Friday, March 5, 2021
Martin Hennecke
HKEx Stock Code : 01883 
Corporate Profile
The Group is principally engaged in the provision of voice services, short message services and other telecommunications services.

Business Review - For the year ended December 31, 2012

Further strengthened partnerships with telecom operators and strived to achieve stable development of its China voice business

In response to the mounting pressure on China traffic in the first half of 2012, the Group has further strengthened collaboration with operators and improved the quality of services. The Group has coordinated with overseas operators in managing their China inbound traffic, in order to maintain the market share of China inbound voice business. On the other hand, the Group has strived to stabilise the market selling price to stabilise the overall gross profit margin of its China voice business. The Group also has managed to lower the termination cost through sourcing less expensive overseas routing services. By implementing these measures, the Group has ensured a stable China voice business and retained its advantageous market position in China's voice traffic market.

Stronger efforts to expand overseas markets boost revenue from international voice business

During 2012, the Group has made considerable progress in increasing contributions from overseas markets through focusing on expanding its business in Europe, India, Middle East, Africa and South America. This was evidenced by a notable increase in international voice traffic and revenue. Besides, the Group continued to acquire more direct end-users in overseas retail markets, thereby securing primary voice traffic and complementing the wholesale business. CITIC Telecom has leveraged the Group's competitive edge in its wholesale voice business by launching Voice over Internet Protocol (ˇ§VoIPˇ¨) products for smartphones under the brand ˇ§HIPPIˇ¨, intensifying the development efforts in end-user markets outside the Greater China Region.

Maintained stable growth in Mobile VAS and SMS businesses through enhanced marketing efforts

The Group has achieved a breakthrough in its international-to-international mobile single IMSI multiple number (ˇ§SIMNˇ¨) business. During the first half of the year, the Group secured an overseas operator to join the SIMN hubbing services solution provided by an operator in Macau. During the year, the Group has continued to promote its Mobile VAS products to other mobile operators by leveraging its extensive network connections and quality service. The increasing take-up of international roaming by mobile users has led to a continuous surge in the Group's Mobile VAS business, providing a good contribution to the Group's performance. To increase operating efficiency and to leverage multi-product capability, the Group reorganised its sales teams structure from a product focus to become geographically oriented. The restructure had enhanced each regional sales team to promote bundled services comprising Voice, SMS and Mobile VAS, thus boosting the Group's competitiveness of the Group's Mobile VAS and SMS businesses.

Optimised product range of data businesses such as VPN and Internet access services and development of cloud computing centres

The Group's wholly-owned subsidiary CITIC Telecom International CPC Limited (ˇ§CPCˇ¨) has continuously offered new products to the market, thereby keeping pace with market needs and developments. In 2012, its cloud computing solution has been well received by the market and has optimised the product range of its data businesses such as VPN and Internet access services. A highlight of this new line is a back-up, replication and recovery service, the ˇ§SmartCLOUD BRRˇ¨ service, which slashes back-up and recovery time. This function prevents any loss of customer information while backing up and also quickly recovers information.

Another major product is the ˇ§SmartCLOUD VCˇ¨ video conferencing service, a cloud technology-based regional video conferencing management solution. ˇ§SmartCLOUD VCˇ¨ extends the meeting place from the conference room to various personal devices such as desktop computers, conferencing systems or notebook computers, tablets and smartphones. Users can arrange multi-point video conferencing with telepresence quality anytime, anywhere.

In March 2012, CPC opened its first Asia Pacific SmartCLOUD cloud computing services centre in Taiwan and was quickly followed by a second one in Singapore in June 2012. These two centres, together with four SmartCLOUD cloud computing services centres in China and Hong Kong opened since 2011, have optimised the development of our cloud computing business across the region. The new cloud computing offerings have complemented the Group's existing cloud computing products and have helped to enrich the variety of its cloud computing solutions. These offerings had reinforced the Group's competitiveness in the rapidly expanding market.

Enhance development of new products, laying a firm foundation for the Group's future development

The Group has responded to the market development and needs by exerting continuous efforts in developing of new products. One of our initiatives was the improvement and optimisation of functions of ˇ§HIPPIˇ¨, a smartphone-based VoIP voice business product. The Group has been preparing for the latest 4G development and has completed installation of LTE/IPX equipment. The Group is now collaborating with several operators for joint testing. While reviewing the mobile certification technology, the Group has also held discussions on the application of mobile certification technology in areas such as mobile banking, internet banking and ATM services. The Group is actively evaluating potential technology solutions with financial institutions in Mainland China to be deployed in business cooperation.

