Asia Satellite Telecom : AsiaSat Reports 2019 Interim Results

MEDIA RELEASE

AsiaSat Reports 2019 Interim Results

Hong Kong, 8 August 2019 - Asia Satellite Telecommunications Holdings Limited ('AsiaSat' - SEHK: 1135), Asia's leading satellite operator, today announced its interim results for the six months ended 30 June 2019.

Financial Highlights:

• 1H revenue down 5% to HK$693 million (2018: HK$730 million), primarily due to non- renewal of certain customer contracts in mid-2018, and the impact of continued pricing pressures from capacity oversupply in some key markets and increased competition from terrestrial networks
• 1H profit attributable to owners up 4% to HK$223 million (2018: HK$215 million), as a result of cost controls, favourable currency fluctuations and reduced tax expenses
• Strong cash flow with cash and bank balances at HK$938 million as at 30 June 2019 (31 December 2018: HK$547 million)
• Interim dividend of HK$0.18 per share (2018: HK$0.18 per share)

Operational Highlights:

• Overall capacity utilisation of AsiaSat's core fleet of AsiaSat 5, AsiaSat 6, AsiaSat 7, AsiaSat 8 and AsiaSat 9 stood at 70% (128 transponders utilised/leased) as of 30 June 2019 (31 December 2018: 72%, 131 transponders utilised/leased)
• The initiative to transform AsiaSat 9 into a video 'hotbird' continues to gain traction, with new channels in Mandarin, Korean and Nepali added and market access expanding across the Asia-Pacific
• With extended C-band satellite spectrum being repurposed for 5G services in various countries at different paces causing a tightening supply of C-band capacity, the company has resorted to commercial and technical solutions including 'traffic re-grooming' to optimise available capacity for video distribution
• Introduction of a new 5G bandpass filter that has been proven effective in protecting customers' existing C-band services against out-of-band interference due to 5G network deployment

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• Proposed privatisation of AsiaSat by way of a scheme of arrangement and delisting from the Stock Exchange of Hong Kong Limited announced on 27 June 2019, which is subject to approval by the scheme shareholders at the Court Meeting and Special General Meeting on 23 August 2019

AsiaSat's Chairman, Gregory M. Zeluck, commented, "It is useful to note that satellite remains as the video delivery method of choice in the Asia-Pacific while new terrestrial services such as over-the-top (OTT), video-on-demand (VOD) and subscription video-on-demand (SVOD) continue to operate at a low revenue base. As of now, though the impact of OTT and other digital terrestrial platforms remains limited, we expect them to grow rapidly and the Group will continue to evaluate and explore various opportunities with our customers to provide new OTT services as value added extensions of our existing video distribution services.

In the first half of 2019, low-flexibilityhigh-throughput satellite (HTS) capacity has been deployed by some regional operators, causing an increase in supply vis-à-vis demand for data services. Such excess of low-flexibility capacity has put pressures on the commercial viability of this type of HTS and some applications in traditional fixed satellite service (FSS) data services, thus reaffirming the Group's decision to adopt a cautious approach to our plans for future data satellites to be designed with a cost-effective HTS architecture that could meet market needs for customised data services."

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Media Contact:

Asia Satellite Telecommunications Holdings Limited

Winnie Pang, Manager, Marketing Communications

Tel: [phone]

Email: [e-mail]

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ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability) Stock Code: 1135

Announcement of Unaudited Results for the Six Months Ended 30 June 2019

Chairman's Statement

OVERALL PERFORMANCE

As the global satellite transponder market remains in the doldrums, the Group's revenue for the first half of 2019 was HK$693 million (2018: HK$730 million), down 5% compared to the prior period. This decrease was largely due to the non-renewal of certain customer contracts in mid- 2018, which was exacerbated by pricing pressures from capacity oversupply in key country markets and increased competition from terrestrial networks.

As of 30 June 2019, our core fleet of AsiaSat 5, AsiaSat 6, AsiaSat 7, AsiaSat 8 and AsiaSat 9 provided a total of 183 C-band and Ku-band transponders and achieved an overall capacity utilisation of 70% (31 December 2018: 72%). The total number of transponders leased or utilised was 128 (31 December 2018: 131). The capacity utilisation of our satellite fleet has remained relatively stable due to enhanced efforts to attract new high-valued customers.

Market Conditions

With extended C-band satellite spectrum coming under the threat of being repurposed for 5G (the fifth-generation mobile networks) in several key Asia-Pacific markets, the supply of high- quality C-band capacity is under pressure. As our C-band transponder supply begins to reach full capacity, we have resorted to technical and commercial solutions such as 'traffic re- grooming' to optimise the available capacity for video distribution. This has allowed us to broaden our broadcast customer base, while reinforcing our market positioning as Asia's most watched TV distribution platform for premium international content.

Amid the rapid transformation of the video market, driven by an evolution in consumer behaviour and the rise of new technologies, we continue to see downward pressures on pricing caused by terrestrial infrastructure buildout, the anticipated roll-out of 5G services as well as advances in broadcast technologies that are bringing disruptive changes and posing further challenges to traditional broadcasting over satellites.

Business Review

The value of contracts on hand as of 30 June 2019 was HK$2,628 million (31 December 2018: HK$2,976 million), a reduction attributable to the prevailing market's wait-and-see attitude and reluctance to commit to longer-term contracts.

