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HKBN announced 1H2024 interim results, as we accelerated our ICT leadership for sustained growth. (From left) William Yeung,
our
Co-Owner and Executive Vice-chairman & Group CEO; and Derek Yue,
our
Co-Owner and CFO.
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Dear Friends of HKBN
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HKBN Achieves Business Turnaround in 1H2024 Interim Results
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Core Business Performance Strengthened, Operational Efficiency Optimised, Setting the Stage for Sustained Growth
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Today, we announced our operational and financial results for the six months ended 29 February 2024 (“1H2024”). Despite a challenging and uncertain business environment, we achieved a business turnaround, marking an inflection point towards sustainable profitability. Through enhancing operational efficiency and strengthening core business performance, our Group has established a solid foundation for continuous growth in Enterprise and Residential Solutions businesses.
ANNOUNCEMENT HIGHLIGHTS
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Revenue decreased year-on-year by 13% to $5,809 million, primarily attributed to weaker than expected performance in handset and other product sales. Despite this, the Group’s core business segment, including fixed telecommunications network services, technology solutions, and consultancy services, achieved a stable year-on-year growth of 1%.
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EBITDA decreased year-on-year by 4% to $1,151 million, mainly due to softer sales of handset and other product, though this was partially offset by reduced operating expenses from operational improvements.
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Profit for the six-month period decreased year-on-year by 93% to $2 million. Despite the decline, this represents a significant turnaround from an annual loss of $1,267 million in the previous fiscal year. In comparison, the adjusted annual loss for the previous year was $67 million after excluding the one-time impairment of goodwill. This positive shift is mainly attributable to the Group’s continuous efforts to enhance its core business performance and operational efficiency.
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Adjusted free cash flow (“AFF”) decreased year-on-year by 66% to $124 million. This was significantly influenced by the prevailing high interest rate environment, which led to a 51% increase in the net interest paid during the review period. In consideration of the Company’s dividend policy and the projected future capital expenditure requirements to create long-term value for all shareholders, the Board has recommended the payment of an interim dividend of 15 cents per share (28 February 2023: 20 cents per share).
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“Despite robust demand for digital transformation, the slow economic recovery and escalating interest rates have challenged our customers’ businesses operations and delayed project timelines over the past six months. Nevertheless, we have effectively leveraged our robust telecommunications infrastructure to forge ahead in our ICT transcendence journey, enhancing our core business performance and operational efficiency. These strategic improvements have led to modest growth during this challenging reporting period, laying a solid foundation for sustained future growth."
William Yeung, our Co-Owner, Executive Vice-chairman and Group CEO
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Enterprise Solutions: Capturing Growth Through ICT Transcendence
Our Enterprise Solutions business continued to strengthen core business performance and recorded a 3% increase in
enterprise services
revenue, after excluding international telecommunications services.
This growth was complemented by a 20% rise in year-on-year new order bookings and a revenue backlog of HK$4.7b.
The cloud services business has been one of the key drivers of this strategic growth, benefited by customers’ strong demand for cloud technology. Notably, the IT packaged solutions,
IT·Simplified
and “AegisConnect”, launched last year, have generated strong customer interest and significantly boosted service uptake among both new and existing customers. Recently, our business launched
OFFICE-IN-A-BOX
and
SHOP-IN-A-BOX
to offer bespoke IT package solutions that address industry-specific challenges.
Moreover, the business has expanded our market presence, particularly in the public and large enterprise sectors, and strengthened our position in the SME sector. Significant progress has been made regionally as we facilitated businesses from mainland China, especially from the Greater Bay Area (GBA), to expand into Hong Kong, and supported both local and global companies to establish themselves in mainland China. Revenue from mainland China and Macau remained stable.
Residential Solutions: Ongoing Infinite-play Strategy for ARPH
(Average Revenue for Household)
Growth
Residential Solutions business demonstrated resilience with a slight revenue decline of 1% to $1,182 million. During 1H2024, we strengthened partnerships to enhance our offerings, leading to a significant uptake in high-speed fibre services, particularly the 2000Mbps package, which saw a substantial surge from customer upgrades. Service revenue remained steady as we diligently pursued our Infinite-play strategy, diversifying our portfolio of value-added services to deepen customer engagement. This approach significantly enhanced our company’s entertainment ecosystem, featuring platforms such as Netflix, Disney+, myTV SUPER, and iQIYI. Consequently, the residential average revenue per user (ARPU) saw a notable rise of 1% to $181.
During the reporting period, we launched N mobile, a new travel and lifestyle mobile brand, to complement our existing MVNO mobile services. Supported by China Mobile Hong Kong, SmarTone and 3HK, our Group now offers one of the market’s most comprehensive selections of local and roaming options to both Enterprise and Residential customers. Additionally, with travel activity rebounding to pre-pandemic levels, there has been a significant increase in sales of our Global SIM service, driven by a resurgence in consumers’ data roaming needs.
25Gbps Fibre Network: Propelling the Evolution of Connectivity
Core telecom services are instrumental in driving our strategic growth. Responding to strong demand for high-speed connectivity across both enterprise and residential markets, HKBN joined hands with Nokia to offer pre-sales of Hong Kong’s first 25Gbps fibre network^. The commercial rollout is set for June 2024, offering customers seamless access to unmatched Internet speeds at competitive prices.
William added, “Our strategic alliance with Nokia positions us to significantly reshape the connectivity landscape. This decisive move will enable HKBN to steadily gain market share and improve revenue from high-margin core services over the next 12 to 18 months, driving solid growth in a crucial sector.”
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For more details about our results in 1H2024, please refer to the announcement:
FY24 Interim Results Announcement
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^According to the market data disclosed by major telecommunication service providers in Hong Kong as at 26 April 2024, HKBN is the first telecommunication service provider to pre-sell 25G broadband service in Hong Kong.
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Leading through purpose, HKBN tops Hong Kong’s telco industry in ESG*
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*Based on the Hang Seng Corporate Sustainability Benchmark Index and MSCI’s ESG Ratings
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