Good evening and welcome to the HKT 2025 Interim Results Webcast. In attendance today, we have Ms. Susanna Hui, Group Managing Director, and Mr. Patrick Poon, Chief Financial Officer. We'll start with a presentation, followed by Q&A, and with that, let me turn it to Susanna.
Good evening. Thank you for attending the annex briefing for HKT 2025 Interim Results. Let me just start with the first slide. Basically, during the first half, obviously, Hong Kong's economy continued to face challenges with the global trade uncertainties and relatively sluggish domestic demand, which of course led to a lot of slowdown and delays in the enterprise investments as well. Despite these headwinds, HKT turned in a very solid performance underpinned by our network infrastructure, our continuous innovations, and of course our sustained industry leadership. If you look at the slide here, we can see that in terms of top line, we delivered a 4% growth with revenue exceeding $2.2 billion, with key growth cylinders being enterprise side, representing an 11% year-on-year growth. As you can see from the slide, mobile services revenue grew by 5%.
EBITDA therefore reported a 3% improvement, reaching $818 million, with a corresponding 3% growth in terms of the AFF at $328 million for the first six months. As a result, the Board of Directors today has declared an interim dividend of $0.338 per share. With the rapid advances in AI technology, we have been introducing a lot of AI tools and applications starting two years ago, and we have been able to harness its power to invigorate our consumer and enterprise offerings, as well as on the other side of the equation, reshaping our business workflow. Specifically, what we have done is that we have used AI to serve our customers with agility and intelligence through personalized offerings, curated, improved customer experience, and therefore we see success in terms of increasing the conversion rate of upselling and cross-selling to our customers.
As a result, customers subscribing to three or more services in our portfolio was up by 13% during the first six months. On the back office side, we have pushed deeper into our own business workflow in terms of transforming, automating processes, and improving productivity, which led to savings of around 7% across the overall cost base. Next slide is basically our fixed network. Of course, in order to embrace AI for our customers and for ourselves, we have to rely on the architecture, basically the ultra high-speed, low-latency fiber architecture. This slide shows that at our core of the network is basically the backbone with a 100 terabit core backbone network. Which has enabled and set new standards for digital infrastructure, empowering not only the enterprise side but also the consumer side, with the foundation for innovation well into the future.
If you look at the consumer side, in terms of speed offers on top of the 2.5G to 10G for mainstream users, we have elevated the speed to up to 50G for premium users. More importantly, for the enterprise side, we saw massive demand for high bandwidth requirements for AI, video, cloud computing, and so on. We have improved from 100G up to 800G services for our enterprise customers. The next slide here is to show that this very unique 800G services, I think it's the only one available in Hong Kong, and this is specifically designed for the supercomputing era.
Therefore, in terms of the services available, we have already basically provided coverage to connect all the data center clusters in Hong Kong, including Zheng Guanou, Chai Wan, Fortran, Cyberport, Qingwan, Kwaichong, and so on, supporting the AI-driven workloads and multi-path routing with carrier-grade redundancy, which is very important for mission-critical tasks. We have also connected to the Longma Chao Loop area in order to potentially surface the massive GBA data flow in the future. On the wireless side, during the first half, we are continuously enhancing our network coverage and performance. In this context, we have extended coverage in terms of building new sites, 40 new sites, both indoor and outdoor, as well as utilizing expanded wave from 400 MHz- 600 MHz for 5G advanced capability in order to enhance the very important venues for the mega events, for instance, a new Kai Tak Stadium boasting 50,000 capacity.
Another important area is to enhance the 5G capacity along the MTR high-traffic stations, which we have done in the first half with a target completion date by 2026. Benefiting from this, as well as the utilization of AI for better data and offerings curation, our mobile business added 45,000 new customers during H1, with ARPU expanding further to $193. In particular, if you look at our 1O1O and CSL segments, we have demonstrated significant strength in terms of customer base. We have expanded 4% and reported a sustained low churn rate of 0.7%. Roaming revenue continued to grow in response to the strong resumption of global travel and also our expansion of different tailored roaming plans. Introducing value-added insurance coverage and so on.
