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Investor Presentation

September 2014 - 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

1

2

(US$ million)

Core Businesses

Solid EBITDA

& cash flow

HKT FY13 Revenue 2,927

FY13 EBITDA 1,013

Market Value (as at Sep 12, 2014) 9,203

Growth

businesses

Media FY13 Revenue 387

FY13 EBITDA 65

Solutions

FY13 Revenue 380

FY13 EBITDA 67

PCPD FY13 Revenue 86

FY13 EBITDA (12)

(100%) (100%)

(63.07%)

Figures in brackets represent ownership by PCCW as at Sep 12, 2014.

(71.69%)

Solid Telecom Business Media & Solutions Businesses – Growth Focus

FY13 Revenue 3,502

FY13 EBITDA 1,030

Market Value (as at Sep 12, 2014) 4,770

3

Diverse Global Workforce

Diverse global workforce fosters business growth and innovation

and best serves our customer needs worldwide

• Approximately 23,000 people work within the PCCW Group worldwide

after the successful integration of CSL

• Diversity of Nationalities

• 50 Nationalities are represented in our workforce

• Gender Balance

• Women and Men accounted for approximately 35% and 65% of the

total workforce respectively

Figures stated as at June 30, 2014

4

Media Business

81

63 65

29 23

FY 2011 FY 2012 FY 2013 H1'13 H1'14

347 360 387

167 191

FY 2011 FY 2012 FY 2013 H1'13 H1'14

5

Consolidating Leadership Position

(US$ million) Media Revenue

• Media revenue up 14% in H1’14 underpinned by

subscription and advertising revenue growth • Softening in EBITDA and margin in H1’14

reflecting the full six-month impact of the

costs associated with BPL. In addition,

investments were made for service

enhancement and business development

Media EBITDA

EBITDA

Margin 17%

12%

23%

17% 17%

818

882927

953992 1001

1028 10391088

11401165 1183

12371204

1269

125

153

169165 167 169

172 173

187

169 171 171 174174

191

H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1

Installed Base Installed base ARPU (HK$/ month)

6

Continued Market Leadership in Pay TV

2007 2008 2009 2010 2011 2012 2013 2014

Thousands

now TV continued to excel over competitors and recorded expansion in subscription

base and ARPU in H1’2014

Apart from BPL, the broadcast of World Cup on now TV platform

in June, reinforced Now TV as the ultimate choice for soccer fans,

and brought forward sports subscription before new BPL season

kick-off

Unique interactive TV features (including Now Player, VOD, Live

Timeshift, and Network Recording functions) plus the upgrade of all

15 sports channels in HD* amplify service differentiation over

competitive services substantiating premium positioning

* now Sports (632-637), now BPL (621-625), Fox Sports (670-672) and Eurosports (676) will be all

upgraded to HD / Super HD in H2’14

Soccer Fans Base Continues to Expand

Interactive Features Amplify Service Differentiation

Unique features amplify service differentiation

Soccer Tennis Basketball Golf Others

now Super

Sports Pack

15 World Class Channels in HD quality

7

Successful First TV Drama Series Production

8

“The Virtuous Queen of Han” Cast : Wang Luo Dan , Raymond Lam, Niki Chow (top actors in Mainland and Hong Kong)

Director / Scriptwriter :

Lau Gar Ho, Mui Siu Ching (highly regarded talented

directors / scriptwriters, best known for directing top-rated

TV dramas in Hong Kong)

Successful completion and launch of Now TV’s first 38-episode

TV drama co-production “The Virtuous Queen of Han”.

Global distribution of the series is well underway

Major Mainland distribution deals have been reached

Top satellite TV stations - Zhejiang Satellite TV and

Anhui TV Station

Major online video platform - Tencent Video

First broadcasting in late August in Mainland has achieved

remarkable result. According to CSM (索福瑞媒介研究有限公司),

the only governmental recognized viewership company, it

became the no. 1 rated drama.* The quality of our production

and creativity of our talents and writers is well recognized

More deals in other territories concluded:

Reached distribution agreement with broadcasters in

Singapore, Malaysia, Vietnam, Japan, Korea,

Philippines, Cambodia, Sri Lanka, Australia & New

Zealand

Production of the second & third TV dramas is in the pipeline

* The viewership data was collected from CSM with 120 million of television viewer units as base.

