Earnings Call: H1 2020

Aug 5, 2020

Hello, and welcome to the HKT 2020 interim results presentation. Attending today are Susanna Hui, Group MD, and Evan Wong, Group CFO. We will start with a short presentation followed by Q&A. With that, I would like to turn over to Susanna. Thank you for watching our interim result announcement online. I guess nowadays no company can discuss their performance without touching on COVID-19. So I would like to start our presentation with the response taken by HKT to COVID-19. I guess our response is threefold. Firstly, to safeguard our employees. Secondly, to continue providing critical services to our customers. Finally, to support the community at large. In terms of safeguarding the employees, a number of initiatives have been enacted, which includes obviously work from home arrangement, flexible working arrangements for office staff, and also implementing strict safety protocols for field staff as well as frontline. To not just protect our employees, but also to protect the customers. For retail shops, we have suspended operation of some shops in the high-risk area, and we have shortened the opening hours of others. We have also undertaken more frequent cleaning and disinfection of premises, and equip all staff with the necessary protective equipment, including masks, sanitizers, et cetera. For the customers, we provide free additional mobile data and free entertainment channels to our mobile customers. To support those who work from home, we speed up installation and upgrade on free to go plan as well. For enterprises, we continue to support remote office needs and help expand the customer service resources and include providing them free cloud retention, IT support and Work Anywhere packs. We have also taken care of the SMEs. We played an active role in terms of their digitalization by providing with cloud and business development services and tools to continue their business. With the closure of some of our physical stores, we remain connected to our customers by accelerating the digital engagement via live chats, WhatsApp and other social media channels. For the community, we have quickly supported the government in terms of providing telecom services for the quarantine camps and quarantine centers. We also supported home study and rolled out tablets loan scheme for the underprivileged students so that they can continue studying at home. We provide handsets and free mobile data to the elderly nursing homes so that the elderlies can stay connected. Recently, we have launched the SIM-for-love campaign for mobile data donation to the underprivileged students, the elderly, unemployed, as well as the homeless. The second slide shows the impact of the COVID-19 on our business. Most noticeable was of course the roaming revenue, as travel in and out of Hong Kong was being shut down for most of the time during the first half. There was of course also a marked slowdown in enterprise ICT projects, as well as line cancellation and potential bad debts from the business closures and consolidation, particularly in the hard hit sectors such as retail, F&B, hotels, hospitality and so on. Nevertheless, we are able to absorb these shock waves with relative resilience. With challenges, we also see opportunities. As COVID-19 demonstrated our critical role in supporting the government, community, business, and individuals. Customers turn to us for reliable broadband services to accommodate the upsurge in bandwidth requirements. We also see enterprises having an increased demand for digital and business continuity solutions, as well as of course marked increase in terms of critical turnkey projects in the government and public sector. Internally, we take an active role in terms of implementing stringent measures to control cost and preserve cash flow, as we limit the discretionary spending on publicity and promotion. Also, we continue to rationalize and consolidate the retail shop portfolio, a process which we started some time ago. At the same time, we continue to boost our digital channels to remain connected to our customers. All these operational efficiencies arising out of this help counteract the subdued business activity and sentiment in the first half. In anticipation of a prolonged period of economic depression, and with the recent resurgence of new infection cases locally, we will of course remain OPEX focused and continuously adjust the cost structure in relation to demand. Let's look at some high level numbers. You can see here that our business was relatively insulated from the COVID-19 and remained relatively resilient. Benefiting, of course, from the scale and diversity of our business operations. Both revenue and EBITDA declined only marginally, while AFF was stable because of the stringent cost on control and the disciplined CapEx that were put in place. As a result, the board has recommended a distribution of 30.1 Hong Kong cents per share, which implies a yield of around 6%. This represents a stable and significant return for our shareholders. This next slide here is to show the well-balanced business portfolio that HKT has. You can see here that broadband is one of our largest revenue generators, and during the period, it's a beneficiary from the fact that people spend more time at home. Revenue grew by 2%, marking the continuous growth for the 13th year. Mobile services, of course, is another important segment representing 25% of our business. But you can see here that local mobile revenue representing 23% was kept relatively steady during the period, with the initial benefits from 5G offsetting the continued price pressure in the lower end of the market. Also, we previously talked about the decline in terms of roaming. You can see here that the roaming revenue declined by 48% year-on-year, but it represents only a small portion of