Good evening, and welcome to the HKT 2023 end results webcast. In attendance today, we have Ms. Susanna Hui, Group Managing Director, and Mr. Patrick Poon, Chief Financial Officer. We'll start with the presentation, followed by Q&A. With that, let me turn it now over to Susanna.
Good afternoon. Thank you for attending the 2023 HKT annual results briefing. Now, despite a slower-than-expected economic recovery in the year 2023, the business fundamentals still had a lot of tailwinds, and we are pleased that our team delivered positive growth across all our key financial metrics. For the year, HKT recorded a 3% growth in terms of services revenue, and with the main dual growth drivers being the enterprise revenue, which was up by 10%, as well as the mobile service revenue, which was up by 5%. Even including a lower handset sales, total revenue inched up by 1%. EBITDA was also up by 3%, benefiting from our relentless focus on cost efficiencies, including from the deployment of a lot of technology and AI applications that helped enhance productivity and process rationalization.
AFF was also up a respectable 3%, reflecting our soft landing amidst a high interest rate environment, creditable to the strong operating cashflow from all the business, which resulted in an impressive 16% increase year-on-year. Now, on the back of this, the board has recommended a final distribution of HKD 0.4444, which, together with the interim, results in a total distribution of HKD 0.7649 for the full year, and a yield of 8.3% based on our latest share price. Our resilience and sustained growth stem from our scale and diversity as Hong Kong's only true quad-play services provider, spanning, of course, from voice, data, entertainment, to even cover financial services and healthcare. The impetus for growth will be twofold. Number 1 is To C .
In terms of To C , we will be maximizing our cross-selling and upselling potentials across the very vast customer base that we have in order to look after their end-to-end communication and entertainment needs, as evident from our recent launch of 1O1O HOME and the Now OTT to expand the basically, the household audience to include the mobile-centric customers as well. Secondly, the growth driver is To B . During the year, we continued seeing robust activities in the enterprise services, spanning from security and cloud to private 5G network, AI, and other services, including from both corporate and government segments. And obviously, our team also has a capability of providing holistic, industry-specific solutions. We believe that we are still only at the forefront of business opportunities for HKT.
Turning to a review of the performance of each of our key business units for 2023, firstly, mobile. We are pleased here; if you look at the slide here, you can see that the subs mobile customer base growth accelerated to 3% for the year 2023, as compared to 1% a year ago. Despite intense competition in the four-player market, we were able to achieve a record net additions of 105,000 during the year, and a substantial proportion of these is in our premium 1O1O segment. Churn was also stable at 0.8% and was even lower for our premium 1O1O segment.
With the return of international travel, there was a recovery in roaming revenue, which led to a 2% increase in ARPU to HKD 191 as at December year-end. Now, looking at the details of the roaming revenue, as travel resumed, we obviously saw a strong rebound, which represented an increase of 176% year-on-year. Now, if you look at the breakdown in terms of quarter, which is shown here in the slide, as compared to 2019, recovery ramped up from 50% in the first quarter to 76% in Q2 and Q3, and then achieved even higher in Q4, reaching 84%, as compared to 2019 benchmark. Now, obviously, if we just look at the consumer outbound roaming revenue, it was even higher.
The recovery is almost 95% of the pre-pandemic levels, and the single month of December even surpassing 2019 December. We also noted a very strong trend of active roamers increase in our CSL customer base. Obviously, this is due to our different customer-friendly roaming options on the popular destinations, and we are optimistic that this momentum will continue into 2024. Even with a higher base for the year 2023, we expect that this year, the roaming revenue will continue to register growth to the tune of around 30%. Now, looking at 5G adoption. Our 5G customers continue to be on the rise, and 5G customer reached around 1.4 million by year-end, which represents around 41% of our total postpaid subscribers.
