.06

Payout Ratio 72% 83%

DPS (HK cents)

Final Dividend

Interim Dividend

(1) Based on PCCW closing price of HK$2.96 on Feb 28, 2012

(2) Based on PCCW closing price of HK$3.72 on Feb 27, 2013

Yield: 5.4% (1) 5.1% (2)

(HK cents)

2011

5.30

10.60

6.35

2012 H1’13

13.55

5.51

Financial Review

Susanna Hui

Group Chief Financial Officer

5

Growth Across All Core Businesses

453 471 505

31 21 1

H1'11 H1'12 H1'13

1,402 1,418

1,643

160 108 64

H1'11 H1'12 H1'13

(US$ million) PCPD Core Business*

* Core business includes HKT, Media and Solutions Businesses

Revenue

• Revenue grew across all core business segments • Remarkable increase in EBITDA underpinned by steady performance of HKT and impressive growth

in the Solutions business

6

Core

EBITDA

Margin

32% 33% 31%

EBITDA

Track Record of Sustainable Profitability

(US$ million)

7

Profit Attributable to Equity Holders Earnings Per Share :

11.79 HK cents

(H1’12: 11.51 HK cents)

Non-controlling Interests

106 107 110

7

57 75

H1'11 H1'12 H1'13

185

164

113

* PAT refers to Profit after Income Tax

444

HKT EBITDA

492 479

464

H1’11 H1’12 H1’13

HKT Revenue

1,419

(US$ million)

1,246 1,223

+ 0% 212

215

+ 9% 341 369

+ 20%

118 145

+ 47%

- 6%

61 48

225 215

281 281

(15) (27)

Mobile

Eliminations

TSS Others

Others

International

Local Telephony

Local Data

8

A Steady Performance

• AFF up 4% yoy to US$190 million • Interim distribution of 21 HK cents per SSU

• TSS delivering steady growth – TSS revenue and EBITDA increased by 14% and 2% respectively, underpinned by strong fiber upgrades and growth in international businesses

• Mobile momentum continues – mobile revenue represented 12% of total HKT revenue (12% in H1’12) and mobile EBITDA accounted for 11% of total HKT EBITDA (9% in H1’12)

Mobile

Others

TSS

H1’11 H1’12 H1’13

+ 2% 434 452

+ 29%

28 44

57

2 (9) (17) (31)

41

174

215

204

413

403

9

Positioned for Next Growth Phase

152

162 167

H1'11 H1'12 H1'13

(US$ million) Media Revenue

• Media revenue up 3% underpinned by improved pay TV subscription revenues

• Encouraging BPL take-up from early monetization effort

• Subscriber base expanded to 1.204 million and ARPU increased to HK$174 from HK$172 driven by expanded

premium content offering

• Steady EBITDA and margin

• Benefits of recent initiatives such as overseas distribution and BPL to

materialize in coming periods

Media EBITDA

30 28 29

H1'11 H1'12 H1'13

19% 17% 17% EBITDA

Margin

140 145

179

H1'11 H1'12 H1'13

10

Delivering its Growth Potential

(US$ million) Solutions Revenue

• Impressive revenue growth of 24% driven by execution of projects, expanding presence in China and increase

in demand for data centre services

• Secured order increased yoy to US$670 million

• Expanded core capabilities and geographical reach via the acquisition of Vanda China and Compass Solutions

20 22

28

H1'11 H1'12 H1'13

Solutions EBITDA

• Continued expansion of EBITDA margin to 16% driven by benefits of increasing

scale of business and improved

productivity

EBITDA

Margin

14% 15% 16%

11

Investing Prudently for Growth

Core Opex to Revenue Ratio: 24% 23% 22%

• Opex grew by 8% in H1’13 and the opex to revenue ratio

was 22%

• Increase in opex primarily at HKT – a combined result of

the expansion in business, in

particular the International

business and inflationary

pressure on staff costs and

rental expenses

• Media & Solutions opex also increased but was mitigated

by operational efficiency

achieved at Group level

(US$ million) Core Operating Expenses

491 547

562

Media, Solutions & Others

HKT

277 264 299

64 67 61

H1'11 H1'12 H1'13

331 341 360

Profit for the period 164 185 + 13%

Effective tax rate NA NA

Associates and JVs (6) 4

Profit before income tax 158 174

Income tax 6 11

12

Financial Performance

(US$ million) H1’12 H1’13

Revenue 1,526 1,707 + 12%

Cost of sales (677) (813)