the total business revenue. One area I would like to quickly highlight is, of course, the international segment. You can see here that it is 27% of the total revenue as a whole. It represents a significant and integral part of our business. For the first half, international business recorded a 9% growth in revenue, reflecting the increased demand for connectivity services globally. Especially amidst the business meetings held online during the pandemic, we expect that this trend will continue as the whole world settles into the new norm. Locally, we continue to record net gains in broadband customers during the year, with our customer base exceeding 1.45 million by the end of June. In fact, for the single month of July alone, we saw encouraging net gains of customers of more than 1,000 for a single month, which is the highest since the year 2018. High speed becomes a must-have. It is no longer a nice to have, as evident from the fact that there was an 8% growth in terms of the fiber to the home customers. Obviously, as people spend more time at home, the different family members staying at home to study, to work, to get entertained. We remain successful in terms of upselling the smart living gadgets and also the Wi-Fi solutions. You can see here that the customers now reach 300,000 and representing a penetration rate of more than 20%. On average, this represents an ARPU uplift of more than HKD 80. Of course, extensive use of data analytics help customize our service proposition as well and help manage churn at a steady 0.8%, despite the continued severe competition that we see. The next slide shows the surge in network traffic on our broadband network during the first half. Interesting to note that the broadband traffic increased by more than 30% on average for the six months from February to July. Peak usage increased notably in the afternoon and in evenings. The highest we have seen is close to even 50%, and that happened actually in April this year. On the other hand, in terms of the mobile traffic, the increase is only 10%. So that highlights the importance of the broadband network and the critical infrastructure. HKT with our fully fiber and fully redundant infrastructure, we have better network nodes and better fiber path diversity, also supported by our international network for full international bandwidth. This is unparalleled. We can handle all of our customer traffic, be it high resolution streaming or video conferencing with overseas parties. We are proud to say that our customers will not experience any network outages or material slowdown in network speed. This explains why the residential and business customers highly value our broadband services. Turning to the enterprises, as we have said before, obviously, there are some headwind. In terms of enterprise focus, we continue to ensure business continuity and also help the enterprises reach their customers digitally. As they turn to our comprehensive suite of digital solutions, this slide here tries to show the different solutions that we provide. For large enterprises, there are a number of tools to facilitate their staff working from home, including the cloud desktop applications, including the remote VPN access. We even help the big corporates to deploy thermal detection solutions to ensure that their premises are safe for customers and employees. We have not forgotten about the needs of the SMEs. We are making the business tools available to them as well so that they can continue doing business in this pandemic, such as online shops, digital payments, gateway. On that aspect, we have also leveraged on the government's Distance Business Programme by the Innovation and Technology Bureau, which is a scheme to provide funding to enterprises to adopt IT solutions during the epidemic. We have already successfully supported SMEs and enterprises in obtaining approval for over 150 projects. To sum up, although we saw subdued business activity, project delays, and even potential bad debts as business fold up and consolidate, we also see upside from the government and large corporates seeking higher bandwidth and increasing demand for digital solutions. This has a compensating effect, resulting in a 3% revenue growth for the commercial sector during the period when the economy is contracting significantly. Turning to mobile, competition remains severe, particular in the mass market. Consumers, of course, in this environment, are very price sensitive. Nevertheless, we have been able to maintain a steady postpaid customer base at 3.25 million. Notably, the 1O1O customers, our premium segment, grew by 8% year-on-year, reflecting the customer demand for premium network and services. Churn improved further to 0.9%, benefiting, of course, from our brand as well as our effective retention efforts through The Club, our loyalty platform. As the slide here shows, roaming and prepaid revenue dropped, and this is inevitable, but it represents only below 10%. It is actually 8% of our mobile services revenue. It is a drop, but as we have said before, in the previous slide, we have shown that this is only a small part, a small component in the bigger business portfolio that we have. You can see here that the roaming decline led to a drop in terms of postpaid ARPU from HKD 198 to HKD 181. Excluding roaming, local services component of the ARPU was very steady. This is partly reflecting the upside from the initial uptake of the 5G plans as well, which help to moderate the impact of the price pressure in the lower end. If we can turn to the 5G take-up. As of July, we are pleased to report that initial take-up of the 5G has been over 100,000 mark, and this represents around 4% of our postpaid base of 1O1O and CSL. For these 5G uptake, these customers command a plan uplift of around HKD 70 on average. There is some upside there