Good afternoon, and welcome to the PCCW 2020 Interim Results announcement. Attending today is BG Srinivas, Group MD, and Susanna Hui, Group CFO. We will start with the presentation, followed by Q&A. With that, I'd like to now turn it over to BG.
Thank you, Marco. Good evening and welcome. We are indeed experiencing unprecedented times. The COVID-19 has impacted both lives and livelihoods. The economies across the world are reeling and impacted adversely. During these challenging times, PCCW Group has been proactive and taken steps to ensure the safety and well-being of our employees. At the same time, we have ensured business continuity. We have proactively leveraged technologies, both to support our customer operations, as well as to enable our employees working remotely. With a series of steps taken, we have ensured that all our core operations on the whole have been uninterrupted. We will continue to watch the situation closely. We are also, in this situation, putting in new measures to bring in new service offerings to our customers, as well as supporting our enterprise customers as they go on to address challenges they are facing in their businesses.
We have also demonstrated resilience across all our business lines by ensuring diversified product offerings and service offerings, at the same time, expanding our market footprint across Southeast Asia region. As you can see, both media and solutions, in the last three years, as a strategic move, we have expanded our footprint, and today our media OTT business operates in 29 markets outside of Hong Kong, and more than 70% of our revenues come from outside of Hong Kong. PCCW Solutions has increased footprint in Southeast Asia, with Singapore as a hub, and today more than 50% of our employee base from Solutions is based outside of Hong Kong, and we continue to support our large enterprise clients across the region.
At the same time, all our core operations here in Hong Kong, we continue to maintain market leadership both in our telco operations, our pay TV operations, as well as our IT services. We will continue to make sure we innovate on our capabilities, leveraging our capabilities, and continuously launch new product offerings to support both our enterprise customers as well as our consumers. With this, I would like to invite Susanna to walk us through the financials, and then I will be back to give you a bit more color on both the media business and the solutions business. Thank you.
Thank you, BG. Overall, the TMT sector, where PCCW operate in, have been able to weather the shock of the COVID-19 pandemic with relative resilience. As you can see here, the total consolidated revenue for PCCW Group was up by 8%, from $2.1 billion to $2.34 billion during the first half of the year. As shown from the breakdown here in this slide, basically, it was mainly driven by the regional business expansion that BG mentioned just now on the IT solution side, as well as the strong data center demand. Also, of course, the positive uptick in the OTT subscription revenue, as well as the recognition of the sale of ski resort in Niseko by our property arm, PCPD, during the first half. As for HKT, it is relatively resilient despite the softer mobile handset sales as a result of the subdued consumer sentiment.
Total consolidated EBITDA grew by 2%, from $678 million to $694 million, reflecting an improvement in both the OTT side as well as the Free TV side, where we see significant narrowing of the EBITDA loss. This was able to counterbalance the lower EBITDA on the HKT side, and also the lower EBITDA on the solutions side, as the COVID-19 and the travel restrictions resulting therefrom took its toll on the economic and roaming business and economic contraction. A quick recap on the HKT results, which was announced yesterday. HKT total revenue was lower by 3%, from $ 1.93 billion to $1.87 billion. As I mentioned just now, it was mainly due to the softer mobile handset sales, as well as a material decline in terms of the mobile roaming revenue, reflecting the impact of the travel restrictions put in place during the first half.
This was offset by the boosted demand of the TSS broadband services and, of course, the scale and resilience of our diversified business portfolio. If we look at the details of it, you can see that basically TSS revenue was up by 2%, from $ 1.3 billion to $1.33 billion, especially underpinned by the sustained growth in the residential broadband revenue, reflecting the demand for our reliable high-speed broadband services as more consumers stay home. Basically, they work home, bank at home, shop at home, study at home, and be entertained at home. On the enterprise side, the revenue is also encouraging, benefiting from the business focusing on the business continuity, and also there is an upsurge in terms of the bandwidth requirements. Again, as people have to work from home.
This was able to, again, counterbalance the general slowdown in terms of the corporate spending and also some potential bad debts which resulted from the SME segment. On the mobile front, again, despite the material decline in terms of the roaming revenue, core local mobile services remain very stable, especially benefiting from the initial uptick of 5G subscribers, which were up to date. The take-up is already 100,000 subscribers. In terms of EBITDA, the total HKT EBITDA dropped by 3%, of which TSS EBITDA was relatively stable at $487 million as a result of the various focuses on the cost side. Mobile EBITDA was down, but the margin was steady at 38%.
