Good evening and welcome to Hutchison Telecommunications Hong Kong Holdings 2024 annual results webcast. Today we have our Executive Director and CEO, Mr. Kenny Koo, and our CFO, Mr. Marcus Ng, to give you an overview of our 2024 annual results. During the presentation, please feel free to raise your questions in the messaging section on the left-hand side of your screen. We will address your questions during the Q&A session, which will follow after Mr. Koo and Mr. Ng's presentation. First, we are pleased to have Mr. Koo to give us an update on results highlights, followed by business review. After that, Mr. Ng will present our financials and our sustainability efforts. Mr. Koo will conclude with the latest developments in network and AI initiatives and our 2025 outlook. Now, may I invite Mr. Koo to begin the presentation?
Good evening and welcome. Before providing you with an update on our results highlights, I would like to share with you some of our key achievements in 2024. Our financial performance has demonstrated solid improvement and resilience despite the challenging environment. In 2024, we experienced a steady growth of 54% in our 5G customer base, alongside a notable increase of 69% in 5G Home Broadband revenue. Our premium brand, Supreme, continued its upward trend, expanding its high-tier customer base by 29% year-on-year and achieving a 12% increase in ARPU compared to the previous year. Our roaming revenue shows strong growth, with over half of our postpaid customers using our roaming services. This was supported by competitive offers and flexible roaming solutions, resulting in a 36% year-on-year increase.
Our innovative prepaid products solidified this position as a key revenue driver, demonstrating strong growth potential with a 40% increase in prepaid revenue and a 29% increase in customer base. Moreover, our comprehensive 5G solutions, coupled with cutting-edge services, saw significant growth across various sectors, contributing to an overall 61% increase in revenue from the enterprise market. Now, let's move on to the financial highlights. Our service revenue in 2024 increased by 1% to HKD 3.6 billion, primarily driven by a 30% growth year-on-year in roaming revenue, which more than offsets the decrease in local revenue. Driven by a surge in outbound travel from Hong Kong, our 2024 outbound roaming service revenue has surpassed pre-pandemic levels. Through disciplined cost management, we also achieved a 5% savings in operating expenses. All this contributed to a 4% increase in EBITDA and an 88% improvement in EBIT compared to last year.
Together, with the help of our interest income, we are pleased to announce a break-even result in 2024 with a net profit of HKD 6 million. Our customer base expanded to 4.64 million, driven mainly by higher prepaid subscriptions, and the 5G penetration increased by 8 percentage points to 54% as a result of extensive promotion of our 5G services. Same as last year, we targeted to distribute the same dividend payment as 2020 for HKD 361 million, but support recommends payment for a final dividend of 5.21 HK cents per share for 2024. Now let me give you an update on our business in 2024. As the digital landscape evolves, the need for faster connectivity and superior digital experiences continues to grow. More than half of our customers are enjoying super high-speed 5G services. Our 5G customer base has continued to grow, driven by our exceptional network performance and strategic business initiatives.
We know how crucial it is for our customers to have seamless and hassle-free roaming experiences when traveling outside Hong Kong. Our 5G Data Roam Like Home Plan, which allows customers to freely mix and match their roaming data usage in Hong Kong, mainland China, and Macau at no additional cost, was designed to meet the increasing needs of customers heading north for spending and outbound travel. Japan is another popular travel destination for Hong Kong residents. With this in mind, we were also the first local mobile operator to launch a local monthly plan with shared data usage between Japan and Hong Kong. For 5G Home Broadband, this year it maintains its growth momentum. Revenues increased by 69%, customer base grew by 32%, and ARPU increased 12% year-on-year. Our growth was fueled by the launch of new packages and supported by a robust network.
In Q1 2024, we rolled out a new plan that bundled high-value gadgets with our broadband services, which was well received by customers and boosted the ARPU. To further accelerate our growth and broaden market reach, we continue to look for strategic partnerships. For example, we collaborated with a property management company under CK Asset Group to promote our home broadband services, in addition to cross-selling to our mobile in-based customers. We are also offering unique promotions to our existing mobile customers, such as extra MoneyBack points, guaranteeing seamless connectivity both at home and while on the go. Supreme, our premium brand, has shown remarkable growth with an expanding customer base and increased ARPU. We have thoughtfully crafted a diverse range of exclusive privileges tailored for our premium market. There was a 29% growth in penetration together with a 12% increase in ARPU of our Supreme customer base.
