PCCW reports interim results for 2007

Wednesday, August 29th, 2007
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Stronger core growth

  • Core revenue up 7% to HK$9,507 million. Consolidated revenue including PCPD decreased 18% to HK$11,607 million, reflecting lower recognition of property development revenue
  • Core EBITDA up 4% to HK$3,068 million. Consolidated EBITDA including PCPD decreased 1% to HK$3,609 million
  • Continued strong momentum for now TV – installed base up 35% to 818,000
  • 3G customers more than doubled to 119,000
  • Growth supported by quadruple play and wireless strategies
  • Profit attributable to equity holders increased 3% to HK$822 million
  • Basic earnings per share of 12.16 Hong Kong cents
  • Interim dividend 6.5 HK cents per share

HONG KONG — PCCW Limited today announced stronger growth of its core telecom, media and ICT business segments in the first half of 2007 as the Company began to reap the benefits of its quadruple-play strategy.

PCCW’s cross-platform delivery of a growing variety of content and interactive services helped lift core revenues* for the six months to June by 7 percent year-on-year to HK$9,507 million. Consolidated revenue including PCPD was down 18 percent to HK$11,607 million, reflecting lower recognition of property development revenue.

Boosted by ground-breaking content deals and technology innovations, PCCW’s broadband, international telecom, TV, mobile and IT services businesses all achieved improved results while fixed-line operations remained stable.

Core EBITDA* rose 4 percent to HK$3,068 million. Consolidated Group EBITDA including PCPD declined 1 percent to HK$3,609 million.

Profit attributable to equity holders of the Company rose 3 percent to HK$822 million. Earnings per share increased 3 percent to 12.16 HK cents. The Board declared an interim dividend of 6.5 HK cents.

Group Managing Director Alex Arena said: “Our core business has returned to growth, with improved revenue and EBITDA performance in all four key core segments – Telecommunications Services (TSS), TV & Content, Mobile and PCCW Solutions. Our focus on maximizing the revenue potential of our telecommunications assets and investing in new growth businesses is beginning to pay off.”

During the first half of 2007, PCCW enriched its quadruple-play by offering a growing variety of content and interactive services across all four platforms – fixed line, now TV, PCCW mobile, and NETVIGATOR broadband.

Telecommunications Services (TSS) returned to growth as revenues rose 4 percent to HK$7,706 million, led by international telecommunications and local data services.

Local fixed line revenue remained stable as the number of direct exchange lines held steady at 2,590,000 and ARPU held firm. Fixed line market share remained at 69 percent for business lines and 66 percent for residential lines during the first half of 2007. The Group strengthened its fixed-line platform during the period, as it introduced the eye home multimedia service and one Communications integrated fixed line/mobile solution.

Revenue from international telecoms services increased, supported by higher demand for traditional and IP-based services.

Local data services revenue increased as NETVIGATOR maintained its market leadership in broadband access. Total lines in service increased 18 percent from a year earlier to 1,176,000 at the end of June 2007.

Broadband demand was fuelled by now TV’s growth momentum and by rising demand for high-quality Internet value-added services, including MOOV digital music streaming service. snaap!, a new multimedia sharing service was launched during the period on all four quadruple-play platforms. On the commercial side, customer demand for bandwidth grew on increasing deployment of bandwidth-hungry applications.

As part of PCCW’s new integrated wireless strategy, the number of PCCW Wi-Fi hotspots was substantially expanded, with more than 3,000 deployed across Hong Kong. Wi-Fi usage has tripled since PCCW Wi-Fi was launched in January 2007.

NETVIGATOR Everywhere was launched in August 2007. This unique wireless broadband service detects and selects the best available connectivity to PCCW’s integrated 3G, 7.2Mbps HSDPA and Wi-Fi wireless networks.

Drawing from expertise and knowledge in deploying world-class quadruple-play services, Cascade Limited (CASCADE) continued to lead IPTV and other network projects in China, Southeast Asia, and elsewhere. New CASCADE opportunities are emerging from telecoms deregulation and growing demand for sophisticated services.

TV & Content revenue surged 42 percent year on year to HK$715 million, driven by now TV’s strong growth momentum. With revenue up substantially, EBITDA loss was cut by more than half to HK$74 million. now TV’s installed base was 818,000 at the end of June, up 35 percent from a year earlier. The paying base for content and interactive services reached 560,000, while ARPU climbed a further 19 percent to HK$166 per month.

The strong ARPU increase for now TV was supported by the launch of the Mega Sports Pack in March 2007, showcasing the strongest line-up of major international sporting events in Hong Kong. This includes exclusive live broadcast of three seasons of Barclays Premier League (“BPL”) football beginning August 2007.

BPL matches can be viewed on all four platforms including PCCW mobile, via broadband on and the PCCW eye home multimedia service.

now TV’s exciting content line-up continued to grow, with around 150 local and international channels currently on offer, including more than 70 exclusive world-class movie, sports, news and general entertainment channels.

With the recent launch of Hong Kong’s first High Definition TV programming, now TV was firmly established as the premier pay-TV service in Hong Kong.

During the first half of 2007, the Group’s directories business was integrated with the now TV advertising and now shop merchandising and transaction units. The integrated Advertising and Interactive Services is charged with developing new revenue opportunities from interactive advertising, merchandising and a variety of transaction-based services. One such initiative was the recent launch of the Hang Seng TV Securities Trading Service, the first such service in Hong Kong, which enables Hang Seng Personal e-banking customers to trade local securities on two now TV channels.

Mobile revenues increased 14 percent to HK$668 million as the 3G subscriber base more than doubled to 119,000 and total mobile subscribers increased to 957,000. 3G exit ARPU rose 14 percent since December 2006 to HK$229. Blended (2G+3G) post-paid exit ARPU also rose, supported by a higher quality 2G subscriber base.

PCCW mobile’s unique content and interactive services include 20 real-time now TV channels on “now on mobile” and “now SPORTS on mobile” plus “MOOV on mobile” and snaap! “now SPORTS HD on mobile” delivers BPL action and other exclusive sports content with a razor-sharp picture on certain handset models. Business customers can also enjoy PUSH eMail and one communications.

Revenue from the Group’s IT services arm, PCCW Solutions, grew by 12 percent to HK$826 million as it continued to expand its business and win significant contracts. These contracts included a 10-year contract from the Hong Kong Police Force for the design, installation and maintenance of a Versatile Maritime Policing Response System, and an application development-outsourcing contract from MTR Corporation to develop and deploy a Maintenance Management Information System in its railway projects in mainland China.

Computer and equipment sales increased as the local economy grew, while the contact center business benefited from a greater demand for business process outsourcing.

“With all four delivery platforms now in place, our focus in the second half of 2007 will be on expanding the volume and quality of content and transaction services across all platforms,” said Mr. Arena. “In addition, we will continue to implement our integrated wireless strategy and look for further opportunities to leverage our experience and expertise in the international marketplace.”

*Note: Core revenue refers to Group consolidated revenue excluding Pacific Century Premium Developments Limited (“PCPD”), the Group’s property development and investment business; while core EBITDA refers to Group consolidated EBITDA excluding PCPD.

• Webcast of 2007 Interim Results Announcement: Broadband; 56K
2007 Interim Results Presentation [pdf – 2.57MB]
2007 Interim Results Announcement [pdf – 317KB]