in terms of the 5G growth. Of course, in addition to the quality of our 5G network, what we try to do in terms of the consumer segment of the 5G is that we want to differentiate the user experience with exclusive applications and content. Despite the suspension of the live sports content, we continue to provide our MOOV 24-bit music service. We have launched our CSL 5G AR Lens, which enable our customers to basically get those coupons for shopping. In gaming and esports as well, we believe that there still exists extensive opportunities. On the B2B side, 5G allows us to offer increased functionality within our business solutions, and we are exploring with different industry-specific application in terms of deployment and further rollout. One successful example is in the property management industry, PropTech. We have partnered with JLL, one of the largest property management companies in the world, to install IoT sensors in more than 200 properties, which would allow them to monitor the buildings to improve the operation as well as the occupant experience. We have extended these 5G rollout and deployment applications to green buildings as well. Another high potential industry vertical is the healthcare vertical. We are in discussion with a number of hospitals in terms of providing and enabling medical training remote mentoring and consultation, which is particularly crucial to the healthcare industry in the current time of COVID-19. Turning to the 5G network, I am sure that you all know that we launched our 5G network and services on April 1st as planned, amid the widespread anti-epidemic measures that were put in place. This was indeed a testament to the experience and dedication of our engineering team. In terms of further rollout of the 5G network, we are on course to reach the 90% target coverage by the end of the third quarter in order to coincide with the prevalence and the availability and the launch of a wider range of 5G handsets. Obviously, including the latest iPhone, which may be launched in October. We also have plans to progressively expand coverage to key indoor locations and transportation nodes, such as MTR and more, and the key shopping malls. The last section that I would like to share with you is our digital business. Early on, I talked about digital engagement, The Club. We are pleased to report here that our loyalty platform continues to grow its membership. We now have a base of over 3 million members, which include not just HKT customers, but also non-HKT customers as well. This is matched by an expansion in terms of the coalition partners and redemption partners to over 860. Going forward, we have plans to integrate the loyalty platform together with our e-commerce platform to provide a unique user experience to our customers as well. In the initial phase, and continuously so, The Club has been instrumental in retaining our customers, which was evident during the first half, as you can see, that our churn rate was kept. In fact, some of the business lines actually recorded improvement in churn rate as well. This is indeed also a more cost-effective way to acquire new customers. This is especially more important given the reduced retail traffic due to the current environment. By combining the ability to directly engage with members digitally and the extensive analytics to derive insights of our customer behavior, we believe that HKT has the potential to capture a share of the customer wallet beyond our core telco spending and expand into new digital verticals. Some of the examples are, of course, fintech. In terms of the fintech area, we leverage on our Tap & Go mobile wallet, which continue to record increase in the users. It grew by 26% to 2.6 million accounts. On this base, we are developing more digital financial services applications that can be seamlessly integrated into existing sales channels and platforms. During the period, we launched the HKT Flexi, a consumer financing service, as well as HEYPARK, a platform for F&B merchants to receive orders and payments digitally. We are also very excited in terms of looking forward to the impending launch of the virtual bank called Mox, which is a partnership with Standard Chartered Bank and Ctrip. Mox will be providing new and exciting features to the Hong Kong market, which of course, will add to the diverse suite of services to our HKT customer base as well. The other promising vertical that we will place our bet on is the health tech space. Last week, we announced the launch of our DrGo services, which is the most comprehensive end-to-end telemedicine service in Hong Kong. It allows users a one-stop shop experience, from doctor appointment to online remote consultation with a doctor, and to prescription, and ultimately, including the delivery of the prescription right to the door of the customers. We believe that with the trust brand that we have, HKT is uniquely positioned in this space. Of course, with the expertise in technology and with data and communication, we will be able to contribute in providing this end-to-end solution and platform to the customers. In the first phase, we are partnering with Gleneagles Hospital, and we have plans to expand the access to more private hospital, other medical networks, and potentially even to public hospitals. Other than B2C, we do also believe that there exists B2B opportunities as well, as we have touched on earlier. There are opportunities in terms of deploying our 5G solutions, remote monitoring, for instance, clinical training with universities in the operating theater, providing the 5G deployment as well. Ultimately, we think that there are a lot of opportunity with upside potential in this particular ecosystem. Finally, as we look forward, although the economic outlook is uncertain with the upsurge of the local infection cases, but we will