PCCW reports solid 2005 results

• Profit attributable to shareholders increased 2.5 percent to HK$1,595 million (US$204.5 million) from HK$1,556 million (US$199.5 million)
• The Board has recommended a final dividend of 12 HK cents per share
• Turnaround in fixed line business, with net line gain of 50,000 in the second half of the year
• now TV customer base grew by 52 percent to 549,000, generating ARPU of HK$114
• Broadband access lines increased 20 percent to 953,000
• Operating costs cut by 9 percent year-on-year
• Net debt reduced by 26 percent to HK$19.486 billion (US$2.498 billion) at end-December 2005 from HK$26.274 billion (US$3.368 billion) a year earlier
• Excluding Bel-Air, revenue rose 1 percent to HK$17.678 billion. Consolidated revenue fell 2 percent to HK$22.499 billion (US$2.885 billion) from HK$23.002 billion (US$2.949 billion) due to a change in accounting standards, delaying the revenue recognition of Bel-Air units sold.

HONG KONG, March 29, 2006 - PCCW Limited reported higher profits for the year ended December 2005, reflecting a dynamic year marked by a turnaround in the Group's core fixed-line business, very strong growth in now TV and a highly promising re-entry into mobile telephony.

The Board has recommended a final dividend of 12 HK cents per share for the year, subject to approval by shareholders. This will bring the total dividend for 2005 to 18.5 HK cents per share.

Among the advances made by PCCW during the year was a turnaround in its fixed line business - a unique achievement for a former incumbent in a post-liberalization era.

"The new fixed carrier license granted to PCCW-HKT Telephone Limited at the beginning of 2005 has enabled us to react with more flexibility to a very competitive market. Thanks to our successful customer win-back campaigns and innovations in products and services, 2005 was a major turning point for PCCW," said Deputy Chairman and Group Managing Director Jack So.

Throughout the second half of 2005, PCCW recorded a continuous monthly net line gain. The total number of fixed lines grew 50,000 in the second half, compared to a net line loss of 53,000 in the previous six months.

Profit attributable to shareholders rose 2.5 percent from a year earlier to HK$1,595 million (US$204.5 million). EBITDA was 1 percent higher at HK$6,650 million (US$853 million). Excluding Bel-Air, revenue rose 1 percent to HK$17.678 billion. Consolidated revenue fell 2 percent to HK$22.499 billion (US$2.885 billion), mainly due to a change in accounting standards, delaying the revenue recognition of Bel-Air units sold.

Year-earlier comparative figures have been restated to reflect the new Hong Kong accounting standards adopted from January 2005.

now TV continued to gain momentum, stimulating further growth for the Company's overall broadband business. New exclusive content agreements with HBO Asia Pacific, the STAR group and Mei Ah Entertainment helped boost the number of installed customers to 549,000, up 52 per cent from the end of 2004. Average revenue per pay channel subscriber rose to HK$114 at December 2005 from HK$105 a year earlier.

Demand for broadband products and services continued to be strong. Customer churn rate remained low as now TV's success in delivering a broad range of high quality and exclusive entertainment, sports and news channels helped to increase customer loyalty for PCCW's broadband services. The total number of broadband access lines rose 20 percent to 953,000 at the end of December 2005 from 796,000 a year earlier.

PCCW further enriched now TV's local Chinese content in early 2006 by signing a long-term agreement with Galaxy Satellite Broadcasting Limited to carry 20 of its channels on the now TV platform; and this month, PCCW launched its 24-hour Cantonese-language now Business News Channel.

Mr. So said: "now TV subscribers will have access to more than 110 channels of attractive local and international content. We expect our new services, including view-on-demand for three of our Cantonese channels, to cement now TV's status as the most comprehensive pay TV platform in Hong Kong, and to be another impetus for subscriber growth in the midst of intense competition."

In 2005, PCCW made an important strategic move by re-entering the mobile market in Hong Kong through the acquisition of a majority stake in SUNDAY Communications Limited, which holds both 2G and 3G licenses. The transaction gave PCCW the means to become a fully integrated operator with the ability to offer quadruple-play services including fixed-line, broadband Internet, pay-TV and mobile services. It also enabled the Company to progress its planning towards fixed-mobile convergence services in the future, and strengthened its status as China Netcom Group's preferred mobile partner in the mainland.

