Seizes Opportunities Presented by Rollout of 4G LTE Network

Further Secures Large International Projects

Financial Highlights (unaudited)

(21 August 2014 － Hong Kong) － Comba Telecom Systems Holdings Limited (“Comba Telecom” or “the Group”, Hong Kong stock code: 2342), a global leading wireless solutions provider, today announced its unaudited interim results for the six months ended 30 June 2014.

In the first half of 2014, the gradual recovery of global economy and the 4G network deployment by mobile network operators after the granting of 4G LTE licenses in China last year, led to a substantial increase of revenue from the base station antennas and services. As a result, the Group’s revenue surged by 39.8% to HK$3,024 million compared to the same period last year. Gross profit soared by 54.4% to HK$852 million and gross profit margin increased to 28.2%, mainly due to the adjustment of product mix and the improved contribution from products with higher gross profit margins. Benefited from the strong growth in its antennas and services business, the improvement of gross profit margin, the economies of scale and effective cost control measures, the Group successfully swung from loss to a profit, recording a net profit of HK$72.305 million. The board recommended the payment of an interim dividend of HK$1.2 cents per share and proposed a bonus issue to the shareholders whose names appear on the register of members of the Company on 15 October 2014 on the basis of one bonus shares for every 10 existing shares held by the Company.

Mr. Zhang Yuejun, Vice Chairman of Board of Directors and President of Comba Telecom, said, “While uncertainties remain in the external economic environment, the overall development of the global telecom industry, including the domestic market, is positive. In the era of big data, the use of mobile data is rapidly increasing in a sustainable way. Meanwhile, after the granting of 4G licenses in the PRC at the end of last year, domestic mobile network operators have increased the large-scale investment in 4G, significantly putting more efforts in mobile network deployment. After the product and business innovation and transformation lasting more than two years, the Group’s businesses have significantly improved, driving the growth of the 2014 interim results.”

Revenue from 3G and 4G mobile networks projects increased significantly to HK$1,950 million, accounting for 64.5% of the Group’s revenue. Revenues from China Mobile Group and China Unicom Group increased by 12.1% and 21.5% respectively to HK$1,323 million and HK$372 million. Revenue from China Telecom Group rocketed by 177.8% to HK$596 million. The Group successfully completed the wireless coverage projects for world-class stadiums, representing another milestone in its business. Attributable to the completion and inspection of large stadium projects and the rising demand from core equipment manufacturers for 4G products in China, revenue from international customers and core equipment manufacturers increased by 58.7% to HK$685 million, accounting for 22.7% of the Group’s revenue.

The proactive 4G network deployment by mobile network operators in the PRC led to a substantial increase in the demand for base station antennas. As a result, revenue generated from the antennas and subsystems business increased significantly by 90.4% to HK$1,356 million, accounting for 44.9% of the Group’s revenue. Due to the gradual recovery of the wireless enhancement market, the resumption of the bidding projects suspended last year, as well as the rising customers' demand for new generation wireless enhancement products, revenue generated from the wireless enhancement business increased by 4.0% to HK$579 million, accounting for 19.1% of the Group’s revenue. Revenue generated from the wireless access and transmission business decreased by 21.1% to HK$ 143 million, accounting for 4.7% of the Group’s revenue. The decline was mainly due to a lower demand as a result of a maturing market of WLAN products. However, the revenue from microwave transmission products and Small Cell system increased. Revenue from services increased by 32.8% to HK$946 million, accounting for 31.3% of the Group’s revenue.

Entering the 4G LTE era, operators have accelerated the deployment of 4G LTE networks. Major global mobile network operators consider Small Cell as an important model for 4G LTE network deployment. During the period, the 2G and 3G Small Cell was commercially launched in 13 provinces and cities, while the 4G Small Cell trial run was extended to 11 provinces and cities. Currently, the Group is also preparing for Small Cell tenders to generate greater economies of scale. The service and technical support provided by the Group with respect to Small Cell have been leading the industry. The Group is confident that the scale of the Small Cell business will significantly expand during the year.

The Group is spending great efforts on R&D and product innovation. During the period, R&D costs upon capitalization increased by 23.5% to HK$107 million, representing 3.5% of the Group’s revenue under reivew. The increase was mainly due to ongoing investment in the development and expansion of new products, and improvement of product quality to achieve higher operational efficiency and better cost-effective performance. Besides, the Group’s new plant in Guangzhou has commenced operations, which will improve the production capability for base station antennas and wireless enhancement products to meet the needs driven by the construction of 4G LTE networks by mobile network operators. The Group will build new R&D facilities at the R&D headquarters be equipped with more advanced and sophisticated software and hardware. The Group will also continue to develop new products to enhance its overall strength.

Mr. Tony TL Fok, Chairman of Board of Directors of Comba Telecom, said, “In late June, the Ministry of Industry and Information Technology of China officially approved China Unicom Group and China Telecom Group to commence the hybrid network trial for TD-LTE and LTE FDD in 16 cities respectively, and indicated that it will issue LTE FDD licenses. The 4G LTE network in China will soon enter its golden years, which will bring more opportunities for the Group. The Group’s global business also recorded robust results. Following the success in securing the wireless projects for the FIFA World Cup in Brazil and the Winter Olympic Games in Russia, the Group has started preparing for tendering the wireless coverage projects of other international large-scale events. Capitalizing on its abundant experience of providing wireless solutions at world-famous stadiums, the Group will strive for more stadium and similarly large scale projects to further enhance the image and perception of Comba Telecom in the international market.”

Mr. Fok concluded, “The product and business transformation of the Group is getting better with businesses significantly improved, validating the decision for transformation. It is a great time for big data and 4G LTE, mobile phone data traffic to continue its rapid growth, as users and mobile network operators have higher requirements of network quality. We will continue to broaden the sources of income and improve cost control, while adhering to innovation and bolstering transformation efforts. The Group will also proactively diversify its products to meet the trend of 4G from a position of strength.”

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