INVESTORS - pccw.com

March 29, 2001March 29, 2001

TRANSITIONING PCCWTRANSITIONING PCCW

INVESTORSINVESTORS’’ DAY DAY2000 RESULTS HIGHLIGHTS2000 RESULTS HIGHLIGHTS

1

AGENDAAGENDA

Results Overview David Prince Chief Financial Officer

Business Unit Highlights:-Telecom Services Roy Wilson Managing Director, TSS-Total Solutions Aloysius Lee President, Group Sales-Business eSolutions Thomas Siu President, eBusiness Solutions-Data Centers Joseph Ma President, Data Centre-HKTI Keith Harrison MD, Global Communications-Enterprise Solutions David Manion-CSL Hubert Ng Chief Executive Officer, CSL-Ventures Mico Chung Chairman, CyberWorks Ventures

Strategic Direction Jeff Bowden Executive Director, Strategic PlanningOutlook 2001

2

FORWARD LOOKING STATEMENTSFORWARD LOOKING STATEMENTS

This presentation contains forward-looking statements. These forward-looking statements are nothistorical facts, but rather are based on PCCW’s current expectations, estimates and projections about itsindustry, its beliefs and assumptions. These statements are not guarantees of future performance and aresubject to risks, uncertainties and other factors, some of which are beyond the control of PCCW, aredifficult to predict and could cause actual results to differ materially from those expressed or forecast inthe forward-looking statements. Reliance should not be placed on these forward-looking statements,which reflect the view of PCCW’s management as of the date of this presentation only.

The forward looking statements described above relate to: (a) the Company's financing needs and itsexpected future expenditures for capital projects; (b) the pace of development of internet and telecomsmarkets in Asia, the growth in demand for services in those markets, and the Company's abilitysuccessfully to develop, and sustain demand for, services that respond to those demands in the face ofstrong competition; (c) the Company's ability to generate revenues and profits from its internet operations;(d) the continuing effects of deregulation of the Hong Kong telecoms markets and the Company's ability todeal with those effects; (e) changes in the political, social, economic and regulatory environment in HongKong, the PRC, India, Japan and the Asia-Pacific market generally; and (f) factors set out more particularlyin the "Risk Factors" section of the Company's convertible bond Offering Circular dated 5 December 2000,a copy of which has been filed with the U.S. Securities and Exchange Commission.

FINANCIAL REPORTING PLATFORMFINANCIAL REPORTING PLATFORM

DAVID PRINCE, CFODAVID PRINCE, CFO

4

KEY FINANCIAL MESSAGESKEY FINANCIAL MESSAGES

One Off Charges/Provisions- Investment portfolio- Bridge loan financing

Impact Of IDD Revenue Decline Is Decreasing- 13% of Telecom Services Revenue Dec ‘00 down from 17% Dec ‘99

Secured Long-Term Financing In Advance Of Troubled Markets- Current interest coverage on HKTC syndicated loan: >3.5x interest- Current PCCW Group cash position solid

We are confident about the Market Outlook For 2001- Broadband and data growth- Minimizing cash burn of internet businesses- Strong macro outlook for greater China

5

PCCWPCCW TODAYTODAY

AccountabilityEach BU Has Its Own P&L

AccountabilityAccountabilityEach BU Has Its Own P&LEach BU Has Its Own P&L

Growth

TelecommunicationServices

Engine Infrastructure

BusinesseSolutions

DataCenters B2C

Joint Ventures

RegionalWireless

REACH:IP Backbone

50% 40%

Ventures

6

BUSINESS PERFORMANCEBUSINESS PERFORMANCEPro forma-Pro forma-12 mths of PCCW Group & HKT Group unaudited12 mths of PCCW Group & HKT Group unaudited

(excluding HKTI & CSL)(excluding HKTI & CSL)

Underlying Business Unit Performance (1)

(US$’M) Unaudited2000

Unaudited1999

Y-O-YChange

Telecom Services 2,593 2,778 (7)%Business eSolutions 154 123 25%Internet Data Centers 16 7 120%B2C 143 107 34%Infrastructure and Real Estate 93 50 86%Others and Eliminations(2) (347) (449) 23%

Pro forma Revenue 2,652 2,616 1%

EBITDA (3) 790 (5)

Illustrative EBITDA incl. JVs/Associates’ EBITDA(4) 1,208 (5)

1. Assumes HKT merger effective 1 Jan 1999. 100% of HKTI and 40% of CSL Mobile are recorded as JVs & associates by equity accounting2. Others include Ventures and PCCW Japan; Eliminations are inter-BU transactions3. EBITDA is earnings before interest, taxation, depreciation and amortization, calculated before provisions and unrealized gains/(losses) of

investments.4. JVs & Associates EBITDA include 100%HKTI & 40% CSL Mobile recorded as JVs & Associates by equity accounting5. Due to complex change of internal and external business structure., it is impractical to construct a meaningful EBITDA.

