Q2 2026 CITIC Telecom International Holdings Ltd Earnings Call
Speaker #1: Holdings Limited, interim results announcement. I'm Carys. Today's presentation will be in a mixed mode for those dialing in, and for those on-site, you should have received your PPT slides before the meeting.
Speaker #1: If you still haven't got a copy, please contact our colleagues. The English telephone line is for listening only if you have questions. Please call the Chinese line; I will now introduce to you Mr. Luo Xicheng, our chairman.
Speaker #1: Mr. Wu Xun, our CEO. Ms. Wang Hua, our CFO. Mr. Fendi Pun, our executive VP and CEO of CTM. Mr. Brooke Wang, our vice president.
Speaker #1: Mr. Luo is going to deliver his welcoming speech. Dear members of the media and investors, good afternoon. Thank you very much for taking time to attend today's interim results announcement, presented by Citig Telecom International Holdings Limited.
Speaker #1: 2026 first half: we have seen new waves of technological reforms and evolution. AI continues to advance leading to rapid iterations. Our group has been adhering to internationalized development and continues to be led by technology to strengthen our foundation.
Speaker #1: An improved quality of our development. At the moment, our performance results continue to grow. We see new points of development and competitive advantages. We continue to be a true leader in the sector.
Speaker #1: 2026 first half: our total revenue 4.748 billion HKD. Attributable profit 463 million HKD. Earnings per share 12.5 HKD. We attach importance to return to our shareholders.
Speaker #1: We recommend interim dividend at 5 HKD per share. CTM, during this period, continued to accumulate very good performance. We have successfully acquired 100% of Hutchison.
Speaker #1: Strengthening is foundation in the city. Total number of users 914,000 odd. Penetration rate 93%. In the first half, CTM has been establishing a very well-founded 5.5 10-gigabit foundation.
Speaker #1: It would continue to upgrade its surfaces offered to its customers. An expand application and improve overall experience of its users. Supporting Macau's high-quality growth.
Speaker #1: We continue to move forward by completing HK-Singapore-Dubai and other important cities in terms of capacity expansion construction. Together with Thailand, Singapore, etc., we have launched a number of network security projects.
Speaker #1: We cover public education, retail, and other key sectors, among which in Singapore, we successfully went over the tender for this IT project. For a landmark building in the Philippines, we continue to expand our internet services.
Speaker #1: Effectively enhancing the penetration level. Our group continued to deepen AI efforts to drive our future growth. We have implemented various strategies. With AI security operations center, as the focal point to enhance level of automation.
Speaker #1: Assisting enterprises to go abroad. And attracting foreign investments and businesses. In Macau, we have also set up this AI international collaboration service center. In terms of data services, we have provided one-stop services in terms of certification and we have accumulated 8 GSMI certification in Hong Kong and Macau.
Speaker #1: We have been the forerunner in this area. Looking ahead, we are going to use a multi-pronged approach to continuously promote 5.5G foundation construction. We will use AI application to promote our business upgrade.
Speaker #1: We also will continue to unleash AI value to enhance safety construction, to perfect the security on all fronts. So that we can achieve higher level of efficiency.
Speaker #1: Now, I would like to introduce to you Madam Wang Hua, our newly appointed CFO. In our group, she has been engaged in human resources personnel management and financial control.
Speaker #1: We believe she is a very valuable addition to the management of the company so that we can continuously develop with high quality. Now, I will see EO Mr. Wu Jin will take you through the details of our interim performance.
Speaker #1: Thank you. Dear members of the media and investors, good afternoon. I'm going to report to you our interim results. Our total revenue was 4.748 billion down by 1.2%.
Speaker #1: Profit attributable to our shareholders 463 million HKD and increase of 0.4%. Interim dividend 5 HKD down 1 HKD. By the end of June total debt 2.928 billion down 329 million.
Speaker #1: Net debt 1.148 billion down 164 million. Net gearing ratio decreased by 2 percentage points to 9%. Now let's look at our specific financial performance.
Speaker #1: Total revenue, as you can see, it is stable. Slight growth for our telecom services. We have been affected slightly by some new product launch.
Speaker #1: Affecting slightly the performance of the sales of mobile handsets. Profit attributable to shareholders in the past 3 years has been at a very stable level.
Speaker #1: We enjoyed a minor growth compared to last year. EBITDA compared to 2025, we see a 20 million drop in EBITDA capex increased by 18 million.
Speaker #1: Cash and deposits. First half of the year, there's a drop of 165 million. Standing at 1.78 billion. Total debt 2.928 billion. A drop of 329 million.
Speaker #1: Net debt 1.148 billion. A drop of 164 million. Net gearing ratio 9%. You can tell that we would like to continuously suppress financial cost to ensure stability and security of cash.
Speaker #1: And we have made certain efforts to reshuffle our debt. Earnings and dividends per share. Earnings per share stable at 12.5 HKD. Dividends per share we have decided to be 5 cents a slight drop of 1 HKD.