To ensure an exceptional user experience, we have allocated more network resources to customers accessing mainland China websites and apps. Furthermore, we provide round-the-clock complimentary travel assistance services, an array of lifestyle privileges, and dedicated personal executive services, ensuring that our Supreme customers receive the utmost care and attention. Roaming. Our roaming network continues to deliver exceptional connectivity for customers worldwide. This year, the momentum in roaming revenue remains strong, with outbound roaming revenue fully recovered to the pre-COVID levels. Several significant developments marked our roaming success. We launched cross-network roaming, enabling effortless connectivity in key destinations like mainland China, South Korea, Japan, and Europe by auto-switching to the best network available. Additionally, our upgraded One Card Two Numbers plan now features VoLTE and number pairing. Over half of our postpaid customers are using our roaming, highlighting the strength and popularity of our roaming services.
SoSIM, a prepaid, is also one of the promising revenue drivers. We have put significant effort into diversifying the SoSIM business and elevating our brand presence with innovative offerings. With our new DIY Roaming Pass, users can customize their roaming experience by selecting the region, duration, and data usage that best suits their needs. Our Supplementary SIM allows customers to share the service package with family members across multiple devices, simplifying connectivity for everyone. We also introduced a So+ Service, which guarantees SIM validity and continuous connectivity for users during their travels. Tailored for our Silver segment, the SoJoy Package offers an all-in-one solution for both local and travel data. We also launched an appreciation package for our loyal customers, offering extra benefits such as annual subscription discounts to express our gratitude for their continued support.
Our expanded distribution channels have made SoSIM more accessible, and we have set up a new kiosk, for example, at the Cross-Border Station at the K11 MUSEA, making it easier for customers to get connected immediately upon their arrival in Hong Kong. Corporate Solutions also is another focus area of the group. With our comprehensive 5G solutions paired with innovative services, we are driving transformative digital change across multiple sectors, including retail, catering, property management, and education. One of our key projects is providing fixed mobile convergence connectivity to over 300 Link's car parks, supporting the implementation of smart car parking solutions, which improves operational efficiency. Through our free education initiatives, we support 400 schools, enhancing teaching and learning experiences by leveraging the latest technologies, including AI, in the solutions that we offer.
Our 5G live streaming solution for the International Forum on Quality and Safety in Healthcare enabled over 5,000 participants from 80 countries and regions to join the events both online and offline, reaffirming our network's capability to support live stream events. Our collaboration with our group companies also showcased our ability to deliver comprehensive solutions that cater to the distinct demands of different industries. As a designated network partner for Cheung Kong Center II, we have provided full-service solutions to redefine workspaces with tailored solutions by integrating advanced smart office systems, and we helped enhance operational efficiency and set a new standard for modern workspaces. We supported Hong Kong Electric on the deployment of the first 5G smart robot in a cable tunnel, leveraging high-speed, low-latency 5G technology.
This innovative solution has significantly enhanced patrolling efficiency in enclosed tunnel areas, demonstrating real-life applications of 5G robotic solutions, ensuring the safety of power supply equipment, and maintaining a reliable electric supply for the community. We also introduced a ShopL ink project for 300 A.S. Watson retail stores, featuring auto failover capability to ensure uninterrupted service even if the primary link is down. Additionally, our Wi-Fi solution incorporates isolated access points to handle different types of in-store operations, addressing security concerns and enhancing overall operational efficiency. Now I will pass the time to Marcus for the financial review.
Thank you, Kenny. Good evening, everyone. Let me walk you through our financials for 2024. First, let's talk about our revenue.