If we just take the CSL and the 1O1O customer base, the penetration is more than 50%. In terms of the 5G network, obviously we have completed the territory-wide build-out. So last year, what the team has been doing is basically to prioritize our efforts in a number of areas, including user experience and particularly for indoor connectivity at key landmarks and prominent locations. And we also supplemented coverage with the 700 megahertz band to boost speed and deepen indoor and outdoor coverage. Another point worth noting is that our team has also upgraded our core network architecture to be SA ready, standalone ready, as you can understand. In the first place, our 5G network was on a non-standalone basis.
Now, this is necessary, we think, in anticipation of the compatible handsets and applications, which will be launched very soon in 2024. Now, the SA capability was first showcased last year in October. And actually we have utilized a mmWave spectrum to facilitate real-time broadcasting via drones during the National Day fireworks. And more importantly, such standalone readiness would allow us to unlock new revenue streams in the commercial sector by way of commercializing bespoke network slices to enterprise. Turning to our fixed fiber network, we have also made substantial upgrades to our fiber network, deploying the latest XGS-PON technology.
Now, what this means is that this will allow us to deliver symmetric speeds of up to 10 gigabits and support multi-home users with Wi-Fi 7 routers that are now coming into the market, becoming more and more popular. HKT is the only provider that can offer such symmetric 10 gig speeds to over 80% of Hong Kong, and this is way ahead of other players in the market. This technology also is future-proof because with this in the network, basically no additional site visits will be required when the customers require upgrade to services beyond 10 gigs. On such robust fiber infrastructure, we continue to see uninterrupted revenue growth in terms of broadband for 16th year, counteracting the headwind from competition and from emigration.
During the year, a total of 6,000 customers, new customers, were added to our customer base, and 38,000 more customers signed on to the fiber to the home service, taking the penetration rate to now over 68% of the base. Particularly encouraging is the take-up of our newly launched 2.5 gigabit service, which provides a boost with HKD 98 ARPU uplift. Just now we mentioned that Wi-Fi router, Wi-Fi 7 routers, indeed are gaining momentum in the market. We expect that demand for 2.5 and 10 gigs broadband service plans will be increasing, particularly for multiple users at home, for casual and hardcore gamers, and for hybrid work arrangements. All of these will increase and contribute to our broadband revenue in the year 2024.
Now turning to our pay TV. Our team obviously has been focusing on expanding the addressing market, addressable market for Now TV. In the past, it has been focused on household big screen experience. But now we recently launched a Now TV OTT streaming video streaming service to tap into our mobile customer base as well. And on the commercial side, we have also expanded the screens available in the hotels, which altogether, including the consumer side, result in a 2% increase in the install base to 1.43 million. And to differentiate ourselves against all the other entertainment platforms, Now TV focus on reinforcing our position as the home of sports.
For example, we bring back the NBA basketball for another three seasons, on top of the fan favorites such as the British Premier League, the LaLiga, and the Formula 1, as well as live broadcasting of popular local sport events such as the Hong Kong WTA and ATP tennis tournaments. I'm also happy to announce here that we recently secured the right to broadcast this year's Euro championships that will be played in Germany. As the 51 live matches will be played at times very favorable to fans in Hong Kong, from 9 P.M. Hong Kong time to 3 A.M., we expect that this will be able to bring in additional contribution, in terms of advertising revenue and sponsorship, as well as new subscribers.
The next slide here shows the new launch of our 1O1O HOME Offers, as we look to further elevate our service offering to customers. This is designed to provide a premium customer experience, leveraging on our fiber and 5G network infrastructure, and basically offering the best network experience, as well as bundling with a wide range of smart living appliances, supported by 7-by-24 priority hotline services and express on-site technical support. We believe that this will be able to generate greater customer satisfaction and increase loyalty, and therefore increase ARPU. During the year, the enterprise segment was an area of strength for us, reflecting very strong demand for the digital transformation solutions and capability in delivering industry-specific applications. Overall data revenue was robust for 2023, which grew by 10%.
