August 22, 2001

i-CABLE Interim Results
for the half-year ended June 30, 2001


Highlights

  • Group profit gains momentum due to high operating leverage
  • Pay TV profit tripled and Internet revenue quadrupled
  • Turnover increased by 21% to HK$934 million (2000: HK$775 million)
  • EBITDA increased by 62% to HK$284 million (2000: HK$176 million)
  • EBITDA margin increased by 7 points to 30% (2000: 23%)
  • Net profit of HK$77 million reported (2000: net loss of HK$40 million)

Pay TV

  • Subscribers grew by 11% year over year to 537,000 to consolidate market leadership
  • Anti-piracy measures initiated and will begin to make impact in second half
  • Turnover increased by 8% to HK$802 million (2000: HK$744 million)
  • EBITDA grew by 22% to HK$327 million (2000: HK$268 million)
  • EBITDA margin rose to 41% (2000: 36%)
  • Net operating profit grew by 203% to HK$185 million (2000: HK$61 million)

Internet and Multimedia

  • Broadband subscribers doubled in 6 months to exceed 100,000 and 33% market share
  • Turnover increased by 327% to HK$132 million (2000: HK$31 million)
  • Positive EBITDA of HK$13 million achieved one year after launch of Broadband service (2000: loss of HK$42 million)
  • EBITDA margin rose to 10% (2000: negative 135%)
  • Subscriber and margin growth expected to accelerate in second half

 

Group Profit Gains Momentum and Pay TV Profit Tripled
and Internet Revenue Quadrupled


(Hong Kong, August 22) i-CABLE Communications Limited (Stock Quote: 1097; NASDAQ: ICAB) announced today that net profit increased to HK$76.5 million in the first half of 2001, following a net profit of HK$20 million for the full year of 2000.

Announcing the interim results for the first six months of the year, i-CABLEs Chief Executive Officer, Mr Stephen T.H. Ng, said the Group continued to report sustained growth. Compared to the first half of 2000, Group turnover increased by 21% to HK$934 million as turnover from Internet & Multimedia quadrupled, EBITDA improved by 62% to HK$284 million as EBITDA margin improved by 7 points to 30%, and net profitability improved by HK$117 million as Pay TV profit tripled to HK$185 million.

Reviewing the performance of different business units, Mr Ng, who was appointed Chairman of the Company today following the retirement from the Board of Mr Gonzaga W.J. Li, effective on August 23, 2001, confirmed that the Internet & Multimedia business is proving to be the new growth engine for the Group.

He disclosed that the Groups Broadband subscribers doubled in 6 months to exceed 100,000 to widen the Groups leadership over other operators who started at about the same time in 2000. Internet & Multimedia revenue quadrupled to HK$132 million and a positive EBITDA of HK$13 million was reported two years after commencement of operation and one year after the launch of Broadband access services.

Mr Ng estimates the Group has achieved a market share of about 33 per cent in the residential Broadband service sector and is rapidly closing the market share gap on the incumbent operator, which has a two-year headstart. That performance contrasts sharply with the five wireless Broadband operators, none of whom has made any significant impact in the market. As at the end of June, the Group had made close to 1.3 million homes in over 6,800 buildings Broadband ready and built a subscriber base of over 100,000, he added.

"Broadband service is definitely proving to be a new growth engine for the Group. After more than a year of service provision experience, marketing and customer service operations have been fine-tuned which will only serve to accelerate growth in this segment," Mr Ng said.

Although the Pay TV business was adversely affected by rampant piracy which resulted in higher churn (to 1.8% per month, from the historical average of 1.5%), subscribers still grew by 11% from a year ago to 537,000. Revenues increased by 8% to HK$802 million and a 203% increase in net profit to HK$185 million was reported.

Mr Ng said the Group has initiated anti-piracy measures to tackle the problem head-on. Among the actions is enhancement of the security of service transmission by converting to digital broadcasting, which is expected to start to make an impact in the second half of the year. The Group is also working closely with the Hong Kong Government to strengthen legislative protection as well as law enforcement. Mr Ng noted that the Government had lately stepped up law enforcement actions and begun to prosecute peddlers of illegal set top boxes.

Mr Ng is optimistic that the growth momentum will pick up again through efforts to reduce pirated viewing and as a result of the enhancement of its programme platforms, in particular sports and movies, including the build-up to the World Cup Finals next year, to further consolidate its market leadership.

On network development, Mr Ng said that as at the end of June, the Groups network covered about 1.84 million homes in Hong Kong, of which 1.5 million were served by fibre optics and close to 1.3 million homes were Broadband service ready.

On the Groups plan to convert to digital television broadcasting, Mr Ng noted much progress had been made and the first site to be converted is expected to be commissioned in several weeks.

"Digital broadcasting will not only enable the Group to enhance its signal security and programming platform with more channels; it will also lay the foundation for the introduction of interactive television services when the technology is ready," Mr Ng said.

He also said trials of delivering voice over the Groups network with Internet Protocol had provided positive results and the Group is planning to roll out the service commercially next year.

"2001 is the first time when leverages of the various business and operation units were allowed full play, bringing significant increase of operating profits to the Group. With healthy returns and an abundance of reserves, the Group is confident that it will continue to achieve further growth and be a leader in the market," he added.

i-CABLE is listed on both the Hong Kong Stock Exchange (stock code 1097) and NASDAQ (symbol ICAB). It is 79.4 per cent held by The Wharf (Holdings) Limited, which is also listed on the Hong Kong Stock Exchange (stock code 0004).