CITIC Telecom Announces 2017 Annual Results– Total Dividend Increases 21.2% YoY to HK16 Cents Per Share, Achieves Record High Profit of Over HK$880 Million

CITIC Telecom International Holdings Limited (“CITIC Telecom” or the “Group”; stock code: 1883), a leading international telecommunications operator and integrated information services provider in Asia, today announced its annual results for the year ended 31 December 2017.

During the year, the Group recorded a profit attributable to equity shareholders of HK$881.3 million, representing an increase of 3.7% as compared with last year. Basic earnings per share were HK24.9 cents, which were comparable with last year. Turnover amounted to HK$7,450.8 million. Revenue from services (excluding sale of equipment and mobile handsets) increased by 5.6% year-on-year to HK$6,340.6 million.

The Board recommended payment of a final dividend of HK13.00 cents per share for 2017. Together with the interim dividend of HK3.00 cents per share, the total dividends per share for 2017 would be HK16.00 cents, representing a 21.2% year-on-year growth. The Group would maintain the effort to create a better return for its shareholders.

Mr. Xin Yue Jiang, Chairman of CITIC Telecom, said, “The year 2017 was an extraordinary year, marking the 10th anniversary of the Group’s listing in Hong Kong. Along with an expanding global presence, the Group has seen a burgeoning market and a growing contingent of business partners. Having spent the last few years adjusting and upgrading its business, cementing its foundation, nurturing its team and gathering strength, the Group will be advancing into a new stage of full-scale, leapfrog development. As such, I am fully confident in the future development prospects of the Group.”

The Group has maintained a healthy financial position and a strong cash flow. As at 31 December 2017, the Group had cash and bank deposits of approximately HK$1,635.6 million, which is sufficient to meet financial obligations and contractual capital commitments in the coming 12 months.

In addition, CITIC Telecom has been formally selected as a constituent of five “Hong Kong Stock Connect” Thematic Indexes (namely the Hang Seng Stock Connect Hong Kong Index, Hang Seng Stock Connect Hong Kong MidCap & SmallCap Index, Hang Seng Stock Connect Hong Kong SmallCap Index, Hang Seng SCHK HK Companies Index, and Hang Seng SCHK ex-AH Companies Index), effective 5 March 2018. The inclusion is expected to attract further attention from investors in Mainland China.

 Business Highlights

Since the second quarter of 2017, the Group’s subsidiary Companhia de Telecomunicações de Macau, S.A.R.L. (“CTM”) has embarked on upgrading efforts on all fronts with the aim of enhancing its network quality and servicing capabilities. The six-month initiative has resulted in notable achievements.  Last August, Macau was battered by a devastating super typhoon rarely seen in its history. CTM ensured smooth telecommunications connection during the typhoon which was crucial to rescue and relief actions. CTM was praised by expert members of the China National Commission for Disaster Reduction, who described the company as a “communication gatekeeper”. Subsequently, the Group announced the implementation plan for the grand scheme of “Digital Macau” at the CTM “Digital Macau” Forum held in October 2017, which enjoyed an enthusiastic response from the public in Macau.

For the mobile sales & services business, the Group strived to seize the opportunities emerging from the national strategy of the “Guangdong-Hong Kong-Macau Bay Area” while CTM has launched the “Guangdong-Hong Kong-Macau Bay Area” service plan on 6 December 2017 in collaboration with carriers in Guangdong and Hong Kong. As the first telecommunications enterprise riding on the concept of the “Guangdong-Hong Kong-Macau Bay Area”, CTM received support from customers and the government alike. Meanwhile, CTM’s 4G roaming services cover 227 carriers around the world, ranking No.1 among the operators in the Bridge Alliance, an industry group formed by leading telecommunications operators.

For the Internet services business, the cloud data centre in Beijing was commissioned last May upon completion of construction, increasing the number of the Group’s global cloud computing platforms to 15. Sound progress was made for the data centre conversion of CITIC Telecom Tower in Hong Kong, and the centre is expected to provide the market with new capacity this coming August, alleviating the persistent under-supply situation. The Group’s Internet market share in Macau was around 98%, and 74% of all CTM broadband customers were on fibre based packages as at the end of 2017. In December 2017, CTM partnered with Television Broadcasts Limited (“TVB”) to introduce the “TVB Anywhere” service to mobile broadband and fixed line broadband customers in Macau. The service not only enhances the Group’s advantage in broadband services, but also opens for it a new front on media advertising.

As for the enterprise solutions business, after the Group completed the acquisition of Linx Telecommunications B.V. and integrated it into CITIC Telecom CPC Netherlands B.V. (“CPC Europe”) during the year, the business started to contribute revenue to the Group. Excluding the income from Macau enterprise solutions business, the revenue from the Group’s enterprise solutions business increased by 34.6% year-on-year on the back of the good performance in the China market and the inclusion of the full-year results of Acclivis Technologies and Solutions Pte. Ltd. and the results of CPC Europe since its acquisition. In addition, the Group continued to expand its Points-of-Presence for VPN services. The Group has coverage in over 130 countries and regions, which improves its advantage in global reach and places it among the first batch of Asian telecommunications enterprises possessing a wide range of service capabilities in the “One Belt One Road” region.

In the international telecommunications services business, the A2P SMS business grew rapidly, with a revenue increase of 32.4% when compared with 2016. Revenue from “DataMall自由行” reached HK$69.5 million for the year, more than four times of the revenue for 2016 as the geographic coverage expanded to Singapore, Malaysia, Indonesia, Thailand and Korea from Hong Kong, Macau and Taiwan. In addition to China Mobile, the “DataMall自由行” platform forged a partnership with another carrier in Mainland China. “CloudSMS”, a new Internet-based SMS service platform developed by the Group, was launched during the year, representing a move towards the new standard of “Communications Platform as a Service” (CPaaS).

Development Strategies

Looking at 2018, the Group will continue to be “rooted in the Mainland market while accelerating expansion in and geographic coverage of international markets with Hong Kong and Macau as bases and connections”, as we strive to achieve the goal of “growth in strength, quality and scale, achievement of higher standards, and delivery of top-rated results”. The Group will enhance its implementation efforts and step up the transformation towards an Internet-based telecommunications company, by building first-rate management team, engineering, technology and R&D team and business team, engaging new ideas, developing new products and businesses, exploring new markets and securing new customers in a bid to promote continuous, quality growth of its business.

The Group will also seize market opportunities presented by national strategic initiatives such as “One Belt One Road”, “Guangdong-Hong Kong-Macau Bay Area” and “Internet Plus” and technological development to speed up its transformation towards an Internet-based telecommunications company to further bolster its competitiveness. The Group will also be evolving into a Smart City operator for “Digital Macau” on the basis of its position as the city’s telecommunications carrier, as it identifies potential to add value in CTM’s digital assets.

Dr. Lin Zhenhui, Chief Executive Officer of CITIC Telecom, said, “Through years of development, the Group has built a multinational team deployed across 21 countries and regions worldwide, with network nodes in over 130 countries and regions connecting over 600 carriers around the globe. The communications and Internet industries are developing at an incredibly fast pace. Cloud computing, big data, Internet of Things, artificial intelligence (AI), mobility and block chain are only some of the endless and exciting array of new technologies and models coming onstream. We have started laying a foundation and are committed to becoming an Internet-based telecommunications company that is ‘Connecting· The Future’ so as to deliver greater value to our shareholders.”