CITIC Telecom Announces 2018 Interim Results, Profit Attributable to Equity Shareholders of Over HK$480 Million, Up 7.5% Y-o-Y

(16 August 2018, Hong Kong) – CITIC Telecom International Holdings Limited (“CITIC Telecom” or the “Group”; stock code: 1883), a leading international telecommunications operator and integrated information services provider in Asia, today announced its interim results for the six months ended 30 June 2018. During the period, profit attributable to equity shareholders was HK$488.8 million, an increase of 7.5% compared with the corresponding period of the previous year. The Group’s overall revenue increased by 36.8% year-on-year to HK$4,913.8 million, with growth recorded in all major businesses. Basic earnings per share amounted to HK13.8 cents, representing a rise of 7.0% compared with the corresponding period of the previous year.

The Board recommended payment of an interim dividend of HK4.00 cents per share for 2018, representing a 33.3% year-on-year growth. 

Mr. Xin Yue Jiang, Chairman of CITIC Telecom, said “Facing a complex and volatile international economy in the first half of 2018, the Group made timely use of the opportunities brought forth by the transformation and upgrade of the Chinese economy as well as the new trends in the international telecommunications market and strove to enhance its core competitive advantages. New products were launched pro-actively, network platforms were incessantly improved in terms of quality, and the Group continuously rolled out staff training programmes. Our work on management, marketing and services were delivered in a state-of-the-art manner. We continued to venture into innovative transformation and strengthen the synergies between various business segments. There was a rapid growth in income from new products, and improvement in operational efficiency was noted. The Group’s profit continued to grow. After years of effort, the Group has become an Internet-oriented telecommunications enterprise providing comprehensive services with diversified development. Such key and material breakthrough will bring about an even more prosperous development future to the Group.”

The Group has maintained a healthy financial position and a strong cash flow. As at 30 June 2018, the Group had cash and bank deposits of approximately HK$1,579.5 million, which is sufficient to meet financial obligations and contractual capital commitments in the coming 12 months.

Business Highlights

The Group continued to strengthen the leading position in the Macau mobile market. During the period under review, the sales of mobile handsets recorded a significant increase, with the total revenue from mobile sales and services business amounting to HK$2,008.4 million, representing an increase of 91.4% over the corresponding period of the previous year. The Group’s subsidiary Companhia de Telecomunicações de Macau, S.A.R.L. (“CTM”) continued to maintain its leading position in the mobile communications market, with the overall number of subscribers amounting to over 995,000, of which approximately 92.3% were 4G subscribers. As at 30 June 2018, the Group’s mobile market share in Macau was around 41.8%, while its market share in the 4G subscribers of Macau’s mobile market stood at 43.4%. The Group’s roaming services volume grew, benefitting from a multiple increase in customer’s roaming data usage.

Internet services business grew attributable to fibre broadband service and data centre. Internet services revenue rose to HK$489.4 million, representing a growth of 4.6% year-on-year, mainly driven by the increased data centre revenue due to the Group’s continued expansion of its data centre operations and the climb in revenue from fibre broadband services as a result of the 3.9% increase in the average number of broadband subscribers to around 184,200. In the first half of the year, the Group’s cloud computing centre in Guangzhou Science City commenced operation following the completion of construction. This cloud computing centre, together with other cloud computing centres in Hong Kong, Macau, Beijing and Shanghai, have formed a data centre network spanning the Greater China region, thereby further enhancing the Group’s cloud computing service level. As at 30 June 2018, the Group’s Internet market share in Macau was around 97.4% while its broadband market penetration rate in Macau was around 88.3%.

Enterprise solutions business revenue has continued to grow rapidly, with the revenue increasing by 10.1% to HK$1,462.1 million compared to the corresponding period of last year. The increase was mainly due to the ongoing growth in enterprise solutions services in Mainland China. In addition, the global network servicing capabilities of the Group continued to expand as TrueCONNECT VPN service has covered over 130 countries and regions worldwide in the first half of the year with approximately 140 PoPs. The focus of the Group’s capabilities in enterprise solutions services has moved from Asia to the entire globe.

New business has driven a rapid growth in the international telecommunications services business. The revenue of international telecommunications services business grew year-on-year by 39.6% to HK$833.9 million. Rising concern on the security of financial services created huge demand for A2P SMS services including authentication services and transaction confirmation, thus total SMS revenue grew 20.6% from the same period last year. The Group’s “DataMall 自由行” service contributed solid growth constantly because we have extended its coverage in the second half of 2017 and it has been well-received by consumers travelling abroad. During the period, its revenue reached HK$54.6 million, representing a 107.6% increase when compared with the first six months of 2017. During the period, the significant increase of traffic volume in areas with relatively higher tariffs substantially boosted the voice services revenue.

To enhance the Group’s core competitiveness and software development capability, the Group set up a software development centre in Zhuhai, TeleOne China (Zhuhai) Company Limited, commencing operation on 23 June this year. This is a major component in its efforts to drive the construction of smart city. At present, the size of the Group’s entire R&D team of has exceeded 200 professionals. Our continuously strengthening power in R&D would enable us to develop more smart applications for the Group and will serve an important function of promoting business transformation.

Development Strategies

Looking into the second half of 2018, strategically positioning itself as an ‘industry leader in Macau and extending into Mainland China and overseas markets’ , CTM will closely track the technological development of 5G mobile networks and make timely investments and business preparation. Meanwhile, riding on the smart city development initiatives in Macau, the Group will be devoted to the development of smart city, aiming to become a major smart city operator. By fully utilising the new Zhuhai software development centre, the Group will also develop more software and applications to support its business development in order to enhance the level of proprietary intellectual properties and nurture new business stream.

As for overseas markets, it will leverage the synergies between the Group and CPC Europe to further its expansion of VPN, cloud computing and Internet access businesses in Europe. It will also seek to expand the scale of its enterprise solutions services in the Southeast Asian markets as a new source of growth for its business.

Besides, the Group will realise continuous innovation through enhancing its R&D efforts for new technologies and new products in order to speed up the Group’s transformation into an Internet-oriented company. In addition, the business scale of “DataMall自由行” shall be expanded at a faster pace so as to speed up the transformation of its international business. It will closely monitor the Phase 3 expansion project of the CITIC Telecom Tower data centre and accelerate the scalable development of the Group’s data centre business.

 

Dr. Lin Zhenhui, Chief Executive Officer of CITIC Telecom, said, “The Group believes that demand will continue to increase for Internet services, Internet of Things, cloud computing, mobile sales & services, smart city, data centre and enterprise solution services – all areas with abundant future development opportunities. The Group will grasp the right strategic direction, while constantly pursuing innovative development. It will remain prudent and optimistic in response to challenges and opportunities brought by market changes. The Group puts emphasis on new opportunities presented by ‘One Belt One Road’ and the ‘Guangdong-Hong Kong-Macau Greater Bay Area’ strategic initiatives, and is advancing for synergies between the Group’s business and the macro-economic developments.”

CITIC Telecom Announces 2018 Interim Results

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