Our service revenue, which accounted for 74% of our total revenue, grew by 1%, primarily driven by our strong roaming revenue growth with 30% increment year-on-year, of which outbound roaming service revenue surpassed our pre-COVID levels. This growth was, however, softened by our local service revenue due to the sustained competitive landscape and a decline in hardware and other product revenue from weaker consumer sentiment and an extended mobile phone replacement cycle. As a result, the total revenue had a decline of 2% compared to last year. Next, turning into our customer base, the total number of customers increased by 17% to approximately 4.6 million. This increase was largely attributable to our substantial growth in our prepaid customers and our SoSIM customer base. Our postpaid customer base, however, had a slight decrease this year, mainly due to the movements related to our corporate customers in the first half of 2024.
Going deeper into our customers, we had an encouraging trend for our 5G penetrations to reach 54% by the end of the year, with a 16% growth against last year, mainly driven by our intensive promotion of 5G service offerings. In terms of our 5G Home Broadband, it demonstrated a sustained strong growth of over 30% last year. The increase in popularity in both consumer and enterprise markets contributed. Next, our ARPU, slight decrease by 2% compared to last year, was being affected by the competitive market conditions. In terms of our postpaid churn, it remained steady at 1% due to our effective consumer customer engagement and retention strategies. Next, let's talk about our profitability. By enhancing our profitability, we have maintained our cost disciplines by reducing our operating expense by 5% against last year.
In terms of capital expenditure, it was reduced by 10% as our major 5G network enhancement projects have been completed, therefore leading to an improvement in our EBITDA less CapEx and CapEx over service revenue. Depreciation and amortizations remained stable year-on-year. On the balance sheet side, we maintained a healthy cash position and a debt-free balance sheet, with our net cash around HKD 3.7 billion by the end of the year, similar to 2023. Now, let me give you an update on our sustainability performance in 2024. This slide shows our four core values: governance, sustainable business model and innovation, environment, and social. I'll highlight some of what we've done in 2024. Our ongoing dedication to sustainable practice is also reflected in our AA rating from MSCI. This is since 2022. We have also improved our sustainability ratings to 26.7.
Also, 92% of our employees received training on anti-corruption, ethics, and integrity. We also achieved a 100% recycling rate for our lead-acid batteries in our Hong Kong operation. Last but not least, we are also very committed to protecting our customer data. Next, I'll pass to Kenny to talk about our network and AI development. We are dedicated to enhancing our 5G network quality and expanding capacity and coverage across key infrastructures. In 2024, we rolled out the 3.5 GHz Golden Spectrum at major transportation hubs, such as the three cross-harbor tunnels and Aberdeen Tunnel, the airport, and high-traffic MTR stations. Now customers can enjoy our top-quality 5G services all over Hong Kong.
During the recent spectrum auction, the group successfully secured sufficient bandwidth in the low-band, 850-900 MHz, and 2.3 GHz frequency bands for another 15-year term, ensuring ongoing excellent network services and supporting diverse demands for 5G applications for both consumer and enterprise markets. For network development, we prioritize customer satisfaction and are dedicated to continuously improving customers' quality of experience from various perspectives. The golden spectrum has been extended to prominent venues like AsiaW orld- Expo, Central Harbourfront Event Space, and the Hong Kong Coliseum. We have also deployed radio-based stations to cover the entire new launch Kai Tak Sports Park, ensuring sufficient resources to handle maximum capacity. Additionally, an intelligent resource allocation algorithm is in place to optimize network resource management, ensuring uninterrupted high-quality service even during heavy traffic and mega events.
By leveraging mmWave capabilities, we can also deliver high-quality service with super high speed and extremely low latency for crowded areas and industrial applications like automation and remote control. RedCap is designed to also support IoT devices more efficiently and offers a middle ground between high-performance 5G and narrowband IoT. With RedCap's ability to balance performance, efficiency, and cost, it can be applied to a wide range of IoT applications such as CCTV and surveillance systems, wearable technology, and CPE solutions. Digital transformation in IT is essential for improving operational efficiency and strengthening customer engagement. It enables us to take prompt action on market demands while fostering steady growth in both postpaid and prepaid segments.