Worth noting is also the China revenue, which increased by more than 32% year-on-year. We were also very happy to report that we have secured new project wins of HKD 4 billion in 2023, and this is a significant growth of 20% as compared to 2022 year-end, and this will be able to sustain revenue growth in the coming years for the enterprise revenue. Now, our team's experience in terms of providing industry-specific solutions can be reflected, in particular, in 2023, in our success in the healthcare sector. During the year, we won contracts from 16 public and private hospitals to help them upgrade to 5G infrastructures and also develop application to help streamline the operations.
We also, during the year, won a large project from the Hospital Authority to deploy eSmartHeal th solutions in their clinics across the entire Hong Kong. Same for the public sector. With our long-standing experience, we have been working very closely with the various government bodies to advance Hong Kong into an innovation and technology hub. Projects that we delivered during the year for the public sector included the provision of infrastructure and applications in a new technology park. We also helped enhance the user experience and infrastructure at two of the largest convention centers in Hong Kong, as well as helping the government rapidly install the network solutions and the infrastructure communications solutions for a new dormitory constructed for important labors.
Of course, with the increasing proliferation of all the AI applications, we have been quickly integrating these into the solutions, not just for ourselves, but also to deliver to enterprise customers. For example, integrating Microsoft 365 Copilot into the enterprise systems, utilizing AI to enhance customer support solutions, as well as using AI-enhanced cybersecurity applications. All these will help generate commercial revenue in the coming year. Again, China. Just now, we already said that we had seen a 32% in 2023, with revenue jumping from HKD 568 million to HKD 700 million. I think we have, in the past, talked about a target of reaching HKD 1 billion in three years, and we are indeed on track to achieve revenue of HKD 1 billion in 2024.
Basically, we expect that this is still an area of growth for us as we see a lot of Chinese companies expanding into not just Hong Kong, but expanding into regional markets. And these customers include a wide range of industries, including automobile, electronics, logistics, and so on. The next slide is on our loyalty program, The Club. Members of The Club continue to grow with 3.85 million members, and obviously, on top of just rewarding customers' loyalty, we have also broadened our offerings to include online shopping, travel, financial services, and healthcare. And we have also deployed AI and data analytics applications to customize the offerings to our customers, as well as adding a fun AI assistant called Clubby for the younger segment. Let's move on to the next slide, which is the financial services business.
On the merchant side, we are working with SMEs to increase the adoption of digital payments in order to help them reduce costs and also drive sales. We also launched a new smart point-of-sale terminal for integrating the use of our loyalty club points, giving consumers even greater choice. On the consumer side, Tap & Go accounts expanded to 3.77 million, which represented an increase of 4% year-on-year. We are one of the first non-bank service providers to integrate the iAM Smart authentication platform. Also, to increase convenience for our customers, we were one of the first service providers to participate in HKMA's initiative to implement the FPS and PromptPay functionality, allowing our user to pay at over 8 million merchants in Thailand, and for Thai visitors, vice versa, to experience the same convenience when visiting Hong Kong.
Next slide is on our Dr Go health tech service. It continued to grow in popularity and convenience. Registered users increased to 386,000 in a post-pandemic year. And we also see the number of completed video consultation increased by 50%, with expanding medical network to over 140 doctors now in our network. We have recently also launched a personalized supplement service called Me+ , to address daily nutritional needs of individuals in a simple-to-use manner. Of course, going forward, we will be looking at expanding into the Greater Bay Area, working with our business partners. Now, the next slide is about our ESG.
Together with PCCW, HKT has been recognized as one of the companies selected for the S&P Global Sustainability Yearbook China in 2023, reaffirming our commitment to integrating ESG considerations into our business strategy and operations to create long-term shared value for our stakeholders and society. We are pleased to continue our support in terms of community of the government's initiative, namely the Strive and Rise program, promoting the development and upward mobility of the underprivileged youth. In terms of climate change, we also step up our efforts to combat climate change and continue to promote the application of renewable energy. We have recently, during the year, completed a full set of solar panel system installation at our exchange buildings. We also continue to support smart city transformation. We have developed 5G weather meter education program in collaboration with schools.
