1. CONFIDENTIAL
China Digital TV Holding Co., Ltd
China’s Digital TV Industry Enabler
November 2011
2. China Digital TV At A Glance
Leading Provider of CA Systems in China’s Digital TV Market
Company Information Major Products / Services
Smart Cards Digital TV
Listed Exchange New York Stock Exchange Application
Software
Head-end
Stock Symbol STV Software
Set-top Box
Terminal-end Design
Stock Price $3.61 (Nov 24, 2011)
Software
Market Cap. US $213M CA Systems
Leading Market Position
Headquarters Beijing, China
300+ carrier customers in China
Employees 585
60.8 million smart cards shipped as of Sep 30, 2011
56.3% market share in year 2010
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3. Agenda
I. Investment Highlights
– China’s rapidly expanding digital TV market
– STV: China’s No. 1 conditional access (CA) system provider
– Company history
– Highly experienced executives and directors
II. Recent updates
– Financial summary
– Cable industry transformation in the long run
– A “Gatekeeper” during convergence period
– Multiple long‐term growth opportunities
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4. Fast Growing Digital Cable Market in China
Quick Facts of China’s Cable Industry
China possesses the world’s largest cable TV market in terms of subscribers
187 million cable TV households, increasing by approximately 10 million per year
Highly fragmented cable industry ‐ over 1,900 legitimate operators
Government targets completion of TV digitalization by 2015
As of September 2011, nearly 100 million households had gone digital
Average Subscription Fee: Basic cable service $2.2/Mo.
Digital Cable service $3.7/Mo.
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5. Fast Growing Digital Cable Market in China
‘Full-scale Migration’ to Digital TV in China is Underway
Around 50% digital penetration rate in 2010 Nationwide migration completed
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Source: SARFT, Company estimates
6. STV is China’s No. 1 CA System Provider
Strong Smart Card Shipments and Market Share
2010 Market Share Market Share Comparison (2007--2010)
Based on Luoda data
Cumulative Smart Card Volume
Unit: MM
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7. STV is China’s No. 1 CA System Provider
A Broad and Diversified Customer Network
Number of Domestic Customers 315 Local Cable TV Operators Across 27 Provinces
Customer Profile
Physical location of our customers
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customer base as of March 31, 2011
8. Over a Decade of Industry Leadership
Market Next Generation
Building Business
Leadership Products and VAS
Feb. 2002 Jun. 2005 Oct. 2007 Feb. 2011
CCTV adopted our 1 Millionth Smart Listed on the 50 Millionth Smart
CA system Card shipped NYSE Card shipped
1998 2000 2002 2004 2006 2008 2010
1999 2001 2003 2005 2007 2009 2011
Aug. 2009
Jun. 2006
Partnered with
Signed contract with
Jul. 1998 Microsoft to
100th network operator
Company founded market PC‐TV
tuner solutions
Aug. 2007 Aug. 2011
10 Millionth Smart Card Partnered with Intel to
shipped develop HD STB
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9. Highly Experienced Executives & Directors
Management Team Independent Directors
Director of Advanced Info Service, a Thailand
Company
Co-founder
Jianhua Zhu Independent director of Pacific Textiles Holdings
12 years with Company Ching Wah Ng Ltd., a Hong Kong listed company
Chairman & CEO Former CEO of Hong Kong CSL Ltd.
Tsinghua University
Former CEO of SmarTone Telecommunications
Holdings Ltd., a Hong Kong listed company
Global Vice President, Asia Pacific President of
Dong Li In charge of daily operations Synopsys, Inc.
President & 12 years with Company Jianyue Pan 20 years experience in IT industry
Tsinghua University M.S from Tsinghua University and EMBA from
Chief Marketing Officer CEIBS
In charge of financial control and Editor-in-chief of Global Business & Finance
management . magazine
Zhenwen Liang Former Chairman of a Nasdaq-listed Chinese
12 years with Company Songzuo Xiang company
Chief Financial Officer
MBA from Renmin University of Master from Columbia University and Ph. D from
China Renmin University of China
11 years with Company Founding Partner of Ivy Capital
Jian Han Experience with Microsoft China Former Senior Executive in IT and investment
Research Institute
Chaoyang Xia banking industry.
Chief Technology Officer
Ph.D, Tsinghua University Ph. D, Tsinghua University
Note: 8
(1) The number of years with Company refers to the time spent with the business of the Company
10. Agenda
I. Investment Highlights
–China’s rapidly expanding digital TV market
– STV: China’s No. 1 conditional access (CA) system provider
– Company history
– Highly experienced management team
II. Recent updates
– Financial summary
– Cable industry transformation in long run
– A “Gatekeeper” during convergence period
– Multiple long‐term growth opportunities
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12. Financial Summary (cont’d)
US$ million
Q3 2011 Q2 2011 Q3 2010
Cash 187.0 159.2 209.4
Bank Deposits 44.0 43.5 -
Short-term Investments - 19.5 43
Total Cash Position 231.0 222.2 252.4
Days Receivable 114 98 66
Days Inventories 75 78 64
Days Payable 36 43 21
Operating Cash Flow 5.8 2.5 12.8
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13. Cable Industry Transformation in the Long Run
Significant Potential in ARPU Upside for Cable Operators
ARPU ~30.0
Interactive multi-media
(US$)
platform
3D TV
High-definition TV
Rich value-added content, 10.0
incl. VOD,TV gaming
Digitalization
3.0
1.5
Advanced CA / DRM/ Tracing Technology / VAS /
Basic CA
Advanced STB / Middleware / Shared Content Platform
Pre-Digital Phase Current Phase Next Phase Long-Term
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14. Cable Industry Transformation In the Long Run
3-Network Convergence and Cable Network Consolidation
Three network convergence policy
In early 2010, China’s State Council announced a decision to promote the
advancement of three network convergence (telecom, broadcast TV and Internet)
Multiple Service Operation time is coming
Under the plan, qualified cable operators will be allowed to provide telecom and
internet services, and telecom operators will be allowed to broadcast TV programs.
vs. “Golden period” for cable industry
Two trial periods are planned:
2010‐2012 for launch of convergent services at trial sites
2013‐2015 for launch commercial convergent services nationwide
Cable network consolidation
SARFT issued guidelines on local cable network consolidation in 2010, setting the
goal of “one province, one network”.
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15. A “Gatekeeper” During Convergence Period
Provide a full suite of content protection technologies
Satellite Set‐top box/DVD
Cable Netbook
Terrestrial TV set
Mobile Mobile phone
IPTV Home gateway
Secure premium content delivered to multiple devices via multiple networks
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16. Multiple Long-term Growth Opportunities
Examples of Recent Initiatives for TV Screens
Cloud Video Delivery Service
• Consumers access services from “cloud end” by using “thin” terminal devices;
• Enable operators to offer new applications efficiently and cost‐effectively;
• Solutions supporting advanced gaming/video/education applications are available
for trial
Smart HD STB Box Design
• Advanced and reliable high‐definition home entertainment products
• Intel Capital made an investment in JoySee, a subsidiary of STV to develop smart
HD STB;
• Product debut expected in early 2012
Integrated Chip Design for STB Box Makers
• All‐in‐one solution cuts production costs by 20% for STB makers;
• 30,000 STB boxes with the integrated chips have been delivered to end users;
• Plan to work with large cable operators to market the chips after product
verification
mysupermovie.com
• Deliver HD movies/TV shows via hard disks;
• Built‐in content protection feature prevents illegal use
• Cooperate with certain HDTV and 3D TV makers to market the service nationwide
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