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CITIC Telecom Announces 2019 Interim Results , Profit Attributable to Equity Shareholders of Over HK$510 Million

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(14 August 2019, Hong Kong) — CITIC Telecom International Holdings Limited (“CITIC Telecom” or the “Group”; stock code: 1883), a leading international integrated telecommunications, and information and communications technologies services provider in Asia, has reported profit attributable to equity shareholders of HK$511.1 million for the six months ended 30 June 2019, representing a growth of 4.6% when compared to the corresponding period of the previous year. Excluding the valuation gain on investment property, the growth was 5.2%.

The Group’s total revenue was HK$4,375.2 million which representing a drop of 11.0% when comparing to the corresponding period of the previous year as affected by the equipment and mobile handsets sales for the period. Revenue for telecommunications services for the current period was up by 2.7% to HK$3,615.3 million when compared to the corresponding period of the previous year. Basic earnings per share amounted to HK14.1 cents, representing a rise of 2.2% when compared to the corresponding period of the previous year.

The Board declared an interim dividend of HK5.0 cents per share for the period, representing a 25.0% growth when compared to the corresponding period of the previous year.

Mr. Xin Yue Jiang, Chairman of CITIC Telecom, said, “In the first half of 2019, the Group remained alert while strengthening its risk assessment efforts in the face of unstable economic developments around the globe, thereby maintaining the Group’s development in a quality and efficient manner. Committed to innovate, the Group implemented a collaborative innovation strategy for advancing its R&D efforts and for reaching out to its partners so as to gain breakthroughs in 5G, AR, AI, big data, SD-WAN, smart city and other areas, and thus accumulate the drivers for future development of the Group. The Group has continued to achieve growth from its core business and realized profits. It also recorded the 12 consecutive years of stable dividend payout growth from its listing, which reflects its conscientious effort and responsibility towards creating value for shareholders”.

The Group has maintained a healthy financial position and a strong cash flow. As at 30 June 2019, the Group recorded cash and bank deposits of approximately HK$1,164.7 million, which is sufficient to meet its financial obligations and contractual capital commitments in the coming 12 months.

Business Highlights

Revenue from mobile services continued to grow, while the Group is well- prepared for the 5G era. During the period, revenue from mobile services business was recorded stable growth to HK$616.6 million. The Group captured opportunities from the Greater Bay Area development. Continuous growth in revenue from services was mainly attributable to the increase in outbound and inbound roaming and postpaid revenue resulting from the popularity of the services and products in the Greater Bay Area. As at 30 June 2019, the Group had around 44.5% market share in the 4G subscribers of Macau mobile market, continued to maintain its leading position in the market. The Group has also completed the construction plan for its 5G network. It intends to launch 5G services simultaneously with the surrounding areas in 2020, and is ready to provide 5G cross-border roaming services to operators.

Growth in Internet services business was driven by continuous expansion in business scale of data centre. During the period, revenue from Internet services increased 8.3% to HK$529.9 million when compared to the corresponding period of the previous year. The Group continued to expand its investment in optic fibre network, data centre and cloud computing fundamental facilities, and introduced major partnership to co-develop smart city applications. As at 30 June 2019, the Group was around 96.8% market share in the Internet market of Macau. Fibrelisation rate of commercial broadband users was near 100%, while that of residential customers rose further to 89%, representing a leading position in the world. Data Centre Phase III (A) at CITIC Telecom Tower has been launched and the sale process has been completed. Phase III (B) is expected to enter the market in the second half of 2020.

Enterprise solutions business maintained growth and expanded to full coverage of ICT services. During the period, revenue from enterprise solutions business increased by 3.7% to HK$1,515.9 million when compared to the corresponding period of the previous year. The Group further expanded service coverage of TrueCONNECT private network to over 140 PoPs around the world, and connected to more public cloud platforms with the advantaged coverage along the Belt and Road. The Group continued to enhance its IT capabilities; its service switched from CT to one-stop ICT services including connectivity, cloud computing, information security and disaster recovery service. The Group allocated more ICT resources to the Greater Bay Area and integrated enterprise CT and IT services in Southeast Asia. The business of large high-end cloud computing platform in the region is well on track, with brand coverage of Pacific Internet has been continuously expanding. It is expected that business in the Southeast Asia will become another important segment of the Group.

International telecommunications services promoted to Internet transformation and A2P messaging businesses maintained rapid growth. Revenue from international telecommunications services during the period increased by 0.5% to HK$838.4 million when compared to the corresponding period of the previous year. The Group’s messaging business Internet transformation leads the industry, and its A2P messaging business has maintained rapid growth. “DataMall自由行”, the Group’s Internet-based roaming data trading platform, has upgraded to provide 4G services, and completed eSIM service deployment, which will lay the foundation for expanding business of scale and tapping emerging opportunities in 5G international roaming. During the period, establishment of Internet-based commercial system went on smoothly and started to support Internet-based operation of certain businesses.

Development Strategies

Looking into the future, the Group will continue to promote technological innovation and increase investment in research and development. In the era of the IoT driven by 5G, the Group’s transition from telecommunications operator to smart city operator will be realised from focusing on enterprise ICT services to government and enterprise ICT services. Taking its mobile services as the main channel, the Group will promote international telecommunication services to a comprehensive Internet-based transformation, taking the big data and AI as the R&D orientation, enhancing the Group’s Internet operation level; deepening the “product-based project development” strategy, upgrading the Group’s success in AI, big data and AR/VR applications into customer-oriented products.

The Group will accelerate the promotion of the “Digital Upgrade Plan” of CITIC Telecom Tower to enhance the business scale and efficiency of the Group’s data centre. The Group will also continue to expand the “DataMall自由行” business coverage and promote service upgrades, and utilise the business to continue to strengthen its advantage in mobile services and promote the transformation of the Group’s international telecommunications business.

The Group enterprise services will focus on developing smart city services based on global enterprise services, regional enterprise services and local enterprise services, increase platform-level investment, and build Southeast Asian regional enterprise services into the next business segment as soon as possible. On the other hand, the Group will continue to accelerate integration work of CPC Europe, so as to leverage on synergy of businesses and improve capabilities to explore the market and successful experience in the Belt and Road.

Dr. Lin Zhenhui, Chief Executive Officer of CITIC Telecom, said, “The IoT era brought by 5G is both a challenge and an opportunity. The Group will fully utilise its unique advantages in the Guangdong-Hong Kong-Macao Greater Bay Area and the “Belt and Road” region; strengthen its capacity for technological innovation and for conducting product R&D; and will track market trends in a timely manner. The Group will also implement clear and correct deployments in respect of network planning, network construction and business development. Also, it will seize relevant opportunities, capitalise on key development of relevant segments in the future, bolster its talent pool and more, so as to ensure that the Group has better prospects for development.”

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