PCCW reports consolidated revenue up 14 percent at HK$25.64B, full-year profit of HK$1.63B

March 29, 2007

6 Min Read

HONG KONG -- PCCW Limited ("PCCW" or the "Company") today announced that PCCW Group (the "Group") consolidated revenue for 2006 increased 14 percent, yielding a profit of HK$1,632 million and a profit attributable to shareholders of HK$1,252 million, as the Company accelerated its transformation from a pure telecoms operator into a multi-platform content and interactive services provider.

Profit attributable to shareholders excluding investment and other non-recurring gains increased from 2005, reflecting a good performance from the core businesses. These investment and non-recurring gains totaled HK$42 million in 2006, down from HK$626 million in 2005.

Backed by cutting edge technology and a constant focus on innovation, PCCW saw strong growth in its pay-TV operations and new mobile business, further positive performance by its property subsidiary and a continued stable fixed-line business with successful new initiatives to win back and retain customers.

Investment in content and delivery channels in 2006 has established PCCW as a leading provider of multiple access options for unrivalled content, programming and interactive services over broadband, fixed-line, mobile and TV. The Company now has a platform for sustained growth in the years ahead.

Next month, PCCW will add another unique platform to its quadruple-play offering, by enriching the customer's fixed line experience with the addition of high-speed data and video services.

Executive Director Alex Arena said: "We made the sound decision to invest in new technologies and businesses during 2006 in order to maintain our market leadership and build a solid foundation for the future. From 2007, we can begin to see the benefits as we unleash the potential of the quadruple play."

Capital expenditure increased to HK$3,366 million from HK$2,441 million in 2005 as the Group continued to invest to build long-term growth. Sharply lower investment and other non-recurring gains were responsible for softening the Group's profit attributable to shareholders for the year, which declined 22 percent to HK$1,252 million.

Consolidated revenue in the 12 months to December 2006 rose to HK$25,637 million from HK$22,499 million the previous year and consolidated EBITDA rose 3 percent to HK$6,827 million, supported by continued strong property sales at the Bel-Air development and a first full year of revenue from the mobile business. EBITDA was constrained to some extent by the higher operating cost of new product launches.

Basic earnings per share amounted to 18.59 HK cents. The Board recommended a final dividend of 12 HK cents per share, subject to approval by shareholders, giving a total dividend of 18.5 HK cents for the year.

The core telecommunications business was stable and delivered another set of positive results, with revenue up 2 percent to HK$15,374 million. The fixed-line business achieved further line gains, and maintained a stable market share.

Netvigator maintained its market leadership in broadband access with total broadband lines in service reaching 1,117,000 by the end of December 2006, up 17 percent from a year earlier, as high-quality value-added services such as now TV, Internet portal and on-line music streaming service moov encouraged customer loyalty.

PCCW is substantially expanding its wireless high-speed broadband network throughout Hong Kong, with 3,000 Wi-Fi hotspots to be installed by mid 2007, supporting other services and increasing PCCW's ability to support new dual mode mobile/Wi-Fi handsets.

Revenue in the TV & Content business segment surged 71 percent in 2006 to HK$739 million, driven by the growth of now TV, where the installed base reached 758,000 by the end of December, up 38 percent from a year earlier.

now TV further enhanced its sports content in November 2006 by winning the exclusive rights to live broadcast in Hong Kong of all of the English Premier League ("EPL") matches for three seasons from the 2007/08 season. It has also recently launched several new sports channels, including Eurosport and Eurosport News, as well as the home-produced now Sports channels, which features premium content sourced from around the globe and commentary on most sports programs in Cantonese and English by a team of seasoned local commentators.

"now TV is the most comprehensive pay-TV platform in Hong Kong. Our success in building superior content, including the exclusive live rights to EPL, will support continued growth, while cross-platform delivery should also benefit other businesses including mobile, broadband and fixed-line," said Mr. Arena.

The mobile business benefited from a first full-year contribution from operations with subscribers reaching 921,000 by the end of 2006, up 25 percent.

The strong mobile subscriber growth was supported by the migration of 3G trial users to monthly service plans in the second half of the year, network improvements, and a host of innovative services, including Hong Kong's first real-time mobile TV broadcasts, moov on mobile, and Mobile Tix, the first local mobile ticketing service, which was launched in early 2007.

PCCW mobile became the sole brand for all the Company's mobile services following the Group's acquisition in December 2006 of all of SUNDAY Group's operating businesses and assets.

The Group's ICT services arm, PCCW Solutions Limited ("PCCW Solutions"), continued to expand its external business and was awarded significant contracts, including high-profile public-sector projects such as the Electronic Passport System (e-PASS), and the Government Financial Management Information System (GFMIS), both with the Government of Hong Kong.

PCCW's network management subsidiary, Cascade Limited, continued to build its external business, and was awarded significant IPTV and network projects in Southeast Asia and elsewhere.

The Group's contact center business achieved encouraging revenue growth, benefiting from outsourcing by multinational corporations. PCCW Global also saw good revenue growth.

Property development subsidiary PCPD saw revenue rise 42 percent to HK$7,263 million and EBITDA up 41 percent to HK$956 million in 2006, as the prestigious Bel-Air residential project continued to deliver strong results.

In mainland China, the alliance with China Netcom Group continued to develop. Having obtained approvals from the relevant authorities, PCCW completed acquisition of a 50 percent stake in China Netcom Broadband Corporation Limited, which provides broadband access and value added services to more than 250,000 customers in Hangzhou and Ningbo.

PCCW Solutions and China Netcom (Hong Kong) Operations Limited have signed an agreement to cooperate in providing IT services. Planned areas of cooperation include data center services, IT outsourcing, managed IT operations, disaster recovery services, and network and bandwidth provisioning in China connecting to Hong Kong and beyond.

PCCW Global has secured a contract with China Netcom to provide 30 Gigabyte connectivity between Hong Kong and the U.S, supporting China Netcom's Internet gateway expansion project.

Discussions are continuing on cooperation in the directories business, while the Hujialou (呼家樓) development in the Chaoyang district of Beijing awaits approval from the Beijing government. Joint feasibility studies on other potential development sites in China Netcom Group's portfolio are under way. A joint venture for a site at Dongsi, in the central Beijing area, is under discussion.

"With a full quadruple-play platform now in place, we can focus in 2007 on reaping the rewards of offering a growing variety of content and interactive services across all four platforms. We have built a solid foundation for the Company's future," said Mr. Arena.

PCCW Ltd. (NYSE: PCW; Hong Kong: 0008)

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