We saw that active Roma penetration to our base increased significantly to 59% now, and roaming net revenue therefore reported a 7% growth in H1, which reached 104% of the pre-pandemic level. In terms of consumer outbound revenue, it increased by 11%, hitting over 140% of the 2019 level. Looking at the 5G adoption, we continue to see 5G subscribers increase to almost 1.9 million as it truly means representing a penetration rate of 54% and an increase year-on-year of 21%. We also noted that the active AI users on [HK] consume 60% more data than non-AI active users. For the first six months, we are offering numerous AI applications as well as general training in order to boost the upgrade cycle as well as driving increased data usage, which hopefully will be driving further services revenue growth in the second half.
Turning to fixed broadband, with the expanding number of high bandwidth applications, the demand for high-speed, low-latency home broadband solutions remains robust. We also saw an upsurge in terms of the upgrading cycle to 2.5G services, with subscriber base growing by over 140%, contributing to an overall growth in fiber users by 3% to over 1.05 million. This represents penetration of 70% over our total broadband base of 1.5 million. The next slide shows the Now TV content, basically encompassing not only live sports but also drama and movie series, including Viu, HBO, Netflix, and the like. I think the highlight for the first six months is that we saw a significant increase in terms of the number of OTT customers, which recorded a 17% increase year-on-year and therefore contributed to the overall expansion of the Now TV base to almost 1.45 million customers.
Now, the star performer, I have to say, for the first six months is our enterprise business. Despite the various market headwinds evident in the first half, our enterprise revenue performed very solidly, with revenue expanding visibly by 11%. This is driven by 14% growth in cloud projects as well as 6% growth in terms of high bandwidth fiber lines. More importantly, we see a very healthy pipeline. New project wins for the first six months was well over $2.2 billion, made possible by both horizontal solutions and applications across diverse industries, as well as industry-specific vertical solutions. The following few slides show some examples. In terms of the contract wins, including in the healthcare sector, for instance, we have recently secured and completed tailored solutions for a Chinese medicine hospital in Hong Kong in terms of digitalized workflow and real-time monitoring of assets and patients.
We have also included an AI-powered automated solution for another Hong Kong public hospital using a robot system to automate material transportation as well as patient tracking. Another example of industry vertical, including setting up a smart ecosystem for cargo management for a leading logistics customer at the Hong Kong airport, which involves interconnected autonomous driving, electric tractors, robotic usage, and so on. Other examples obviously include usage of AI-driven solutions for utility companies, IoT, as well as network operating center in terms of providing AI-powered video analytics and so on. We also have been benefiting from assisting enterprise customers to build resilience and diversity for their tech stack in terms of supply chain, in terms of incorporating dual-brand design and solutions.
Turning to the next slide, which is the China revenue, originally we thought that we would be a little bit concerned in terms of slowdown in the China business, but indeed, during the first half of the year, we saw China revenue actually grow by 13%, in particular powered by our SD-WAN services demand growth, as well as data center take-up by the mainland Chinese entities in support of their Go Hong Kong, Go ASEAN initiatives, with Hong Kong firmly upholding the role of the financial hub, as evident from the recent boom in the capital market, as well as Hong Kong maintaining the role of super connector with the mainland enterprises, seeing Hong Kong as a gateway to global and regional expansion. We are still optimistic in terms of growing the China business going forward. For our PCC Global International Business, we continue to make significant strides.
For our software-defined network platform, Console Connect, we have launched a white-label service to enable other carriers to benefit from the self-procurement capabilities of the platform. On the infrastructure side, we continue to invest in subsea cable on top of the investment in the Simi Route 6, as well as the Trans-Pacific Route 2 subsea cable, which are on track to be up and running for service, bringing top-line and profit contribution in due course. In addition, we recently signed MOU to participate in the development of the Pan-Asia Express cables, as well as the Asia-Africa-Europe cables, AAE2, which we see significant demand in terms of the Pan-Asia area. We also have partnered with a partner to help extend the LEO satellite coverage along the Belt and Road Corridors. Next slide shows our club loyalty platform.
