(22 March 2017, Hong Kong) – Comba Telecom Systems Holdings Limited (“Comba Telecom” or “the Group,” Hong Kong stock code: 2342), a leading global wireless solutions provider, has today announced its audited annual results for the year ended 31 December 2016.
In 2016, due to reduced capital spending by most mobile network operators as a result of rapid 4G penetration and deceleration in macro-economic growth, the Group’s revenue decreased by 12.1% to HK$5,954 million and operating profit decreased by 23.9% to HK$302 million. Nonetheless, gross profit margin increased by 0.7 percentage point to 29.0%, mainly due to higher efficiency by successfully optimizing operations and manufacturing processes coupled with growing revenue contributions from some high-end products. The Board has recommended the payment of a final dividend of HK$0.8 cents per ordinary share; hence the annual dividend payout ratio will be 36.9%.
Mr. Zhang Yuejun, Vice Chairman and President of Comba Telecom, said, “The declining overall market demand for network build-outs with the popularization of 4G networks has affected the Group's earnings to a certain extent. However, the trend of more users migrating to 4G has increased the focus of mobile network operators on densifying networks to manage rising mobile data traffic consumption, thus providing new development opportunities for our wireless access products. At the same time, the rapid development of mobile communications will further accelerate the establishment of the 5G system. In order to master the advanced technologies of the industry, Comba Telecom will strive for innovation and enhance the competitiveness of the Group. Moreover, the Group is actively carrying out relevant research and development activities, so as to grasp the opportunities arising from the digital process of mobile communications.”
During the year, revenue generated from China Mobile Group decreased by 16.9% to HK$1,756 million, accounting for 29.5% of the Group’s revenue. Revenue from China Unicom Group decreased by 11.4% to HK$1,537 million, accounting for 25.8% of the Group’s revenue. Revenue from China Telecom Group decreased by 25.3% to HK$1,178 million, accounting for 19.8% of the Group’s revenue. Revenue from other customers, including mainly China Tower Corporation Limited (“China Tower”) and specialized government and enterprise network customers, increased by 86.3% to HK$394 million and represented 6.6% of the Group’s revenue. The Group expects revenue contributions from China Tower and specialized network customers to gradually increase in the future. On the international front, although revenue contributions from international customers declined, revenue generated by core equipment manufacturers increased. Nonetheless, revenue generated from international customers and core equipment manufacturers slightly decreased by 4% to HK$1,089 million, accounting for 18.3% of the Group’s revenue in 2016.
Due to declining overall market demand as 4G network build-outs were basically completed, revenue generated from the antennas and subsystems business decreased by 19.1% to HK$2,502 million, representing 42% of the Group’s revenue. Revenue generated from the wireless enhancement business decreased by 11.9% to HK$885 million, accounting for 14.9% of the Group’s revenue. Driven by the growth of Small Cell and microwave businesses, revenue generated from the wireless access and transmission business increased by 37.6% to HK$393 million, accounting for 6.6% of the Group’s revenue. Revenue from services dropped by 9% to HK$2,174 million, accounting for 36.5% of the Group’s revenue.
In respect of the public network business for operators, Comba Telecom has been named as a global Tier 1 Supplier for five consecutive years since 2011, demonstrating a long-established leading position in the antenna market. During the year, Small Cell products have recorded significant growth, and have won several tenders in a number of provinces and cities. Looking ahead, the Group will continue to compete for market share in the construction of in-building distribution systems, advance the Group’s R&D and innovation by consolidating resources so as to expand and improve the business of this segment, and extend Comba Telecom’s advantages to 5G technology.
As for the specialized network business, the Group has made great progress in the railway communication business which laid a solid foundation for its railway business to achieve breakthroughs and extend specialized network business to cover other industries. Meanwhile, the Group is developing maritime VSAT (Very Small Aperture Terminal) communication and internet-of-vessels businesses. Going forward, the Group will take a stepwise approach to add a new dimension to its product portfolio, including the offering of new self-developed satellite solutions as it strives to gain market share. The Group is making great efforts to develop specialized network customers, and provide customized and more extensive professional services based on their different usage scenarios. Besides, the Group is also developing the integration of information and communication technology (ICT) business at full strength, striving to continuously improve its ICT application service capabilities pinpointing particularly the needs of specialized network customers.
With regards to the international business, the Group operates in China, North and South America, Europe, the Middle East, Southeast Asia and other regions around the globe. Looking ahead, the Group will be strengthening cooperation with the world's leading telecommunications equipment service providers, and will be launching innovative solutions on a continuous basis to satisfy the demand from customers generated by the industrial transformation and upgrade process, which will facilitate the development of the Group's position in the international market. In addition, the Group has announced the acquisition of 51% equity interest in ETL Public Company Ltd, which is the third largest state-owned operator in Laos. Comba Telecom is thereby stepping into the Laos’ wireless telecommunications network market.
Mr. Tony TL Fok, Chairman of Comba Telecom, concluded, “More corporations are attempting to include different developmental elements like mobile Internet, IoT and cloud computing into their businesses to enhance competitiveness. Consequently, the telecommunication system is gradually evolving into a new ICT system. At the same time, the increasing proliferation of mobile data service plans along with improving network coverage and capabilities are stimulating the development of the mobile telecommunications industry. Looking ahead, Comba Telecom will therefore seek to gain an in-depth understanding of the needs of customers and create significant value for them by offering quality products, comprehensive services and innovative technologies, as well as through its own transformation and development.”