PCCW reports profits down as it invests in US media company
Hong Kong’s PCCW has reported increased revenue but lower profit in the first half of 2016. At the same time the company has invested in Hollywood-based movie producer STX Entertainment.
The company announced that core revenue increased by 2% over the first half of 2015 to HK$18.4 billion (US $2.37 billion), but EBITDA fell 1% to HK$5.7 billion ($739 million).
BG Srinivas, group managing director of PCCW, said: “PCCW’s core businesses of telecommunications, media and IT solutions continue to enjoy leadership positions in the Hong Kong market. While strengthening our capabilities as market leaders and continuing to grow in Hong Kong, we are looking at expanding our footprint in the region and beyond." PCCW owns HKT, the Hong Kong operator, plus PCCW Global.
“As the telecom business is making a solid contribution to the group, we are scaling up the media and solutions businesses to drive growth in the medium to long term.”
The company has also made an investment of an undisclosed amount in STX Entertainment, along with Chinese internet company Tencent. According to the Los Angeles Times, a person close to the company said the new investments, including a recent increase to STX’s credit facility, will give the company access to about $700 million in new capital for its planned expansion. The transaction values STX at $1.5 billion, said the newspaper.
PCCW is already active in TV and media, with a product called Now TV. Srinivas said the Now TV business “firmly maintains its leadership position in the local pay-TV market”.
PCCW Media has an over-the-top business, under the Viu brand, that aims to further expand in the region to capture opportunities arising from the changing viewing habits of customers.
“ViuTV will continue to invest to ensure there are more quality programme choices for viewers, thereby gaining a larger share of advertisers’ spending budget,” said Srinivas.
He added: “In 2016, the business sector as a whole is faced with a subdued local economic sentiment and an uncertain external environment. At PCCW, we will focus on our strategic plans and invest judiciously with a view to creating value for shareholders in the medium to long term. In these challenging times, we will monitor the market situation more closely than ever.”