PCCW reports 2007 annual results

Thursday, March 6th, 2008
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  • Core revenue up by 12% to HK$20,581 million; consolidated revenue including PCPD decreased by 7% to HK$23,715 million on lower recognition of property development revenue
  • Core EBITDA increased by 11% to HK$6,506 million; consolidated EBITDA including PCPD increased by 7% to HK$7,296 million
  • Mobile achieved EBITDA breakeven – 3G mobile subscribers almost quadrupled to 206,000 now TV has taken a leadership position in the local pay-TV market; installed base increased by 16% to 882,000
  • Profit attributable to equity holders of the Company up by 20% to HK$1,503 million
  • Basic earnings per share of 22.21 HK cents
  • Final dividend of 13.5 HK cents per share

HONG KONG — PCCW Limited (“PCCW” or the “Company”) today reported healthy core business growth in 2007. Core revenue for the year ended December 31, 2007 increased by 12% to HK$20,581 million and core EBITDA increased by 11% to HK$6,506 million as the Group’s quadruple play and growth strategies started to deliver results.

Consolidated revenue including PCPD was down 7% to HK$23,715 million, reflecting lower recognition of property development revenue. Consolidated EBITDA including PCPD increased by 7% to HK$7,296 million. Profit attributable to equity holders increased by 20% to HK$1,503 million, reflecting growth in our core businesses.

Basic earnings per share increased to 22.21 HK cents from 18.59 HK cents the year before, and the Board recommended a final dividend of 13.5 HK cents per share. Total dividend for 2007 will be 20 HK cents and based on the Company’s closing share price of $4.55 on March 6, the dividend yield is 4.4%.

After launching Hong Kong’s first quadruple-play capability, last year PCCW focused on making more attractive media content and interactive services available across its four customer-delivery platforms – fixed-line, broadband, TV and mobile.

Group Managing Director Alex Arena said: “Building on our quadruple-play operations, we have strengthened PCCW’s leadership of a consumer market that was ready to embrace new ways of enhancing everyday Hong Kong life via technology. An outcome of this strategy was that our mobile, TV and broadband businesses proved to be growth drivers for PCCW in 2007.”

Despite keen competition, the growth momentum of PCCW’s TSS business continued in 2007. The Group successfully maintained its overall fixed-line market share in 2007 and total fixed lines in service at the end of December 2007 grew slightly to approximately 2,590,000. Residential and business lines’ market shares were approximately 66% and 68% respectively. A significant development last year was the launch of PCCW eye which provides families with audio-visual infotainment and an expanding range of practical applications.

NETVIGATOR maintained leadership in broadband access, and total access lines in service reached 1,237,000 at end of December 2007 – up 11% from 2006 – mainly due to greater consumer demand for reliable high-speed Internet access, captivating content on our media platform, and the value added enhancements to mobility.

PCCW has transformed Hong Kong into a “Wi-Fi city” by increasing the number of its hotspots from 400 in 2006 to around 4,000 today. More Wi-Fi facilities are being installed by the Company including an exclusive rollout of a Hong Kong Government Wi-Fi scheme.

PCCW became the first in Hong Kong to integrate Wi-Fi and mobile networks with the launch of NETVIGATOR Everywhere, which detects and selects the best connectivity between PCCW’s Wi-Fi, HSDPA and 3G capabilities. Last year, PCCW launched Fiber Direct to make optical-fiber available to some two-thirds of Hong Kong’s residential buildings. First-in-market packages combine optical-fiber and wireless connectivity with other features and extend the choice of bandwidth speed to 1,000 Mbps.

Revenue in our TV & Content business segment grew 70% in 2007 to HK$1,703 million, compared with HK$1,002 million in the previous year. now TV has taken a leadership position of the local pay-TV market last year and secured an installed customer base of 882,000 at year end, up 16% from 2006’s 758,000.

now TV                   2007        2006    Better/
                      ---------   ---------  (Worse)
                       H1    H2    H1    H2    y-o-y
                      ---   ---   ---   ---  -------
Installed base ('000) 818   882   608   758      16%
Paying base ('000)    560   628   444   501      25%

A milestone achievement in 2007 was the launch of a high-definition TV (HDTV) service. The appeal of Hong Kong’s first HDTV viewing experience accelerated when now TV began broadcasting major sports events, such as exclusive Barclays Premier League coverage, in high definition, followed by content such as National Geographic Channel HD.

Our stable of in-house TV productions was joined by eight now SPORTS channels and a brand-new 24-hour Cantonese language now NEWS Channel which runs alongside the existing now Business News Channel.

now TV’s growing popularity among viewers also led to the increase of new revenue streams last year, as the Group’s Advertising & Interactive Services unit explored opportunities to better serve local and international businesses by aligning advertising solutions with programming and the increasing power of interactivity.

As well as building more 3G cell sites to improve network quality last year, PCCW mobile became the first in Hong Kong to launch a 7.2 Mbps HSDPA service. The expanded pool of innovative services, such as Hong Kong’s first handset delivery of live sports action in high-definition and MOOV on mobile’s choice of over 100,000 songs and music videos, helped position PCCW mobile as the preferred service in a highly competitive market. PCCW mobile drew the largest net gain in subscribers wanting to transfer their phone numbers from other local operators in the 4th quarter of 2007, which helped boost our subscriber numbers by 16% to 1,071,000 by year end. Mobile achieved EBITDA breakeven in 2007.

PCCW Solutions Limited, the Group’s IT outsourcing arm, continued to build a profitable and sustainable business by winning large-scale, long-term projects in Greater China and other parts of the world. Similarly, our Contact Center Business enjoyed more revenue growth last year by securing outsourcing and other contracts among multinational corporations in the region.

The Company’s flair for innovation and homegrown expertise in cultivating new lines of business is now being made available on commercial terms to network operators around the world. This follows last year’s formation of PCCW International Projects, which works with our CASCADE technical services arm and other business units to develop new-age ICT services for overseas clients. Last year also saw PCCW Global grow in international reach and capability in the service of enterprise and wholesale markets.

Property development subsidiary PCPD saw revenue decrease 57% to HK$3,134 million, mainly due to lower revenue recognized from property completions from the Bel-Air project.

Alex Arena said: “Having strengthened our position in the Hong Kong market through innovation, prudent investment and a determination to meet the changing needs of customers, the Group has established a solid foundation on which to develop a promising and sustainable business in markets at home and abroad.”