HKBN, the second-largest fixed-line residential broadband services provider in Hong Kong, is targeting further market share gains after reporting a 25 per cent increase in revenue in the six months ended February 28.
“This interim result marks the beginning of our quad-play harvest,” HKBN chief executive William Yeung Chu-kwong said at a press conference on Thursday.
Yeung was referring to the company’s aggressive transformation over the past several months into a competitive operator of broadband, traditional telephone, mobile and over-the-top video streaming services.
“Our biggest asset is no longer our comprehensive fibre network, but rather our monthly billing relationship with more than 870,000 broadband households – representing more than one-third of Hong Kong’s 2.51 million total households – and over 50,000 corporate accounts,” he said.
HKBN posted an interim revenue of HK$1.5 billion, up from HK$1.2 billion in the same period a year earlier, on the back of its increased residential and enterprise operations in the city.
That growth was driven by HKBN’s decision last year to become the city’s newest licensed mobile virtual network operator, which provides communications services by leasing mobile network capacity from an existing telecommunications operator and reselling it to consumers at reduced prices under its own brand.
SmarTone Telecommunications and China Mobile Hong Kong are the mobile network partners of HKBN, which counted more than 100,000 registered mobile subscribers at the end of February.
HKBN also doubled the size of its enterprise service business in February last year, when it acquired the fixed-line broadband network and corporate marketing operations of New World Telephone Holdings for HK$650 million.
Net profit for the six months to February, however, dropped 66 per cent to HK$46 million, down from HK$135.2 million a year ago, on rising operating expenditures.
Network expenses and cost of sales doubled year-on-year to HK$304 million, mainly due to the acquired New World Telephone business.
Other operating expenses increased 22 per cent year-on-year to about HK$1 billion, while finance costs increased 76 per cent year-on-year to HK$117 million.
“[HKBN’s] shift in focus towards revenue is perceived positively by investors,” a recent Nomura report said. “But there were questions on the cost impact, as well as multiple strategic changes, and how management is positioning the company in the market.”