For the year 2002, PCCW reported a net loss of HKD 7.76bn ($995m), compared with a restated net profit of HKD 1.34bn ($172m) in 2001 (it had previously reported a net income of $243m in 2001). Revenue fell 8% to HKD 20.1bn ($2.58bn), from HKD 21.9bn ($2.82bn) in 2001. The loss was mainly due to a HKD 8.26bn ($1.05bn) write-down of its 50% stake in the undersea cable venture Reach Ltd.

PCCW was already smarting from its botched takeover approach for troubled Cable & Wireless Plc, and has now admitted it will not pay a dividend in 2004, citing an unpredictable business environment for the decision.

Last month Richard Li, the son of the Hong Kong billionaire businessman who owns Hutchison Whampoa, came in for investor criticism after he told the Hong Kong stock exchange it wasn’t bidding for the troubled UK carrier. However, he was then forced to reveal that his company had made an informal approach to C&W, which was rejected. The Hong Kong authorities rapped the company over the knuckles with a thinly veiled warning that all companies must abide by the rules and ensure they do not release misleading, false, or deceptive information, and not omit anything likely to affect the import of such statement or information.

At the time, one of the principal reasons for the markets astonishment at Li’s approach to acquire Cable & Wireless, was the fact that PCCW was lumbered with a $4.2bn net debt pile, and had a market value of only $3bn. According to its results, PCCW has managed to reduce its net debt by 16% to HKD 32.9bn ($4.22bn), from HKD 39.3bn ($5.03bn) in 2001.

In an effort to reduce its costs, PCCW has also lowered staffing levels from 14,583 in 2001 to 11,560 in 2002. Li has stated that PCCW’s priority is to cut debt and achieve an A rating for the rest of its debt. Its target is to cut at least $1bn of debt between 2002 and 2005.

PCCW also reported that broadband access lines increased by 39% to approximately 559,000, while its consumer broadband customers rose by 36% to approximately 424,000.

However, PCCW’s core market is in decline. The fall in revenue is reflected by the falling sales of its core fixed-line business. This is mainly as result of customers switching to mobile phones, and pressure from competitors.

Source: Computerwire