Thursday, March 28, 2024
 
Columnist
Martin Hennecke
 
HKT-SS
HKEx Stock Code : 06823 
 
Corporate Profile
The principal activities of the HKT Limited Group are the provision of telecommunications and related services which include local telephony, local data and broadband, international telecommunications, mobile, customer premises equipment sale, outsourcing, consulting and contact centers. It operates primarily in Hong Kong, and also serves customers in mainland China and other parts of the world.

Business Review - For the year ended December 31, 2012

Telecommunications Services (ˇ§TSSˇ¨)


The growth in revenue and EBITDA in 2012 reflected the fundamental strength of HKT's TSS business. Driven by the successful fiber service strategy, turnaround to revenue growth of our traditional fixed-line business and strong growth in our international telecommunications business, TSS revenue for the year ended December 31, 2012 increased by 6% to HK$18,366 million and EBITDA increased by 2% to HK$7,126 million for the year.

Local Telephony Services. Local telephony services halted the decline in revenue and recorded a modest increase to HK$3,401 million for the year ended December 31, 2012, compared to HK$3,397 million a year earlier. The return to revenue growth in 2012 reflects the success of our innovative eye multimedia service, an integral part of our quadruple-play strategy which is instrumental in increasing customer stickiness. Total fixed lines in service at the end of December 2012 increased to 2,646,000, and eye penetration of the residential customer base grew to 19% for the year.

Local Data Services. Local data services revenue, comprising broadband network revenue and local data revenue, increased by 7% year-on-year to HK$6,055 million for the year ended December 31, 2012. The strong take-up of our fiber service accompanied by our premium customer service drove a 9% year-on-year growth in broadband network revenue for the year. At the end of December 2012, the total number of broadband access lines increased by 3% year-on-year to 1,567,000. Of these broadband access lines, 300,000 were fiber-to-the-home (FTTH) connections. Meanwhile, local data revenue also recorded a healthy growth due to increased business demand for local data services.

International Telecommunications Services. International telecommunications services revenue for the year ended December 31, 2012 increased significantly by 25% year-on-year to HK$5,247 million, driven by strong demand growth from carrier customers and enterprises and the addition of a number of new customers following the acquisition of businesses and assets in Europe and Africa. During the year, international voice and data connectivity services performed very well due to continued growing demand from both wholesale and enterprise customers.

Other Services. Other services revenue primarily comprises revenue from the sales of network equipment and customer premises equipment (ˇ§CPEˇ¨), provision of technical and maintenance subcontracting services and contact centre services (ˇ§Teleservicesˇ¨). Other services revenue for the year ended December 31, 2012 decreased by 9% year-on-year to HK$3,663 million, primarily due to lower CPE sales and the timing of the completion of certain telecommunications projects.

Mobile

The Mobile business once again delivered stellar growth with a 25% surge in total mobile revenue to HK$2,466 million for the year ended December 31, 2012. Mobile service revenue also increased by 25% year-on-year on a growing customer base and higher average revenue per user (ˇ§ARPUˇ¨).

During the year, the Mobile business witnessed healthy subscriber growth which lifted the total subscriber base to 1,645,000 at the end of December 2012, up 7% from a year earlier. The number of post-paid subscribers also increased by 7% to 1,013,000. More importantly, our continued focus on acquiring high-quality, premium smart device customers pushed the blended post-paid exit ARPU to HK$206, up 12% from HK$184 a year ago.

Our focus on providing an unparalleled mobile experience is reflected by our continued mobile network investment, highlighted by the launch of our 4G LTE service in May, and the roll-out of numerous mobile service initiatives during the year including unlimited voice plans. Our strong suite of 4G smartphone offerings combined with our range of ˇ§Ultimate Mobilityˇ¨ service plans continued to drive mobile data usage. As a result, mobile data revenue for the year ended December 31, 2012 increased by 55% year-on-year and accounted for 73% of mobile service revenue for the year.

HKT enjoys unrivalled competitive advantages because of its unique fixed-mobile integrated network boasting an extensive fiber backhaul network and more than 11,000 Wi-Fi hotspots as at the end of December 2012. Benefiting from these advantages and the continued improvement in ARPU, the Mobile business recorded impressive EBITDA growth of 44% year-on-year to HK$736 million and margin improvement from 26% in 2011 to 30% in 2012.

Other Businesses

Other Businesses primarily comprised Unihub China Information Technology Company Limited (the ˇ§ZhongYing JVˇ¨), which provides network integration and related services to telecommunications operators in the PRC. Revenue from Other Businesses for the year ended December 31, 2012 was HK$684 million, as compared to HK$810 million a year ago. The decline in revenue was mainly due to the shifting business focus of ZhongYing JV from the lower-margin CPE sales to software development projects with lower revenue but higher margin.

Business Outlook - For the year ended December 31, 2012

It is evident that the hard work of the HKT team last year has ignited a strong momentum for the Company to continue to grow in 2013. As we continue to benefit from the steady and solid performance of our long-established businesses, we also expect our new business initiatives to flourish and make more significant contributions in the coming year. The broadband and mobile businesses shall continue to be the main growth drivers, while the global connectivity business has considerable development potential.

Competition is likely to remain keen, although we are confident that our first-class network and innovative products and services continue to provide a competitive edge. Furthermore, our professional and friendly customer service staff and investment in customer service web portal, apps and other channels will further differentiate HKT from the other operators in the market.

The general economic conditions will also likely remain challenging in the foreseeable future in the absence of a breakthrough of the economic doldrums in the U.S. and Europe. Management will cautiously examine any opportunities and threats with a view to further developing our businesses and maximizing return for unitholders.

Source: HKT Limited (06823) Annual Results Announcement
Chairman LI Tzar Kai, Richard Issued Capital (shares) 6,417M
Par Value HKD 0.0005 Market Capitalisation (HKD) 48,767M
 
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