We have continued to expand our digital ecosystem, which continues to serve as a flywheel by offering exclusive services and products to our 4 million members. With the 4 million members, we are able to not just improve customer retention via stronger member engagement, but I think an important point is that we can also see a lot of customer acquisition from the non-HKT base from these club members. Now, during the first half, we have expanded merchandise selection and brand numbers. More importantly, we are able to showcase clear differentiation to our base by including unique lifestyle experience vouchers, which includes concerts and mega events tickets on our shelves, and also including GBA travel benefits as well. Another new business for us, the telemedicine service Dr Go,
also has started a new chapter in terms of extending consultation to the GBA area and also selected destinations in Asia, including the very hot destinations such as Japan, Singapore, Thailand, and so on, available to our HKT roaming and traveling customers. We have also launched a new Dr Go One Wellness subscription plan for telemedicine for synergistic integration into the insurance ecosystem. We have also partnerships with an insurance company into the enterprise segment for employee benefits, which will help accelerate mass absorption of telemedicine. The next slide is on ESG. We have continued to be focused on sustainability, community engagement, and so on. Volunteer hours rising nearly 80%. We continue to support the government's Strive and Rise Programme.
We also contributed to improving digital literacy through ongoing AI workshops and also participated in anti-fraud detection and education to the community at large, including other sustainable finance and also energy efficiency initiatives and so on. Our efforts have been recognized with an MSCI AA ESG rating for the fifth year. Looking ahead into the. Coming months of 2025, I think short-term challenges aside, we saw a lot of silver linings in terms of boom in capital markets, creating personal wealth effects and improving consumer sentiment. We saw mega events like concerts and football matches currently underway, bringing goodwill and reviving tourism. We saw AI continue to drive enterprise transformation in both public and private sectors. Specifically to HKT, the recent enhancement and strengthening of the balance sheet and also the lower highball alleviate the interest outflow. All this helped positive growth in terms of the AFF.
Of course, just now we talked at length in terms of the advent of AI, how this helped our organizational agility, helped our competitive differentiation, and sustained industry leadership. Overall, we continue to support Hong Kong strive to be a leading tech and innovation hub, and we are confident of the business growth and therefore the dividend growth in the second half of the year. With that positive note, I will pass to Patrick to walk through the financials.
Thank you so much.
Patrick.
The first week of our key financial lines for the first six months of 2025, our AFF continued to deliver a solid growth of 3% year-on-year to $328 million. Both total revenue and service revenue reported a 4% growth to $2.22 billion and $2.09 billion, respectively.
The service revenue growth was driven by the robust demand for our local data service in the enterprise segment, as well as the continued growth in mobile service revenue from higher 5G adoption and also expansion of customer base. Our EBITDA for the period was up by 3% to $818 million, with margins stable at 37%. Our NPAT grew by 4% to $265 million. Now let's go into the segment performance, TSS segment first. From the chart on the right-hand side, you can see our local TSS revenue grew by 5% year-on-year, underpinned by the continued growth in local data and broadband revenues. Local data revenue achieved an 11% robust growth, attributable to the continued growing demand for our unique digital transformation solutions, utilizing the latest technologies incorporating 5G, AI, IoT, cybersecurity, and multi-cloud applications, etc., across diverse industries in our enterprise segment.
