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HKT eyes Pokemon Go-spurred data usage to lift city’s telecoms market out of the doldrums

Company posts growth in net profit for first six months of year on stable mobile and fixed-line revenue

PUBLISHED : Wednesday, 10 August, 2016, 9:17pm
UPDATED : Wednesday, 10 August, 2016, 10:56pm

HKT Trust and operating arm HKT, which runs Hong Kong’s largest fixed-line and mobile telecommunications networks, see the rise of virtual and augmented reality applications, like Pokemon Go, boosting broadband use after reporting modest interim earnings growth.

Alexander Arena, the group managing director of HKT, said on Wednesday that increased data usage by players of Pokemon Go and other similar games in the future “could drive our business moving forward”.

HKT last month offered free unlimited high-speed data to all subscribers of its “CSL” and “1010” mobile brands in time for the release of the Pokemon Go game in Hong Kong.

“That [initiative] has given us insights on what we can do ... and how we can increase revenue for the company without increasing prices,” Arena said.

In a filing with the Hong Kong stock exchange, HKT described its set of financial results in the first half of this year as “satisfactory” amid soft economic conditions in the city.

It posted a 30 per cent increase in interim net profit to US$297 million, up from US$228 million in the same period last year, on stable mobile and fixed-line revenue. Customer acquisition costs were also down 3 per cent year on year to US$455 million, due to a large shift by users to SIM (subscriber identity module)-only mobile plans from fixed contracts with handset subsidies.

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Earnings before interest, tax, depreciation and amortisation – representing net cash flows from the company’s operating activities – advanced 2 per cent from a year ago to US$752 million.

Total interim revenue grew 3 per cent to US$2.101 billion from US$2.048 billion the previous year.

Adjusted funds flow, which is the measure by which the cash distribution of HKT’s share stapled unit holders is based, rose 5 per cent year-on-year to US$263 million.

HKT’s total mobile subscribers, comprising those in its premium 1010, mainstream CSL and low-cost “Sun Mobile” brands reached 4.445 million at the end of June, of which 3.106 million were post-paid customers.

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The operator also had 1.569 million total consumer and business broadband subscribers, as well as 587,000 optical fibre-to-the-home customers.

Nomura analysts said in a report last month that HKT expected to see some more revenue growth in the near term for its mobile business, despite the market slowdown.

“The growth is from upselling of tariff packs, adding more over-the-top content like Viu, data rollover plans and speed upgrade plans,” the analysts said.

Arena warned that the Hong Kong government’s latest plan to reassign a huge batch of 2G mobile frequency spectrum and auction these off at a high price could drive up the administration fee charged by operators to their customers.

“We made a calculation that ... monthly charges could potentially increase by about HK$36 per family,” he said.