Established important affiliate partnerships to distribute now TV channels

across Asia and North America

Latest addition to footprint

Viettel of Vietnam and Bell’s Fibe TV of Canada

Debuted Chef Corner & Junior Chef Corner co-production projects with StarHub in

Singapore and Fairchild TV in Canada proving success of our home grown formats

Chef Corner

(Singapore) Territory Affiliates

Malaysia Telekom Malaysia HyppTV

Singapore StarHub Limited

Thailand CTH Public Co. Ltd.

Indonesia Big TV (First Media)

USA Dish Network Corp

Canada

Canada

Fairchild TV

Telus Optik TV

Rogers Communications

Bell Fibe TV

Vietnam Viettel

Junior Chef Corner

(Vancouver)

Continual Expansion of International Footprint

9

Total Overseas

Subscribers

>500K

new

Launch of Brand New MOOV App

to Capture OTT Music Market

ENJOY Music Visual driven UI,

1 click to favorite &

download songs Discover 1st in HK Playlist

Central with 20+

Music Gurus to curate

1000+ playlists

Share Patent-pending

LyricSnap merges

music, lyrics and photos

with social media

KPOP Library HK’s Largest KPOP

library with 100+

music labels direct

distribution

• Digital Music Industry Revenue in HK

grew over 50% between 2010 to 2013*

• In line with our overall OTT strategy –

brand new version of MOOV offer an

open-to-all Hong Kong music service

to attract mobile and connected device

users with new features and enhanced

content library

• Following the launch in Guangdong,

we further reached agreement with

BesTV to roll-out MOOV nationally in

mainland China throughout its IPTV

markets as exclusive music partner

3.3M app download.

Users enjoy now TV contents via now apps in HK

* IFPI’s Recording Industry in Numbers Apr 2014

Unique features in new MOOV App

10

IT Solutions Business

11

49

56

67

28 30

FY 2011 FY 2012 FY 2013 H1'13 H1'14

283

318

380

179 187

FY 2011 FY 2012 FY 2013 H1'13 H1'14

12

Demonstrates Continued Growth

(US$ million) Solutions Revenue

• Revenue growth of 5% in H1’14 driven by timely execution of

projects and continued demand for data center capacity

• Secured order increased by 16% yoy to US$774 million as at

Jun 30, 2014

• Overall data center occupancy rate at 87% as at Jun 30, 2014

Solutions EBITDA

• EBITDA growth of 7% and stable margin

in H1’14 driven by recurring service

revenue and maintaining staff and data

center utilization levels

EBITDA

Margin 16% 16% 17% 18% 18%

Significant Contract Wins

Project Implementation

• Re-design and implement the

education information system

for Education Bureau

• Supply, installation and re-

commissioning of extra-low

voltage solutions systems for

Venetian Macau Serviced

Apartment

13

Outsourcing

• Provide IT managed services

including IT workplace support

and data center management

services for MTR

• Provide frontline support &

maintenance service for the

control centre at Hong Kong

International Airport

Data Center Services

• Design, plan and provide

data center services for a

government department

• Provide data center

services for a well-known

European financial

institution

China

• New wins from existing customers

including in China Unicom and

China Mobile

• Vanda Group - New wins in

complementary industries such as

auto finance

• New SAP wins in the logistics and

manufacturing industries

Secured Orders increased by 16% yoy to US$774m

Expanding Data Center Capacity

A new world-class data center in Kwai Chung

with gross floor area of 202,000 sq.ft. and

maximum electricity capacity of up to 8,000 kW

has been opened in phases. Around 73,000 sq.ft.