Also coupled with our 13% year-on-year growth in the China business. Our broadband service revenue registered another 3% year-on-year growth, driven by the increasing demand for our high-speed, high-bandwidth, ultra-low-latency, reliable fiber-to-the-home services. Our [FTTH] service customer base surged 141% growth year-on-year, spurred by the acceleration adoption of home smart devices and escalating bandwidth requirements from data-intensive activities such as video streaming and online gaming. As a result, local data service reported a solid 8% growth year-on-year. Now TV service remained resilient, with OTT customers growing by 17% year-on-year, overall local TSS revenue expanded by 5%. Our international business revenue grew steadily by 1% year-on-year, driven by the increased global data revenue and also growing demand for our Consul Connect services. Overall, total TSS revenue increased by 4% to $1.61 billion. TSS EBITDA grew 3% to $567 million, fueled by further operating efficiency improvement.
EBITDA margin was stable at 35.3% versus 35.6% for the last year. Now, let's turn to our mobile business. Showing on the chart, as you can see, mobile service revenue rose consecutively by 5% year-on-year to $537 million, underpinned by a 7% increase in roaming revenue, mainly contributed by an 11% growth in consumer outbound roaming. Secondly, further expansion of our postpaid customer base to 3.48 million, a net gain of 45,000 year-on-year, of which the 5G adoption momentum continued, with 5G base growing by 21%, reaching to 1.89 million, representing more than 54% of total postpaid customer base. There was also higher mobile wholesale revenue and growing demand for our enterprise solutions deploying 5G and IoT technologies. Postpaid exit ARPU was up to $193. Product sales grew by 3% to $130 million, steered by initial AI features of new handset model, despite generally weak consumption sentiment.
Total mobile EBITDA grew 5% year-on-year to $309 million, with mobile EBITDA margin stable at 46%. Let's have a closer look at our operating efficiency achieved. We attained an overall 4% OpEx savings, down from $257 million to $246 million, with OpEx to revenue ratio improving from 12.1% to 11.1%. This reflects our continuous efforts in streamlining business structures and reshaping business workflows via AI to achieve higher efficiency. This AI initiative generated remarkable productivity gains and cost savings for the company. Apart from OpEx, we also keep on exercising cautious control over our CapEx spend. You can see here our total CapEx for the first six months was lower to $138 million, representing a 3% year-on-year saving. CapEx to revenue ratio further improved from 6.6% to 6.2%.
Mobile CapEx registered a 4% saving to $46 million, reflecting the efficiency gain from the capacity upgrade and network maintenance following the completion of our HKT 5G Coverage. TSS CapEx was lowered by 2% to $84 million, with investments largely to support the growing demand for our unique integrated fixed mobile solutions for enterprise customers. Next is AFF. The EBITDA down to CapEx size had just been covered. On the CAC license fee, which was dropped by 4% to $88 million, mainly due to lower CAC as a result of improved sales channel efficiency. Payment for right-of-use assets also edged down by 3%. These savings were partly offset by the higher fulfillment costs to support our growing base of consumer and enterprise customers. Operating AFF before tax, net finance costs grew notably by 8% year-on-year to $468 million.
Benefiting from the lower cost of finance linked to HIBOR and also the successful deleveraging done last year, payment for finance costs decreased by 14% to $98 million. Tax payment was stable at $25 million, together with the addition of working capital requirements to mainly finance the enterprise project delivery, which brings positive net cash flow upon completion. Overall, AFF for the first six months of 2025 grew 3% year-on-year to $328 million, translated into an income distribution of $33.8 per SSU. Income statement. For the P&L, we have covered from revenue to EBITDA lines. Depreciation and amortization slightly increased to $354 million, of which depreciation decreased, reflecting our continued effort in managing down CapEx in recent years, but amortization increase attributable to higher fulfillment costs incurred for the enterprise projects.
Our P&L costs decreased significantly by 19% to $130 million, driven by lower market interest rate coupled with reduction in borrowings. Income tax expense increased to $53 million as a result of higher profit level, with effective tax rate steady at around 15%. Profit for the period increased by 15% to $295 million. The NPAT attributable to the SSU holders grew by 4% to $265 million, after the sharing of MI. Turning to our year-end position, our total gross debt at the end of June was $5.57 billion, as compared to $5.94 billion last year. Corresponding gross debt to EBITDA ratio improved to 3.11 times. The lower debt level was due to the successful completion of deleveraging at last year-end. As of today, we have around $2.3 billion total liquidity, including undrawn banking facilities of around $2.05 billion and also $250 million cash on hand.
