Good afternoon, and thank you for joining Hutchison Telecommunications Hong Kong Holdings 2021 annual results announcement webcast. Today, we have our Executive Director and CEO, Mr. Kenny Koo, and our CFO, Ms. Suzanne Cheng, here to give you an overview of our 2021 annual results. During the presentation, please feel free to raise your question in the bottom-right of the screen. We will address your questions during the Q&A session, which will follow after Mr. Koo and Ms. Cheng's presentation. First, we are pleased to have Mr. Koo to give us an update of results highlights, followed by business review and development. After that, Ms. Cheng will present on the financials and our sustainability efforts. Mr. Koo will conclude with an update on our 2022 outlook. Mr. Koo, please.
Good afternoon, and welcome. 2021 continued to be a challenging year given the disruptions brought upon by the ongoing COVID-19 crisis. Ever since the pandemic began, we have responded swiftly to the accelerating digitization demands with reliable connectivity and innovative service offerings. Despite the tough and uncertain operating environment, we have delivered a set of resilient financial results in 2021 while building strong commercial momentum to prepare for the post-COVID-19 recovery. Revenue in 2021 increased by 18% against last year to HKD 5,385 billion. Despite a 29% decline in roaming revenue, which reflected in the full year impact of travel restrictions, the revenue increase was mainly driven by a 70% growth in hardware and other product revenue, as well as a 35% increase in revenue, mainly from the corporate solutions.
EBITDA decreased by 12% to HKD 1,477 billion. Besides the lower roaming revenue, the lower EBITDA was primarily due to higher network costs that we invested associated with the advanced 5G technology and the network coverage expansion. I will explain later. Nevertheless, we continue to benefit from the improved cost base following the successful implementation of our cost efficiency enhancement initiatives in 2020. Even though we have reduced the number of our own store presence during the year, our ongoing collaboration with the retail chain of the A.S. Watson Group of companies has generated valuable synergies. EBIT decreased by 67% to HKD 132 million.
Aside from the factors that just mentioned earlier, the lower EBIT was due to a 6% increase in depreciation and amortization resulting from investments in expanding the network coverage and the launch of 5G network during 2020, along with the renewal of our existing spectrums with higher spectrum utilization fees. Profit attributable to shareholders amounted to HKD 4 million, a 99% drop when compared with last year. This decrease was mainly due to the factors affecting EBITDA and EBIT mentioned earlier, as well as the lower interest income as both the bank deposit rates and the group cash and bank balances decreased. As we announced during 2021 interim announcement, we targeted to pay out the same dividend payment as in 2019 for HKD 361 million, until the net profit of the year exceeds the number.
The board recommends payment of a final dividend of HKD 0.0521 per share for 2021, which is in line with last year. Combine it with the interim dividend of HKD 0.0220 per share and an interim dividend of HKD 19.8 per share. The full year dividend of HKD 0.2729 per share will be 264% more than that declared in 2020. Let's look at our service performance in 2021. Service revenue dropped 1% to HKD 3,241 billion. This was mainly due to a 29% decline in roaming revenue, as mentioned, reflecting the full year impact of ongoing travel restrictions.
If we exclude the impact on roaming, local revenue, service revenue actually reported a 2% year-on-year growth. This was driven by a 35% increase in revenue from corporate and the solutions. Service EBITDA reduced by 14% to HKD 1.415 billion, mainly due to the lower roaming revenue and the higher network costs, as mentioned earlier. Meanwhile, our service EBIT dropped by 82% to HKD 70 million, reflecting the higher depreciation and amortization charges with the increased investment in the advanced 5G technology and network coverage expansion, as mentioned, and along the renewal of the existing spectrum with higher spectrum utilization fees.
We are reporting a healthy EBITDA margin at 44% as supported by our efficient cost structure, as well as the synergies generated from our ongoing collaboration with the A.S. Watson Group on the distribution, as mentioned also. Now I will give you an update on our business and our development in 2021. To meet the market needs, especially under the current COVID-19 disruptions, we diversify development and solution offerings and can highlight on five major achievements in 2021. First, on network development, we have optimized our network coverage and connectivity by completing the 2.1 GHz 5G refarm and deploying over 1,300 base station at the 3.5 GHz golden spectrum band. Our 5G network coverage is now over 2,100 sites.