TELECOMMUNICATION SERVICESTELECOMMUNICATION SERVICES

Roy Wilson, Managing DirectorRoy Wilson, Managing Director

““TSS THE CHANNEL FOR SOLUTIONSTSS THE CHANNEL FOR SOLUTIONS””

8

Wholesale ServicesWholesale ServicesRetail SalesRetail Sales

Hong Kong:• MNCs• SMEs• Residential

• Carriers• ISR operators• ISPs• Pay TV operators• Mobile operators• International backbone carriers

Telecommunication ServicesTelecommunication Services

Overseas• MNCs

IDDRetail IPLCInternational Data

Home SolutionsBroadband AccessLocal Data

Local Exchange LinesLAC/MDFInterconnect

Business SolutionsEquipment Sales

Network ConsultingNetwork SolutionsNetwork MaintenanceCall Centers

Products

Channels

Customers

BUSINESS STRUCTUREBUSINESS STRUCTURE

9

TSS PERFORMANCETSS PERFORMANCE- Balancing Revenue Streams-- Balancing Revenue Streams-

IDD• IDD market share stabilized and improving on competitive routes• Retail volume and margins maintained• TSS revenue reliance on IDD minimizing to 13% in Dec ‘00 from 17% in Dec ‘99

IPLC• Pricing pressure partially offset by 63% increase in bandwidth to 1.4Gbps

Local• Total number of direct exchange lines maintained - 3.7 million

- gains in higher value business local lines- first full year of rebalancing

• Strong data growth in retail and wholesale- wholesale broadband lines grew 196% to 282,000- bandwidth growth of 27% to 86 Gbps (excluding broadband)

10

RETAIL IDD RETAIL IDD MANAGING MARKET POSITIONMANAGING MARKET POSITION

• Stabilized market share onCategory A route- market share gained successfully in the four most competitive routes

• Revenues impacted by pricingpressure but margins maintained

• Non-dominance status on Chinaand Philippines routes nowprovide greater pricing flexibility

1 Includes Australia, Canada, US and UK Market share derived from PCCW outgoing minutes/OFTA published minutes

IDD outgoing market share of majorCategory A routes1

20%

25%

30%

35%

40%

45%

Jan-99

Mar-99

May-99

Jul-99

Sep-99

Nov-99

Jan-00

Mar-00

May-00

Jul-00

Sep-00

Nov-00

Mar

ket S

hare

Per

cent

age

11

RETAIL IPLC RETAIL IPLC MARKET IN TRANSITIONMARKET IN TRANSITION

Trends in IPLC bandwidth and pricing

• Meeting strong demand for capacity- retail IPLC bandwidth grew 60% yoy- end-to-end IPLC solutions to increase

market penetration

• Facilities based competition fromJanuary 2000 impacted price

- bandwidth prices dropped 54% yoy

• Position of strength in access toextensive IPLC network coverage

• Initiated proactive customer careprogram to retain customers

-

400

800

1,200

1,600

Jan-00

Feb-00

Mar-00

Apr-00

May-00

Jun-00

Jul-00

Aug-00

Sep-00

Oct-00

Nov-00

Dec-00

Ban

dwid

th (M

bps)

-

4

8

12

16

20

AR

PMbp

s (U

SD '0

00s)

12

LOCAL DATA LOCAL DATA LIFT OFF LIFT OFF

Wholesale Broadband Growth Trend

1. Broadband access includes wholesale broadband access lines for Broadband Internet (BBI) and iTV2. Circuit/packet switched services, including:ISDN, T1/E1/T3, ATM, Fibreline(T3), DDS

• Average 16,000 wholesale broadbandlines sold per month in 2000

• Wholesale broadband lines1 grew196%

- driven by strong residential demand- 82% market share

• Other local data2 bandwidth grew 27%to 86 Gbps

- driven by Banking and Financesegment which accounted for 32% ofdata revenue

- minimal contribution of new economycompanies at 14% of revenue

0

50

100

150

200

250

300

Jan-00

Feb-00

Mar-00

Apr-00

May-00

Jun-00

Jul-00

Aug-00

Sep-00

Oct-00

Nov-00

Dec-00

Broa

dban

d Li

nes

in 0

00's

13

GOING FORWARD TSS IS IN GOING FORWARD TSS IS IN A POSITION OF STRENGTHA POSITION OF STRENGTH

PCCW positions as at Dec 2000

Maintain leading share of access lines and backbone marketCompetitors have focused on resale