became available in H1 2014

14

Customers including government departments and

financial solutions provider will move-in in H2 2014

MCX 10

Key Organic Growth Drivers

Secured orders from Cloud Computing

15

Cloud Computing – Healthy growth engine

• Implemented a Central Hosting

Infrastructure supporting more than

100 e-government services for the

Office of the Government Chief

Information Officer

China Business – Connecting China to the world

• Bringing in world-class technologies

and successfully built high-tech digital

theater systems at Dunhuang Mogao

Caves Visitor Center and Beijing

Planetarium

+38%

y-o-y

Revenue from China

+21%

y-o-y

Telecom Business

16

17

A Solid Performance

And the Return of CSL • Adjusted Funds Flow up 7% yoy to US$204 million in H1’14

• Interim distribution of 21 HK cents per SSU

• Enlarged mobile business with return of CSL – Mobile revenue and EBITDA increased by 63% and 113% respectively in H1’14. Mobile

revenue represented 23% of total HKT revenue (16% in H1’13) and mobile EBITDA accounted for 22% of total HKT EBITDA (12% in H1’13)

• TSS delivering steady growth – TSS revenue and EBITDA increased by 4% and 2% respectively in H1’14, underpinned by the broadband and

international businesses

HKT EBITDA HKT Revenue (US$ million)

Mobile

Eliminations

TSS Others

Others

International

Local Telephony

Local Data

Mobile

Others

TSS

(13) (25) (27) (17) (18)

897 912 927

450 461

66 96 113

59 124

FY 2011 FY 2012 FY 2013 H1'13 H1'14

567 492

950 983

104 88 88 41 37

426 395 340 149 151

436 436 440

215 216

728 776 828

403 415

538 673

860

413 444

341 391

432

229 373

(31) (56) (61) (31) (31)

FY 2011 FY 2012 FY 2013 H1'13 H1'14

1,605 1,419

2,542 2,703

2,927 1,013 16%

29% 28%

15% 23%

28% 26%

13%

11%

1% 1%

9% 12%

91%

-3%

22%

81%

-3%

Stable Fixed-line Business

18

1,144 1,164 1,180 1,183 1,195 1,182 1,183 1,228 1,238 1,242 1,245

1,423 1,400 1,407 1,407 1,408 1,406 1,407 1,408 1,408 1,409 1,409

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 H1'14

Business Lines

Residential Lines(’000)

Solid Customer Base Maintained Since 2004

Consolidated Position in Broadband

19

Consolidated broadband market position with churn rate of around 1%

Industry dynamic has shifted from market share gain to value creation and ARPU growth

(‘000)

1,005 1,060 1,099 1,126 1,136 1,146 1,148 1,215 1,285

1,363 1,385 1,410 1,408 1,408 1,408

104107

110 113 113 114 114115

116119 122 126 128 130 131

Series 1 Series 2 Series 3 Series 4 Series 5 Series 6 Series 7 Series 8 Series 9 Series 10 Series 11 Series 12 Series 13 Series 14 Series 15

Wholesale

Business

Consumer

1,237 1,275 1,302 1,305 1,297 1,298

1,367 1,437

1,518

1,176

1,540 1,567 1,567 1,567

2007

H1 H2 H1 H2 H1 H2 H1 H1 H1 H2 H2

2008 2009 2010 2011 2012

H1

2013

H2 H2

1,567

H1

2014

Wide Coverage of our Fiber Network

20

* FTTB-ready means FTTH service can be available within 29 days of receiving a service order, building management access permitting

** FTTH-ready means FTTH service can be available within 4 days of receiving a service order

(as of July 2014)

FTTB-ready (86.9%)* (supporting speeds of up to

100Mbps)

1.5M or above

(98%)

FTTH-ready

(79.9%)** (supporting speeds up to

1000Mbps)

Continued Growth of Fiber Customers

21

Fiber-To-The-Home (FTTH) Service continued to attract new

customers and existing customers for service upgrade

462K customers enjoying FTTH service as of Jun 2014,

grew 28% vs. Jun 2013

(‘000)

