Firm upbeat despite profit loss, falling shares and ratings cut
It has not been a good week for City Telecom (HK) investors.
First, the highly geared company announced a $206 million loss, with little respite in store for dividend seekers over the next two years, while its shares dived 11.68 per cent to 68 cents yesterday.
Then, credit agency Standard & Poor put the telecommunications company's 2015 US$125 million bond on 'credit watch with negative implications' - equal to a two-notch downgrade from its BB-minus junk-grade status.
However, chief financial officer Lai Ni Quiaque yesterday insisted City Telecom (CTI) had a 10-year 'runway' to reap a return from its $2.2 billion investment in the company's fixed assets.
After raising the equivalent of about $970 million from the 10-year bond issue, Mr Lai said CTI had the ammunition to launch a concerted attack for a more meaningful slice of Hong Kong's $9 billion telecommunications market.
'We have 10 years funding commitment to match our conviction,' he said. '[PCCW] has a fantastic return of 44 per cent margin. This is a good place to be ... there is a lot of profitability as long as you can get past the entry barrier.'