In terms of the distribution network, we have various online channels and over 500 internal, external offline channels to reach customers, including three Hong Kong's own shops, our franchisee and dealers, as well as a shop-in-shop in FORTRESS, ParknShop, and Watsons. As for the digitalization journey, we have digitized the prepaid platform and build up a digital SoSIM community, connecting customer to enjoy hassle-free experience with online app. For the 3 One World under the 3Care brand, we engage customers on both telecom and non-telecom services with 5G technology, providing various support and responding to the community needs under COVID-19. Last but not the least, for 3Business, we built up a full portfolio of 5G enterprise solutions to enable corporations' digital transformation. These all will be further elaborated in the following slides. Network. We are passionate in the network excellence.
During 2021, we made significant progress in network optimization and enhancement to facilitate the rapidly growing data usage. These include the deployment of 5G 3.5 GHz sites. Currently, we operate a significant amount of 1,300 base stations at this spectrum, what we call the 5G golden spectrum band, which is leading in Hong Kong market. We have rapidly expanded new sites. Our 5G sites location has expanded by 43% since the third quarter of 2020 and up by 24% when compared with last year. We have expanded our capacity through allocation of the radio spectrums, and we have completed the 2.1 GHz 5G reform across all networks and the site reconfigurations.
Being the first operator in Hong Kong terminating 2G network services in last September, we further optimize our spectrum resources for 5G and LTE. In addition, we have optimized our network via software upgrade and improved customer engagement by launching the NetYouOwn program. Together with the additional spectrum acquired in the spectrum auction in 2021, 3 Hong Kong has a rich portfolio of spectrum to meet the long-term network capacity needs for a seamless 5G experience for both consumer and enterprises. With all this, we strive to continue providing the best availability in Hong Kong and reliable 5G network with 99% 5G network coverage to our customers.
Apart from building our best network, we have also focused on educating our customers on how our super fast and ultra-low latency 5G network experience can relate to their everyday lives and encourage 5G upgrade. We have performed on-site 5G speed tests at popular locations of interest by KOLs in all 18 districts, not just outdoors, but also indoors to demonstrate we have the best 5G network availability and showcase different 5G applications relevant to different segments of customers. For distribution, under the pandemic, I think convenience to reach and the sales distribution is most important to serve our customers the best.
We leverage on extensive retail network of ours and also leverage under the A.S. Watson Group by increasing the distribution points to over 500 outlets in Hong Kong, creating the best customer convenience and engagement. We have also enhanced our support service type such as sales, inquiries, retention, SIM replacement and handset purchase in different channels for both our post-pay and pre-pay customers. For our pre-pay proposition, since our launch in late 2020, SoSIM has become one of the most popular pre-pay SIMs in the market, with super high penetration. Both the number of subscriptions and the revenue contributed a significant growth to our pre-pay sales. The recharge rate has also kept increasing to a high double-digit percentage, as illustrated in this chart. During the year, we digitized our pre-pay platform and introduced SoSIM mobile app that provides convenience for customer self-service.
That includes real name registration, which will be effective very soon in early March, and the SIM card recharge, SIM card balance checking and transaction history, usage balance, usage limit setting, subscribe VAS and activate the value-added services, and the real-time three eye checked for CS inquiry. Customer can get the SoSIM cards in any of the outlets or even online, which is most important under the pandemic situation. In addition, the mobile number portability is available for both post-pay and pre-pay, with a flexible top up through a number of payment methods, including cash, Visa, Mastercard, MoneyBack and Alipay. We have reported a very strong growth in pre-pay subscriber base, which represent a great potential for upselling and cross-selling to 5G and other services.
Also, under the pandemic situation, a fast and easily acquired data service is as most important to ensure connectivity. This is how the SoSIM can add value to customers. Other than the SoSIM, I would also like to highlight the success of our easily implemented 5G broadband service, which was launched in May 2021. This service is available for both consumer and enterprise market. Our 5G broadband subscribers can enjoy 5G ultra-high speed without any need of landlines. It is just simply a plug-and-go concept with unlimited data and no complicated renovation is required. More importantly, it offer dual location service with a single subscription, such as customer's home and office. This is our unique proposition in the market to allow customer to use, not limited to a single location.