57

144

226

304

362

419 462

Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14

Growing fiber customer base creates future upgrade

opportunity to higher speed, higher price service plans

583K customers enjoying high speed service (FTTH and

VDSL) as of Jun 2014

International Business Continues to Grow

22

Our Mobile Business Now

23

● Total customer base of 4.512M

– Post-paid customer base of 3.183M

CSL Acquisition Completed on May 14, 2014

* Figures stated as at June 30, 2014 or for the six months ended June 30, 2014

● Post-paid exit ARPU of HK$216

● Mobile data represents 68% of total services revenue

● 76% of post-paid customers are smart-device users

● IDD and roaming represent 18% of total services revenue

Staff Integration Complete

– CSL staff acceptance rate of over 94%

Launched Multi-Brand Strategy

– Three-brand strategy allows full coverage of the market according to customer’s affordability

and service requirements

Rationalized Shop Networks

Started Network Integration

– Deploying “Multiple Operator Core Network” technology to integrate the networks, with an

initial focus on the 900MHz network

– Most CSL cell sites located at MTR stations have already been upgraded to fiber backhaul

Unified and Simplified Service Plans and Pricing

– CSL plans retained although a number of low volume plans have been removed

– PCCW-HKT mobile tariffs have been aligned

– Unified pricing plans reduced complication while still offering significant choice for

customers based on their requirements

Integration Process Well Underway

24

25

Investing Prudently for Growth

• Opex grew by 16% in H1’14 and the

opex to revenue ratio was 23%

• Increase in opex in H1’14 primarily

at HKT, largely due to the CSL

acquisition; expect the synergies

realized from increased scale and

rationalization of the operations to

manifest more evidently over the

course of the next 18-24 months

• Media & Solutions opex also

increased in H1’14 but was

mitigated by operational efficiency

achieved at Group level

(US$ million) Core Operating Expenses

Media, Solutions & Others

HKT

547 562 617

299 354

113 113 116

61 63

FY 2011 FY 2012 FY 2013 H1'13 H1'14

360

660

417

675 733

Core Business

Opex to Revenue Ratio: 23% 22% 23% 21% 22%

205 249 260

130 147

36

41 73

23 40

FY 2011 FY 2012 FY 2013 H1'13 H1'14

26

(US$ million)

26

Demand-Driven Core Capex

290

241

Media, Solutions & Others

HKT

• HKT’s increase in capex

in H1’14 due to CSL

integration but synergies

expected

• Increase in Media,

Solutions & Others capex

in H1’14 mainly for data

center expansion of

Solutions business

• Maintain 10% capex to

revenue ratio guidance

187 153

333

8% Core Business

Capex to Revenue Ratio: 9% 10% 10% 9%

27 27

Solid Financial Position

(US$ million)

Gross Debt (1)

Gross Debt / EBITDA(2) 3.4x 3.7x

(HKT) 3,093 3,157

(HKT)

5,727

(HKT) 4,724

(HKT)

3,403 3,853

6,423

5,573

2012 2013 H1'14

(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 July 31, 2014 divided by PCCW FY13 EBITDA and CSL FY13 EBITDA

(5) Based on net debt as at July 31, 2014 divided by PCCW FY13 EBITDA and CSL FY13 EBITDA

(6) Includes cash and cash equivalents of disposal group classified as held for sale

(7) Based on the cash balance as at June 30, 2014 adjusted for the HKT Rights Issue

(HKT)

5.9x

Post the HKT Rights Issue

Cash Balance (US$ million) 584 706 1,162 (6)

Net Debt / EBITDA(3) 2.8x 3.1x 4.9x

3.8x (4)

676 (6),(7)

3.3x (5)

Jul’14

500 500300

500

447

1,011

559154

2,602

2014 2015 2016 2017 2018 2019 2022 2023

As at July 31, 2014

28 28

• HKT refinanced the commercial banking facility in relation to the CSL acquisition by way of the

drawdown of US$1.5 billion in 5-year banking facilities and the US$1 billion proceeds raised from the

HKT’s rights issue

• Ample liquidity of approx. US$1.7 billion in undrawn facilities across the entire group as of July 31, 2014