We participated in the first smart community in Hong Kong's transitional housing projects, and so on. As we look ahead into 2024, we remain highly confident in driving continued growth, as we said before, through cross-selling an ever-growing array of services to our large base of customer, on the consumer side, especially, using data analytics, helped by AI as well. And also supporting our enterprise customer as they look to expand beyond Hong Kong into the mainland and regional markets, as we embrace AI to improve our own business operation efficiency, as well as integrating AI solutions to help our enterprise customers' ultimate aim to delivering solid and sustainable AFF growth for our shareholders. With that, I will pass it to Patrick to walk through the financials.
Thank you, Susanna.
Thank you.
Let me first recap our key financial lines for the year 2023. Our AFF continued to deliver another year of solid growth of 3% year-on-year to $743 million. Our service revenue was up by 3% to over HKD 4 billion, driven by the accelerated growth in mobile service revenue, underpinned by the expansion of customer base and rapid recovery in roaming revenue. The sustained demand for our reliable high-speed broadband services is another key growth drivers, and also supported by the continuously robust demand and execution of our smart city development projects for government as well as the enterprise sector. Including handset sales, total HKT revenue was up by 1% to HKD 4.4 billion due to softer mobile product sales, which dropped by 18% to HKD 379 million.
Our total EBITDA for the year was up by 3% to HKD 1.72 billion, attributed to revenue growth and concerted cost optimization achieved across the group, leading to an expanded EBITDA margin to 39%. Our NPAT grew 2% to HKD 640 million. Looking into details of our TSS segments, from the chart on the right-hand side, you can see our local TSS service revenue grew by 2% year-on-year, reaching to HKD 2.16 billion, underpinned by the strong growth in local data and broadband revenues. Local data revenue registered an impressive 10% growth year-on-year as we deliver industry-specific solutions incorporating AI, IoT, and cybersecurity application, et cetera, that help the enterprise customers to serve their clients better and efficiently.
Spurred by the ongoing upgrade to our high-speed and reliable fiber to the home services, including the newly launched 2.5G service offering, our broadband service revenue reported another 2% year-on-year growth. Overall, local data service revenue registered a solid revenue growth of 6%. Pay TV services remain resilient as Now TV further strengthened its content proposition to expand addressable market for cross-selling. Pay TV services revenue slightly softened to HKD 303 million due to lower advertising revenue impact from weaker economy, and also, 2022 was benefit from the impact of exclusive broadcast of FIFA World Cup.
If we include the continuous drop in local telephony revenue and our international business, whose revenue was down by 2% year on year from the fluctuated demand of wholesale voice business and absence of one-off cable revenue during the year, our total TSS revenue increased by 1% to HKD 3.1 billion. As a whole, TSS segment EBITDA grew 3% to HKD 1.2 billion, attributable to the continued operating efficiency and ongoing conscious cost control. TSS EBITDA margin further improved from 38% last year to 39%. Now, let's turn to our mobile business. Showing on the chart, on the right-hand side, mobile service revenue rose 5% to HKD 1.07 billion for 2023, contributed by the rapid recovery in roaming revenue.
As just mentioned by Susanna, roaming revenue saw by 176% year-on-year as international travel fully resumed. Secondly, further expansion of our postpaid customer base to 3.4 million, with a net gain of 105,000, or 3% growth year-on-year, of which 5G adoption momentum continued, with 5G consumer base approaching to 1.4 million, representing 41% of total postpaid base. Postpaid exit ARPU grew 2% or HKD 3 to 191 at the end of the year. Handset sales slowed down by 18% year-on-year, as consumers delayed the replacement of handset due to weak overall sentiment and also lack of new features to entice upgrades.