Fiber Backbone Market Share 84% Exchange Line Market Share 94% Broadband Market Share 82%

14

Strategies Going ForwardStrategies Going Forward

• Network operational,management expertise

• Transportable, transferableplatforms & applications

• Focus on Greater China --PRC, Taiwan

• Sweat the assets

• Accelerate data, broadbandgrowth

• Increase local ARPU

• Broaden product offering

• Wholesale to drive usage ofnetwork, leverage scale

Leverage Network Capacity/CapabilitiesLeverage Network Capacity/CapabilitiesLeverage Network Capacity/Capabilities

Grow Revenue and EBITDA:Replicate and LeverageOutside Hong Kong:

15

TSS BUSINESS METRICSTSS BUSINESS METRICS

Proforma Revenue

12 months ended 31 December 2000US$ million

Local Telephone Services(Direct Exchange Lines, interconnection, local access charges)

Local Data Services(Wholesale BB, wholesale ITV, traditional IP/data products)

International(IDD, retail IPLC, int'l data & messaging)

Others(Equipment sales, Teleservices, co-location, sub-contracting)

Total

1999

899

439

903

537

2,778

EBITDA

2000

967

432

652

542

2,593

1,200

International Voice ('M mins) Retail IDD Minutes ETS IDD Minutes

IPLC Bandwidth (Mbps) Average monthly revenue per bandwidth(1)

(US$ ‘000)

Local TelephonyExchange Lines in Services ('000)

Business Lines ('000) Residential Lines ('000)

Local Market ShareBusiness Lines (incl IDA)Residential Lines

Broadband Network customers ('000) Broadband Access iTV Broadband Access

2000

1,436 1,162

274

1,401 8

3,703 1,545 2,158

93.8%89.0%97.6%

282 215 67

1999

1,138

85818

3,6941,5242,170

96.7%93.2%99.3%

959

86

1,275

137

Operating Drivers

(1) IPLC metrics are indicative as the market only started in 2000.

TOTAL SOLUTIONSTOTAL SOLUTIONS

Aloysius Lee, President Group SalesAloysius Lee, President Group Sales

17

Corporate Model

TOTAL e-BUSINESS SOLUTIONSTOTAL e-BUSINESS SOLUTIONS

Industrial Model

International Model

Horizontal Consultancy

Bus.Con-

sultancy

ApplicationsPlatforms& SystemIntegration

Outsourcing &Managed Services

Data HostingServices

Superior NetworkConnectivity

VerticalConsultancy

Top 50Accounts

(Full range ofservices)

RetailTourismFinance

IndustrialEndorsement

IndustrialPlatform

Region

al Exp

ansio

n

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HONG KONGHONG KONG

Local VPN 850 connections

ASP B2B2C capability

e-Solution CRM, Call Centre, Payment Gateway

REGIONAL DEVELOPMENT OFREGIONAL DEVELOPMENT OFTOURISM INDUSTRY SOLUTIONSTOURISM INDUSTRY SOLUTIONS

CHINA

JAPA

N

TAIWAN

KOREA

SINGAPORE

HONG KONG

Regional IP VPN

BUSINESS eSOLUTIONSBUSINESS eSOLUTIONS

Thomas Siu, PresidentThomas Siu, President

““ e-ENABLING BUSINESSe-ENABLING BUSINESS ””

20

BUSINESS STRUCTUREBUSINESS STRUCTURE

Greater China Directories Businesses• Telecom Directories Limited (TDL) - Official publisher of Hong Kong Yellow Pages• China Big - JV with China Unicom - Leading supplier of Yellow Pages services in China

SecureNet Asia Ltd (SecureNet Asia)• JV held by PCCW, HSBC and SecureNetwork to provide eCommerce

security consulting & products• Key customers: HSBC, HK Jockey Club, Stock Exchange of HK …

Solar Inc• JV between PCCW and Computer Associates to provide web-based

business software applications

Business eSolutions

Core Business Joint Ventures

eSolutionsTelecom

Directories(51%)

Broadband Access

SecureNet Asia

(50.4%)

China Big(37.65%)

Solar JV(50%)