New video businesses generated during the first half of 2019 included long-term strategic partnerships with video customers for the distribution of regional and local language television services in high-definition(HD) format. These new services, encompassing news, entertainment, drama and cinema films, have further enhanced our superior video neighbourhood that serves more than 840 million homes via rebroadcast platforms and numerous hotel networks across the region.

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Our initiative of transforming our AsiaSat 9 into a video 'hotbird' has continued to gain traction. During the period under review, the satellite has diversified its customer base to include new channels in Mandarin, Korean and Nepali, to complement the existing South Asian television services. With these new services, AsiaSat 9 has rapidly gained market access via key television platforms in East Asia, South Asia, Southeast Asia and the Pacific. In addition, the superior performance of the satellite is attracting the interest of 4K channels that are looking for highly efficient transmission solutions in Asia.

In terms of the data market, international and domestic customers from South Asia, East Asia and Southeast Asia have continued to take up new capacity for aviation, mobile backhaul, corporate networks and other VSAT applications for wide area coverages.

As we continue to see attractive opportunities coming from some of the fastest growing countries across Asia, we are committed to expanding into new markets and deepening our penetration regionally and locally by leveraging on the high-quality capacity and unrivalled coverage of our satellites.

Occasional Use

AsiaSat has continued to distribute a wide range of sports, news and special events using our occasional use (OU) video distribution services, with AsiaSat 5 reinforcing its role as a leading distribution platform for live sports and special events, including the English Premier League (EPL), J League and K League soccer tournaments, Australian Open Tennis, Cricket World Cup, AFC Asian Cup, Formula E motorsport as well as the annual Academy Awards and MTV Movie & TV Awards.

AsiaSat's fleet has been chosen for the delivery of news-making world events such as the G20 Summit, the Boao Forum for Asia, the annual plenary session of China's National People's Congress (NPC) and the Chinese People's Political Consultative Congress (CPPCC) and the North Korea-U.S. Summit.

The 5G Challenge

In anticipation of the imminent roll-out of 5G services in the Asia-Pacific, AsiaSat has conducted multiple studies and tests with regulators to explore various mitigation measures to ensure that our customers' C-band traffic are sufficiently protected against out-of-band interference due to 5G network deployment. These mitigation measures include traffic migration, use of bandpass filters, proper site selection and shielding.

Recently, AsiaSat co-developed a 5G bandpass filter which has been deployed at various satellite receiving sites and has been proven to work effectively within the developed guidelines. These filters will be available for volume distribution in September 2019. This, along with AsiaSat's strong technical knowledge of the co-existing requirements vis-a-vis 5G services, has made us confident that the impact of 5G deployment on our standard C-band customers' services could be kept to a minimum.

As mobile operators begin to deploy commercial 5G networks, new opportunities will emerge for satellite operators to complement 5G network buildout as part of the network design. With this, AsiaSat is working in conjunction with our satellite industry colleagues, mobile network operators and regulators to protect existing services while pursuing other new business/service opportunities offered by 5G networks.

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OUTLOOK

It is useful to note that satellite remains as the video delivery method of choice in the Asia- Pacific while new terrestrial services such as over-the-top (OTT), video-on-demand (VOD) and subscription video-on-demand (SVOD) continue to operate at a low revenue base. As of now, though the impact of OTT and other digital terrestrial platforms remains limited, we expect them to grow rapidly and the Group will continue to evaluate and explore various opportunities with our customers to provide new OTT services as value added extensions of our existing video distribution services.

In the first half of 2019, low-flexibilityhigh-throughput satellite (HTS) capacity has been deployed by some regional operators, causing an increase in supply vis-à-vis demand for data services. Such excess of low-flexibility capacity has put pressures on the commercial viability of this type of HTS and some applications in traditional fixed satellite service (FSS) data services, thus reaffirming the Group's decision to adopt a cautious approach to our plans for future data satellites to be designed with a cost-effective HTS architecture that could meet market needs for customised data services.

INTERIM FINANCIAL RESULTS

Revenue

Revenue for the first half of 2019 was HK$693 million (2018: HK$730 million), down 5% compared to the prior period. This decrease was substantially due to the non-renewal of certain customer contracts in mid-2018, which was exacerbated by continued pricing pressures and lower revenue contribution from AsiaSat 3S, which is currently operating in inclined orbit.

Operating Expenses

Excluding depreciation, the operating expenses in the first half of 2019 totalled HK$99 million (2018: HK$131 million), a decrease of HK$32 million, attributable to currency fluctuations, the recovery of previously impaired receivables, lower staff costs and the adoption of a new accounting standard which now treats office rental as depreciation of right-of-use assets rather than operating expense as in prior period. These cost-savings and reallocation were partially offset by higher legal and professional fees resulting from increased corporate activities during the reported period.

Other Gains

Other gains totalled HK$7 million (2018: HK$2 million), an increase of HK$ 5 million, mainly due to interest earned on higher bank balances.

Finance Expenses

Finance expenses were HK$49 million (2018: HK$51 million), a decrease of HK$2 million.

Depreciation

Depreciation in the first half of 2019 was HK$293 million (2018: HK$289 million), an increase attributable to the inclusion of office rent within depreciation of right-of-use assets following the adoption of a new accounting standard that became effective during the reported period.

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