Total EBITDA, total mobile EBITDA grew 4% year-on-year, of which mobile service EBITDA was up by 5% to HKD 649 million, with mobile service EBITDA margin being 61%, same as last year. Let's have a closer look at our operating expenses, the OpEx. TSS and mobile both achieved 9% OpEx savings year-on-year, respectively, reflecting our continuous focus on efficiency improvement across each business segment through optimizing and digitizing business process via generative AI, consolidation of business operations, and rationalization of IT platforms. On mobile network operation side, efficiency gains were also captured from improved mobile cell site architecture, enabling network design optimization. Together with savings from other businesses, the group reported a 12% OpEx savings year-on-year to HKD 446 million, with OpEx-to-revenue ratio improving significantly from 11.6% to 10.1%.
Apart from OpEx, we are also exercising cautious control over our CapEx. Our total CapEx for 2023 was further lowered to HKD 291 million, representing a 3% year-on-year saving. Mobile CapEx registered another 8% saving to HKD 93 million, reflecting the completion of our territory-wide 5G coverage rollout in 2022. Looking forward, onward CapEx spending is mainly for capacity upgrades and indoor coverage enhancement to meet customer demand. TSS CapEx was down by 2% to HKD 179 million. We're focused on meeting continued demand for our customized smart city solutions for enterprise. Accordingly, the overall CapEx-to-revenue ratio further improved from 6.9% to 6.6%, which is well contained within our stated guidance of 10%. Next is the AFF. We have already covered our EBITDA and CapEx.
CAC and license fee went up by 11%, mainly due to higher customer acquisition costs to serve our growing base of consumers, customers, especially on mobile postpaid customer base, with an accelerated net gain of 105,000 for the year. Fulfillment costs in respect to customized commercial projects increased to HKD 84 million as compared to HKD 72 million last year, largely due to more customized enterprise project, as just discussed. Payment for right of use asset, which is representing rental payments, slightly edged up by 3% to HKD 183 million, reflecting more space rented to serve our new enterprise customer contract. With the high collection of account receivables and more being cashed out upon project completion, change in working capital turned into a positive HKD 27 million.
AFF before tax payment and net finance cost paid grew 16% year-on-year. Payment for full-year finance costs increased to $200 million, caused by general increase in cost of finance linked to HIBOR. Tax payment was also higher due to the delay, settlement of a tax demand note, deferring from 2022 to 2023, as this I already been discussing in the interim. Therefore, overall, AFF for the year 2023 grew 3% to HKD 743 million, despite net finance cost hike. Translating into a final distribution of HKD 0.4444 per SSU, including the interim distribution of HKD 0.3205 per SSU, total distribution for 2023 full year is HKD 0.7649, up by 3% year-on-year.
For the P&L income statement here, we have basically covered from the revenue to EBITDA lies. Next is the depreciation and amortization, which decreased by 3% year-on-year to HKD 725 million, as certain intangible assets, mainly in relation to customer base, was fully amortized in 2022. And explained in the AFF slide, our P&L finance costs went up by 34% to HKD 273 million, caused by the higher market interest rate. Income tax expense was lower at HKD 63 million, as compared to HKD 82 million last year, as we recognized some tax credits. As such, our net profit for 2023 was up by 2% to $640 million. Turning to our gearing position, our total gross debt at the end of December 2023 was stable at HKD 5.7 billion.
Corresponding gross debt to EBITDA ratio was dropped from 3.38 times to 3.34 times. We have over HKD 1.85 billion total liquidity, including undrawn banking facilities of around HKD 1.63 billion, and also HKD 219 million cash on hand. We continue to carry an investment grade rating at BBB or Baa2. Our current proportion, the debt maturity profile here, our current proportion of fixed to floating rate debt is approximately 55%-45%. Slightly more debts are on fixed interest rate to counteract the adverse impact from the interest rate hike. Our effective interest rate was up to 4.05% versus 3% last year. There is no imminent need of refinancing in 2024.
