The Wharf Communications group has, over the years, assembled a strong management and technical team to exploit technology opportunities in the areas of cable television, high speed Internet and telephony. Upon providing a useful currency for the communications business through the i-CABLE listing, this team has emerged as seasoned in managing a multimedia platform based on the broadband hybrid fibre coaxial (HFC) network within Hong Kong as the regional telecommunications hub. It is also on the frontier of global IT revolution that makes them alert to the dynamics and challenges of changing trends. In actively developing e-commerce and related contents, the Group through this management team effectively owns a unique experience and know-how that could not be matched by any of the existing and potential competitors in the market.
Hong Kong Cable Television Limited (HKC)
1999 saw the successful listing of i-CABLE Communications Limited ?a new holding company that encompasses the Group's telecommunications activities except New T&T - in the US and on the Hong Kong Stock Exchange. By attracting a broad base of institutional investors in North America, Europe, Asia and Hong Kong, the public floatation and its valuation provides a useful currency for this business unit. The asset base of the Wharf Group has de facto been substantially enlarged by the establishment of i-CABLE's enterprise value.i-CABLE is well placed to take advantage of the opportunities provided by the convergence of the broadcasting and telecommunications industries. As a multimedia company with a broadband hybrid-fibre coaxial network that provides the last mile to the home, it offers a virtual total solution in enabling the implementation of the "triple play"strategy of bundling video, data and voice services under the same brand name. i-CABLE's first-mover advantage in broadband access technology puts it in a strong position to compete in the high tech market.
HKC's subscription television broadcasting licence was renewed following a satisfactory review of its performance by the Government. It has already taken proactive steps to maintain its leading position in the pay TV market. Among them is the acquisition of exclusive local broadcasting rights for the European Football Championship this year and the FIFA World Cup 2002.
Subscription growth returned to double digit in terms of percentage during the year. Over 120,000 new subscribers were connected to our service with the SIF standing at over 450,000 at the end of 1999, which represented a 12 per cent growth over 1998. Net churn was controlled to be below 1.5 per cent per month. Independent surveys showed the HKC's daily viewership continued to rise last year for the fourth consecutive year. The number of HFC homes surpassed the number of MMDS homes during the last quarter of 1999. About 60 per cent of the 1.67 million homes covered by HKC's network are now fibre homes.
months after the launch of i-CABLE - a dial-up Internet access service,
it has become one of the top five ISPs in Hong Kong, with over 160,000
registered users by the end of 1999. With an FTNS licence awarded by the
Government in January this year, HKC launched a high speed broadband Internet
access service based on cable modem technology at the end of the same
month. Close to one million homes (in 4,000 buildings) in Hong Kong will
be able to subscribe to cable modem service by the end of 2000. New content
of the company's portal site will be introduced in stages during the first
quarter of 2000.
T&T continued to be an innovative mover in the telecommunications industry
with its building e-Connections vision. With the fall of the final monopoly
in the telecom market, New T&T has built its own international gateway
and has in effect become a full service provider.
The advent of ISR operations in Hong Kong on January 1, 1999 enables New T&T to bypass Hongkong Telecom's gateway and to directly connect to various international networks offering IDD 007 access to over 200 countries world-wide.
New T&T has launched new services during the year including ATM, broadband IP and multimedia conferencing. The company's move from a general spectrum of product and service offerings to more focused data and bandwidth applications continued with the successful IP Connect and IDA-P for carriers and PABX customers. Significant major accounts such as Merrill Lynch, CMG Asia and Winterthur Life Insurance show New T&T's capability to acquire and serve large new customers. New initiatives such as more IP-based services, public payphones and multi site hubbing are under planning to produce new revenue streams and to cut costs further.
1999, over 80,000 business lines were acquired while the carrier and wholesale
business exceeded expectations. The commercial building access rollout
program continued during the year and brought the total number of direct
access commercial buildings to 198 and residential buildings to 76.
Due to the relatively low levels of hardware sales achieved in 1998, hardware maintenance revenues in 1999 remained constant.
Continuing the trend observed in the later part of 1998, the hardware sales situation remained difficult throughout 1999. This situation can largely be attributed to major capital expenditure being deferred throughout the year and Y2K related change freezes implemented in the last quarter of the year.