Under the new brand "PCCW mobile", the Company in January 2006 launched an unprecedented six-month trial of its 3G service designed to stress-test the network, familiarize customers with 3G offerings and prepare the market for the commercial launch.

"The 3G trial has been highly successful, with over 330,000 registered participants and 110,000 users selected for the trial. Exclusive now TV content and other features such as local and international news give us a significant advantage over our competitors. We will continue to extend our 3G coverage and we look forward to migrating 3G trial users to paying customers in the second half of 2006," Mr. So said.

The Company continued to exercise tight cost control, cutting 9 percent from operating expenses by improving efficiency in corporate overheads and overall productivity, while streamlining under-performing businesses.

De-leveraging also remained a key financial priority. Net debt was reduced by 26 percent to HK$19.486 billion (US$2.498 billion) at end-December 2005 from HK$26.274 billion (US$3.368 billion) a year earlier.

Pacific Century Premium Developments (PCPD)'s prime residential Bel-Air development continued its strong sales performance, helped by a strong brand and favorable property market conditions in Hong Kong. More than 210 luxury apartment units were sold in 2005, generating proceeds of HK$3.551 billion (US$455 million). Due to a change in accounting standards delaying the revenue recognition of the Bel-Air units sold, sales contribution to Group results fell 11 percent to HK$4.821 billion (US$618 million).

In mainland China, there has been further progress in PCCW's cooperation with the China Netcom Group. Earlier this month, a PCCW subsidiary entered into a sale and purchase agreement to acquire a 50 percent stake in China Netcom Broadband Corporation Limited, which provides broadband access and value added services in the cities of Hangzhou and Ningbo.

PCCW Group and China Netcom Group are moving forward with the Hujialou (呼家樓) development in the central Chaoyang district of Beijing, having received positive responses from local land, planning and traffic bureaus. Meanwhile, joint working teams are conducting feasibility studies on other potential development sites in China Netcom Group's portfolio.

A joint working team has also been formed to study the provision of mobile services in Guangdong Province and the Yangtze River Delta. China Netcom Group is conducting a 3G trial in a designated city on the mainland and awaiting the result of the telecoms review by the Central Government, which will decide on the issue of 3G licensing in due course.

PCCW's wireless broadband business in the United Kingdom, UK Broadband, continued its successful rollout into its second phase, focusing on selected London residential areas. The service, which has been rebranded as now, is currently available to more than half a million homes.

"The Company is looking forward with confidence to 2006 and will build on the progress made in our core business, further strengthen IPTV, and develop the 3G mobile service. Our focus will always be to deliver value to our shareholders," said Mr. So.

Webcast of 2005 Annual Results Announcement
- Broadband
- 56K

2005 Annual Results Presentation [pdf - 6.03MB]

2005 Annual Results Announcement [pdf - 178KB]

Statement from Chairman [pdf - 73KB]

Statement from Deputy Chairman and Group Managing Director [pdf - 274KB]

About PCCW

PCCW Limited (SEHK: 0008, NYSE ADR: PCW) is the premier telecommunications provider in Hong Kong and a leader in Information and Communications Technologies in Asia. While expanding opportunities in mainland China in partnership with China Network Communications Group Corporation, PCCW continues to enhance Hong Kong's role as a regional center of technological excellence through innovative services in new generation fixed-line and mobile telephony, broadband, information technology, wireless communications, and IPTV (through its successful now TV network operated by PCCW subsidiary PCCW Media Limited). Internationally, PCCW is proceeding with the phased rollout of a sophisticated wireless broadband network in the United Kingdom. PCCW also provides cutting-edge technical services to network operators worldwide. PCCW subsidiary Pacific Century Premium Developments Limited is engaged in property development.

To learn more about PCCW, go to www.pccw.com.

For media inquiries, please call:	For investor inquiries, please call:
Joan Wagner/ Hans Leung Corporate Communications Tel: (852) 2514-8883/2883-8747 Email: joan.wagner@pccw.com hans.leung@pccw.com	Erik Floyd / Lisa Cheong Investor Relations Tel: (852) 2514-5084 Email: ir@pccw.com