Confirmation of dividend provides investors with rare bright spot in earnings report for first nine months Fixed-line giant PCCW, struggling to stem market share losses, may fail to live up to net profit forecasts this year after its nine-month result showed core revenue continued to shrink. Reporting its maiden nine-month unaudited results yesterday - to comply with company laws as it formally declares its first interim dividend in four years - PCCW confirmed the 5.5 cents interim dividend proposed in its August half-year result, payable by the end of the month. For the period to September, PCCW's net profit was $1.02 billion, up 47.54 per cent from $690 million a year ago. However, any comparison is distorted by a $670 million loss recorded last year from its jointly controlled companies, which analysts said was related to its 50 per cent owned underwater cable carrier, Reach. As PCCW has already written down Reach's value to zero, this year it did not need to consolidate Reach's losses. A poll of 21 brokerages showed a net profit consensus of $1.65 billion. Analysts say PCCW is lagging their estimates at the nine-month mark. Its three months net profit grew $213 million from $805 million in the first half. PCCW's weaker core earnings was shown in the 15 per cent drop in ebitda (earnings before interest, taxes, depreciation and amortisation), to $4.74 billion from $5.59 billion. 'The drop in its ebitda had mostly to do with the drop in its core fixed telecommunications revenue,' one analyst said. In the three months to September, the company's overall fixed-line market share dropped slightly to 69 per cent, from 70.4 per cent in June, or 56,000 lines, to 2.606 million lines. 'The line loss has clearly slowed from a year ago,' said Nomura Securities analyst Kelvin Ho, adding that PCCW's text-messaging capable telephones had slowed line loss. Local telephony service revenue dropped 12 per cent. Mr Ho expects PCCW's full-year net profit at $1.4 billion. Still, its core fixed telecommunications revenue dropped 9 per cent to $11.36 billion, as IDD revenue shrank 22 per cent. Meanwhile, net profit for its Cyberport luxury residential development, Residence Bel-Air, increased $76 million to $288 million, from $212 million in June. Pacific Century Premium Developments, PCCW's 75 per cent held property arm, said 1,600 units had been sold by last month. Another bright spot was its pay-television service, Now Broadband TV, which signed 51,000 more customers during the three months. It now has 367,000 subscribers, a 500 per cent increase on the 58,000 a year ago. Its broadband lines increased 17 per cent to 774,000. However, local data revenue dropped slightly by 1 per cent year on year to $3.27 billion. Assuming that PCCW pays the same 5.5 cents interim dividend in the second half, based on its $4.825 closing price yesterday, its would give investors an annual yield of 2.28 per cent. This is lower than the 3 per cent paid by China Telecom, analysts say.