PCCW reports 2005 Interim Results
Revenue up 9 percent, profit up 43 percent

  • Profit for the six months ended June 30, 2005 increased 43 percent to HK$1.1billion (US$141million) from HK$767 million (US$98 million) for the same period last year
  • Net profit attributable to shareholders increased 25 percent to HK$954 million (US$122 million) from HK$766 million (US$98 million)
  • The Board has declared an interim dividend of 6.5 HK cents per share
  • Consolidated revenue increased 9 percent to HK$11.7 billion (US$1.5 billion) from HK$10.779 billion (US$1.382 billion)
  • Basic earnings per share increased 11 percent to 15.77 HK cents
  • General and administrative expenses were cut by 10 percent year-on-year
  • Net debt has been reduced by 33 percent to HK$17.614 billion (US$2.258 billion) at end of June 2005 from HK$26.2 billion (US$3.359 billion) at end of December 2004
  • Broadband access lines have increased by 14 percent year-on-year to 857,000
  • now Broadband TV customer base grew to 441,000 with wider range of content, generating an exit ARPU of HK$110
  • Stemmed line loss through effective win-back campaigns

HONG KONG, August 18, 2005 - PCCW Limited reported increased consolidated revenue and a higher attributable profit to shareholders for the first six months of 2005 as now TV, New Generation Fixed Line (NGFL) and PCCW Convergence services stabilized core telecom revenue and higher contribution from Pacific Century Premium Developments (PCPD) was achieved.

The Board declared an interim dividend of 6.5 HK cents per share for the first six months of the year.

Despite intense competition in the local telecommunications market, the Group has made impressive progress in slowing net fixed line loss. In June 2003, monthly line loss peaked at 38,000. In June 2004, line loss had been reduced to 16,000 and in June 2005 line loss was down to 1000. Key differentiators in PCCW's progress have been innovative products, enhanced features, and quality of service. Continuing this positive trend, in July, PCCW reversed the line loss situation and recorded line gain in both residential and business lines.

"PCCW is delivering on its strategies for creating value. Our broadband and next generation offerings have transformed our fixed line into a digital pipeline for voice, data and video. In the process, we have reduced churn rates and stabilized our core revenues," said Deputy Chairman and Group Managing Director Jack So.

Effective pricing and market segmentation strategies, a growing now TV and broadband business, and a higher contribution from the sales of the Bel-Air property development by PCPD, produced a sound performance in the first half of 2005. Profit for the period increased 43 percent to HK$1.1 billion (US$141 million). Net profit attributable to shareholders rose 25 percent to HK$954 million (US$122 million) from HK$766 million (US$98 million) in the same period a year earlier.

Year earlier comparative figures in the Group's interim report have been restated to reflect new Hong Kong accounting standards adopted from January 2005.

With more than 70 channels available on now TV, subscribers continue to sign up at a steady pace reaching a total 441,000 installed users as at June 30, 2005, up 22 percent from 361,000 as at the end of December 2004.

now TV's success has also helped strengthen PCCW's broadband services in Hong Kong and reduced customer churn. The total number of broadband access lines rose 8 percent to 857,000 as at the end of June 2005 from 796,000 as at the end of December 2004. Similarly, consumer broadband grew to 715,000 lines as at the end of June 2005 from 660,000 lines as at the end of last year.

"In just two years, now TV has established itself as a major player in the pay-TV market and its revenue contribution to the Group is increasingly significant. The latest long-term exclusive agreements with HBO, STAR, and Mei Ah Entertainment will give us a significant edge in our movie offerings, and our Chinese-language content initiatives such as our forthcoming local financial news channel, will broaden now TV's appeal," said Mr. So.

"now TV is the world's largest commercial IPTV service. PCCW continues to keep Hong Kong in the forefront of innovation and technical excellence. We also plan to be the first to introduce HDTV to the territory - at the beginning of next year," he added.

De-leveraging remains one of the Group's key financial priorities. Several initiatives have significantly reduced debt: with net debt as at June 30, 2005 reduced by 33 percent to HK$17.614 billion (US$2.258 billion) from HK$26.2 billion (US$3.359 billion) as at December 31, 2004.

The Group continued to exercise tight cost control and has cut 10% from general and administrative expenses by improving both efficiency in corporate overheads and overall productivity, while streamlining under-performing businesses.

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 (SUNDAY).

"SUNDAY holds both 2G and 3G licenses. The acquisition is an important strategic step in our future development - it allows us to enter the wireless communications, data services and 3G markets in Hong Kong, enables us to progress implementation of fixed-mobile convergence services, and confirms us as China Netcom's preferred mobile partner in China," Mr. So said.

"Integrating SUNDAY's wireless offerings with the rest of our core telecommunications business will be one focus in the coming months, as will the maximization of the advantages afforded by our strategic alliance with China Netcom," he added.

PCPD's impressive sales performance at Bel-Air, helped by favorable property market conditions in Hong Kong, provided a significant revenue contribution to the Group. Revenue from Bel-Air sales for the six months ended June 30, 2005 increased 52 percent to HK$3.179 billion (US$407 million).

Outside Hong Kong, PCCW's wireless broadband business in the United Kingdom, UK Broadband, continues to expand its coverage area and subscriber base, maintaining a prudent approach through a carefully phased rollout.

In mainland China, PCCW is working closely with China Netcom Group. Discussions on areas of investment cooperation have made good progress during the first half of 2005, in broadband, property development, international connectivity and Yellow Pages.

Notably, PCCW Group and China Netcom Group have reached a consensus under which PCCW intends 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.

Following the signing in March of an MOU for joint property development in the mainland, PCCW Group and China Netcom Group are moving forward with the Hujialou (呼家樓) development in the central Chaoyang district of Beijing. PCCW Group will develop and manage the project, once the necessary government approvals are obtained. Joint working teams will continue to explore other property development projects in the mainland.

"I am convinced that with the expertise that resides within PCCW and with our core business stablised, together with the prospects presented to us through our alliance with China Netcom Group and the acquisition of SUNDAY, this year may well be regarded as the turnaround point for the Group's core telecom business," Mr. So said.

2005 Interim Results Announcement [pdf - 165KB]

Webcast of Interim Results Announcement
- Broadband
- 56K

2005 Interim Results Presentation [pdf - 2.37MB]

Statement from the Deputy Chairman and Group Managing Director [pdf - 167KB]

About PCCW

PCCW Limited (SEHK: 0008, ADR-NYSE: PCW) is the leading communications provider in Hong Kong and one of Asia's leading IT&T players. Hong Kong's image as a center of technology excellence continues to be enhanced by PCCW's innovation, especially in new generation fixed-line telephony, broadband, IT, wireless and delivery of home entertainment. Internationally, PCCW provides cutting-edge technical services to network operators, and enables organizations to bring their business to Asia and take Asian business to the rest of the world. The Company's English name was changed in 2002 from "Pacific Century CyberWorks Limited" to "PCCW Limited".

To learn more about PCCW, go to

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