Speaker #1: Gearing and debt levels more solid at the moment. 9%. Net gearing ratio to further suppress our financial cost. Operational performance. Revenue from mobile services increased 11% to 610 million.
Speaker #1: International telecom services increased 3% to 1.39 billion. Enterprise solutions revenue decreased by 7% to 1.27 billion. Internet services down 1% to 750 million. Fixed line services decreased 8% to 58 million.
Speaker #1: Sales of mobile handsets down 9% to 670 million. Mobile services we consolidated our regional advantages and built a cross-border service ecosystem. We continue to strengthen 5.5G services applications in Macau the penetration rate has exceeded 93%.
Speaker #1: At the moment, we continuously strengthen the switching over. After completing the acquisition of 100% stake of 4% telephone Macau we boosted our mobile business market share and strengthened competitiveness.
Speaker #1: We strengthened leading advantage of 5.5G network and deeply cultivate this industry private network application. We continue to deepen strategic cooperation with three major Chinese mainland operators and Asia Pacific operators.
Speaker #1: Internet services we consolidate the dual 5.5G 10 gigabit foundation we upgrade our optical network facilities to expand and speed up city network. In terms of enterprises, we continue to promote operation of enterprise service market expand internet exit bandwidth in the Asia pack and Hong Kong Macau regions and continuously deepen Hong Kong Macau regional synergy.
Speaker #1: We cultivate deeply the Chinese mainland internet market and we focus on high value customers and steadily optimize customer base structure. International telecom services we continuously promote our refined operations offering better quality services you can see a growth of our performance in revenue.
Speaker #1: A growth of 15 million. Our data mall services we continue to upgrade it. And we have also seen a growth of international mobile data traffic transactions.
Speaker #1: Enterprise solutions a mild drop in our revenue. Because of certain seasonal arrangements. We continuously expand and upgrade our backbone network complete expansion and new construction in key hubs such as Hong Kong Singapore and Dubai and further strengthen connectivity capabilities in Asian region and along the Belt and Road countries.
Speaker #1: We deeply implement the cloud network security plus AI dual wheel drive strategy we focus on AI SOC to enhance user surface experience and empower multi-scenario smart office upgrades.
Speaker #1: We also focus on AI centered technology evolution and expand intelligent business. CTM continues to launch AI Macau based on deployment of localized AI platforms successfully deploy multiple government and enterprise digital intelligence benchmark projects.
Speaker #1: And we plan to transform to token operations so you can see that. That is a clear trend. In Southeast Asian market we have made some major breakthroughs we won a very well-known local project in Singapore enhancing market competitiveness.
Speaker #1: Fixed line services continue to decline this is a continuous trend so far the revenue has been dropping to 58 million. Which is in line with our expectation.
Speaker #1: Now I would like to report to you what we have done in terms of innovation and technology how we have deepened AI ecosystem development.
Speaker #1: We participated in the formulation of technical and application requirements for intelligent assistant agents. Standards. Which has now been officially released leveraging its strength in AI security governance the group continues to drive a dual.
Speaker #1: Engine strategy of standards leading technological innovation and technology empowering business expansion. Our AI innovation center has been steadily advancing projects in areas such as smart finance industrial intelligence and digital communications.
Speaker #1: We have developed our own SIEM mind platform achieving its first commercial breakthrough in Hong Kong with upgraded SaaS products with the addition of quantum encryption functionality further enriching its product portfolio.
Speaker #1: Concerning CTM site concerning this smart city we have launched Dr. EC platform providing an upgrading cloud and data center services for non-medical institutions. And we have also this new contract that has been signed to promote the use of AI.
Speaker #1: CTM announced a localized CTM AI platform offering one-stop surface large language models computing power tokens and AI tools leveraging the upgrade of its computing and network infrastructure.
Speaker #1: CTM is planning a strategic transition towards a token-based business model. In recent years Citig has been working tirelessly and we have been widely recognized by all sectors here are some of the examples.
Speaker #1: For example we have been chosen as the best product innovation partner by China Telecom our cross-border encrypted communication surface solution was awarded top 10 lighthouse projects by Quinlin ecosystem alliance roundtable conference.
Speaker #1: We have always attached a lot of importance to ESG principles. For example green operations and environmental protection. In terms of community care we have also.
Speaker #1: Done quite a bit. Among which you can see in Beijing Shanghai Guangzhou we have launched this warm winter campaign working with the local district offices in Hong Kong to gather with the Hong Kong police we have demonstrated some anti-fraud technologies to inspire students.
Speaker #1: In terms of security and compliance CTM has established compliance governance framework integrating ISO standards and regulatory requirements to standardize policies risk assessments and audit processes.
