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PACIFIC CENTURY Presented by Group 1B. PACIFIC CENTURY Agenda 1)Background of PCCW 2)Industry Life...
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Transcript of PACIFIC CENTURY Presented by Group 1B. PACIFIC CENTURY Agenda 1)Background of PCCW 2)Industry Life...
PACIFIC CENTURY
Presented by Group 1B
PACIFIC CENTURY
Agenda1) Background of PCCW2) Industry Life Cycle3) Key Strategies
-Where to compete-How to compete-Business Model
4) Potential sustainable advantages5) Major competitors6) Recommendation7) Conclusion
April
Maggie
Angel
IsabelApril
PACIFIC CENTURY
PCCW Background• Technology flagship of Pacific Century
Group
• Founded in 1993
• Listed in Hong Kong in May 1999
• 3 main subsidiaries – Pacific Convergence Corporation– Cyberport– Cyberworks Ventures
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Pacific Century Group
Pacific Century Cyberworks
CyberportsCyberworks
VenturesPacific Convergence
Corporation
Organizational structure of PCCW
PACIFIC CENTURY
PCCW Background• Core business
– Internet Industry• Broadband service
• ISP-enabling service
BroadbandService
ISP-Enablingservice
InternetIndustry
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PCCW objectives• A leader in Internet
Infrastructure, content and service
Leader
InternetInfrastructure
InternetContent
InternetService
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PCCW Strategy• Turn into giant Internet venture capital
fund
• Provide hybrid Internet access and interactive television in SE Asia
to be a leader in internet industry
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PCCW Performance
Began the service roll-out of NOW2000 Jun
Entered into the agreement of “Cyberport” with Government
2000 May
Formed a Joint Venture with CMGI2000 Jan
Established CyberWorks Ventures1999 Aug
Listed in Hong Kong1999 May
Bought a telecommunications-equipment distributor
1999 Apr
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Internet IndustryBroadband
Introduction
Growth
Indu
stry
sa
les
time
Introduction Growth Maturity Decline
Internet IndustryDial-up Service
Maturity
Decline
Industry Life Cycle
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Life Cycle Pattern
• Life cycle regeneration– Dial-up– Broadband
Sal
es
Time
Dial-up
Broadband
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Key Strategic Issues – Where to compete
A) Which Service? • Advantages– High Speed– More reliable– Support more conten
t– Interactive
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Where to compete
B) Which Geographic Market?1) Limited Broadband Users
Singapore - 1 Million Internet users - 35,000 Broadband subscribers
Hong Kong - 400,000 narrowband subscribers
- 60,000 Broadband subscribers
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Where to compete
2) High Operating CostsChina
- PCCW need to lower its operating cost
- need to open internet market
Unfavorable?
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• Favorable Factors
1) High Potential Demand Life cycle theory - demand for new technology:
advanced industrialized countries
developing countries
Where to compete
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2) Fast growing telecommunication industry
- China - large potential market
- large population
Where to compete
High potential revenue
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3) Risk-accepting Population
- Hong Kong - more likely to adopt innovation
- higher living standard
Where to compete
High potential to use broadband
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• Improving content– Key success factor– NOW offers 8 web channels– Interactive content
• Improving connection infrastructure– Cable modem, optical fiber network and satellite– NOW : satellite
How to compete
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• Joint Venture– Share risk and return– Pooling of resources and capability
How to compete
Improve content and infrastructure
Improve innovation
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Business Model
• How to generate revenue?– Internet
• Subscription fees for Broadband connection• Internet Advertising• E-Business
– Venture Capital
PACIFIC CENTURY
Sustainable Advantages
• Complementary Resources– Financial Resources
• By issuing shares in May 1999
• Raised 1.3 billions
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Sustainable Advantages
• Complementary Resources– Complementary Technologies
• By joint ventures e.g. CMGI• Shared technologies and information
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Sustainable Advantages
• High complexity of internet industry– Unique capabilities of TV, PC and
World Wide Web
– Difficult to be copied
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Sustainable Advantages
• Lead Time – Enough fund by issuing shares– large scale investments
High barrier Beneficial to be a potential leader
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Sustainable Advantages
• The presence of technical standards– Early mover– The Network of the World (NOW) and
broadband services– Enough resources
High barrier
Beneficial to be a potential leader
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PCCW’s Competitors
• I-Cable Communications Ltd– Hong Kong company– Second largest broadband network– TV system operator
• Siti Company– Indian company– Cable rights and rights for new movies
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PCCW’s Competitors
• KDD Winstar Corporation– Japanese company– Technical expertise
• Star TV– 30 channels in seven languages
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PCCW’s Competitors
• Hong Kong Telecom– Hong Kong company– One of the largest telecommunications
companies in Asia– Leading provider of integrated
communications services– Network infrastructure e.g. iTV
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Recommendation
• Acquisition of Hong Kong Telecom
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Pros• Reduced competition• Complementary resource• Increased Asset• First step for globalization• Diversification
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Complementary Resources
•Strong Cash Flow•EBITDA of nearly 6 Billion
•70% of Hong Kong Household
•fully digital fiber optic broadband network•ATM broadband•interactive TV
Core technology
Complementarytechnologies
FinanceDistribution
Customer service
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Diversification• Narrowband and Broadband
Internet access
• Interactive multimedia service
• Fixed and wireless voice service
• leased circuits
• Others
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Globalization
• Network with other Asia Countries
• Asia Pacific Cable Network 2
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Cons
• Difficulties in control and manage
• High debt of Hong Kong Telecom
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Recommendation
• Declining in IDD business• Huge investment results in high
risk – Leader or follower– In depth Analysis for the market
• Importance in globalization
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Conclusion
PCCW
Good prospect in SE Asia
Broadband Service
PCCW has high potential to be a leader
Reasons: limited capabilities
e.g. lead time advantages Complementary resources Technical standard
Acquire HKT to conquer HK market
PACIFIC CENTURY
Thank You Comments & Questions