In another attempt to increase market share, the company will offer further discounts to fixed-line subscribers City Telecom (CTI) plans to cut prices further for fixed-line telephone services as it fights to gain market share from dominant player PCCW. The No4 player did not reveal any new tariff details yesterday, but earlier said price cuts had in part helped the company's profits rise by almost 200 per cent this year. CTI recently lowered its rates to half what its four competitors charge and hopes to sign up 12,000 new customers every month. The main-board-listed firm yesterday reported profit rose 182.91 per cent to $257.82 million in the year to August, helped by a one-off rebate of $84 million it overpaid into a fund that provides services to money-losing remote areas. The strong earnings beat a Thomson First Call poll of analyst forecasts of $224 million. Revenue climbed to $1.29 billion from $1.15 billion, up 12.92 per cent. Gross profit margin rose to 75 per cent from 60 per cent, largely due to increasing sales at its telephone and broadband unit, Hong Kong Broadband Network (HKBN). It proposed a year-end dividend of 7.5 cents a share. CTI and HKBN chairman Ricky Wong Wai-kay yesterday said he was confident the government would relax its Type II interconnection policy, which requires PCCW to lease its local loop access to rivals in order to facilitate competition. 'There will probably be just three fixed-line operators in Hong Kong and there is much room for growth,' he said. CTI, PCCW and Hutchison Global Communications want the Office of the Telecommunications Authority to relax the Type II policy. HKBN - which accounted for about a third of the group's revenue - has 146,000 fixed-line customers, compared with 21,000 a year ago. The unit reported its first profit before interest, tax, deprecation and amortisation of $78.39 million, compared with a loss of $28.75 million previously. The HKBN figures included the results of a three-month-old pay-television business which was expected to cost $15 million in its first year of operation, but Mr Wong declined to provide a separate breakdown. CTI said its fixed-line operations were turning around and sales would surpass IDD services. Rival PCCW has stepped up efforts to hang on to its three million fixed-line subscribers, offering text messaging services, a free telephone and other new products. Mr Wong told analysts he had underestimated PCCW's efforts but would fight back with more discounts of his own. 'Our second son [HKBN] has grown up. We have much room for price reductions,' he said. 'Only the dominant operator worries about price wars, not us.' CTI aims at keeping its market share of IDD services at more than 20 per cent. Long-distance sales dropped 3.65 per cent to $875.8 million. DBS Vickers Securities analyst Wallace Cheung said a possible price war in the IDD segment would not hurt CTI. 'It has been surviving amid severe price wars and doing well so far,' said Mr Cheung, who rates the company's shares a 'buy'. 'Price wars won't be a big problem to the firm,' he said. CTI shares rose as much as 6 per cent after the results announcement but finished down 3.73 per cent at $3.225 yesterday. The counter has climbed more than 120 per cent since the beginning of the year.