We shall continue to monitor the market environment such that we can further enhance and optimize our debt profile and structure when appropriate. The average debt maturity is now approximately four years, same as 2022. This ends my presentation. Thank you.
We'll now open it up for questions. The first question is: What enables HKT to deploy XGS-PON technology on such a large scale compared to its peers?
Thank you for the question. Basically, we have been continuously investing in our network, be it good times or bad times. So right now, I think we have built the most extensive fiber network underground. And with our large customer base, this would obviously result in scale economics, and therefore, you know, we are able to deploy the XGS-PON technology at a much more cost competitive basis. And we believe that we are way ahead as compared to our peers. Thank you.
The next question is: What growth rate do you expect for enterprise revenue in the coming years?
As we were saying in the presentation, I think the enterprise revenue will continue to be a growth driver. Obviously, we saw growth from the China business. We also saw quite significant pipeline, especially from the government's initiative in building in developing new areas, including the Northern Metropolis, the recent Lau Fa u Shan new area into another Cyberport type of projects. And we also saw the hospitals upgrading themselves in the post-pandemic era, and hotels also upgrading in preparation for receiving the strong recovery of tourists back to Hong Kong.
So overall, I think we are confident that the enterprise side will continue to deliver quite significant growth to the tune of double digits in the coming years.
The next question is: Are the benefits from the new 5G capabilities you mentioned most likely to be seen in the corporate or consumer segments? And can you give a few examples?
Are the benefits from the new 5G capabilities you mentioned most likely to be seen in corporate and consumer? I think the questions actually refer to basically the AI and the 5G, such as the standalone capabilities, the architecture that we have completed in the year 2023. And if we are referring to those aspects, basically, it would be more applicable to the corporate side. Because, for example, the SA, the standalone architecture would allow basically network slicing, which would be very important for building private 5G network for different campuses, for different industries. So I think it's more applicable. For the consumer side, fundamentally, it depends on whether the number the handsets compatible to SA would be popular or not.
We, you know, we know that it will be coming out to the market in 2024, probably in the third quarter and last quarter. But the consumer applications of it might still be limited, so it's more on the corporate side. Thank you.
The next question is, is there room for further OpEx improvements?
I'll take this, and then maybe you want to supplement. I think that in terms of the OpEx, I'm sure that you will notice that we have done quite a good job in terms of continuous OpEx efficiency efforts. And in terms of giving you an example, last year we have consolidated the mobile business unit with basically the broadband and the fixed unit to form an integrated consumer-facing business unit. And that initiative actually delivered quite a lot of OpEx efficiencies, and it also had a benefit of enabling us to better cross-sell and up-sell across the consumer customer base. And so this is one of the areas which would contribute.
But of course, Patrick might want to-
Okay.
talk about OpEx, AI, and so on.
Sure, sure. Since last year, as just mentioned by Susanna, we, we have been deploying new technology, AI, digital transformation, et cetera, to drive operating, operational efficiency, which satisfactory result in terms of OpEx saving of, year-on-year 12%, reduction we have looked to. The works will definitely continue, this year, and further OpEx improvement, is also expected for 2024. Thank you.
The next question is, what is the guidance for CapEx in 2024?
Patrick, you take that?
Sure. With the completion of our 5G network coverage, the future focus will be more on meeting customer demand for both mobile and broadband network. As such, we don't expect significant change in CapEx spending in 2024.
The next question is, is HKT going to bid for additional spectrum in the upcoming auctions this year?
Thank you. I think obviously, in terms of spectrum, the more, the better. But of course, we would look at different scenarios and, at reasonable cost, anything that would help improve the user experience, improve the network strengths. We would seriously assess the pros and cons of it.
That was the final question. Thanks again for your attendance today.
Thank you.
Thank you.