Most important of all, the adjusted funds flow, which was kept steady at $292 million for the first half due to our efforts in terms of stringent cost control, especially, we can see a clear reduction in terms of the discretionary spending as well as very disciplined CapEx. Yesterday, we declared an interim dividend of HKD 0.301 per share for the period. PCCW holding 52% in HKT will therefore receive $152 million. Turning to our Now TV business. Revenue for the first half was softer as sales activities were affected negatively by the suspension of the live sports events, as well as, of course, the various social distancing restrictions and so on put in place affected the commercial screens in bars, restaurants, and hotels. As such, revenue came in lower by 6%, from $174 million to $ 163 million.
Installed base, however, remained very steady at 1.35 million, and this is supported by the continued growth in the Now E service as well, which was sold across not only the broadband base, but also the mobile base as well. We continue to look very carefully at the content costs, and there was continuous streamlining and also lower discretionary marketing spend. All of these helped the margin repair from 15% to 16%, with EBITDA therefore steady at $25 million for the Now TV business. Turning to our Viu OTT business. Our regional OTT platform continued to exhibit very strong growth during the first half due to the higher user engagement as well as the monetization of its growing user base. Total revenue for the period grew by 14% year-on-year from $57 million to $64 million year-on-year.
This is indeed underpinned by a very impressive 26% growth in video revenue from $44 million to $56 million, which now accounts for 86% of the total OTT segment revenue. In particular, we would like to highlight the very encouraging growth in terms of the Viu revenue, which is our direct-to-consumer video streaming service, which reported a 46% growth in subscription revenue. As we saw, the Viu paying subs expanded by over 2x year-on-year to 4.3 million, while the MAU also expanded significantly to 36.1 million, representing a 21% growth. This more than compensated the softer advertising revenue. As you all know, the COVID-19 basically had a very negative impact on the total ad spend from the various corporates.
EBITDA loss was therefore significantly narrowed by 2/3 to $10 million from the previous $30 million for the first half as we continue to benefit from the growing brand and the growing scale. On ViuTV, our free-to-air business, total revenue also grew 2% to $17 million for the first half. Of which advertising revenue increased from $12 million to $14 million, stemming from an expanded viewership and improved ratings despite the overall decline in the local TV advertising market. EBITDA loss was significantly lowered from $18 million to $12 million, again, on the back of an expanded revenue base and also very stringent cost control. The next slide here is a slide on media asset value creation. As you may have seen from our announcement, on top of our result announcement, we have put out a separate announcement on our media strategy today.
Basically, we announced that we have undertaken a strategic review on the various media assets in order to help better position ourselves for the rapidly changing trends and opportunities and capitalize the market window. First and foremost, we are proposing to transfer the Now TV business from PCCW to HKT so that it can be fully integrated into the HKT portfolio and maximize the synergy potential currently between HKT's broadband as well as the mobile businesses. At the same time, we have evaluated additional support for the growth of OTT business as well as just now we talked about the significant upsurge in terms of the consumption and in terms of the subscription revenue, because more people stay at home longer, and we do believe that this trend will continue.
Therefore, we are looking diligently in terms of potential spin-off, as well as of course remain open-minded to any other strategic investors. We believe that both of these steps will create tremendous value for our PCCW shareholders. At the same time, in terms of the Free TV, which is independently run, it will remain with PCCW, which will continue, of course, to focus on delivering high-quality, relevant local Hong Kong content to the audience in Hong Kong. Turning to our IT solutions business, total revenue rose by 11% to $244 million, primarily driven by our new projects in the region, and also, as we mentioned before, a very strong demand in the pipeline for data center services.
If you look at the split here, you can see that the recurring revenue now accounted for 76% of total revenue, actually increased very significantly by 30% year-on-year from $143 million to $185 million. This is made possible by the growth of our IT contracts, in particular in the Singapore market. We also see significant increased demand for our data center services from hyperscale cloud providers and also leading financial institutions, which led to a data center revenue growth by 21% year-on-year. As to the project-based revenue, it suffered a reduction due to the disruption caused by the COVID-19 as we were denied access to some of the customer premises, so there was a hold-up of some of the projects, and therefore recognition of the project revenue were lower for the first half at $59 million.
More importantly, we saw a significant growth in terms of pipeline, with secured orders up by 43% to more than $1.3 billion as compared to same time last year it was $950 million. Again, this is underpinned by a few major wins of contracts, in particular in the international segment, which of course BG will cover more in his session later. Overall, a lower EBITDA was reported, and this is largely due to the reason that I mentioned just now, the lockdowns in both Hong Kong, China, and Singapore. These markets led to closure and restricted access to the customer premises, which affected the staff utilization level severely, and in some cases, resulting in cost overrun. Obviously, there are certain bad debts which would have to be recorded during this period, especially from the China market.