We continue to carry an investment-grade rating at BBB or [Aa2]. Our current proportion of fixed to floating rate debt is approximately 60 - 40, more based on fixed interest rate to counteract the adverse impact from the interest rate fluctuation. Our effective interest rate dropped below 4% to 3.96%. The average debt maturity is now approximately 3.2 years, no imminent need for refinancing this year. There is $750 million U.S. dollar bond due in July next year, but as mentioned, we have around $2.3 billion liquidity on hand, sufficient enough to redeem the bond when they become mature. We will keep monitoring the market situation and minimize the interest growth costs going forward. This ends my presentation. Thank you.
Thank you. We'll open up the floor for questions.
The first question is, what is the guidance for interest costs in the second half, given that the impact of lower highball only started in May?
Overall, I think for the first half, we did record a savings in terms of interest cost of around 19%. Assuming there is no significant spike in terms of highball again in Q3 and Q4, we do expect that full-year interest savings will be at least 25% - 30%.
Yep. Thank you. The next question is, will enterprise growth of 11% be maintained for the full year 2025? 11% maintained for full year 2025?
I think overall, we have already secured a very significant and healthy pipeline. Given the fact that the recent, and in fact, it is the release of data today, seem to point to a very, some recovery in terms of the Hong Kong economy.
As I can read it here from this headline, "Hong Kong grows fastest since 2023 as spending stabilized." Therefore, I do see that we can be a little bit more optimistic in terms of the enterprise growth, especially with the AI drive. I think 10% - 12% is what we will be targeting for full year.
Thank you. The next question is, do you expect the strong roaming revenue growth to be maintained for the remainder of 2025?
Again, I think the answer is positive because if you look at the roaming growth in the past 24 months, the driver is mostly coming from consumer outbound revenue. For. The corporate side, the commercial. Roaming revenue, the recovery as compared to 2019 is only 70%.
With the recent pickup in terms of activities in the capital markets, we have also heard news that some of the iBankers and people from private equity are acquiring property again in Hong Kong. We will be optimistic that the commercial roaming revenue will also increase. Also, with the mega events, with the football and a lot of the concerts and so on, we do expect that inbound roaming can also improve. Therefore, a very long answer to the question is that, yes, we do expect that the growth can be maintained in terms of roaming revenue.
Thank you. The next question is a two-part question. Let me ask the first question first. With HIBOR dropping so low, is it possible for us to further capitalize on this through refinancing into more, I think, means floating debt?
I think right now we are 60% fixed, 40% floating right now.
All of these, the 60% are bonds and so on. Obviously, the floating debt benefits very strongly from the low HIBOR because we are basically rolling one-month HIBOR. Honestly, the rate is below, the cost is below 2%. Obviously, to the extent possible, we would be leveraging on this into more floating, taking advantage of this, but also maintaining the balance in order to be prudent in case there is a sudden spike. What's the second question?
The second question is around working capital. We noticed that there was some seasonal movement in working capital. What is the outlook for the second half on that part?
I think this is the part that we would need to manage. Normally, for the first half, working capital requirement would be higher because we have not been able to maybe collect the receivables.
Also, in terms of completion of a lot of the enterprise projects, it's all funding required rather than collection. We do expect that we will be, we need to, in fact, we need to manage. Normally, second half working capital would be better. With that, we are hopeful that that would be positive. The next question is whether there's any guidance for full-year growth in AFF. Must be better than 3. Is that satisfying? Must be better than 3%. Currently, we are, I think, third half is only 2.7. It's 2.7%, 3%. With all the positive factors that we have talked about, I am optimistic that we will be better than 3.
That was the final question. Thank you, everybody. That ends our webcast. Thank you.
Thank you.
Thank you.