• SystemsIntegration

• ApplicationsDevelopment

• Vertical IndustrySolutions

• Consultancy

• CorporateBroadbandAccess

21

BUSINESS eSOLUTIONS BUSINESS eSOLUTIONS PERFORMANCEPERFORMANCE

• Gross Revenue increased 25% to US$154M

• Revenue mix changing from internal to external

• Key external wins during the year:

- Hong Kong Stock Exchange, Airport Authority SI contracts

• Broadband Retail Access Scaling

- EBITDA breakeven by December 2000

- total Subscribers increased to 24K

- ARPU increased: BBI@Work: 76%, Always On: 33%

• Initial step towards China market

• over 50% of 2001 targeted revenue under contract

22

PRO FORMA YEAR 2000 PRO FORMA YEAR 2000

Notes: The above financials include consolidated revenue and EBITDA of Telecom Directories and SecureNet Asia.

• 19% growth in eSolutions revenue- external SI projects driving

• 188% increase in Broadband Access- increased market penetration- increasing ARPU

• Joint ventures contribution stable- Telecom Directories Ltd- SecureNet Asia

(US$ M) 1999 2000

Core Business 83 116 eSolutions 73 88 Broadband Access 10 28Joint Ventures 40 38

Total Revenue 123 154

EBITDA (13)

23

EXTERNALIZING EXTERNALIZING REVENUE STREAMSREVENUE STREAMS

• Expanded external client portfolio

• External revenue contributed 51% oftotal revenue in the second half of year2000.

• PCCW Internal revenue is significant- 2nd largest IT business user in HK- largest data warehouse (ex Japan)

• Internal revenue is charged for systemintegration, maintenance and logisticfunctions of PCCW’s business units

• Knowledge base of templates beingactively utilized

• Supported by 700 IT/IP professionals

0%

20%

40%

60%

80%

100%

1999 Full Year 2000 1st half 2000 2nd half

External Internal

24

BUILDING A STRONG BUILDING A STRONG EXTERNAL REPUTATIONEXTERNAL REPUTATION

Finance Sector

Public Sector

Multi-Media Communications Sector

Dai Sing Bank To provide online banking and stock trading solution.

Ping An Insurance To design and implement financial management system.

HK Exchanges and Clearing Ltd

Efficiency Unit of the HKSAR Gov’t

To design, implement and support an integrated Call Center for 15 different departments.

Airport Authority To provide wireless LAN services for users of wirelessdevices including computers and PDA.

A leading Japanese Multi-media manufacturer

To design and implement ISP infrastructure and eCommerce platform

To develop a customized and integrated solution for Internet Initial Public Offering (IPO) service

25

BROADBAND RETAlL ACCESSBROADBAND RETAlL ACCESSSCALING TO PROFITABILITYSCALING TO PROFITABILITY

• EBITDA breakeven as of Dec ‘00

• Increasing ARPU- Focus on high end customers- Provide premium service- BBI@Work increased 76%- Always On increased 33%

• 80% market share by Dec ‘00- BBI + Always On: 19.4K- Leased Line: 3.9K

BB

I@W

orks

BBI ARPU (USD)

0

10

20

30

40

50

60

Jan Apr July Oct Dec

Always On ARPU

0

100

200

300

400

500

600

700

Jan Apr July Oct Dec

(US$)

26

• Explosive growth forecast for IT andApplication services in China

• Targeting 4 key industries- Finance, Public Sector, Multi-media

Communications, Manufacturing- over 70%of market demand

• Initial steps taken to penetrate market- established JAVA based Shenzhen

Software Development Center- expanded Telecom Directories through

acquisition of 37.65% ChinaBig

• Recent wins- Ping An Insurance, China- Consulting projects

Source: IDC

Market Potential in Greater China

US$ Billion CAGR

30%

27%

0

2

4

6

8

10

12

14

16

2001 2002 2003 2004 2005

IT Services

Packaged Softw are

FOCUS ON eENABLINGFOCUS ON eENABLINGCHINA ENTERPRISESCHINA ENTERPRISES

27

Strategic Direction Strategic Direction • Maximize leverage on core competence and group’s assets

• Develop industry operating platforms providing total solutions- targeted industries, enhancing margins, provide recurring revenue

• Establish strong base across Greater China- strategic partnerships to achieve scale, e.g. China Big, Legend Digital China

PARTNERING TO ACHIEVE SCALEPARTNERING TO ACHIEVE SCALE

Value Proposition Value Proposition • One-stop total solutions provider

• Holistic approach tailoring best-of-breeds solutions

• Partnership that enhance clients’ return on investments

INTERNET DATA CENTERSINTERNET DATA CENTERS

Joseph Ma, PresidentJoseph Ma, President

““CARRIER CLASS SERVICESCARRIER CLASS SERVICES””

