Hong Kong telecoms firm PCCW interim profit falls amid expansion at media and tech services businesses
PCCW, the flagship company of tycoon Richard Li Tzar-kai, wants to bolster its media and information technology services operations, after reporting a drop in net profit in the first half of this year.
“As the telecoms business is making a solid contribution to the group, we are scaling up the media and solutions businesses to drive growth in the medium to long term,” Bangalore Gangaiah Srinivas, the group managing director at PCCW, said in a conference call with analysts on Thursday.
The company posted an 11 per cent decline in interim net profit for its core operations to US$133 million, down from US$150 million in the same period last year, because of increased amortisation of content costs at its over-the-top (OTT) and free television businesses.
Its core operations’ interim earnings before interest, taxes, depreciation and amortisation – a measure of a firm’s operating profitability – slipped 1 per cent to US$735 million from US$742 million a year earlier.
Core revenue advanced 2 per cent to US$2.4 billion from US$2.3 billion the previous year.
PCCW’s core operations excludes its property development and investment business, Pacific Century Premium Developments.
Before its results announcement, PCCW saw its share price slip 0.52 per cent to close at HK$5.70 on Thursday.
“In 2016, the business sector as a whole is faced with a subdued local economic sentiment and an uncertain external environment,” Srinivas said. He added the company anticipated business in the second half to be much improved.
ViuTV, PCCW’s free-TV channel launched in April, has already made an auspicious start, generating US$7 million in revenue in the first half.
A report by Nomura last month said: “Free to air [TV service] is a new opportunity to tap into ad revenue.”
Srinivas said PCCW’s Viu OTT service has become the leading provider of premium Asian content to OTT users, with first-half revenue up 64 per cent year on year at US$35 million from 16 markets across the region.
The company’s tech services unit, PCCW Solutions, saw stable revenue growth in the first half. It aims to expand PCCW Solutions business in mainland China and in Southeast Asia.