continue to focus in terms of fortifying the strength and preserve the profitability of our core business areas. We remain on course with the further rollout of our 5G network for territory-wide coverage and with a growing ecosystem of application and handsets in the second half. We are confident that 5G, in the medium term, will provide a growth impetus for HKT. Finally, riding on the growing membership base of The Club, we have started to diversify into new business lines, especially those relevant to COVID-19, such as health tech and e-commerce. We believe that there will be substantial value creation from these new digital services in the longer term. With that, I will pass to Evan to share more on the financial performance. Thank you. Thank you, Susanna. Let's take a look at our key financial lines for the first half of 2020. First, on AFF, the most critical financial KPI of HKT. Under the current tough market condition, we are pleased to report that we have been able to maintain our AFF at the level of $292 million US dollar, being generally flat on a year-on-year basis, thanks to our effort in tight control over our both OPEX and CapEx spendings. As such, we are able to maintain a stable distribution to our equity holders during this difficult economic condition. Our total service revenue has slightly declined by 1% to $1.748 billion US dollar, mainly reflecting the drop of the roaming revenue under the COVID-19 condition. If to include the sales of mobile handsets, our total revenue for the period has dropped by 3% to $1.872 billion US dollar. The decline in mobile handset sales was generally due to the weak market consumer sentiment. Our EBITDA amount has reduced to $711 million US dollar, while our overall EBITDA margin has been kept steady at 38%. With the slight decline of the EBITDA amount, our NPAT for the period has dropped accordingly to $243 million US dollar. Looking into the details of our TSS segment. Our total TSS revenue has reported a growth of 2% to $1.33 billion US dollar, in which our broadband revenue has grown by 2% to $298 million US dollar. The extensive stay at home and work from home arrangement in the society has driven the demand for our high-quality broadband network services as well as home Wi-Fi solutions. By which we saw a continuous growth of 8% on our fiber to the home broadband subscriber on a year-on-year basis. On local data, the total revenue has also reported a growth of 3% to $176 million US dollar. The growth was supported by the increasing demand for higher bandwidth requirement as well as the reliable connectivity and managed cloud services in order to support business continuity under the COVID-19 condition. Certain infrastructure and ad hoc project from the public sector has also helped offsetting the slowdown in some ICT projects from the private side. On international business, the total revenue for the period has increased by 9% to $483 million US dollar. The increase was mainly contributed by the strong growth of international voice wholesale business for the period, as well as the solid demand for the international data connectivity. On local telephony business, the revenue has declined to $196 million US dollar for the first half of 2020, reflecting the continuous trend of conversion of our local telephony customers to our other broadband and mobile product offerings, as well as the reduction of business telephone lines caused by the downsizing of certain enterprise customer. The other revenue in TSS has declined to $179 million US dollar, mainly due to the reduced sales of CPE equipment as a result of more cautious spending and delayed project by certain customers. As a whole, our TSS EBITDA amount has declined slightly by 1% to $487 million US dollar. As the profit margin brought by the increased voice wholesale business was comparatively lower than our other revenue categories. We have maintained the EBITDA margin for TSS at a stable level of 37%. Let's turn to our mobile business. Our total mobile service revenue for the period was HKD 458 million. It declined by 8% on a year-on-year basis. The drop in service revenue was basically all due to the reduction in roaming revenue due to the COVID-19 global travel restriction since early this year. If to exclude this, our core local mobile service revenue has indeed remained very stable on a year-on-year basis, with our postpaid customer pool has actually expanded to 3.25 million by end of June. Reflecting the initial benefits from customers upgrading to our 5G plans despite the continued price competition in the lower-end market. With the impact of the roaming revenue, our postpaid ARPU by end of June has also declined slightly to HKD 181. But at the same time, if to only looking into the local portion of our postpaid ARPU, the amount has in fact remained very stable on a year-on-year basis. On mobile product sales, the total revenue for the period was HKD 124 million, representing around a 28% decline on a year-on-year basis. This, as I mentioned earlier, is due to the overall weak consumer market sentiment. But because these handset sales actually are just carrying very nominal margin to us, the reduced revenue contribution mix from the sales of mobile handsets has actually pushed the blended EBITDA margin of our mobile segment from 42% to 45%. Again, affected by the roaming revenue decline, our overall mobile EBITDA amount for the period was HKD 264 million. It declined by 7% on a year-on-year basis. If to exclude the mobile handset sales, our mobile service EBITDA margin has still improved by one percentage point to 58%, reflecting our benefit obtained from the cautious cost control over the OpEx spending and our retail shop rationalization strategy. Let's have a closer look at the operating expenses. Under the current tough market and operation condition, we have