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TELECOM & INTERNET | Tony Chua, Hong Kong

CITIC Telecom profit up 30% to HK$233.8mn

All of the company’s business segments sustain growth behind active product innovation.

CITIC Telecom International Holdings Limited (“CITIC Telecom”), a leading telecoms services provider in Asia, announced on Friday its interim results for the six months ended 30 June 2011. During the period under review, the Group reported growth in turnover and net profit. Its turnover increased by 15.5% to HK$1,491.6 million and net profit rose by 29.8% to HK$233.8 million, as compared with the same period in 2010. Basic earnings per share rose by 14.0% to 9.8 HK cents. The Board has declared payment of an interim dividend of 2.4 HK cents per share, in line with the same amount last year.

Mr Xin Yue Jiang, Chairman of CITIC Telecom, said, “The Group’s business was subject to new challenges during the first half of 2011 amidst intense competition in the international telecommunications market. We addressed the highly competitive environment in a proactive manner, employing effective measures and diligent efforts in market development both overseas as well as within China in order to sustain stable growth.

“During the period under review, the Group made headway in the integration of recently acquired CEC, forging a strong sales and servicing network for the VPN market in Mainland China. With the completion of the Group’s acquisition of the subsidiary of CEC in Hong Kong, China Enterprise Netcom Corporation Limited, a solid foundation has also been provided for the further growth of CEC’s overseas business. Moreover, the CTM acquisition has generated synergies with the Group’s businesses, delivering significant profit contributions to CITIC Telecom and spurring development of voice, SMS and Mobile VAS businesses”, he continued.

The Group maintains a healthy financial position, with each business segment generating strong cash flow to the Group. As at 30 June 2011, it had cash and bank deposits of approximately HK$309.4 million, and no bank borrowings.

To address new challenges arising from market dynamics, the Group will step up efforts to develop international voice markets in the second half of the year. Furthermore, the Group will expand into new markets in the Asian Pacific region, the Middle East and South America. These strategic directions will sustain a stable international voice business and generate positive synergies with the Group’s voice business in Mainland China. Research and development of new products in SMS and Mobile VAS will be escalated, and the Group will also expand its market coverage to sustain rapid growth in these businesses, according to a CITIC Telecom report.

The Group will continue to facilitate the integration of CITIC Telecom International CPC Limited (“CPC”) and CEC in terms of marketing, business and assets to generate greater synergies. The marketing of the Group’s VPN and Internet access services will be further enhanced with the timely launch of new products, so that CPC will become a brand with greater influence in both domestic and international enterprise markets. The Group will also continue setting up data centres to provide a solid foundation for future development. Meanwhile, positive growth is expected from the business of CTM, offering synergies as well as significant profit contributions to the Group.

The 26th Universiade, to be held in Shenzhen, the PRC in August, presents the Group with a good business growth opportunity given the requirement for China-based telecoms services for that event. Staff deployment, equipment, network capacity, customer service and technical requirements have already been fully prepared. The Group is also working closely with PRC operators to adopt communications security measures for the Universiade, so that the event will be supported by top-rate telecoms hub services and that all voice, SMS and Mobile VAS services facilitated through the Group will be delivered in a smooth and seamless manner.

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