Richard Li sets threshold for B2C success
REUTERS
Pacific Century CyberWorks chairman Richard Li said the company's consumer-targeted Internet effort must be valued internally at US$2 billion to US$3 billion if it is worth doing at all.
Mr Li also said on Thursday that PCCW's business-to-consumer Internet operation should break even within four years.
Already, he has said PCCW will cap its expected loss this year on an EBITDA (earnings before interest, taxes, depreciation and amortisation) basis from B2C at US$200 million.
Mr Li said the company would provide an outline of its consumer Internet plans in 90 days, but his remarks were among the clearest signs yet that PCCW is seriously rethinking the Network of the World (NOW) broadband TV and Internet project that a year ago was at the core of its new economy vision.
Many PCCW watchers have criticised NOW, and company officials rarely speak publicly about the effort.
Late on Wednesday, PCCW posted a consolidated net loss of US$886 million (about HK$6.91 billion), due in large part to the plunging value of its investment portfolio.
"If we cannot build a business that is worth US$2-3 billion ... then we should get out of it and not do it," Mr Li told analysts, referring to consumer Internet efforts. "So, the fact that we are still aiming for it and pushing for it, there's a strong reason for that."
Mr Li said PCCW assumed that Internet advertising revenue would be "scarce or nil".
"Wherever it is possible, it'll be a subscription base .... we do not have that model outside of Hong Kong today," he said, referring to PCCW's consumer Internet businesses.
He said that a subscription-based model in Asia outside of Hong Kong did not appear viable in the next year or two.
"So, it will be dependent on an advertising model from traditional media," he said, without elaborating.
Mr Li was responding to a question from an analyst who said, "clearly investors are deeply troubled as to where its going next".
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