continued to place focus on maximizing our operation efficiencies. As such, in the first half of 2020, we have achieved an overall OpEx saving by 13%, with the reduced total OpEx amount to HKD 272 million. Improvement in operation efficiency has been achieved on both mobile and TSS center. Key initiatives include the gradual transition to digital platform in respect to our marketing, promotion, and operation functions, as well as the enhancing sales channel efficiency through the retail shop consolidation process. As a result, even during the period, we continue to invest in certain new business initiatives in respect to our digital eco-environment, such as e-commerce, fintech, and healthtech platforms. Our overall OpEx to revenue ratio still has improved from the level of 16.1% in the first half of 2019 to 14.5% in this first half. Apart from OpEx, we are also exercising tightened control over our CapEx spending. As you can see, our total CapEx spend for the first half of 2020 has declined by 10% to HKD 154 million. On mobile side, while we have launched our 5G services and network since the 1st of April, we have still been able to contain the mobile CapEx amount at the level of HKD 59 million. Thanks to our effort of managing the related CapEx investment by spreading over the recent years. On TSS side, the total CapEx spending amount has reduced by 15% to $89 million. This has reflected our continuous investment in the local fiber network over the past year, has come to a more mature level, as well as our cautious management and control over certain non-time critical CapEx item, given the current market condition. As such, our overall CapEx to revenue ratio has also declined from the level of 8.8% in last year to 8.2% in this year, which is still well contained within our 10% guidance. Next on the details of our AFF. We have already discussed about the EBITDA performance as well as the savings in our capital expenditure. The total customer acquisition cost and license fee payment for the period has slightly increased by $2 million, mainly reflecting the incremental 5G license fee payment made during the first half. Our payment for rental costs, which is the payment for right of use asset, has also declined by 10% to $98 million, mainly reflecting the benefit we have achieved from our retail shop consolidation, as well as the result of the general decline in the market rental rate. As such, our AFF before tax finance costs and changes in working capital has been kept steady at $373 million. The cash payment for finance costs for the period has also declined to $48 million, mainly benefiting from the lower HIBOR interest rate during the period, as well as the maturity of certain of our swap contracts during the first half. The cash payment for tax for the period has also reduced to $19 million, reflecting the increased tax incentive that we have enjoyed from our investment in digital system and product development. After the changes in working capital of $40 million, our AFF for the period has been maintained steady at $292 million, translating to an interim distribution of 38.1 Hong Kong cents per SSU in issue. On our consolidated income statement, again, we have gone through from the revenue to OPEX and EBITDA. On the depreciation and amortization expenses, the amount has increased slightly by 5% to $319 million, mainly reflecting the increased amortization charge on the 5G license as well as our investment in digital business and operation platform. The overall effective tax rate for the period has been kept steady at 18%, and with the decline of our EBITDA amount, our NPAT for the period has reported a drop by 12% to $243 million. Next, on our viewing position, our total gross debt outstanding by end of June was around $5.3 billion, with the corresponding gross debt to EBITDA ratio at 3.29 times. Currently, we have a total liquidities on hand of around $1.386 billion, including over $1 billion undrawn facilities. We continue to carry an investment-grade credit rating at BBB/Baa2. On our debt maturity profile. In September last year, we have issued a 10-year, $500 million bond for the purpose of refinancing certain of our outstanding bank facilities. After that refinancing, we don't have any further immediate refinancing need for the remaining of 2020. Our current floating rate portion of debt is around 35%, and we will continue to monitor the market situation closely so as to fine-tune our fixed to floating rate profile from time to time. Our overall effective interest rate for the first half was 3.2%. With this, it ends my financial review session. Thank you. The first question, please provide the CapEx guidance for 2020 and the CapEx trend for 2021. Kevin? Yeah. Thanks for the questions. As you can see, in the first half of this year, we have exercised quite cautious control over our CapEx spending under the current market condition. As we have explained to our investor all along, actually, we have tried to spread over our key infrastructure CapEx investment over the years. We do not foresee any particular spike in any period in the past and in the future. Of course, as I mentioned, we have controlled some non-time-critical items during the current period, and that may be reconsidered once the market condition turns better with our increase in revenue being reported. As a whole, we are still fairly confident that we will maintain within our CapEx guidance of 10%. In the past couple of years, as you can see, our actual CapEx to revenue ratio has been even kept below 9%. I think that is an appropriate level that we are working on so as to contain our AFF distribution. Yeah, I think if I can supplement. Basically, if you look at the mobile CapEx, I think even with the 5G, there is no significant increase in terms of the mobile CapEx. We have already factored in the