HKT, Hong Kong’s largest mobile operator, reported double-digit growth in profit and revenue last year, as its acquisition of rival CSL more than doubled its mobile sales while the increased scale helped it reduce costs.
The company’s net profit in 2014 increased 22 per cent to HKD3.05 billion ($393 million) as it benefitted from a 19 per cent drop in the cost of sales to HKD12.05 billion.
Overall revenue rose 26 per cent to HKD28.8 billion as its mobile business, which included the CSL results since May, expanded 165 per cent to HKD8.95 billion. Mobile data revenue increased 124 per cent and accounted for 68 per cent of mobile service revenue for the year, while IDD and roaming revenue accounted for 19 per cent of mobile service revenue.
The addition of CSL and the launch of several popular smartphones in the second half fuelled a 175 per cent jump in handset sales to HKD2.05 billion.
CSL’s higher ARPU contribution helped boost postpaid ARPU 4 per cent to HKD219.
HKT now has a mobile connections base of 4.58 million, giving it a 37 per cent market share. The company said almost 80 per cent of its postpaid connections are smart device users. The postpaid churn rate was 1.5 per cent last year. More than 80 per cent of its customers are postpaid.
After it acquired CSL New World Mobile from Telstra in May, it rationalised its overlapping retail network, adjusted the tariff plans and started integrating its networks. It dropped the PCCW mobile brand for the better known CSL brand.
While its second half results benefitted from the increased scale and rationalisation of the operations, HKT said it expects to see “the synergies arising from the acquisition to be realised more fully in the coming 12 to 18 months”.
Its fixed-line business grew 3 per cent to HKD19.9 billion and represented amost 70 per cent of total revenue. International voice rose 4 per cent to HKD9 billion, while local voice was up 1 per cent to HKD3.48 billion.
Both its fixed-line and broadband customers base remained the same as a year ago at 2.65 million and 1.57 million respectively.
Its EBITDA for the year rose 30 per cent to HKD10.24 billion. Its EBITDA margin rose 1 point to 36 per cent. Its fixed business EBITDA margin was 37 per cent vs 35 per cent for its mobile business.
Its capex last year of HKD2.53 million was up slightly from 2013, but as a percentage of revenue fell to 8.8 per cent from 8.9 per cent in 2013.