Sustainable Advantages

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PACIFIC CENTURY
CYBERWORK
Presented by Group 1B
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Agenda

• Background of PCCW
• Industry Life Cycle
• Key Strategies
• -Where to compete
• -How to compete
• -Business Model
• Potential sustainable advantages
• Major competitors
• Recommendation
• Conclusion

• April
• Maggie
• Angel
• Isabel
• April

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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
Cyberports
Cyberworks Ventures
Pacific Convergence Corporation
Organizational structure of PCCW
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PCCW Background

• Core business
• Internet Industry
• Broadband service
• ISP-enabling service

Internet Industry
Broadband Service
ISP- Enabling service
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PCCW objectives

• A leader in Internet Infrastructure, content and
  service

Leader
Internet Infrastructure
Internet Service
Internet Content
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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
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Industry Life Cycle
Industry sales
Introduction Growth Maturity
Decline
time
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Life Cycle Pattern

• Life cycle regeneration
• Dial-up
• Broadband

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Key Strategic Issues Where to compete

• Advantages
• High Speed
• More reliable
• Support more content
• Interactive

• Which Service?

Broadband
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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 Costs
• China
• - PCCW need to lower its operating cost
• - need to open internet market

Unfavorable?
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Where to compete

• Favorable Factors
• High Potential Demand
• Life cycle theory
• - demand for new technology
• advanced industrialized countries
• developing countries

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Where to compete

• 2) Fast growing telecommunication industry
• - China
• - large potential market
• - large population

High potential revenue
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Where to compete

• 3) Risk-accepting Population
• - Hong Kong
• - more likely to adopt innovation
• - higher living standard

High potential to use broadband
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Favorable prospect in Asia
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How to compete

• Improving content
• Key success factor
• NOW offers 8 web channels
• Interactive content
• Improving connection infrastructure
• Cable modem, optical fiber network and satellite
• NOW satellite

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How to compete

• Joint Venture
• Share risk and return
• Pooling of resources and capability

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

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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

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PCCWs 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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PCCWs Competitors

• KDD Winstar Corporation
• Japanese company
• Technical expertise
• Star TV
• 30 channels in seven languages

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PCCWs 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
Customer service
Distribution
Core technology
Finance
Complementary technologies

• Strong Cash Flow
• EBITDA of nearly
• 6 Billion

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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
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(No Transcript)
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Thank You Comments Questions