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CTI Announced 2004 Interim Results - Unprecedented Value and
Choice
* Group turnover of HK$572 million, down 13% YoY, due to IDD price
weakness.
HONG KONG, May 19 /PRNewswire-FirstCall/ -- City Telecom (HK) Limited ("The
Group") today announced the interim results of 2004 for the six months ended
29th February 2004. Despite the intense competition in the telecommunications
market, FTNS recorded satisfactory results that brought the Group to a new
level of maturity.
The board of directors has resolved an interim dividend of HK$0.015
(2003:HK$0.05) per ordinary share for the six months ended 29th February 2004.
During the period under review, our growth FTNS segment performed strongly with
this segment rising to 43% of our total revenues. Profit attributable to
shareholders was HK$35 million in this reporting period, a YoY fall of 68% (50%
excluding the USC rebate in 1H03). Total revenue fell 13% to HK$572 million,
mainly due to the price pressure on our IDD business.
Despite intense price competition across our businesses, our group's gross
margin actually increased YoY from 63% to 71% (excluding the USC rebate in
1H03) in response to the improving revenue mix towards the more profitable FTNS
segment. As such, our gross profit YoY fall of 2% to HK$404 million (excluding
the USC rebate in 1H03), was substantially less than our revenue decline.
Total operating costs of IDD business (excluding the USC rebate in 1H03)
dropped by 27% to HK$256 million compared to last corresponding period. For
FTNS, operating costs increased by 22% to HK$285 million, mainly due to our
investment made in network and subscriber acquisition, together with the launch
of our pay-TV service.
As a result of the above, our operating profit (excluding the USC rebate in
1H03) dropped by 55% to HK$36 million. Operating loss from FTNS business was
reduced by 16% to HK$36 million but our IDD business recorded a 41% fall to
HK$71million.
"At City Telecom, we strive to provide innovative diversified products, at
affordable prices for the mass market, and we are committed to invest for the
benefit of our shareholders and the community of Hong Kong," said Ricky Wong,
chairman of City Telecom (H.K.) Limited.
BUSINESS REVIEW
Fixed Telecommunications Network Services (FTNS)
During the period under review, we have prioritized our local fixed line
business, expanding our market share with an installed base of 194,000 (today:
208,000) lines, averaging approximately 8,000 net line additions per month. On
our broadband Internet access business, we also reached a customer base of
approximately 189,000 (today: 195,000), although growth has matured to 2,800
line additions per month.
In addition, in last August 2003, we launched our pay-TV service, a third
revenue stream on our underlying Metro Ethernet network. Our enriched content
offering now consists of 33 channels (up from seven channels at launch) of
quality television programming and 11 channels of interactive applications. We
will continue our investment in the pay-TV segment, subject to demand take-up.
As of 29th February 2004, we had secured 7,000 (today: 18,000) pay-TV
subscribers.
International Telecommunications Services (IDD)
During the reviewing period, the Group succeeded in re-establishing its market
share to 22% (up from 21% in 1H03), resulting in a 18% volume increase to 492
million minutes. However, a hostile market environment between existing and new
entrants in the market, created an adverse fall in our average revenue yield,
which resulted in a significant drop of revenue to the Group.
In terms of traffic routes, China is still our number one route that accounted
for 69% of our total traffic. The second and third most popular routes
remained to be the US and Canada.
PROSPECTS
The first half of this year has been characterized by the substantial growth in
the Group's fixed telecom network business, reducing our traditional dependence
on IDD. Started in 2003, we are on schedule to deepen the penetration of our
fiber backbone to majority million of our 1.2 million Metro Ethernet access
homes within calendar year 2004. This progress, will allow us to lower our
costs, improve service quality and provide unparalleled capacity to offer new
services to our customers
However, the overall telecom operating environment in Hong Kong remains
intensely competitive. The Group has seen some softening in the affordability
of tariffs of various telecom services. Nevertheless, the penetration for our
numerous FTNS offerings is expected to rise continuously through our efforts in
marketing and technology advancement, and we are confident that the rate of
decline in our IDD business can be slowed.
Network coverage has always been a key for business development. Upon the
review period in the past two years, such development has been reactivated and
we target to extend the existing 1.2 million households network coverage by
increment of more than 30%.
"As one of the leading fixed telecom network operators in Hong Kong with
superior network, established brandname, premium customer services, aggressive
marketing strategies and effective sales channels, we are well-positioned to
deliver growth and value to our shareholders and for the benefit of Hong Kong,"
Mr. Wong concluded.
About City Telecom
Established in 1992, City Telecom (H.K.) Limited (NASDAQ:CTEL)(SEHK: 1137)
provides integrated telecommunications services in Hong Kong. CTI's wholly
owned subsidiary, Hong Kong Broadband Network Limited (HKBN), has deployed a
Metro Ethernet network of 1.2 million homes passed and to date, has achieved an
aggregate broadband, voice and Pay-TV base in excess of 400,000 subscriptions.
Additional information on City Telecom can be found at http://www.ctihk.com/.
For media enquiries, please contact:
Corporate Communications
Jessie Cheng
Tel: (852) 3145 4118
Fax: (852) 2199 8372
Email:
Investor Relations
NiQ Lai
Tel: (852) 3145 4710
Fax: (852) 3145 8445
Email:
DATASOURCE: City Telecom (HK) Limited
CONTACT: Corporate Communications - Jessie Cheng, +852-3145-4118, or
fax, +852-2199-8372, , or Investor Relations - NiQ Lai,
+852-3145-4710, or fax, +852-3145-8445, , both of City Telecom
(HK) Limited
Web site: http://www.ctihk.com/