Hong Kong Broadband Network says annual profit more than doubled, targets accelerated growth

Telecommunications network operator sees bundled subscription campaigns, which include over-the-top video content and mobile services, driving its sales

PUBLISHED : Wednesday, 09 November, 2016, 7:35pm
UPDATED : Wednesday, 09 November, 2016, 7:35pm

Hong Kong Broadband Network (HKBN) is targeting accelerated revenue growth on the back of its latest business expansion initiatives, after posting solid earnings in its fiscal year to August 31.

Chief executive William Yeung Chu-kwong said on Wednesday that the company estimated an addressable market worth HK$24 billion-a-year, or HK$1,000 a month per household, for its “quad-play” of broadband, fixed-line voice, video content streaming and mobile services in the city.

“With 898,000 residential customers, we have a total billing market share of 44 per cent, which suggests room for growth relative to our 7 per cent revenue market share of the expanded quad-play market,” Yeung said.

He pointed out that business alliances formed by HKBN with over-the-top (OTT) video content providers and with wireless network carriers as one of the city’s licensed mobile virtual network operators have helped the company evolve into a competitive quad-play services provider in Hong Kong’s telecommunications market.

In a filing with the Hong Kong stock exchange on Wednesday, HKBN saw its net profit more than doubled to HK$244.68 million in its fiscal year to August 31, up from HK$104.27 million in the same period last year.

It attributed that increase to improved revenue on the back of strong residential and enterprise broadband subscriptions.

Earnings before interest, taxes, depreciation and amortisation -- a measure of a firm’s operating profitability -- advanced 3 per cent year-on-year to about HK$1 billion.

Total revenue grew 19 per cent to HK$2.78 billion from HK$2.34 billion a year earlier.

HKBN chief financial officer Lai Ni Quiaque said: “Our business is surging forward on a strong foundation.”

Residential sales rose 3 per cent year on year to HK$1.81 billion on popular campaigns that bundled the content services of HKBN’s two major OTT partners, TVB and LeEco.

Enterprise revenue grew 70 per cent year on year to HK$811 million, driven primarily by the integration of fixed-line broadband network and online marketing operations of New World Telephone Holdings.

HKBN acquired New World Telephone in a cash transaction valued at HK$650 million in February to strengthen its enterprise operations. As a result, total enterprise customers reached 50,000 as of August 31.

“We’ve just leapfrogged four to five years of organic growth and doubled our enterprise solutions business overnight with this deal,” Lai told the Post in February.

HKBN is looking to sign up about 150,000 subscribers in its first 12 months of operation as one of the city’s 27 mobile virtual network operators as of October 31.

The Office of the Communications Authority granted HKBN that license in July. It also allows the company to sell smartphones and other mobile devices.

A mobile virtual network operator license-holder provides communications services by leasing mobile network capacity from an existing telecommunications operator, typically, at wholesale prices and resells it to consumers at reduced prices under its own brand.

According to a Nomura report in July, HKBN’s “transition could help position the company better in the longer term”. It added, however, that “execution is key to keeping earnings intact”.

In September, HKBN introduced a quad-play free-to-go bundle plan, enabling customers to enjoy mobile services, fixed-line broadband, OTT entertainment and home telephone services for as low as HK$248 a month, without signing a fixed-term contract.

Its mobile network partners are SmarTone Telecommunications and China Mobile Hong Kong.