Promotes information innovation in telecommunications to drive business expansion

(24 August 2017 – Hong Kong) – Comba Telecom Systems Holdings Limited (“Comba Telecom” or “the Group,” Hong Kong stock code: 2342), a global leading wireless solutions provider, announced its unaudited interim results for the six months ended 30 June 2017.

In the first half of 2017, PRC mobile network operators was experiencing a general transition from 4G to 5G after basic completion of their 4G network build-out. The operators therefore exercised greater prudence in their investment schedule to secure a balance between performance and external investment. As a result, the Group’s revenue recorded a decrease of 12.2% to HK$2,722 million with gross profit margin declined by 1.8 percentage points to 28.3% and net profit dropped by 16.3% to HK$94.2 million. The Board of Directors of the Group does not recommend the payment of any interim dividend (2016: HK1.5 cents).

Mr. Zhang Yuejun, Vice Chairman and President of Comba Telecom, said, “The increased coverage of the 4G mobile telecommunications network and the development of network traffic data applications have led to a slower 4G growth. The capital expenditure of operators continued to decrease and market demand was weakened. Nevertheless, the strong growth of data traffic, Internet-of-things, cloud platform and smart city deployments have encouraged operators to expand and enhance the network, as well as intensify the investment in 5G network. These favorable factors are driving telecommunications development forward. In the face of the complex and dynamic business environment, Comba Telecom continued to develop its innovative business and expand its business coverage while actively consolidating its traditional businesses.”

During the period, revenue generated from China Mobile Group has decreased by 18.1% to HK$670 million, accounting for 24.6% of the Group’s revenue. Revenue generated from China Unicom Group has declined by 56.9% to HK$406 million, accounting for 14.9% of the Group’s revenue. Revenue generated from China Telecom Group has increased by 44.8% to HK$841 million, accounting for 30.9% of the Group’s revenue. Revenue generated from other customers, mainly including China Tower Corporation Limited (“China Tower”) and specialized government and enterprise network customers, has climbed by 8.5% to HK$168 million and represented 6.2% of the Group’s revenue. The Group expects the revenue contribution from China Tower and specialized network customers to gradually increase in the future. On the international front, revenue generated by international customers and core equipment manufacturers has risen by 5.5% to HK$637 million, accounting for 23.4% of the Group’s revenue.

Due to the basic completion of the 4G network build-out, revenue generated from the antennas and subsystems business decreased by 17.1% to HK$1,240 million, representing 45.5% of the Group’s revenue. Revenue generated from the network system business, including wireless enhancement and wireless access, increased by 8.5% to HK$644 million, accounting for 23.7% of the Group’s revenue. Among which, revenue generated from wireless access business increased significantly by 231.7% to HK$125 million, especially the revenue from Small Cell products greatly increased by 264.0% to HK$117 million. In view of mobile network operators’ increasing focus on networks enhancement to manage rising mobile data traffic consumption, the Group expects the scale of the network system business to further expand over the next few years. During the period, revenue from services decreased by 16.8% to HK$741 million, accounting for 27.2% of the Group’s revenue. Revenue from other business (including wireless transmission and specialized enterprise network) decreased by 18.5% to HK$98 million, accounting for 3.6% of the Group’s revenue. Among which, revenue from specialized enterprise network increased significantly by 82.0% to HK$14 million which was mainly due to the further expansion and development of the Group’s railway communications business. Meanwhile, the Group’s newly launched satellite communication business, which include the maritime VSAT communications and internet-of-vessels businesses, is gradually expanding.

In respect of the international business, the Group has participated in the wireless network coverage project of the South Island Line (East) of the MTR in Hong Kong, and has reached cooperation agreements with an Australian telecommunications operator and a leading in-building wireless network supplier in Vietnam respectively, as well as leading global telecommunications equipment providers. The business progress has demonstrated the Group's advanced technology in wireless solutions, as well as the recognition from its overseas clients.

Nowadays, more companies are targeting to develop Internet-of-things, big data, cloud platform and smart city businesses. At the same time, the boosted data traffic which spurs operators to expand and enhance the current network, as well as the increased 5G network deployment, create enormous business opportunities. In order to grasp the market opportunities, the Group’s business is to undergo diversified development, including network product system solutions, specialized enterprise network business and operator business.

As for network business for operators, the Group has a wide antenna products portfolio ranging from single-frequency to multi-frequency, single-system to multi-system covering all frequencies and standards, which can meet various requirements of different customers, the Group will continue to allocate more resources to develop the latest technology, so as to further consolidate its leading-edge position in the industry by continuously providing more cost-effective products to its customers. Besides, the Group’s small cell wireless access solution effectively provides large data traffic access for areas with no or weak coverage. The product has been undergoing trials within a number of provinces in mainland China and the Group believes that the product will be widely used in network build-outs in the future. In addition, the Group is continuing to proactively invest in 5G technology and applications, as it extends its technological advantages to 5G.

In respect of specialized enterprise network construction and information services, the Group has commenced to develop integrated information, communications and intelligent solutions and taken the lead in maritime satellite communications by engaging in the maritime VSAT communications and internet-of-vessels businesses, to provide solutions to such marine industry customers as large cruise ships and fishing and cargo vessels. In addition, the Group has fully developed information and communication technology (ICT) to provide convenient, tailor-made and agile services for more specialized enterprise customers in order to grasp the opportunities presented by digital transformation, digital interconnect, industry interconnect and intelligent communication applications, among others.

As for the operator business, the Group had completed the acquisition of the 51% interest in ETL Public Company Ltd early this month. With the Group's competitive advantages in network construction, operation management, technology products and services over the years, and capitalizing on the Group’s leading global communications network and information solutions as well as its network construction experience accumulated from the advances of mobile communications technology over the past two decades, the Group will accelerate its business penetration in the telecommunications market in Laos through light asset operation strategy to achieve appreciation of its business model.

Mr. Tony TL Fok, Chairman of Comba Telecom, concluded, “The evolution of information infrastructure to a higher speed, more widespread coverage and greater intelligence has been accelerated in the Internet era as 5G testing enters a new stage, and the Internet-of-things represents a new development pattern. In order to grasp the market opportunities, leveraging the Group’s advantage in leading technology and capabilities, Comba Telecom will adhere to the principle of innovation and is committed to promoting digital transformation in the telecommunications industry.”