Supported by a full range of choices of 5G routers, or we call it CPE to our customers, no installation is required, with the activation almost immediate in minutes. Our 5G broadband services are ramping up very well since its launch, and it would be a new market segment for us, and we are expecting the growth trend will continue in view of the current market situation, best for work from home and learn from home. This accelerated revenue stream is one of our key growth drivers from 5G, and by leveraging on our unparalleled distribution network to address the household segment in particular. 5G is not just technology, but we believe that 5G can connect people together without any social distancing restriction.
We have introduced the 5G live services, which are high-speed, high definition, up to 4K, and great for seamless live broadcast and online ticketing, which has been widely adopted since launch by different corporations and individuals under the pandemic with the social distancing restrictions. For example, our 5G network and 5G live solution have enabled the Hong Kong Chinese Orchestra to conduct an outdoor 4K live concert called Universe in a Flower Concert at the Tsz Shan Monastery. In addition, we also enable 5G services and application for new areas in fintech for blockchain and NFT, AR and VR for metaverse and EdTech, for example. We held events of the first of its kind, what we call the 3 Orbstellar NFT Big Bang Immersive Experience Hall since July and others in the digital art space.
We foresee more and more 5G specific applications with high speed and low latency will be developed to provide more opportunities to further uplift our 5G revenue and ARPU. Along with our 3 One World strategy, we have deployed various innovative services to support our customers during pandemic to deepen our engagement with them. For example, we held workshops for elderly to use smartphones. We have revamped our loyalty program with MoneyBack from the A.S. Watson Group to offer different types of incentive and products redemption via spending. During the difficult pandemic situation, we also have provided lucky draws which helped to encourage vaccination, collaborated with the Hong Kong Jockey Club to distribute smartphone with SIM card to elderly in need, and offer free data and services were provided to those under mandatory quarantine to stay connected.
We believe customer satisfaction is the key to success in the long term. As another key driver for our growth, our 5G professional enterprise solutions are available to be the leaders in different key industries that we defined. By leveraging on the government subsidy scheme for encouraging early 5G adoption, we have delivered a number of projects in 2021, and we have managed to deliver a very encouraging result with year-on-year growth of 35%. Let me highlight a few of our 3Business key successful showcases in this slide. The 5G 4K broadcast solution facilitates the broadcast performances and classes. Like the smart robots as more service, mobile kiosk and concierge during the day and providing an e-directory and assisting with shoppers' inquiries.
For companies in construction and manufacturing sector, the low latency nature of the 5G networks also enables the BIM solutions for viewing of 3D MR images, as well as instant comparison and analysis of works on the construction sites. The 5G networks also allow higher capacity for high-quality 4K video conference to customers and business partners all over the world anytime. We also extend the benefits of 5G to education, which we are going to talk about more in the next slide. We have extending our service to education sector by a platform called 3Education, which currently over 300+ schools are enjoying the service offering, such as VR and AR learning, including the DIY and view AR multimedia content by scanning the teaching materials.
AI also involves for the machine learning and big data, and also the deep learning. The campus TV station, which is allowing the high speed and reliable 5G mobile network equipped with the professional setup. STEM, last but not the least, to facilitate the students' learning ability and creativity remotely. In addition, we have various value-added services launched from time to time based on the customer needs. Other than the 5G LIVE service that we mentioned, they also include the 3Care, where like the new VDoctor+ provide unlimited video consultation anywhere with free medication and delivery to the doorstep under the pandemic. Flexi Entertainment Pack also provide multi-entertainment with unlimited data and some STEM learning packages for children as well, while customer have to stay at home.
In terms of mobile security, which is becoming more and more demanding, we have launched a new PIA VPN Pass to protect customers' privacy and hide digital footprints to avoid digital scam. All in all, 3 Hong Kong's continuous striving for innovations, riding on our best 5G technologies to enrich the service offerings for better return on our network investment. Next, I will pass to Suzanne to give you an update on our 2021 financial results. Suzanne, please.