29

BUSINESS ESTABLISHMENTBUSINESS ESTABLISHMENT- BUILD-LEASE-PARTNER-- BUILD-LEASE-PARTNER-

Internet Data Center

FacilitiesManagement

Internet DataCenter

Partners

80,000 ft2

85,000 ft2

Shanghai (45%)2,000 ft2

Beijing (42.5%)15,000 ft2

Op Dec ‘00

Shanghai

3Q 01

Guangzhou

3Q 01

Taiwan

3Q 01

Singapore (50%)15,000 ft2

2Q 01

Future PlansMalaysiaIndonesiaThailand

KoreaPhilippines

India

Ventures

iLink(47.7%)

Others

Greater China RegionalHong Kong

30

HONG KONG IDC LAUNCHEDHONG KONG IDC LAUNCHEDJUNE 2000JUNE 2000

• Strong platform of FacilitiesManagement Services- 27% growth

• New Internet Data Center capabilitiesshowing ramping growth- 4Q00 +124%

• Established a total customer base of217- cornerstone clients requiring mission critical solutions

• Launched exclusive portfolio ofmanaged solutions

(US$ M) 1999 2000Facilities Management 7 9IDC 6

Total Revenue 7 16

EBITDA (4)

Racks Rented 306

Pro Forma Results

31

GOING FORWARDGOING FORWARDSHIFT TO MANAGED SERVICESSHIFT TO MANAGED SERVICES

• Expecting a huge amount of supply- business model is changing from build to lease

• Increased margins through complex web hosting solutions- partner where appropriate

• Introduce usage-based services- e.g. computing power, disk storage and bandwidth

• Work collectively with Business eSolutions and Reach to enable“Total Solutions”

HONG KONG TELECOM INTERNATIONAL (HKTI)HONG KONG TELECOM INTERNATIONAL (HKTI)

Keith Harrison, Managing DirectorKeith Harrison, Managing Director Global Communications Global Communications

““POSITIONING AS A DATA CARRIERPOSITIONING AS A DATA CARRIER””

33

HKTI [REACH] PERFORMANCEHKTI [REACH] PERFORMANCE

• Hong Kong Telecom Internationalexpanded global PoPs

• Investments in new cablesbecame operational during year- China-US

- SEA-ME-WE3, linking South East Asia to the United Kingdom

• Large customer deals- Infonet, Digital Island

• NetPlus Backbone ranked #2 IPbackbone provider in Asia

Note: Discussion, including financial data, refers to HKTI onlyduring year

Reach provides the base service center platform under which“Total Solutions” services approach rests

IDC

TSS

Reach

B2B

SIUnified Voice/Data Services

Applications

Complex Web Hosting

Last Mile Connectivity

IP ConnectivityEverywhere

IPVPN

SI

Reach

B2B

IDC

TSS

Reach

34

• Stable EBITDA margins average 38%

• Gateway wholesale voice traffic volumegrew 3%

- competitive pricing pressure- lower delivery costs - maintaining margins

• Wholesale International data bandwidthgrowth

- IPLC: 142% YoY- IP Bandwidth: 209% YoY

• Shifting mix in revenues- data contribution grew 13% YoY- exit 2000 Data revenue at 39% of total

• Increasing external contribution towholesale revenues

- external revenue 55% in 2000 from 48% in1999 (i.e. not TSS, CSL or other divisions)

FROM VOICE TO DATAFROM VOICE TO DATA

US$m 1999 2000

Revenue

Voice Revenue 871 567Data Revenue 276 343Other Revenue 32 31Total Revenue 1,180 941

EBITDA 357

Business MetricsGateway O/G Mins 1,667 1,732Gateway I/C Mins 1,443 1,483Total Gateway Mins 3,110 3,215

IPLC B’width Mbps 1,749 4,237Netplus B’width Mbps 298 922

35

GOING FORWARD - REACHGOING FORWARD - REACH

• Reach JV with Telstra formed on 7th February 2001

• Combined assets create the largest Asian voice and data network

• Recent appointment of Alistair Grieve as CEO

• Wholesale supplier of IDD and Internet

• Target dramatic step increase in volumes to drive lower productunit costs

• Leverage ubiquitous access into Australia and Hong Kong throughparent relationship

• Aggressively pursue opportunities to access “traffic generating”customers in other markets

Rationalization to Increase Scale/ReachRationalization to Increase Scale/ReachRationalization to Increase Scale/Reach

