PCCW annual results for year-ended December 31, 2000

Hong Kong March 28, 2001 - PCCW (SEHK: 0008, ADR-NYSE: PCW) today announced its first consolidated financial results since its acquisition of Cable & Wireless HKT Limited (HKT) on August 17, 2000. These consolidated results include 12 months for PCCW and 4.5 months for HKT and equity account for the results of the businesses to be injected into the IP Backbone Company and Regional Wireless Company, which formed part of the alliance established with Telstra Corporation Limited of Australia (Telstra) after the year end.

Consolidated revenues for the year ended December 31, 2000 increased to US$935 million (HK$7,291 million) from US$19 million (HK$152 million) in 1999. Consolidated EBITDA (earnings before interest, tax, amortization, depreciation, other provisions, gains or losses on investments and results from investments that are equity accounted for) for 2000 was US$191 million (HK$1,489 million).

Consolidated operating profit was US$67 million (HK$520 million) before provision for impairment losses of US$40 million (HK$312 million) and net unrealized losses on investments of US$627 million (HK$4,887 million). These provisions contributed to total consolidated losses of US$886 million (HK$6,907 million).

It is the Board's belief that the transformation of the Company this year was accomplished against the background of substantial challenges and volatility in global financial markets. The fundamental changes in market conditions have particularly impacted telecommunications, Internet and technology companies.

The Board has conducted a thorough review of the Company's investment portfolio, which has been consolidated with that of the HKT Group. Taking a prudent approach, to reflect current market conditions, the losses on investments for the year include a substantial provision for a decline in the value of certain of the Company's investment securities that the Board believes was other than temporary. In addition, unrealized losses have been recognized in respect of other investments which have been marked-to-market at the period end.

The consolidated losses also reflect net finance charges of US$302 million (HK$2,356 million). Finance charges include amortization of arrangement fees of US$115 million (HK$896 million) relating to the short-term bridge-loan financing facility raised for the HKT acquisition.

The balance of goodwill, arising upon the HKT acquisition, of US$22 billion (HK$172 billion) was written off against reserves according to Hong Kong Generally Accepted Accounting Principles (HK GAAP) applicable to the Company's consolidated financial statements for the year ended December 31, 2000.

To allow a more meaningful assessment of the underlying business performance, the Company prepared unaudited pro forma financial data, which reflects the acquisition of HKT as if it had taken place on January 1, 1999, in line with usual market practice. On this basis, unaudited pro forma revenues increased 1 percent to US$2.65 billion (HK$20.69 billion) for the 12 months to December 31, 2000. Unaudited pro forma EBITDA was US$790 million (HK$6,162 million) for the year.

In addition, the Group's existing IP Backbone business generated unaudited pro forma revenues of US$941 million (HK$7,340 million) and EBITDA of US$357 million (HK$2,785 million) for the year to December 31, 2000. The Group's Hong Kong wireless business generated unaudited pro forma revenues of US$663 million (HK$5,171 million) and EBITDA of US$152 million (HK$1,186 million).

"Our core business performance is solid, with a decreasing reliance on IDD revenues and strong demand for data and connectivity services," said PCCW Group Chief Financial Officer David Prince, who noted a challenging year for the entire communications industry. "I am confident we are well-positioned for the year ahead."

Unaudited Pro Forma Business Performance Highlights

Telecommunications Services

  • Overall telecommunications services revenue fell 7 percent year on year, largely due to a 34 percent decline in international voice (IDD) revenues. Revenues from IDD services accounted for just 13 percent of total telecommunications services in December 2000 (down from 17 percent a year earlier), while revenues from local exchange lines, broadband and data services accounted for 86 percent, up from 83 percent in 1999.
  • Local telephone services revenues increased 8 percent to nearly US$1 billion (HK$7.5 billion), reflecting a full year's impact of the increase in residential line tariffs in September 1999. Residential and business line tariffs were increased in January 2001 and this will be reflected in the results for the 2001 financial year. The Company has made substantial progress in rebalancing its revenues from IDD services to local telecommunications services.
  • Local data services revenues of US$433 million (HK$3.4 billion) were driven by a 196 percent increase in wholesale broadband access lines in service to 282,000 and strong demand for other local data and network solutions. The amount of local bandwidth sold increased 27 percent year-on-year to 86 Gigabits per second ("Gbps").

Business eSolutions

  • Revenues from Business eSolutions increased 25 percent year-on-year to nearly US$154 million (HK$1.2 billion), driven by major system integration projects for the finance and public sectors.
  • The Company expanded its Hong Kong Yellow Pages directory business into China through the acquisition of 37.65 percent of China BiG (mainland China's largest telecom directory business) in November 2000.
  • Revenues from new DSL-based retail business broadband Internet access services increased 190 percent to US$28 million (HK$219 million), with customers for the Company's high-speed "@work" and "Always On" services expanding from 1,400 as of December 31, 1999 to 19,400 at year end 2000. The services are primarily focused on small and medium enterprises.

Internet Data Centers

  • Internet data center revenues increased 120 percent year-on-year to more than US$15 million (HK$121 million) following launch of premium services under the Powerb@se brand in June 2000.

Business-to-Consumer Services (B2C)

  • B2C revenues increased 34 percent year-on-year to US$143 million (HK$1,115 million), driven by accelerating local take-up in broadband Internet access services. PCCW operates the leading Internet access service in Hong Kong, and broadband take-up during 2000 saw year-on-year customer growth of 506 percent to 194,000 for the Company's 1.5 Mbps Ultraline service. Total Internet access customers at the end of the year were 626,000, including 432,000 narrowband customers.

Financial Statements

Attached to this press release are Final Results Announcement for the year ended 31 December 2000 and unaudited pro forma financial data.

Live Web Broadcast

Simultaneously with the live global webcast of the results presentation, the Company announced details of six major strategy initiatives. The full presentation is available at and

About PCCW

Hong Kong-listed Pacific Century CyberWorks (SEHK: 0008, ADR-NYSE: PCW), the flagship of the Pacific Century Group, is one of Asia's leading integrated communications companies. From its market-leading position in Hong Kong, PCCW is focused on building shareholder value by leveraging the synergies between its core businesses. Among those businesses are: telecommunications services (PCCW-HKT); mobility and connectivity services; broadband interactive services (B2C); ventures; business-to-business services; infrastructure services; and data center/web-hosting services.

To learn more about PCCW, go to

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