Operating expenses (357) (388)

Depreciation & Amortization (273) (291)

Gain on disposal of property, plant and equipment, net - 1

Net other gains 2 25

Non-controlling interests (57) (75)

Profit attributable to equity holders of the Company 107 110 + 2%

EBITDA 492 506 + 3%

Earnings per share (in HK cents) 11.51 11.79

Net finance costs (57) (71)

205 249

130

36

41

23

2011 2012 H1'13

13

(US$ million)

8% Core Business

Capex to Revenue Ratio:

13

Demand-Driven Core Capex

290

241

Media, Solutions & Others

HKT

9% 9%

• HKT capex focused on demand driven spending for

fibre upgrades and increasing

mobile data usage

• Only light capex spending required for the Media and

Solutions businesses

• Moderate increase in Solutions capex for data center

expansion to meet demand

• Overall capex to revenue ratio continues to remain within the

below 10% guidance

153

14 14

Sound Financial Position

(US$ million)

Net Debt (1)

Net Debt / EBITDA(2) 2.4x 2.8x 3.0x

(1) Net debt refers to the principal amount of short-term and long-term borrowings minus cash and cash equivalents and certain restricted cash

(2) Based on net debt as at period end divided by EBITDA for the 12-month period

(HKT)

2,785 (HKT)

2,879 (HKT)

2,333

2,819 3,029

2011 2012 H1'13

500 500 500

300500

395

706

457

154

2013 2014 2015 2016 2017 2018 2022 2023

Repaid in

July 2013

15 15

Optimal Financing Structure

• Next debt repayment only due in 2015

• Ample liquidity of US$673 million for HKT, US$211 million for PCCW and US$209 million for PCPD in undrawn banking facilities post the redemption of US$500 million guaranteed

notes due in July 2013

• Proactively monitor capital markets for opportunities to lock in long term financing

• Effective interest rate was approx. 3.2% in H1’13

(US$ million)

Bank Loans

US$ Bonds

As at June 30, 2013

PCCW

Level

PCCW

Level

Business Review

George Chan

Group Managing Director

16

17

Media Business

10 Years of

Strong Brand, Content &

Innovations

18

2007 2008 2009 2010 2011 2012 2013

Market Leader in Pay TV

now TV continues to excel with good customer up-take; total installed base reached over 1.2M. Growth to

accelerate as the new BPL season kicks off in H2’2013.

Early BPL Monetization & Service Differentiation

Set Stage for Growth

Early monetization of BPL:

Commencing January’13, the price of premium packages

including sports has increased from $258+ to $428+

Early bird offer has brought forward momentum of new

subscribers and existing subscribers upgrade before

season kick-off

Service differentiations deliver more value to

subscribers and drive ARPU :

Enhanced BPL viewing experience via expanded capabilities

and innovations:

1. SuperHD – new standard in picture quality

2. nowPlayer – TV everywhere

3. TIMESHIFT – allows a viewer to watch a match from the beginning even if late in joining

4. nowRecord – virtual personal video recorder

19

Most KIDS & EDUCATION Channels & On-demand Learning Content in Town

Exclusive

Unrivalled World-Class

SPORTS content Exclusive

A Significant Producer of

LOCAL Content

- Providing 23 self-produced channels - Producing ~1000 hours of fresh programs annually

Exclusive

Clear Leadership Across All Key Content Categories

Top-class content line-up, only on now TV!

