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Broadband price increase on way

Victor Cheung

Friday, August 10, 2012

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HKT Trust (6823), the city's dominant fixed- line telecom operator, plans to increase prices for broadband internet services as costs rise and the market stabilizes.

"Costs are going up as in other businesses, and we'll have to pass some of them to customers," managing director Alex Arena said yesterday, after the trust announced a 45 percent jump in interim net profit.

He said as the broadband market stabilizes and most customers sign two to three-year contracts, price cuts - rather than attracting new business - will hurt profitability.

Broadband prices "are biased to go up rather than down," Arena said, while refusing to give any guidance for the impending price increases.

Broadband revenues rose 11 percent to HK$1.86 billion for the first six months as the customer base grew 7 percent to 1.54 million. That translates to an average monthly revenue per broadband user of HK$202, up about 4 percent from last year.

Net income soared to HK$778 million from HK$537 million a year ago, mainly due to reduced interest expenses following the trust's HK$9.3 billion spin-off from PCCW (0008) last November.

Its so-called adjusted funds flow - HKT's preferred gauge for distribution - rose 6 percent to HK$1.43 billion, or 22.29 HK cents per share. It will pay 20.06 HK cents per unit as interim distribution, translating to an annualized yield of 6.4 percent, based on yesterday's unit price.

Arena said he remains confident about achieving US$330 million (HK$2.57 billion) of adjusted funds flow for the whole year.

Revenues rose 2 percent to HK$9.72 billion, while earnings before interest, tax, depreciation and amortization climbed 3 percent to HK$3.47 billion on better cost control.

PCCW Mobile, which launched a fourth- generation mobile service in May, saw revenues grow 23 percent to HK$1.13 billion, and ebitda up 57 percent to HK$342 million.

HKT rose 0.5 percent to HK$6.23 yesterday before the results were revealed.


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