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Cause and effect

Last year’s tariff reduction imposed by CTM on Internet and leased line services ‘notably impacted’ the overall revenues of Hong Kong communications group CITIC Telecom International Holdings Limited in the first half of this year, the group announced

Hong Kong communications group CITIC Telecom International Holdings Limited stated in its results report for the first half of the year that its revenues were ‘notably affected’ by the price concessions implemented by Companhia de Telecomunicaçōes de Macau (CTM) last year on Internet services and leased lines.
The overall revenues recorded by CITIC Telecom for the first half of this year fell by 6.1 per cent year-on-year to HK$3.59 billion (US$58.15 million), with the group’s interim report stating they were affected by CTM’s implementation of price concessions for Internet services and Direct Internet Access and leased lines services in the last three months of last year.
In October of last year, CTM announced it would reduce its tariff on local leased circuits (LLC), international private leased circuits (IPLC) and Direct Internet Access (DIA) services for the city, by 37 per cent, 49 per cent and 50 per cent, respectively.
In statements made by the Secretary for Transport and Public Works, Raimundo Arrais do Rosário in July of this year, the tariff adjustment resulted in a reduction of MOP10 million in CTM’s monthly revenues, Portuguese newspaper Tribuna de Macau reported.
According to the CITIC Telecom filing, in order to make up for the impact of the price reduction, CTM expedited the upgrade to optical fibre Internet services for existing residential and business broadband users.
‘New users were added during the first half of the year and the number of users registered for optical broadband as at the end of June increased by 16 per cent as compared to the number of users registered as at the end of last year,’ the filing stated.
The group also announced it would continue to increase the number of optical fibre users and raise the percentage of conversion, in order to provide speedier and higher-quality services to customers.
On August of this year, CTM stated it had178,000 broadband customers, of whom 75 per cent were optical fibre customers, with the company expecting the fibre penetration rate would increase to 90 per cent by the end of this year.
Despite the impact on revenues, CITIC Telecom’s profits still rose by almost 11 per cent yearly to reach HK$454.64 million for the first six months of this year.