You can see here that the EBITDA was lower from $ 38 million to $ 29 million, but important to note is that the recurring revenue EBITDA was relatively stable. Turning to OpEx. Obviously, in this kind of market, everybody has to look at the OpEx and be very diligent in terms of cost control. Indeed, this is what we have done for the first half. You can see here that there was a significant 10% savings in the total overall core OpEx for the PCCW Group, with OpEx revenue ratio improving further to 18%. In particular, on the HKT side, there was an OpEx savings of 13% across the different lines of business as we consolidated our retail shop portfolio and also reaped profits from sustained improvement in terms of the various operating efficiencies across the business units. Media OpEx also dropped.
Solutions OpEx increased a bit in support of the regional market expansion. Turning to CapEx. Most of the CapEx would be, of course, on the HKT side in terms of rolling out 5G and also on the TSS side. As we explained yesterday, the HKT CapEx overall was controlled and in fact was lower by 10% for the first half. Overall, you can see here that the CapEx revenue ratio on a group level has improved from 9.8% to 8.3%. Turning to liquidity and the debt side. The group continued to enjoy significant healthy liquidity of undrawn facilities of more than $1.95 billion between HKT and PCCW. Cash balance was also healthy with $ 300 million on HKT side and $150 million on the PCCW side.
Gross debt edged up a bit in terms of the working capital requirement and a little bit aging, lengthening of the age of the accounts receivable . Therefore, net debt-to-EBITDA ratio was slightly up from 3.4x to 3.6x . Finally, the debt maturity profile. We have split it into two, the HKT and the PCCW and PCPD side. There was no material movement as compared to year-end of last year. Suffice it to say that there is no imminent bank refinancing requirement, and we have been looking at a fixed-to-floating ratio at around 60/40 on both PCCW and HKT side. Currently, we are enjoying an effective interest rate of 3.4%, especially when the floating-rate borrowings are enjoying a significantly lower HIBOR. Finally, on the dividend, the board has recommended a regular cash interim dividend of HKD 0.0918 per share.
This is kept the same as the interim dividend of 2019. In addition, we are declaring a special dividend in the form of distribution in specie of PCPD shares amounting to 85 shares per 1,000 PCCW shares, which may increase to 108 shares per 1,000 PCCW shares, subject to certain consents. This will effectively reduce the PCCW shareholding in PCPD to 51% post-distribution and potentially to 40%. Based on the PCPD closing price as of this afternoon of HKD 1.38, this would represent a value in terms of incremental dividend of HKD 0.1173 to a maximum of HKD 0.149. If I can share with you the rationale behind this. The main reasons for declaring the dividend in specie are to increase liquidity and public float in PCPD to help facilitate its access to capital market for independent funding of its future growth of the various key business property projects.
It would, of course, also help to unlock the value to both PCPD shareholders as well as to PCCW shareholders. It would also have the benefit of allowing PCCW to focus its investor base on our core business of telecom, media, and technology. I would refer all of you to the details as spelled out in the announcement itself. This ends my presentation on the financial, and I will pass to BG for the operation review.
Thank you, Susanna. Let me walk you through the various business lines of PCCW Media, starting with the pay TV operations. As you saw from the financials, the overall business has been resilient. While there was an impact on the revenue for the first half, given the cancellation of EURO as well as the cancellation of several sports, that had its impact, as well as the fact that there was softness in the commercial sector. However, by improved operational efficiency as well as managing our content cost effectively , we have been able to stabilize the EBITDA. The customer base continues to remain stable at 1.36 million. We have seen in the recent months, because of COVID, there is increased traction, increased viewership, and daily average reach has gone up across the Now TV channels, both in terms of entertainment and news.
We have looked at the fact that there are not too many live sports events, and hence we are focused much more on the entertainment. We have had series of content which we have been able to source and acquire. In this context, we have launched campaigns, what we call Stay Home, Stay Entertained, both to our Now E customers as well as our Now TV customers in order to encourage more viewing and upgrades to the current packages. We are seeing traction in the last six months due to these campaigns. However, looking forward for the next six months, we do see the live sports returning, and we definitely would be seeing an uptick in the revenue momentum going forward. The soccer season will start very soon. We have seen Premier League announce the startup in September.
