Alice Wong, CFO, City Telecom (HK) Limited 36 September 2012

Transcription

1 Alice Wong, CFO, City Telecom (HK) Limited Learning new lines Alice Wong tells George W. Russell about City Telecom s transformation from a telecommunications operator into a television company Photography by Samantha Sin lice Wong is helping her company take one mighty leap. Several years ago, City Telecom was a start-up telecommunications infrastructure company, laying high speed broadband rapidly across the territory and charging subscribers to receive content from third-party providers. But then the chairman of City Telecom, Ricky Wong, hatched a plan to change all that. The telecoms infrastructure unit would be sold off, and the company would enter the free-to-air television market competing with TVB and ATV for Hong Kong viewers. In 2009, City Telecom lodged a bid with the government for a free-to-air TV licence, while the infrastructure unit now named Hong Kong Broadband Network was sold to the Asian arm of CVC, a British private equity group, in April for HK$4.87 billion. That left Alice Wong, as financial con- 36 September 2012

2 troller at the time, something of a challenge: learn a new business on the job in which different financial management and accounting standards are applied. I spent almost nine years at City Telecom with 80 percent to 90 percent of my time on telecoms business and operations, whether in investor relations, on road shows or meeting vendors, she says. Now we re in the media and everything is a restart. The company is in a holding stage. The decision on a free-to-air TV licence was You suddenly need a wheelchair, costing thousands of dollars, for a hospital scene filming now. expected by 30 June, but the outgoing government deferred the announcement. As at press time, City Telecom has not yet received a licence, for which it is competing with Hong Kong s two pay-tv operators, PCCW and i-cable Communications. (The government has not even announced how many licences it will issue.) Wong says the company is confident it will receive a licence and be able to begin broadcasting in the first quarter of Last year, City Telecom began an aggressive hiring programme, recruiting dozens of creative employees as it rushed to build up an September

3 inventory of programming. It hopes to produce 500 hours of scripted TV by the end of the year. Once she was aware of the company s directional change, Wong busied herself with research. The company s obligations under the Broadcasting Ordinance, compared with the Telecommunications Ordinance, were very similar, she found to her relief. (The ordinances will eventually be converged.) It is all about how you categorize the programming costs and before we didn t have these concepts as telecoms is very simple. You can capitalize the costumes, capitalize the props. Differing attitudes One of the first differences Wong encountered was in financial management. For example, in telecoms we have a stringent purchasing policy. You fill out a purchase requisition form, a purchase order, and so on. It can take several days. In the media industry that could be very difficult to implement. You suddenly need a wheelchair, costing thousands of dollars, for a hospital scene filming now. Wong s answer is compromise. We have to enhance our internal controls to give the production people more flexibility, she says. But we both must adapt. They need to exercise more control and we have to be more flexible. Different accounting practices are used in the television industry, she discovered. It is all about how you categorize the programming costs and before we didn t have these concepts as telecoms is very simple, she says. You can capitalize the costumes, capitalize the props, and so on. Wong oversees a finance team of about 50 people, including two other Institute members and five others pursuing their CPA qualification. During the company s transformation, she has worked closely with its auditors, KPMG. They have different books 38 September 2012

4 A PLUS Of our shareholders, a majority of them are telecoms investors and they can be very different from a media investor. I have to tell them where the growth is in the media industry. for the media industry and we study them carefully. Wong was promoted to CFO in June and she is grateful for the confidence that the company s management has shown as she grapples with transition. Overall my role is treasury management, financial and regulatory management, budgeting investment, investor engagement and procurement, she says. Now I need to look at [issues] with both management and administrative perspectives before I make a decision. A sceptical audience One of Wong s important roles is interaction with investors. And one of her toughest tasks of late is convincing investors, who had invested in a telecoms business, why it makes sense to turn it into an entertainment business. The telecoms business is a stable, cash-generating business, she says. People pay regular monthly subscription fees so we had secure funding. Wong has to explain the company s shift of focus to sometimes sceptical shareholders, some of whom are conservative institutional investors. Of our shareholders, a majority of them are telecoms investors and they can be very different from a media investor. I have to tell them where the growth is in the media industry. Ricky Wong s transformation from telecoms entrepreneur to budding entertainment impresario didn t surprise many observers. He was known to have long harboured ambitions to be in the TV business and was chief executive of ATV for a whirlwind two weeks in City Telecom has estimated that it will require HK$2.5 billion over the next four years to invest in production. The company expects to see a significant shift in its shareholdings. What I need to do today is find a group of media investors and build a new investor base, says Alice Wong. The challenges are to find the investors, to communicate with existing investors and to understand the business. I have a packed schedule. Wong encourages existing and potential investors to visit the company s film sets. If time permits, the production department welcomes you to see how drama production works, she says. We don t need to do that in the telecoms industry. At City Telecom s temporary headquarters in Kwai Chung (the company is building a new station at Tseung Kwan O at the cost of HK$800 million), Wong guides visitors through rooms filled with costumes, makeup and wigs. She says all employees are encouraged to become familiar with the basics of TV production. You have to get yourself involved in the production process and you learn there are many more steps than in telecoms or manufacturing. Some people think it is easy to produce a drama but it isn t. There s pre-production, production and post-production. Then the sales and promotion team become involved. We also have a standards and practice team to monitor each production. Wong s lack of previous entertainment experience leaves her unfazed. It reminds her of her interview a decade ago when she first joined City Telecom. I was asked how much I knew about the telecommunications industry. I said I was willing to learn and I was a quick learner and they gave me the feeling they were willing to teach me. September

5 Family values Wong says she has always been a keen student. Her first accounting teacher was her father, who ran his own plumbing and drainage business in Cheung Sha Wan, a gritty industrial area of Kowloon that was just a 20 minute walk from their home. He worked Monday to Sunday and he wanted to spend some time with me. So, on Sundays I went to the office with him. I would just sit there and do nothing, she recalls. Probably because he saw I was bored there, he started to teach me bookkeeping, she says. They were simple, generic lineby-line books. He d been doing the bookkeeping himself. Despite the basic system, she was hooked. From that point onwards I thought Her first accounting teacher was her father, who ran his own plumbing and drainage business in Cheung Sha Wan. it was very interesting. I cleaned up all the bank statements, all the invoices, and eventually did the books by myself. When I was 14 or 15, he taught me double-entry bookkeeping. By secondary school, Wong had decided to become an accountant. I finished high school in Hong Kong then I went to the University of Queensland for a bachelor of commerce degree. I majored in accounting and finance. However, Wong was not tempted to build a life in Australia. I came back to Hong Kong straight away as I had a very serious homesickness issue. I missed my family. After two months working with a local auditing firm, because she had missed the deadline for recruitment by international firms, PricewaterhouseCoopers hired Wong in a winter intake. Wong threw herself into the hardworking life of a junior auditor. I remember coming home at 5 a.m., taking a shower and going back to work. I was young and didn t need to sleep. She stayed at PwC for five years. In the fifth year I asked myself, Do I want to stick with an audit firm or do I want to try commercial? I think my experience as a teenager with my father made me want to run a business. Wong s dilemma coincided with a phone call asking if she wanted to join City Telecom. I thought it was fate, she recalls. Firstly, I knew the name and, secondly, it was a listed company, so I could apply the knowledge I had acquired over the past five years. The company s dual listing on the Hong Kong stock exchange and the Nasdaq in New York also appealed. I had some background at PwC in working with U.S.-listed companies. I knew Sarbanes-Oxley, she says referring to the complex American corporate governance legislation. It seemed a perfect place for me, she adds. It s still great. I think the culture is really good. 40 September 2012