Strongest MOVIE Line-up Bringing Home-Theatre Excitement

Exclusive

20

http://nowtv.now.com/channel/442http://nowtv.now.com/channel/445http://nowtv.now.com/channel/446http://nowtv.now.com/channel/447http://nowtv.now.com/channel/441C:/wiki/File:RyderCupLogo.svg

Strategic Alliance with Mainland Partners

21

Co-produced TV Drama with Top Rated Casting of

Popular HK & Mainland TV Stars, and First-class Directors

Chinese movie channel with

Huayi Brothers, We Pictures

& Edko Films

Top rated Drama Gems from Hai-run Media Group

Repackaged Star- studded variety

& talk shows

from Hunan TV

Strategic alliance with key partners to build

exclusive content asset of dramas,

movies, lifestyle and entertainment

programs to satisfy Hong Kong,

Mainland and overseas Chinese viewers

Co-production of TV drama series with

Huace Film & TV, one of the largest listed

media companies in mainland China:

now TV creativity and Huace

distribution network

Enables primetime national broadcast

in China maximizing income stream

International distribution opportunities

Launch Markets Partners Channels/Content

Nov-12 Malaysia

Dec-12 Canada

May-13 Thailand

Jun-13 USA

Jun-13 Singapore

22

Continual Expansion of International Distribution

Business expansion outside the local market continues. now TV programming also made available to pay TV viewers of StarHub in Singapore.

StarHub Limited – The largest Cable TV operator in Singapore

Digital music service MOOV also made its debut outside of Hong Kong in Guangdong, China.

The Dish Network Corporation – One of the largest satellite platforms in the U.S.

Telekom Malaysia Berhad - TM’s Hypp TV is Malaysia's leading IPTV service which

forms part of TM’s integrated telecoms portfolio

FairChild Media Group – The largest Chinese media group in Canada

Cable Thai Holding Public Co. Ltd. - The largest cable operator in Thailand

Jul-13 Guangdong

China

Southern Media

Corporation The world’s

1st overseas paid

music service in China

International

International

International

International

International

new

new

/url?sa=i&rct=j&q=now+tv&source=images&cd=&cad=rja&docid=rmnoEEX1zK_OIM&tbnid=PbtOOhHyPNZfpM:&ved=0CAUQjRw&url=http://en.wikipedia.org/wiki/File:NowTV.png&ei=w3ryUcitIYftkgXOlIG4Dg&psig=AFQjCNGCl-UE5uRGbi1cekx2CgDKBzFCBQ&ust=1374932023591246C:/url?sa=i&rct=j&q=now+tv&source=images&cd=&cad=rja&docid=rmnoEEX1zK_OIM&tbnid=PbtOOhHyPNZfpM:&ved=0CAUQjRw&url=http:/en.wikipedia.org/wiki/File:NowTV.png&ei=w3ryUcitIYftkgXOlIG4Dg&psig=AFQjCNGCl-UE5uRGbi1cekx2CgDKBzFCBQ&ust=1374932023591246C:/url?sa=i&rct=j&q=now+tv&source=images&cd=&cad=rja&docid=rmnoEEX1zK_OIM&tbnid=PbtOOhHyPNZfpM:&ved=0CAUQjRw&url=http:/en.wikipedia.org/wiki/File:NowTV.png&ei=w3ryUcitIYftkgXOlIG4Dg&psig=AFQjCNGCl-UE5uRGbi1cekx2CgDKBzFCBQ&ust=1374932023591246C:/url?sa=i&rct=j&q=now+tv&source=images&cd=&cad=rja&docid=rmnoEEX1zK_OIM&tbnid=PbtOOhHyPNZfpM:&ved=0CAUQjRw&url=http:/en.wikipedia.org/wiki/File:NowTV.png&ei=w3ryUcitIYftkgXOlIG4Dg&psig=AFQjCNGCl-UE5uRGbi1cekx2CgDKBzFCBQ&ust=1374932023591246C:/url?sa=i&rct=j&q=now+tv&source=images&cd=&cad=rja&docid=rmnoEEX1zK_OIM&tbnid=PbtOOhHyPNZfpM:&ved=0CAUQjRw&url=http:/en.wikipedia.org/wiki/File:NowTV.png&ei=w3ryUcitIYftkgXOlIG4Dg&psig=AFQjCNGCl-UE5uRGbi1cekx2CgDKBzFCBQ&ust=1374932023591246

Over 2M app downloads allowing users to enjoy free TV content in HK!