Thank you, Kenny. Good afternoon, everyone. Now let me take you through about our financial result in 2021. Our total revenue increased by 18% against last year to HKD 5,385 million in 2021. As shown on the chart on the left-hand side, the service revenue, which account for 60% of the total revenue, dropped by 1% against last year, mainly due to the roaming revenue reduction that mentioned by Kenny earlier, and which was partly offset by a 2% growth in the revenue from our local service. The increase in the local service revenue was mainly driven by a 35% increase in our revenue from the corporate solution due to the accelerated digitalization and growing market demand during the pandemic period.
For the roaming revenue, as mentioned, which accounted for 8% of the total service revenue, the decrease was because of the full year impact of the prolonged global travel restriction, which had been in place since the second quarter of 2020. In terms of the customer base, our total number of customers in Hong Kong and Macau decreased by 2% against last year to 3.2 million. The slight decrease was mainly due to the full year impact of the mandatory real name registration requirement in Macau for the prepaid customers, which enacted in April 2020.
This decrease was actually in turn partly offset by the newly acquired prepaid customer after the launch of the SoSIM in November 2020 in Hong Kong. The postpaid customer, on the other hand, reported a 1% increase against last year and the first half of 2021. The local net ARPU at HKD 159 represent a 4% growth from last year. This was primarily attributable to the higher contribution from the corporate segment and the customer upgrade to our 5G services. Our monthly prepaid churn rate actually increased slightly to 1.1% from 1.1% in 2020 to 1.2% this year, was mainly due to an effect of the termination of the 2G network service during the year.
In terms of the 5G, we reported a steadily uptake with a penetration of approximately 21% of the total postpaid customer base in Hong Kong. For 5G broadband, which leverage on the ultra-fast and easy to connect characteristic of 5G service, was a success and exponentially grow as reported. In terms of the operating cost, it's actually increased by 11% to HKD 1,888 million. This was driven by our ongoing effort in our 5G network investment, as well as the network coverage expansion, which lead to the higher network cost in 2021. Consistent with the past year, CapEx spending was subject to a very stringent control in the year under review, and the CapEx spend was HKD 874 million during the year, which grew 47% against last year.
The increase was mainly attributable to the capital investment in 5G infrastructure. 5G CapEx is expected to reduce in the coming year, and we will continue to scrutinize with due care and prudence in ensuring the resources are properly utilized. In our net cash position, which reduced to HKD 3.9 billion compared to last year, following the distribution of the special interim dividend of HKD 954 million in September 2021, as well as the settlement of the 5G investment and the spectrum spending. After settling the 5G CapEx and the evaluation of the potential investment opportunity, the group will continue to preserve its cash position, and it may consider declaring another special dividend at the time of interim announcement in 2022.
I would like to go through the sustainability effort that we have spent during the year. In the next slide, we show that we care about creating sustainability long-term value and what matter to our stakeholder. During the year of 2021, we make remarkable progress in achieving a number of our target, building on our sustainability pillar relating to action to climate change, promoting sustainability ecosystem, creating a great place to work and also to support the local communities. We received various ESG award during the year in recognition of our achievement as well. In the year ahead, we will continue to positively contribute to generate long-term value to our stakeholder. I think I would like to pass the time to Kenny again so that he can give you some idea of the outlook. Thank you, Kenny.
Thanks, Suzanne. Looking ahead in 2022, our goal is to optimize our whole network while efficiently utilize our spectrum resources to operate and maintain the best 5G networks in Hong Kong. We will also focus on monetizing the 5G technology innovation to accelerate 5G adoption from both mass and corporate customers. As mentioned earlier, we will build on the successful launch of our 5G mobile broadband services with a view that its contribution to the group's profit to further increase in the year ahead. We will also further extend our collaborations with the group's company and aim to further strengthen our distribution network and database marketing to reach out more customer segments. Hence, our partnership with MoneyBack will support our strategies in deepening the customer engagement and loyalty to further improve our churn rate.
The board is very confident that with the steady growth in the local service revenue and the gradual 5G service upgrade, as well as the launch of the 5G broadband services for residential and the corporate businesses, the group will continue to deliver solid local operating results and maintain strong cash flows in the year ahead. Hence, the group targets to deliver a dividend similar to that of 2020 next year. We will continue to review our cash position and may consider declaring another special dividend at the time of our interim results announcement later this year. This is the end of our presentation. Thank you.