Improved overall service standards through better quality management of engineering and stronger back-office support

The Group has continued to improve quality management of its services offering and enhanced back-office support capability. Quality supervision and management and routing quality management meetings were held on a regular basis to discuss quality management issues and suggest relevant solutions. In response to changing market requirements, the Group has continued to expand its network capacity, upgrade its network equipment, optimise its global IP network and strengthen the transmission capacity of its international network.

Data centre business strengthened with completion of Data Centre Phase II and the commencement of construction of the Ap Lei Chau Data Centre

The Group started the construction of Phase II of the Data Centre in January 2012. Through comprehensive arrangement and meticulous planning, the Group has ensured the construction complies with quality standards and realised capital efficiency by completion within the budget.

The Group continued to evaluate the construction of new data centre on an all-round basis and has adhered to the principle of ˇ§spend less and do moreˇ¨. The Group has completed the planning and preparation of related documents of the Ap Lei Chau Data Centre and confirmed the initial layout design and technological standards. The Group expects the construction of the new Data Centre to be completed on schedule which will further strengthen the Group's competitiveness in the data centre business.

Business Outlook - For the year ended December 31, 2012

Global economic condition remains uncertain for 2013 which will definitely affect the telecommunications market. The operating environment for the Group's traditional business remains challenging. Management will continue to increase its effort to explore the emerging market and to launch new product offerings so as to strengthen its competitiveness and to improve room for growth. With the continued support from shareholders and dedication of the team, management is confident that the Group can overcome these challenges, as it has during the past few years.

The Group's strategy is to maintain the stable growth of its voice, SMS and Mobile VAS businesses, and to allocate more resource in order to develop the established data business in cloud computing VPN and Internet access services. The Group continues to proactively procure the smooth completion of the acquisition of 79% equity interest in CTM and maintain that enterprise's growth. The Group will leverage on each of its overseas subsidiaries to penetrate the local telecommunications market. To summarise, through enhancing operational efficiencies, and more effective control of costs, the Group is confident it can achieve stable profit growth in 2013.

Fortify partnerships with telecom operators and maintain stable business growth

The Group will continue to deploy more resources to the development of new products. Through constant improvement of our quality of service, we will enhance our collaboration with the operators and strive to maintain stable business growth. CPC will also provide VPN and other telecommunications services to domestic SMEs engaged in overseas expansion in close alignment with China's economic development.

Secure new customers, expand market coverage and broaden the scope of business cooperation with third-world nations

Leveraging on its global marketing reach and telecommunications network, the Group will continue to conduct timely analysis on market changes and customer demands of emerging markets such as Africa, Central Asia, the Middle East and South America. The Group plans to engage business partners along these new frontiers through the formulation and execution of effective marketing initiatives.

The Group will continue to collaborate with China's telecommunications operators to identify new opportunities for cooperation within new market situations and geographies. The overseas operations experience of the Group place it in an advantageous position to proactively and effectively engage in mutually beneficial business ventures with Chinese operators in developing countries.

Enhance management and competitive advantages of overseas offices in their local markets

The Group will continue to deploy more resources to expand the operation of our overseas offices. Through bolstering the business capability of our overseas offices, the Group will aim to create new growth drivers through enhancing the management of overseas offices and boosting their competitive advantages within their respective markets.

Strengthen development of new businesses such as VoIP, cloud computing and LTE, enabling fast time-to-market for new products

We will continue to develop and deploy new technologies and applications to meet market demand and trends. In particular, we will enhance our efforts in the application of VoIP services, cloud computing services, mobile roaming certification payments services and LTE technology with the intention to launch new products in a timely manner. Emphasis would be on LTE technology applications so that we could provide customers with top quality nextgeneration LTE solutions.

Construction and marketing of data centres to enhance their business development potential

The construction of Phase II of the Data Centre located at CITIC Telecom Tower in Hong Kong is in progress and will commence service soon. Detailed planning is also underway for the construction of the data centre in Ap Lei Chau to ensure the quality of its implementation. The construction of the data centre in Ap Lei Chau would further strengthen the development of the Group's data centre business, and becomes a new growth driver in the Group's operation.

Expedite the completion of the acquisition of CTM

The acquisition of CTM is subject to approvals from shareholders at the shareholders' meeting, and authorities of the Macau Government and PRC Government. If the acquisition is completed, the Group will hold 99% equity interest in CTM. This is a major milestone in the development of the Group. After completion of the acquisition, the Group will continuously improve the network quality of CTM and enhance the ability of CTM to provide higher quality services to Macau residents. The Group will apply new technologies, explore new businesses and make new contributions to the development of the telecommunications industry in Macau.

Source: CITIC Telecom (01883) Annual Results Announcement
Chairman Xin Yue Jiang Issued Capital (shares) 3,314M
Par Value HKD 0.1 Market Capitalisation (HKD) 7,356M
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