As you can see, a host of live sports events starting from August all the way to September, October. Moving over to the Viu OTT business. As you saw from the financials, we have had a decent run during the COVID times. As you can see, several key metrics here, which captures the business pre-COVID as well as post-COVID. Viu OTT has emerged as a leader in capturing the upside, both in terms of average monthly time on our apps as well as adding new subscriber base. We have also seen, because of our dual revenue model, which was again, a very clear strategy we embraced right from day one, to leverage both revenues from subscriptions as well as from advertising. In the recent past, because of the ad spend, which has been under challenged, we have increasingly put our content behind the paywall and driving more subscription revenues.
Southeast Asia, again, has proven very well for us, both in terms of acquiring new users as well as increasing viewership on our existing customer base. We have also increased our partner ecosystem across Southeast Asia. Now we have more than 30 telco partners who are supporting our video streaming business. We are also increasingly leveraging our data analytics as well as AI to optimize customer acquisition and manage our cost effectively. We have consistently emerged as a regional leader across Southeast Asia. As you can see from this, next to Netflix, Viu has emerged as number two, both in terms of monetization, that's our revenue, acquiring new customer base, which is monthly active users, as well as total time viewed on our platform. Both engagement and new acquisitions have gone up in terms of our consumers. 21% jump in monthly active users and 23% jump in the video views.
We will continue to ensure that we maintain our leadership in these markets by a high blend of very key content, which we believe has been our success story. We do have pan-regional Asian content, which is a very unique value proposition for our customer base across Southeast Asia, including Korean content. At the same time, we have real high-quality Viu Originals, which are very local and very regional, which are very relevant in the markets we operate. The next line of business, the Free TV business. This is very much Hong Kong-centric, as you have seen that the advertisement spend in Hong Kong has definitely dropped overall in the market. However, our revenue share from the market has gone up by 19%. This is on account of our grabbing market share in the market where the overall ad spend is reducing.
This clearly shows the fact that, one, our rating of our content has gone up more than 100% in the last six months. At the same time, we will continue to ensure we manage our cost prudently and continue to launch quality scripted and non-scripted content to continue to grow in this market. Moving over to IT solutions. The COVID-19 has had its impact, particularly to the enterprise businesses, and we see particularly sectors which are heavily affected are the hospitality, travel, and retail. We have also seen some public tenders delayed. We have also seen the fact that enterprises are in a cost-control mode and discretionary IT spend is challenged.
In spite of these challenges, with the mitigation steps and measures we have taken, we have ensured there is business resilience, both in terms of the kind of revenue mix we have in managed services and data center business, which is more resilient to this nature. The other part is also increasingly focusing our efforts to support our enterprise customers in automation, in enabling customers and enterprises to migrate onto the cloud platform and their digital transformation initiatives. We were also awarded a large multi-year strategic IT outsourcing contract in Singapore, which has helped us sustain the revenue momentum. Across the board, what we're clearly seeing is our ability to win businesses across the key industry verticals we operate. One of the key factors has been our point solutions as well as our platforms, which are very unique in terms of addressing some of our customer requirements.
These are solutions which are repeatable across our customer base, and we will continue to leverage these platforms and solutions to position PCCW Solutions as a unique service provider for the markets we operate. This depicts the revenue mix as well as the exposure to various industry segments. As you can see from both, we have de-risked ourselves in not necessarily depending on an industry vertical or a specific service. We have pretty much broad-based exposure to several industry verticals, as well as the fact that we have broad-based service offerings, which has helped us to overcome the challenges of the current COVID situation. Our secured order backlog has gone up significantly, a very healthy uptick, up 43% year-on-year. These are specific industry case studies across the key industry verticals.
While I will not get into each case study in detail, as you can see, that we have been winning key contracts across telecommunications, travel, transport, and public sectors. The two notable wins in Singapore, one is StarHub, which is a large telco. We have been chosen as a strategic partner to support their business transformation initiatives, as well as manage their IT shop. We have had a significant win with the Singapore government across 28 government agencies. Here are a couple of other wins in retail manufacturing sector, hospitality and financial services. The first one, Tien Li Offshore Wind Technology. Here, it's a win in Taiwan. Strategic IT outsourcing partner. This is again, one of the big wins in a new market. The other two examples are in Hong Kong, where we are supporting a large international theme park in their new initiative, which has been launched recently.