Thank you, Kenny. Our Q&A session will now begin. Suzanne, please.
Thank you, Priscilla. Thank you, Kenny. We've got quite a number of questions, so I will try to answer all of them. I think the first one, by looking at the cash position, the company still have around HKD 4 billion cash at the end of the year, 2021. Would there be any plan for further special dividend this year? If not, what is the company's plan with the cash, and are there any potential investment or M&A deal in the pipeline? I think maybe, Kenny, you can give some color on this.
Thanks, Suzanne, and the question. I think as I just mentioned, we will continue to review our cash position, and we will consider declaring another special dividend at the interim results announcement, this year. However, please note that we have already paid higher than our dividend policy of 35%. We honored what we will pay, the HKD 361 million full year dividend, no matter how much earnings we have got, like last year, so that we have some time to get our 5G business being ramped up. Thank you.
Okay. Thank you, Kenny. I've got a number of analysts asking, based on the current competitive landscape, seems like all the local operator offering price cut on 5G. How do you build this in the longer term? For the service to MVNO, does that represent another price cut? I think, Kenny, maybe you can help with this.
Okay. Thanks, Suzanne again. Thanks for the question. I think, in the market, everyone knows that Hong Kong market is quite competitive, and that's why the markets always have some tactical offers with pricing promotion. But most of them are short-term offers. So far, we do not see any unhealthy price war yet. I think this is just a you know a phenomenon that I think during the pandemic, and people are looking for some promotion. For MVNO, we can still manage to have a very good margin that help us to monetize our network investment. I think I can address the question. Thank you.
Okay. Thank you, Kenny. I've got some question. I'm trying to combine some of the question together. I got some question asking how do you respond to the decrease in roaming revenue given the uncertainty that remains with the pandemic in the year ahead? And, also, do you see any further downside of your business? Can I pass the question to you again, Kenny?
Okay. Thanks, Suzanne. No problem. I think the ongoing pandemic has damaged our roaming business indeed since Q2 2020, and we are uncertain about the resumption. During the pandemic, we have been responding to the market trends and the customer demands by striving to strengthen our other businesses to replace the loss of income. This includes capitalizing on the potentials of 5G to develop, for example, like the 5G corporate solutions, and in enabling the enterprises to transform their business models using the digital technology, and thereby expanding our revenue streams. We see the pandemic also as an opportunity for us, as the demand of our services surge, which is proven by the steady growth in our local service revenue.
Like we have digitalized our prepaid platform, and we also build up the SoSIM digital app, for example, last year. In the year ahead, I think we will continue our digitalization journey, and to ensure our customer can enjoy the hassle-free experience of online app, even though the social distancing is undergoing. We will also continue to stay connected with our customers via different online channels to ensure that our promotion can reach out to our customers and to fulfill our service. Thank you.
Thank you, Kenny. I got some question about the real name registration. An analyst asking if there is a decrease in prepaid customers due to the mandatory real name registration requirement in Macau. Is the implementation of this requirement a concern for a similar case in Hong Kong, do you expect? Kenny, maybe you can give some idea on this.
Okay. Thanks, Suzanne. With the real name registration policy being enforced in Hong Kong starting from first of March, we believe that there will be a slight adjustment on the number of prepaid customer base. I think we believe that those are mostly the inactive silent customers, and we expected that decrease to be short-term, and we have no significant effect on our revenue in terms of the business. Meanwhile, the decrease in local customer has been offset by those newly acquired prepaid customers through SoSIM, for example, after the launch. For those roaming customers, we still need to wait for relief of the travel restriction for prepaid travel SIM. We will see. Thank you.
Okay. Thank you, Kenny. I've got quite a number of questions about our 5G. I try to summarize all the question in one go. What is the status of the 5G subscription? How many customer are currently using the 5G service, and how many customer are having upgraded to 5G services? Some analysts asking, what is the 5G penetration target for us in 2022? Maybe you can help with this one as well.
Okay. Thanks, Suzanne, for the question. I'll just address this very briefly. 5G plans are very popular among our customers, and we have recorded a steady growth from both new acquisition and the in-base upgrade from existing customers. I think this trend is expected to continue and accelerate this year. Since the launch of our 5G services in April 2020, we offer a full range of 5G innovative services and applications for both corporate and 5G home broadband, for example. These services have become available, and we have received very positive feedback. As mentioned earlier, our current 5G customers represent around 21% of our post-paid customer base.