Some of our key technical advancements include modern cloud infrastructure to enhance system performance and scalability, real-time billing system to efficiently streamline transactions, obtaining PCI 4.0 compliance to strengthen our data security framework, ensuring robust protection of our customers' data, and omnichannel experiences to enhance customer interaction across platforms. Advanced CRM solutions also enable more effective customer relationship management. Real-time data analytics empowers us to make strategic decisions based on precise insights and trends so that we can meet customer demands swiftly and more accurately. Overall, digital transformation increased our revenues by reducing time to market by around 60%, six zero. Revenue generated from our digital transformed platform has been a 45% uplift year-on-year. It has also streamlined our work processes, resulting in cost reductions, strengthened customer engagement, and increased our competitive edge in the market.
Moreover, open integration tools have accelerated product development with partners and vendors, in addition to supporting wholesale operations, thereby driving scalable B2B growth. Next, a hot topic. I would like to talk through how we utilize AI and automation to drive business growth. First of all, we have leveraged AI to strengthen customer relationships and boost revenue. Our AI chatbots provide real-time support and improve response times. In 2024, around 45% of customer inquiries were handled by AI chatbots, alleviating the burden of our customer service hotline. The use of predictive analytics helps us improve customer retention through proactive identification of at-risk customers and targeted retention strategies. We also offer a range of AI-powered educational solutions, such as paper marking and specialized training courses, providing a comprehensive suite of AI-driven educational solutions designed to streamline administrative tasks for educators.
From the network improvement aspect, AI technologies help optimize our network resources allocation and promptly address network issues to ensure minimal service disruption. The adoption of AI energy-saving solutions enables us to regulate our network power consumption, achieving around 10% energy savings at our base station in 2024, while maintaining superior customer experience. This not only reduces operational costs, but also contributes to our commitment to sustainability. In terms of operational productivity, we utilize AI to enhance operational productivity through automation, thereby streamlining processes and improving efficiency. We can also fortify network security through the adoption of advanced threat detection technologies and mitigate fraud by implementing anomaly detection techniques. Adopting advanced threat detection technologies has contributed to over 90%, nine zero, man-hour savings for carrying out particular network security tasks. Last but not least, let me round up with our outlook for 2025.
Looking ahead in 2025, we will continue to strengthen our roaming offerings to drive revenue growth. We hope to maintain strong growth momentum in the SoSIM prepaid segment to solidify our market leadership position. We will continue leveraging AI technologies and big data analytics to strengthen customer engagement and enhance operational efficiency. We are focused on strengthening our digital platforms to fuel revenue growth across all customer segments. Last but not least, we will also focus on expanding our prepaid wholesale business overseas to capitalize on CPaaS opportunities and increase our market share in the prepaid wholesale sector. Thank you. This is the end of our presentation.
Thank you, Mr. Koo and Mr. Ng. This is the end of our results presentation. We will now continue to the Q&A session. Please feel free to raise your question in the chat window.
In the case that your question is not answered during the session, please do not hesitate to email us, and we will further follow up on that. We will group similar or repetitive questions together. Now, let me take a look at the questions we have received so far. The first question: With total roaming revenue nearly back to pre-pandemic levels, what strategies do you have in place to ensure the group's revenue performance? Mr. Koo, can you help on this one?
Okay. Thank you for these questions. While our recent growth has been mainly driven by roaming service revenue, we recognize the importance of diversifying our revenue streams to ensure sustainable growth. Our 5G Home Broadband services, for example, have shown significant improvement in 2024, with a notable double-digit increase in revenues and customer base.
Beyond the residential usage, these services have expanded also to enterprise and SMEs, as well as various indoor and outdoor use cases and events. As mentioned earlier in our presentation, we continue to look for strategic partnerships to further accelerate the growth. Another area is the corporate solutions, which have always been a strategic priority for the group. As I said, leveraging on the AI technology, we can now deliver more customized solutions, such as the AI educational technology for different sectors, which will drive our revenue growth and enable digital transformation for businesses. Additionally, our prepaid SoSIM business remains a promising revenue driver, and we will explore opportunities to grow our prepaid wholesale business also in overseas markets. Thank you.
Thank you, Mr. Koo. The next question is on roaming. Will your data sharing plans, such as Roam Like Home, cannibalize your roaming revenue? Mr.
