PCCW - Mobile Goes EBITDA Positive Thanks to 3G Growth

PCCW operates one of six mobile networks in Hong Kong, where it holds approximately 10% of the total mobile customer base. At the end of Q2 08, it had a total customer base of 1.18m, up 22.9% year on year. In real terms, the yearly gain was 0.22m.

PCCW has made steady if not spectacular progress over the past year. Annual customer growth increased compared to Q2 07, but only by 0.4pp. On a quarterly basis, net additions were down 37.1% to 61k, although it should be noted that the Q2 07 figure of 97k net additions was an all-time company record.

The W-CDMA base took the lionÃ's share of net additions for the third successive quarter with 40k compared to GSMÃ's 21k. There were 0.29m 3G connections at the end of the quarter, up 142.0% year on year, and this represents 24.5% of the total compared to 12.4% a year earlier. The proportion of contract customers also increased from 60.7% to 63.5%, the highest percentage since Q3 04.

The company does not report blended ARPU figures, but contract ARPU saw a slight decline from HK$158 per month in the first half of 2007 to HK$156 per month in the first half of 2008. W-CDMA ARPU is significantly higher with an average of HK$222 per month in H1 08, although again this represented a decline compared to H1 07 when the figure was HK$229. However, mobile revenues showed strong growth compared to H1 07 with a 28.3% rise to HK$857m.

The increase in high-value 3G customers was doubtless one of the key factors here.

The growth in mobile revenue was particularly impressive given that consolidated revenue for the PCCW group was down 2.0% to HK$11,372m; as a result, mobileÃ's contribution increased from 5.8% to 7.5%. Mobile also bucked the downward trend in consolidated group EBITDA, which fell 4.8% to HK$3,436m. In fact, mobile managed to turn round a negative EBITDA of HK$56m to a positive HK$108m - surely the most impressive result of all.

Posted to the site on 27th August 2008