Enterprise SolutionsEnterprise Solutions

David ManionDavid Manion

C o r p o r a t e A c c e s sEnterprise SolutionsEnterprise SolutionsEnterprise SolutionsEnterprise SolutionsEnterprise SolutionsEnterprise SolutionsEnterprise SolutionsEnterprise Solutions

37

• Skill base to implement businessmodels:- Small- Nimble- Entrepreneurial

• Cash flow break even

• Reselling services to SMEs

• Forecast revenue for 2003- US$ 90-110 million

TAKING GROWTH INITIATIVES TOTAKING GROWTH INITIATIVES TOMARKETMARKET

CSLCSL

Hubert Ng, CEOHubert Ng, CEO

““HONG KONGHONG KONG’’S LEADER IN WIRELESS INNOVATIONS LEADER IN WIRELESS INNOVATION””

39

• ARPU well above other Hong Kongnetworks- increased to US$58- market average dropped about 10% to

US$33

• Reduced churn from 3.5% to 3.4%.- Current churn is around 3%

• Currently over 1m subs

• Handset subsidies reduced- down from HK$1,400 to HK$700

• Improved operational efficiency

• Headcount down from 873 to 849

Profit & Loss Breakdown

(US$ M) 1999 2000

Total Revenue 629 663

EBITDA 152 EBITDA Margin 23%

Key Performance Indicators

1999 2000

ARPU US$ (Contract) 56.4 58.2Churn Rate (Contract) 3.5% 3.4%

HKHK’’S MOST PROFITABLES MOST PROFITABLEOPERATOROPERATOR

40

• Short Messaging- growing fast, expected to be a key application- expect to see strong growth in revenue when SMS interconnection is implemented

between networks around April/May

• Innovative applications with multiple platforms- I-dating, wireless betting, banking, stock trading, financial news, email

• GPRS- existing roaming agreements with Singapore and Taiwan already in place- uptake inhibited by lack of handsets and limitation on speed- expect greater handset choice by 2H01 and real impact on revenues in 2002

• Exercise prudence on 3G License

MOVING BEYOND ACCESSMOVING BEYOND ACCESS

VENTURESVENTURESMico Chung, ChairmanMico Chung, Chairman

““CORPORATE VCCORPORATE VC””

42

Market conditions have impacted the valuation of the Ventures Portfolio• NASDAQ has dropped more than 60% in the past 12 months

Going forward 4 key focus activities

1. Assist PCCW operating units to structurally execute growth strategies

2. Only participate in those investments that add value to the PCCW operating units - financially - competitiveness

3. Actively hedge position

4. Only re-invest realized proceeds

VENTURES OUTLOOKVENTURES OUTLOOK

43

66 Companies and JV Invested, 27 Companies Listed1

INVESTMENT SUMMARYINVESTMENT SUMMARY

(US$ M) 2000

Provisions 2 (627)

Carrying Value in 2000 1 309

1. Includes HKT portfolio

2. Provision for diminution of value principally in CMGI and Softnet

STRATEGIC DIRECTIONSTRATEGIC DIRECTION

Jeff Bowden, Executive Director Strategy PlanningJeff Bowden, Executive Director Strategy Planning

““REAL BUSINESSES WITH REAL CASH FLOWSREAL BUSINESSES WITH REAL CASH FLOWS””

45

1) Provide Customers IntegratedSolutions

SIX STRATEGIC THRUSTSSIX STRATEGIC THRUSTS

STRATEGY INTENTIONS

• Three Targets- Export Hong Kong success- Expand penetration top 50 accounts- Expand industry-specific platforms - Tourism Industry - Financial Brokerage - Retail Industry - Medical Care Industry

• New sales channel- In place since August- Exponential growth- US$100M revenue by year end- Currently 25% operating margin- Lead by Aloysius Lee

IDC

TSS

Reach

B2B

SIUnified Voice/Data Services

Applications

Complex Web Hosting

Last Mile Connectivity

IP ConnectivityEverywhere

IPVPN

SI

Reach

B2B

IDC

TSS

Reach

46

LEVERAGING HONG KONGLEVERAGING HONG KONGEXPERIENCE REGIONWIDEEXPERIENCE REGIONWIDE

2001 2003

US$ 135 million US$ 414 million

CAGR:75%

Source: The Yankee Group, PCCW

Hong Kong

AustraliaSingapore

Taiwan

Korea

Malaysia

PRC

IndiaHong Kong

AustraliaSingapore

Taiwan

Korea

Malaysia

PRC

India

47

2) Become “First-Choice”Provider of EnhancedCommunications Services


STRATEGY INTENTIONS• Increase and acquire capabilities

and talents in B2B, IDC & SystemIntegration to achieve “Best-In-Region” capabilities

