Hong Kong Telecommunications Ltd has posted a healthy rise in pre-tax profits for the six months to September 30. The group turned in a 13% rise to the equivalent of $817m on revenue that rose by 9% to $2.06bn. Cable & Wireless Plc, the Hong Kong-based telephone company’s majority shareholder with a 58.4% stake will report later this month. Hong Kong partially attributed the growth in profits to an 11% growth in international traffic, which it said reflected the shift in traffic patterns, particularly on the North American routes. Here the so-called callback system – where a caller first establishes contact with a server in the US from which the call is established as a US-to- Hong Kong call, continued increase. The result is that more calls are originating in the US, and since international telephone revenueis shared more or less equally by companies in the origination destination countries, last month the US Federal Communications Commission complained that Hong Telecom had been profiting unfairly as a monopoly (CI No 3,021). The firm said callback had effectively reduced international revenues as the Hong Kong outgoing call charge was replaced by a lower incoming payment from the callback country, but admitted this had been offset in part by reduced administration payments for delivery of international direct dial calls. Instillation of facsimile lines increased by 8% during the half, and the company said multiple lines in the home to cater for the growing demand for electronic mail and facsimile lines, now account for some 16% of the market. International leased line capacity was up 47% and the mobile voice and messaging services performed well during the interim. In his statement, chief executive Linus Cheung said the group would focus on additional value added services such as Caller Number display and PhoneMail to boost revenues. At the same time the group would continue to reduce it reliance on international direct dial calls, said Cheung. At the halfway stage it represented 55% of overall revenues, down from 63% three years ago. The group’s entry into the Internet market in April with Netvigator had signed up 43,000 customers. So far users can use the service to shop on-line, but Hong kong said a whole range of multimedia services will launch in July, the first of which will be Video on Demand. And by the end of this year the group will know if its bid for a Groupe Speciale Mobile and Personal Communications Service licenses in partnership with the Data Communication Business Group, a subsidiary of Chunghwa Telecommunications Co of Taiwan, has been successful. A dividend equivalent to 4.5 cents per share is recommended.