continuous rollout of our 5G network to achieve the 90% target. That has been included in our CapEx guidance. If you look at the first half results, the CapEx for the fixed side, for the TSS side, was significantly lower. There are several reasons to that. Of course, some are deferral of the non-critical, non-time-sensitive CapEx. The other is in fact also in response to the slower enterprise ICT projects. A lot of the TSS CapEx is demand driven. In terms of lower demand, lower revenue, therefore, we do not need to spend the CapEx. I think in one of my slides in the presentation, I talk about the broadband network. I think that one of the messages that I want to share and get across is that even with the upsurge of the traffic, we have enough capacity and headroom in terms of accommodating. Obviously, the peak traffic on the broadband side. We do not expect that there will be a lot of incremental CapEx on the fixed side. Therefore, what Evan said just now in terms of the guidance, I think we are relatively comfortable. The next question is, what is your expected take-up rate for 5G by the end of 2020? Originally, we have quite high hopes. I must share with you that I have been basically revising down the expected take-up rate. Right now, we are at around 4%, and we are in the beginning of August. We have originally planned for a September launch of one of the important iPhones, which recently, I think a lot of you have read from news that it will basically be postponed in terms of the launch. The impact in terms of accelerating the take-up might also be affected. From a very conservative estimation, I would think that the take-up rate would be, say, around 6%-8%, depending on, obviously, the sentiment, depending on the prevalence and the availability of the 5G handsets, and so on. Because of all the social distancing and all that, we have put on hold a lot of the marketing campaigns, which would, of course, affect the pace of the take-up as well. Let's see. I can't really have a very firm answer, but we are looking at 6%-8%. The next question is a two-part question. The first part is why was there a high increase of new broadband subs in July, and do you think this is sustainable? The second part is, what is the average 5G ARPU? I think in terms of the broadband subs, as I have explained, with more people staying at home longer, they have to stay at home not just to work, not just to watch TV. The different family members have different needs. They have to stay at home for even study. I think the government has already announced that even September starts, basically, the schools will continue with the online teaching, so everybody will stay at home. A lot of the time, in the past, we have seen keen competition, and some operators have been using price as a proposition. But I think from the experience that we have seen in the first half, we do see that people value the fiber and the quality of the network a lot more. Because, as I said, it is not nice to have anymore in terms of a good fiber connection. It is a must-have, especially different members in the family are using the broadband for different purposes. So we do see a lot of new adds already translating into revenue, starting from Q2. Actually, Q1 is a bit difficult because of the Chinese New Year and then the outbreak. So people are very cautious in terms of letting the technicians to go into your places. Starting from Q2, we already speed up the installation to accommodate the request. Again, in July, as basically the resurgence of these local new cases. Again, people believe that the broadband at home is very important. So we see a very significant increase, a high uptick in terms of new additions. I think this trend will obviously be able to continue in the second half, given the fact that, as the new norm, I don't think that anybody would be dropping the using the broadband. I think as a lot of business will be cutting down the travel and so on, it will still be Zoom at different time of the hour when you are at home. So the need is still there. As to the second question on the 5G ARPU. As I said, for those who sign up, average ARPU uplift is around HKD 70, some from 50 to actually 100. So average is around 70. The next question is, how much further upside do you expect in international services, or does the trend in the first half already reflect most of the increased demand from work from home and other COVID-19 measures? As far as international services is concerned, there are basically two parts. One is the voice side. We see an upsurge in terms of the voice traffic globally with all the lockdowns and the travel ban and so on. I think this trend will continue in the second half given there is this potential of a second wave, third wave happening as we speak all over the world. The second component, of course, is the data side. Again, I don't see any easy relaxation of the travel restrictions anytime soon in the second half. So I think that it will be sustainable into H2. Let's see. The next question is, I understand that Huawei is a major supplier to HKT. What is our vendor strategy under the current situation? Yes. I think in terms of the mobile radio network, we have selected Huawei as our 5G vendor. In fact, for the 4G, it is also Huawei. On the mobile side, yes, I think Huawei will continue to be our major supplier, as in a lot of the global operators as well. But in terms of the other fixed network, we have other vendors. We would continue with this multi-vendor strategy in the overall portfolio. On the international side, it is also multi-vendor. I guess that answers your question. The next question is would management expect stable AFF distribution for the full year 2020? This is our current target, yes. That was the final question, and ends our results presentation. Thank you again. Thank you.