PCCW reports interim results for 2008

Continued double-digit growth in core business

HONG KONG, August 21, 2008 - PCCW Limited today reported continued double-digit growth in its core business performance in the first half of 2008 as the Company successfully implemented its growth strategies.

Highlights of the interim results for the six months ended June 30, 2008 are as follows:

  • Core revenue* increased by 13% to HK$10,754 million; consolidated revenue including PCPD decreased by 2% to HK$11,372 million, reflecting lower recognition of property development revenue
  • Core EBITDA* increased by 10% to HK$3,364 million; consolidated EBITDA including PCPD decreased by 5% to HK$3,436 million
  • Mobile achieved a positive EBITDA of HK$108 million
  • now TV has become the largest local pay-TV operator with installed base up 13% to 927,000
  • Profit attributable to equity holders of the Company amounted to HK$656 million
  • Basic earnings per share of 9.68 HK cents
  • Interim dividend of 7 HK cents per share

The strong core revenue growth was driven by growth in all core business segments - 11% in Telecommunications Services, 45% in TV & Content, 28% in Mobile and 9% in PCCW Solutions.

Consolidated revenue including Pacific Century Premium Developments (PCPD) was lower than a year ago due to lower property development revenue recognized from the Bel-Air project in the period.

The 10% core EBITDA increase was primarily attributed to strong revenue growth in all core business segments and significant improvement in TV & Content and Mobile EBITDA.

Group Managing Director Alex Arena said: "It is encouraging to note that during the first half of 2008, an increasing number of customers were using more of our unique quadruple-play services via each of the four delivery platforms. We are confident that, subject to the continuing satisfactory performance of the Hong Kong economy, this trend will continue, thereby contributing to a rise in household average revenue per user (ARPU), which will drive an increase in core business revenue."

He said the growth of PCCW's core business had provided a favorable backdrop for the reorganization that the Company announced in May. The Company believes the reorganization of its telecoms services, media and IT solutions businesses under a newly incorporated holding company, HKT Group Holdings Limited, will improve the operational efficiencies of the Group. The exercise will help recognize the increases in the value of the Group's core assets which have been achieved as a result of improving profitability, the creation of new income streams and the many service innovations launched in recent years.

Review by segments

Telecommunications Services (TSS) - TSS revenue achieved an 11% growth to HK$8,551 million, marked by significant growth in International Telecommunications Services and Other Telecommunications Services.

Total local fixed lines in service at the end of June 2008 maintained at approximately 2,593,000, with firm ARPU recorded.

Local data services revenue grew 9% year-on-year to HK$2,415 million.

Strong growth in broadband network revenue was fuelled by another double-digit rise in consumer and business broadband service revenues. Total broadband access lines in service reached 1,275,000 at the end of June 2008, up by 8% from a year ago. Our unique content provision across the quadruple-play platforms has proved to be highly attractive to new customers. More subscribers opting for the new higher-speed broadband services, together with growth in wireless data usage via our seamless Wi-Fi/3G/HSPA networks, have led to higher ARPUs in both the consumer and the business segments.

Revenue from International Telecommunications Services also increased, mainly due to the growth in the wholesale market of traditional and IP-based international connectivity and voice services.

TV & Content - Revenue surged by 45% from a year ago to HK$1,039 million, driven by higher service subscription revenue from a larger paying base and growing ARPU, as well as higher TV advertising revenues. EBITDA loss further narrowed by 46% year-on-year to HK$40 million.

now TV's installed subscriber base climbed higher to 927,000 at the end of June 2008, an increase of 13% from a year earlier. The paying base also recorded an increase of 19% to 668,000. As the largest pay-TV service provider in Hong Kong,

now TV has further boosted its content line-up to more than 160 local and international channels at the end of June 2008, including over 85 exclusive world-class movies, sports, news and general entertainment channels.

ARPU in June 2008 grew by 28% from a year ago to HK$213. The UEFA EURO 2008 had attracted new customer subscriptions to the Mega Sports Pack. The higher ARPU was also attributed to the growing demand for high value packs and HD premium channels. The introduction of the All-In-One Set-top-box with HD and digital terrestrial television reception capability also helped develop new incremental revenue streams.

MOOV, PCCW's digital music brand with a library of over 130,000 songs and video titles from more than 90 local and international partners/labels, continued to help drive up the subscribers and ARPU of, PCCW's popular broadband portal.

Mobile - The robust growth continued this year, with revenue up 28% year-on-year to HK$857 million. After achieving EBITDA breakeven in 2007, PCCW mobile generated a positive EBITDA of HK$108 million for the six months ended June 30, 2008.

PCCW mobile's 3G subscriber base grew impressively by 142% year-on-year to 288,000, while the total 2G subscriber base increased by 6% to 888,000. ARPU of 3G service increased by 3% from December 2007 to HK$222 in June 2008, and the blended 2G and 3G post-paid ARPU increased by 2% to HK$156 during the same period.

PCCW Solutions - Revenue increased by 9% to HK$900 million. This was driven by the continued growing demand for IT solution services from both the public and private sectors in Hong Kong and mainland China, and the success in securing contracts from new clients and expanding relationships with existing ones.

Commenting on PCCW's international activities, Mr. Arena said the Company had scored significant successes in the Middle East market. PCCW Global signed a network service agreement to interconnect with du, the second telecoms services provider in the United Arab Emirates, while the International Projects team is part of a consortium that has been awarded a contract to build the second fixed network in Saudi Arabia.

"PCCW's reputation in telecommunications and IT is well recognized outside Hong Kong and I am confident that this is opening up several significant growth opportunities," he said.

Core revenue refers to Group consolidated revenue excluding Pacific Century Premium Developments Limited (PCPD), the Group's property development and investment business, and core EBITDA refers to Group consolidated EBITDA excluding PCPD.

2008 Interim Report [pdf - 912KB]

Webcast of 2008 Interim Results Announcement

2008 Interim Results Presentation [pdf - 2.04MB]

2008 Interim Results Announcement [pdf - 336KB]