We are working closely with the Hong Kong Exchanges in supporting and implementing their next-generation Post Trade Gateway. This is a solution which we believe is relevant to other markets as well. As was mentioned earlier, we'll continue to invest in our data center business. As you can see, most of our data centers are already running full capacity. At the same time, the new data center at Fo Tan, Phase 1 , is completely sold out. Even the Phase 2 , there is a lot of capacity which has already been pre-sold. We will continue to make sure we invest further in Hong Kong, as well as selectively in Southeast Asia, as we see customer demand picking up in this particular sector. Our strategic move three years ago in terms of international expansion has already paid dividends in terms of significant wins in Singapore.
We will continue to use Singapore as a base, and with our near-shore delivery center in the Philippines, we are also expanding in Malaysia and Indonesia. We will be very selective in the kind of clients and the kind of service offerings in these markets, leveraging our capabilities and the solutions we have built for the Hong Kong market. PCCW Solutions continue to be recognized in various aspects, and one of that is clearly the fact that we have continued to be demonstrating market leadership in Hong Kong. We have also won several marketing excellence awards in the region. With this, I would like to summarize. PCCW Group, we will continue to be at the forefront of technology, leveraging digital technologies to enable both our enterprise customers as well as our consumers.
Bringing in diverse set of capabilities across our telco operations, media, and solutions to be very relevant for our enterprise customers in enabling them on their digital transformation journey, as well as supporting the consumers as they continue to embrace the digital lifestyle. With this, I'd like to conclude. Thank you. We are open for questions.
The first question is, when will the transfer of the Now TV business happen and proceeds be collected? Will PCCW consider transferring other media businesses to HKT over time?
I'll take it.
Yeah.
Thank you for the question. Basically, the completion of the transaction will happen probably in the last quarter, as early as September. There is certain regulatory approval which is required, which currently we don't think that there is any particular roadblock. The second part of the question is whether PCCW will consider transferring other media business to HKT over time. No. I think just now we have made it very clear that the Now TV, which actually is very closely correlated to our broadband customers as well as the mobile customer, especially now that we have launched the 5G, would be the logical step to do in terms of maximize the synergy between the two. But in terms of the other assets, which is basically the Viu OTT business, it is not just a local market. It has grown over the past couple of years very significantly in the pan-region area.
We have seen significant growth, and the proposition is basically on a growth model. The valuation is more on the growth side. We think that it still, will be sitting in PCCW, and we will be looking at strategic options, including but not limited to, seeking an IPO for the business. As to the timing of the proceeds collected, that will again happen upon completion of the transaction, which will be in September timeframe. Thank you.
The next question is, what is Viu's longer term content strategy with respect to Viu Original and Korean content?
Viu's unique value proposition in the last few years has very clearly been pan-regional content, both a hybrid of content which we source from the market as well as our Viu Originals. This is something has played well to our viewerships in these markets, and we have seen significant growth uptake. We will continue to strengthen our Viu Originals, which are very local and regional. We will continue to work with partner ecosystem, to source high-quality exclusive content, including Korean, to support our both medium-term and long-term strategy.
The next question is, where does Viu plan to list, and what type of investors would you like to bring in?
I think currently, we have not decided the venue of the listing yet. The important point is to, obviously look for the optimal valuation for the OTT business. We have to look for investors who will be able to appreciate the upside potential and the growth of this particular business, OTT. In terms of what type of investors, obviously, strategic as well as financial, which can help escalate and continue to grow the business.
The next question is, can you provide an update on PCCW Solutions' regional expansion strategy?
As I mentioned during my presentation, we are very selective in our expansion beyond Hong Kong. We do have presence in mainland China, and that's an area where we'll continue to invest. However, across Southeast Asia, Singapore will be the key hub, where we already have both capability in terms of delivery as well as sales. In the other markets, which include Philippines, Indonesia, and Malaysia, these are the other markets we are focusing on. At the same time, we are clear in terms of adding capacity to our capabilities in these markets. We will be very selective in terms of the key industry verticals where we do have strengths. Like I mentioned, we are going to continue to leverage our capabilities and solutions which we have built for the Hong Kong market to these markets in the Southeast Asia region.
The next question is, is PCCW Solutions planning to add more data center capacity, and if so, where?
The data center business is again, integral and strategic to PCCW Solutions. We are continuing to see a big demand for data centers in Hong Kong. Hong Kong will continue to be a focus for our expansion of data center. However, beyond Hong Kong, in Southeast Asia, we see, again, demand picking up. We will look at markets like Singapore, Malaysia, to establish a foothold in the region for our data center expansion. This will come on top of our existing customers, hyperscale cloud providers, who are seeking to expand their footprint in Southeast Asia. On back of that kind of a customer demand, we will make these choices.
That was the final question, and ends our presentation.
Thank you.
Thank you.
Thank you.