23

now subscribers enjoy TV everywhere service with enriched content and features:

42 live streaming channels and services

Over 3,000 hours of on-demand videos

Launched now FREE TV app with 3 free channels

Increased viewer base and propensity

of viewing

Promotional platform for content sampling

to up-sell free viewers to pay TV subscribers

Embracing New Media Technologies

Embracing new media technology for revenue and subscriber growth:

23

Solutions Business

24

140 145

179

H1'11 H1'12 H1'13

25

Delivering its Growth Potential

(US$ million) Solutions Revenue

• Impressive revenue growth of 24% driven by execution of projects, expanding presence in China and increase

in demand for data centre services

• Secured order increased yoy to US$670 million

• Expanded core capabilities and geographical reach via the acquisition of Vanda China and Compass Solutions

20 22

28

H1'11 H1'12 H1'13

Solutions EBITDA

• Continued expansion of EBITDA margin to 16% driven by benefits of increasing

scale of business and improved

productivity

EBITDA

Margin

14% 15% 16%

Diversified Customer Base

Technology, Media

& Communications

Public Sector

Transport &

Hospitality

Retail

Manufacturing

Secured Order increased by 4% yoy to US$670m

Banking and

Finance

26

http://www.amway.com/en/default.aspxhttp://www.swire.com/

Contribution from Cloud Computing to Secured Order

2012 1H Secured Order

27

Cloud Computing

Services 9.6%

2013 1H Secured Order

Healthy Transition from Project-Based Systems Integration to Cloud Computing

Solidifies Recurring Nature of Secured Order

Cloud Computing

Services 2.8%

Key Growth Drivers

• Migrated the HKSAR Government’s entire financial system to a private cloud

providing a centralized database and removing the need for hardware monitoring,

software maintenance, first line support and future upgrades. Currently serving

10,000 users and easily scalable.

• Major public transportation company in Hong Kong using our cloud platform to

provide real time emergency notification. During a service disruption, the cloud

platform can cater to an upsurge in demand allowing passengers to access real

time information and make alternative arrangements to reach their destinations.

Organizations moving away from owning infrastructure and software license:

PCCW Solutions Has the Scale and Expertise to Play a

Leading Role in Cloud Computing

28

Cloud Computing

Connect China to

the World • ICT managed services to support Bank of Shanghai’s expansion in Hong Kong

• Data center services to Tencent for expansion outside PRC

Digital Economy

• Virtual Reality System and 3D Theatre Systems for heritage sites and cultural venues in both Hong Kong and China to enhance visitors’ digital experience

• Self-developed RFID-enabled Smart Shelf won 2013 Retail Innovation Award

• “Build to Demand” strategy; improves speed to market and return on investment

• 75,000 sq. ft. GFA completed earlier this year

• Confirmed to convert 166,000 sq. ft. GFA of an existing building to data center with completion expected between Q4 2013 – Q3 2014

• Further secured another 36,000 sq. ft. GFA to cater for increasing pipeline

Data Centre

Hosting

Increasing demand for premium data center hosting services

Providing reliable IT service to serve PRC companies’ international expansion

Digital technology to enhance customer experience and to reach

more customers

29

Key Growth Drivers

Inorganic Growth Yielding Synergies

• Acquisition Date: Nov 2012

• Expert software company serving city

commercial banks and finance companies

in China

• With enhanced capabilities the combined

team is in a better position to serve top

ranking banks in China

• Acquisition Date: May 2013

• 200+ SAP expertise and 300+ customer base in

retail and manufacturing sectors

• Combining PCCW Solutions’ resources and

Compass’ expertise, we became the 1st company

in Hong Kong to be recognized as SAP official

provider of Cloud and Hosting Services

• Combined team successfully won contract from a

major Hong Kong government department

30

Vanda China Compass Solutions

31

Solid Financial Performance

(US$ million)

Consolidated Performance

H1’12 H1’13 % change

Revenue 1,526 1,707 + 12%

EBITDA 492 506 + 3%

Profit Attributable to Equity Holders 107 110 + 2%