Our customers, those are willing to pay the premium in range of about HKD 60-HKD 70 uplift, to enjoy the 5G service compared with 4G. In 2021, I think our revamped network, we spend a lot of effort in upgrading our existing high-end customers to 5G. Other than that, we capture the opportunities to bring in new innovative services to our customers, such as the 5G Broadband I mentioned, and we also focus effort on fulfilling the market demands during the pandemic. With the tough, even though the tough operating environment in 2021, 2022 now, we will introduce more promotional offers and ramping up our service with the aim to attract more customers and to bring in more attractive offerings to our customer riding on our best network. I think I have addressed the question. Thank you.
Yeah. Thank you, Kenny. I've got question which interested in our new, like, distribution strategy. Some of the analysts asking, I notice there is a own store presence was reduced during the year, and also we following the collaboration with A.S. Watson Group as well. Will the company take further moves so that the 3Shop will be disappeared on the high street completely? Kenny, maybe you can help with this one.
Thanks, Suzanne, for the questions. I think we believe our collaboration with the A.S. Watson Group can rapidly and efficiently increase the retail reach and the service points of ours. The breadth of the product offerings at the members of the group will allow our customer to enjoy seamless and convenient one-stop shop sales service. Currently we have 26 3 Hong Kong Shop-in-Shop in Fortress, and we are launching 5 Shop-in-Shop in ParknShop, and more will be coming. That will be a one-stop shop for customers who are now you know having dinner at home and buy some grocery from the supermarket, but at the same time they can find us to upgrade their plans to 5G or 5G home broadband. In addition to our 23 3Shops that are around the territory.
I think the number of 3Shops in future are all depending on the market demand. Sales and customer service strategies at the retail points are complementary to each other, so as to maximizing our operational efficiency. Together with expanded distribution network of over 500 outlets, as I mentioned, I think the new synergy values have been created, and that will show in our upcoming return and results. Thank you.
Thank you, Kenny. I see some of the questions again, they are very interested in 5G again. Some questions asking, do you see the home broadband service provided by your competitor being a threat? What is the company strategy in encountering this kind of competition? What is our update on our 5G home broadband services? Kenny, maybe you can help with this one again.
Thank you, Suzanne, and the question. I think every player has his own position. For 3 Hong Kong, we aim to provide the superfast connection with mobility. Our 5G home broadband or 5G broadband services for business are the one. We don't think that other home broadband service offered by the competitors a threat because the market is still growing. Other than that, we also have good partners with some fixed line operators, such as HKTC, our previous company. At the same time, I think they can refer mobile customer to us, while we can refer some fixed line broadband service to them as well in reciprocal.
so far, as I mentioned in the earlier presentation, we have recorded a very good update on our 5G broadband uptick last year, and we will continue to ramp up this service to capture the growing demands on the year ahead. The revenue contribution from that will likely to increase and keep accelerating. Thank you.
Thank you, Kenny Koo. I think I've got a question on CapEx guidance. What is the CapEx guidance of the company this year? Noting that the company has a higher CapEx spending during the 5G network expansion and the spectrum spending in 2021. Are you expecting the CapEx to continue to increase in 2022? I can address this one. For CapEx, we expected that in 2022, the guidance is around HKD 400 million-HKD 500 million. Yes, we have spent quite a lot in the 5G investment and the network coverage expansion in 2021, 'cause we believe that the peak CapEx has passed and expenditure on the 5G network is expected to decrease in 2022.
That's why I come to the amount around HKD 400 million-HKD 500 million. As per our interim announcement as well, we invest over HKD 3 billion into the network CapEx as well as the spectrum, and we believe that we should get a better network to serve our customer, and we will continue to scrutinize our project with care and also be prudent to ensure that all the resources spent are being properly utilized. I think for CapEx it should be we should be lower in 2022.
Thank you, Kenny and Suzanne. That's the end of the webcast today. For those questions that were not addressed, we will reach out to you separately. Have a great evening. Thank you all.
Thank you.
Thank you.