• Effective interest rate fell to around 3% in H1’14

Debt Maturity Profile

(1) Based on the cash balance as at June 30, 2014 adjusted for the HKT Rights Issue

(2) Includes cash and cash equivalents of disposal group classified as held for sale

(US$ million)

Bank Loans

US$ Bonds

US$ million

Cash

Balance (1) Debt

Undrawn

Facilities

HKT 320 4,724 542

PCCW 251 657 781

PCPD 105 (2) 192 392

Total 676 5,573 1,715

1,602

US$1 billion

proceeds from

Rights Issue

PCCW 255

PCPD 192

PCCW 102

29

Shareholder Focused Dividend Policy

• 2014 interim dividend per share

of 6.99 HK cents, representing

an increase of 10% over the

same period last year

Interim 5.51 6.35 6.99

Final 13.55 13.85

Total 19.06 20.20

Payout Ratio 83% 78%

DPS (HK cents)

Final Dividend

Interim Dividend

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

(2) Based on PCCW closing price of HK$3.60 on Feb 27, 2014

Yield: 5.1% (1) 5.6% (2)

(HK cents)

2012 2013 H1’14

13.55

5.51 6.35

13.85

6.99

Appendix

30

Free TV Preparation Underway

31

We continue to make progress with the Government

on the final terms of our free TV license. Consistent

with the government policy on spectrum allocation

in the interest of public benefit, we urge the

Government for equal access to broadcast spectrum

to new entrants

Preparation underway - Production capabilities and

expertise established, acquisition of pay and free TV

content rights for sports, TV series and other

programming in good progress

News

Lifestyle

& Entertainment

Sports

The HK$300M Independent Production Scheme,

set up upon license granted in-principle to encourage

outstanding independent productions, has received

encouraging response from the creative industry. A

number of outstanding proposals for TV movies,

dramas, mini-series are confirmed

Movies / Drama

32

Summary P&L

Effective tax rate 8% 6% NA 19%

Profit for the year / period 329 392 185 210 + 14%

Associates and JVs (3) 18 4 1

Profit before income tax 359 419 174 260 + 50%

Income tax (30) (27) 11 (50)

(US$ million) FY 2012 FY 2013 H1’13 H1’14

Revenue 3,246 3,502 1,707 1,880 + 10%

Cost of sales (1,515) (1,681) (813) (870)

Operating expenses (733) (791) (388) (449)

Depreciation & Amortization (566) (586) (291) (323)

Disposal (loss)/gain on property, plant and equipment (2) 1 1 -

Net other gains 48 88 25 88

Net finance costs (116) (132) (71) (67)

Non-controlling interests (116) (150) (75) (74)

Profit attributable to equity holders of the Company 213 242 110 136 + 24%

EBITDA 998 1,030 506 561 + 11%

Earnings per share (in HK cents) 22.87 25.98 11.79 14.57

Adjusted Funds Flow for the year / period 343 372 190 182 204 + 7%

33 33

Adjusted Funds Flow

Adjusted for:

Tax payment (26) (42) (14) (28) (10)

Net finance costs paid (93) (88) (31) (57) (47)

Changes in working capital (57) (52) (39) (13) (62)

Adjusted Funds Flow before tax paid, net finance costs

paid and changes in working capital 519 554 274 280 323 + 18%

(US$ million) FY 2012 FY 2013 H1’13 H2’13 H1’14 YoY

EBITDA 983 1,013 492 521 567 + 15%

Less cash outflows in respect of:

Customer acquisition costs and licence fees (220) (205) (91) (114) (98)

Capital expenditures (244) (254) (127) (127) (146)

Adjusted Funds Flow per Share Stapled Unit (HK cents) 41.64 45.21 23.13 22.08 24.78 /

21.00 *

* Based on an enlarged basis of 7,571,742,334 Share Stapled Units

in issue after the Rights Issue

Distribution per Share Stapled Unit (HK cents) 41.64 45.21 21.00 24.21 21.00 *