Profit from property sales mask PCCW’s fixed line woes

3 Nov 2004

Hong Kong incumbent PCCW reported a 46% rise in net profit for the first nine months of 2004, thanks to vibrant apartment sales at the Residence Bel-Air project at Cyberport, but its share of the fixed line telecoms market dropped once again – to 69% – amidst stiffening competition from alternative operators. The company posted net profit of HKD1.018 billion (USD131 million) for the nine months to 30 September 2004, up from HKD690 million for the same period of 2003, but turnover from telecoms operations dipped 9% to HKD11.3 billion as more fixed line customers switched allegiance; PCCW reported a market share of 70.4% at the end of June.

The total number of fixed lines in PCCW’s control stood at 2.606 million by the end of the third quarter, down approximately 60,000 quarter-on-quarter. The telco’s rivals Global Communications and Wharf T&T are gaining ground thanks in part to the SAR’s legislative framework which allows them, but not PCCW, to cut tariffs without first seeking regulatory approval from the regulator. In addition, one of Hong Kong’s internet services providers, City Telecom, has recently turned up the heat by introducing a VoIP service across PCCW’s network. The former monopoly is currently seeking a judicial review of the regulator’s decision to allow the service.

On a more positive note, PCCW’s broadband services are continuing to grow strongly. By the end of September the company had a total of 774,000 broadband access lines, with retail connections rising by 33% to 643,000. Moreover, the telco’s Broadband TV offering has experienced a five-fold rise in subscribers to 367,000, despite only adding 51,000 new accounts in the third quarter.

Hong Kong, HKT (incl. CSL)