• Compete on value added not price

• Leverage Reach extensivegeographical reach

• Operated with high degree ofindependence- Objective to be publicly-listed likely in market outside HK- Executive Director accountable for executing integrated operating plans- Telco manages infrastructure

• Major effort, next three years

Create Best-In-RegionCapabilities

Current Position

Public Listing

Expand Via Consolidation

48

SIX STRATEGIC THRUSTS SIX STRATEGIC THRUSTS

STRATEGY

3) Promote Subscription-BasedConsumer Internet Services

INTENTIONS

• Free, advertising only-dependentInternet services profitabilityuncertain

• Emphasize subscription-basedrevenue model going forward

• Traditional media revenue-basedmodel will be used wheresubscription-based approachimpractical

• Asia Regional activities leverage“Corporate Access” capabilities

49

SIX STRATEGIC THRUSTS SIX STRATEGIC THRUSTS

STRATEGY

4) Extend Total SolutionsBusiness Geographically

5) Promote Independent Resale

INTENTIONS• Leverage Reach

• Partner with local connectivityproviders

• Provide customers Total Solutions

• Already present: Japan, Taiwan,Korea, and Singapore

• Acquired “Corporate Access”• Created second Entrepreneurial

Resale Unit (“BTN”)• Focused on Small Medium

Enterprise Customers• Year 3 revenue US$90 - 110 million• Cash flow positive Year 3• Increases network utilization

50


STRATEGY

6) Cost Reduction/Growth Focus

INTENTIONS

• Reduce total costs

• Increase individual accountability

• Incent / reward growth

• Recruit talent / personnel necessaryto achieve total growth

KEY TAKEAWAYSKEY TAKEAWAYS

Jeff Bowden, Executive Director Strategy PlanningJeff Bowden, Executive Director Strategy Planning

““WE ARE EXTREMELY POSITIVE ABOUT PCCWWE ARE EXTREMELY POSITIVE ABOUT PCCW’’s PROSPECTS INs PROSPECTS INTHE CURRENT MARKET ENVIRONMENTTHE CURRENT MARKET ENVIRONMENT””

52

FINANCIAL OUTLOOK FINANCIAL OUTLOOK MANAGEMENT DISCUSSIONMANAGEMENT DISCUSSION

((Does not include CSL and Reach)Does not include CSL and Reach)

CAPEX• Major capex behind PCCW, not in front to achieve growth• Scaleable - Revenue driven

USD 'M

Gross Turnover EBITDA

Adjusted Group Total:Telecom Services 2,593 1,200 B2B 154 (13) Data Centre 16 (4) B2C (IMS + PCC) 143 (261) Infrastructure & Real Estate 93 22 Corporate Functions - (115)

Others & Eliminations (347) (40)

Group Total 2,652 790

Gross Turnover Range

2000Proforma Actual

EBITDA Range

2001

53

KEY TAKEAWAYSKEY TAKEAWAYS

1) Successfully completed Largest NJA Merger

2) Provide Stable, Improving Results from Hong Kong Core

3) Expand to Adjacent Markets: Current/New Customers

4) Coming to Market with Attractive Total Solutions Combining OurStrengths

5) Focused on Delivering Improved Operating Performance: YoY

2000 RESULTS HIGHLIGHTS2000 RESULTS HIGHLIGHTS

Q & AQ & A

55

GUIDANCE WITH MAPPINGGUIDANCE WITH MAPPING

HKT Group to PCCW-HKT StructureHKT Group to PCCW-HKT Structure

APPENDICESAPPENDICES

56

Telecom Services Sector (TSS)Telecom Services Sector (TSS)

Revenue Line LOB Category Revenue source Internal costIDD Revenue (o/g) International Corporate / retail IDD ReachLAC & Delivery Fees (o/g) International ETS/Gateway operators -LAC & Delivery Fees (i/c) International ETS/Gateway operators, Reach -Local Data (Datapak lines) Local ISP's, cellular operators, B2C, B2B -Retail IPLC Services International Corporate / retail IPLC ReachInterconnection fees (PNETS, Type I, II) Local ISP's (inc B2C), cellular & VAS (ISR etc) -International Data & Messaging International Corporate / retail data ReachBB Network Access (wholesale) Local Wholesale to B2C, B2B, third parties -Local Telephone Services Local Corporate / retail fixed line -BBI Installation (wholesale) Local Wholesale to B2C, B2B, third parties -CFO enquiry (directory enquiries, hotlines) Local Corporate / retail customers, B2C, B2B, CSL -Retail shop management Local Retail customers, B2C, CSL -Computer & CPE revenue Local Corporate customers, PCCW BU's -MNP Local Cellular operators (inc. CSL) -LAL, exchange colocation etc Local Fixed line competitors -Teleservices Others Corporate customers -

