Page 57 - Annual Report 2014

Group financial review

1.1 REVENUE

Year ended 31 December

2014 2014 2013^ 2013^ Incr/(Decr)
$m % $m %
$m %

Mobile revenue 1,247.6 52.3 1,243.4 52.5 4.2 0.3
Pay TV revenue 389.7 16.3 386.0 16.3 3.7 1.0
Broadband revenue 201.9 241.8 10.2 (39.9) (16.5)
Fixed Network Services revenue 378.3 8.5 368.3 15.5 10.0 2.7
Total service revenue 15.8 94.5 (22.0) (1.0)
Sale of equipment 2,217.5 92.9 2,239.5 39.6 30.5
Total 169.7 130.1 5.5 17.6 0.7
7.1 100.0
2,387.2 100.0 2,369.6

^ Restated The Group’s service revenue at $2,217.5 million was 1.0%
lower than FY13, due mainly to lower revenue from Broadband
The Group’s total revenue for the year ended 31 December 2014 services which decreased 16.5% or $39.9 million, impacted by
(“FY14”) increased 0.7% to $2,387.2 million when compared price competition in the NGNBN services. This was mitigated by
to last year ended 31 December 2013 (“FY13”), with increase higher services revenue from Fixed Network, Mobile and Pay TV
attributable to higher revenue from equipment sales. businesses, totaling $17.9 million.

Compared to FY13, revenue from equipment sales in FY14 was $39.6
million or 30.5% higher at $169.7 million, driven by increased handset
sales after the launch of new iPhone models in late September 2014.

1.2 OPERATING EXPENSES Year ended 31 December

Cost of sales 2014 2013 Incr/(Decr)
Other operating expenses $m
Total $m $m %
Compared to FY13, total operating expenses was 0.6% higher at
$1,957.1 million in FY14, primarily driven by higher cost of sales. 949.0 941.5 7.5 0.8
1,008.1 1,004.5 3.6 0.4
1,957.1 1,946.0 11.1 0.6

As a percentage of revenue, total operating expenses was 82.0%
in FY14 compared to 82.1% in FY13.

Details of total operating expenses are as follows:

(i) COST OF SALES

Year ended 31 December

2014 2013 Incr/(Decr)
$m
$m $m %

Cost of equipment sold 411.4 376.7 34.7 9.2
Cost of services 382.9 364.3 18.6 5.1
Traffic expenses 154.7 200.5 (45.8) (22.9)
Total 949.0 941.5 0.8
7.5
The increased cost of equipment sold and higher cost of services
were partially mitigated by the lower traffic expenses which Compared to FY13, cost of services in FY14 increased 5.1%
resulted in total cost of sales in FY14 to be $7.5 million or 0.8% to $382.9 million, driven mainly by higher take-up of NGNBN
higher at $949.0 million when compared to FY13. broadband services.

The strong demand for the new iPhones in FY14 drove handsets Traffic expenses decreased $45.8 million or 22.9% to
sales higher, which resulted in cost of equipment sold to increase $154.7 million in FY14, due to lower international traffic
$34.7 million or 9.2% to $411.4 million. volume and improved interconnection rates.

54 many lives of hubbing