Koo, maybe you can help on this one too.
Thank you. Our data sharing plans and the roaming plans actually are designed to be complementary, presented to the customers. The data sharing plans cater to frequent travelers who look for convenience and a seamless user experience. These plans offer our customers a flexible and cost-effective option for staying connected, converting untapped, but this is to convert the untapped segment into our roaming customers and attracting those who have not previously tried our roaming service. The roaming usage from data sharing plans is also treated as part of the roaming revenue. There is no cannibalization effect. Thank you.
Thank you, Mr. Koo. Next, we have several questions asking about CapEx. What is your CapEx outlook for 2025? Mr. Ng, can you help on this one?
Sure. Okay.
As highlighted in our 2024 results, our CapEx decreased by 10% compared to 2023, mainly because we have already completed a majority of our 5G network enhancement projects. We expect our capital expenditure to be stabilized in the coming year, remain at a similar level to 2024. Moving forward, our focus will be on our network optimization and digital transformation. Thank you.
Thank you, Mr. Ng. I also see a few questions on AI. Let me group them together. In what areas has the company applied AI technology, and how can this technology help the company improve its productivity and profitability? Mr. Koo, maybe you can take this one.
Okay. Thanks for all the questions. Let me address that briefly. Actually, for the details, you may still refer to the earlier slides covering the AI applications.
In short, AI technology enhances our customer service quality and the workspace productivity. The solutions like our AI power trend prediction model, as I mentioned earlier, improves customer retention and profitability. On the B2B corporate market, it enables us to offer more innovative solutions to generate more revenue, of course, to support enterprise customers in leveraging the AI technologies. On the cost efficiency side, as I mentioned, we are adopting the AI energy saving solution in our network to reduce our energy consumption of the base station, and that will continue to contribute to our sustainability commitment. Thank you.
Thank you, Mr. Koo. The next question. During the spectrum auction held in 2024, your peers have successfully bid the 6-7 GHz band, which can support 6G technology development, while your company did not secure any spectrum in this band.
What is your plan for 6G development? Mr. Koo, can you please help with that?
Thank you. We did consider seriously and participated in the auction, but after considering several factors, including mainly the lack of the ecosystem, such as the device terminals and the network equipment for that particular frequency band, limited market or regional adoption, and also the absence of relevant application and use cases, also, of course, the cost effectiveness, we decided not to actively bid in the auction. I would say the spectrum bands are still available even after this auction, such that we can still have a chance to acquire when the factors are becoming more mature. Thank you.
Thank you, Mr. Koo. Some questions are asking about our Macau operations.
One of them is that SmarTone announced its exit from the Macau market in 2024, reporting continuous losses for their Macau business for the last two years. Is there any financial burden from your Macau operations? Mr. Koo, can you please help again with this question?
Thank you. As a leasing company, we cannot or we are not appropriate to comment on another company's performance or decision. For our own business in Macau, I would say it remains stable yet challenging due to the smaller market size. From an overall company perspective, our strong performance, in particular in the second half of our Hong Kong operation, is offset by the weaker performance of our Macau operations. Thank you.
Thank you, Mr. Koo. We will now take one more question before concluding the briefing today. Many analysts are asking similar questions about the company's cash position.
Let me select one for the last question. Congratulations on your break-even result, which is encouraging. With your healthy cash flow and abundant cash on hand, what are your plans for distributing special dividends and use of surplus cash? Mr. Ng, maybe you can take this last question.
Okay. Okay. Let me explain this a little bit. I think before each result announcement, we carefully evaluate our use of surplus cash and also our cash position, as well as any other potential investment opportunities. Last year, during our AGM, the chairman indicated the board would contemplate distributing a special dividend if the company achieves a turnaround in 2024. However, this year, we are breaking even result with the help of the interest income. Following discussions with the board this afternoon, I think we will have further consideration when the company's financial performance is more stabilized. Thank you.
This will conclude our briefing session for today. Thank you very much for joining, and thank you for your time. Thank you to Mr. Koo and Mr. Ng as well. Have a good night.