Telecom Services Sector

InternationalOutgoingIncomingTransit & OthersIPLCInt'l P/N DatacomNetplus BackboneMessaging Services

Local Local Telecom ServicesInterconnection FeesValue Added ServicesLocal P/N DatacomBroadband ServicesCPEs & Computer SalesOther Telecom Services

HKT OthersC&W TeleservicesTDLTSA/AAProperty RentalExternal CAL

Old: Line of Business

New: TSS Business Unit

57

HKTI Contribution to ReachHKTI Contribution to Reach




New: HKTI Business Unit

Revenue Line LOB Category Revenue source Internal costIDD Outbound Collection fm TSS - TSS -IDD Outbound Collection fm PCS/PMRS/FTNS International Wholesale cellular, fixed line & ISR operators -IDD Inpayment International Overseas IDD operators (wholesale) TSS (LAC, Delivery fee), CSLTransit International Overseas IDD operators (wholesale) -IPLC collection from TSS International TSS (as wholesale customer) -IPLC (from wholesale) International Wholesale operators -Netplus collection Local, International ISP's, corporates, B2C, B2B, IDC -Data & Messaging fm TSS International TSS -Int'l POPs (Canada, Regional) Internet & IMS Wholesale & o'seas customers, inc TSS & IDC-Others (Property) Others Rental income, inc from TSS -

HKTI

Internet & IMSInternet AccessiTVMass & Business PortalData CentreVenturesSNSFICNet, TTNS & Canada

58

B2CB2C


New: B2C Business Unit


Revenue Line LOB Category Revenue source Internal costAccess: NB Internet & IMS Dial-up customers TSS: PNETS, hotline, Datapak lines

Reach: int'l capacityAccess: BB Internet & IMS Residential BB customers TSS: wholesale access, installation,

hotlineReach: int'l capacity

ITV Internet & IMS Residential ITV customers TSS: installation, wholesale accessMass portal (netvigator) Internet & IMS Subscription/Advertising TSS: network, datapakNOW PCCW Subscription/Advertising TSS: network, datapak

B2C

Old PCCWPacific Century SystemsVenturesNOWProperty

59

B2BB2B



New: B2B Business Unit

Revenue Line LOB Category Revenue source Internal costeSolutions HKT Others External SI & fulfillment customers, PCCW BU's -BB Access Internet & IMS Corporate BB (netvigator@work) & leased line

customersTSS: wholesale access, installation, sales, hotlineReach: int'l capacity

JV's (SNS, TDL) HKT Others Banks, stock exchange, etc -

B2B


60

IDCIDC


New: IDC Business Unit


Revenue Line LOB Category Revenue source Internal costEquipment Sales Local Data Centre customers -Co-location Internet & IMS Data Centre customers -Facilities Management Local/Property Data Center customers -Hosting Internet & IMS Data Centre customers -Bandwidth Internet & IMS Data Centre customers ReachManaged Services Internet & IMS Data Centre customers -

Data Centre


Local Local Telecom ServicesInterconnection FeesValue Added ServicesLocal P/N DatacomBroadband ServicesCPEs & Computer SalesOther Telecom Services

61

Property & InfrastructureProperty & Infrastructure


New: Property Business Unit

Revenue Line LOB Category Revenue source Internal costPCCW : Sales PCCW Cyberport entrustment fee -PCCW : Rental and Mgt fee PCCW 3rd party rental income -PCCW : Cyberport mgt fee incomePCCW 3rd party rental income -HKT : Rental Income HKT Others 3rd party & BUs rental income -

Property & Infrastructure



62

VenturesVentures


New: Ventures Business Unit


Ventures


63

MobileMobile


New: Mobile Business Unit

MobileSalesOperational ServicesOther RevenuesMobile Data Revenue

Revenue Line LOB Category Revenue source Internal costMobile Sales Mobile Handset sales -Mobile IDD/ Roaming Revenue Mobile Service revenue ReachMobile Services Revenue Mobile Service revenue TSSMobile Data Revenue Mobile Service revenue -Prepaid Sim Card Mobile Service revenue -Other Revenue Mobile Service revenue -

Mobile

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