Speaker #1: Enhancing transparency and effectiveness of internal controls. It also established a data security governance framework. Looking at our future development we will continue to advance digital intelligence development closely tracking our operators evolving needs expand our roaming services through data more and enhance IPX services.
Speaker #1: To provide full support to 5GSA. We will accelerate product innovation and expand AI plus cloud network security business to coordinate internationalized and digital intelligent development.
Speaker #1: CTM is seizing the opportunities presented by AI Macau to advance its 5.5G infrastructure and is leveraging its innovation center to promote AI powered smart solutions in areas such as tourism and transport to government and enterprise clients.
Speaker #1: We deepen our presence in the southern Asian markets including Singapore Malaysia and Thailand expanding into the Indonesian and Philippines market actively. We will continue to deepen our development of AI so far we have driven business transformation and upgrade evolving into integrated AI service provider and promote commercialization of AI technologies.
Speaker #1: We promote diversified exploration of token services ecosystem providing multilingual multi-regional and compliance adapted model. We will build a three-tier system of model plus application plus ecosystem placing equal emphasis on internal benchmark development and external market expansion.
Speaker #1: We are going to set up landmark or iconic projects. To take the lead. We will also accelerate cross-border connectivity on the security front. We will advance edge computing security research on a node by node basis explore the deep integration of security capabilities into platform operations.
Speaker #1: And build a robust foundation for security technology. Focusing on AI empowerment. We'll drive cross-border circulation layout for token export services. And accelerate development of a computing node network.
Speaker #1: Connecting Hong Kong Macau and Guangxi. As well as a multi-cloud integration architect. We will recruit key talents optimize t structure and strengthen on the operation sales synergies and leverage the technology innovation center's role as a hub.
Speaker #1: So concerning AI development that is the major direction for our next step forward. So that is our interim presentation. Thank you very much. Now we will proceed to the Q&A session.
Speaker #1: We will first take questions from onsite participants. So it's calling in. Please press star one and wait. We will invite questions from online participants later on.
Speaker #1: Let's take the first question from an onsite participant. I would like to ask about AI related business. What is the percentage of your revenue?
Speaker #1: What are the main products or client groups that represent the major sources of income? AI is going to be an important growth engine. So in what areas are you going to make your investments?
Speaker #1: Through strategic collaboration or M&A are you planning to use these methods to speed up your development? Okay. Concerning air related development as I have already pointed out the entire enterprise has this major direction.
Speaker #1: But this year at the moment we are still at the starting point. So in order to be more specific concerning revenue proportion we are not able to give you a figure because at the moment when it comes to AI related services we are looking at a number of different directions.
Speaker #1: First of all on the supply side models. And algorithm capability computing power that is one major direction. And our company is going to focus on computing power we will do prudent investment.
Speaker #1: Secondly in terms of application services AI related products concerning this our company based on current applications we have incorporated AI capabilities to provide more professional services to our customers.
Speaker #1: As I presented we have our network operation center with AI and we will add that to our center. So that we can offer to our customers more efficient and more accurate AI related services.
Speaker #1: So that is already incorporated into SOC capability including applications in CTM we have provided to Macau government a lot of tourism education security document analysis related products.
Speaker #1: At that time they were all incorporated into the enterprise solutions segment to be launched and implemented. So in terms of this direction of application we will rely more on AI capabilities.
Speaker #1: To do certain complementary services. For the enterprises. Later on in terms of AI applications we're going to strengthen AI products and tools for enterprises.
Speaker #1: We'll focus more on that front. And afterwards based on the products and revenue we can do the statistics separately later on. If you look at the survey we have done in relation to customer needs the use of AI shows a very strong demand at the moment it is reflected in a number of areas.
Speaker #1: First of all LLM and computing power supply is reflected on the demand for tokens. It corresponds to demand from different models. For example for short videos they will have their own LLM models in terms of smart offices they will need LLM such as Doubao our company is currently looking at enterprise solutions.
Speaker #1: Helping them to use better models. So that they can realize one stop connection with external players. For example we have heard about this tokenized platform and we have already received standardization certification concerning this aggregation platform.
Speaker #1: We will continue to bring high level of convenience and security to enterprises. When they use AI services. So this token surface platform will continue to attract more customers.
Speaker #1: We see very great demand enterprises when they use AI they are particularly concerned about security other than network connection services. We also have other types of security related services.
Speaker #1: So when it comes to AI security direction it is a very natural direction for our expansion. We will have different points of breakthroughs. Including together with mainstream LLM manufacturers we will look into SaaS sandbox services to ensure when our enterprise customers use AI their data or information won't be stolen.
Speaker #1: By third parties. We can ensure enterprise customers high level of security in the use of AI. When we look at the enterprise side when they use AI services including sensitive data and when it comes to ethical or legal matters our products will able to help we are still researching and developing these products.
Speaker #1: And we have launched a product with one of the mainstream players. And we're doing some pilot runs. We believe AI related services represents a major direction for the group.
Speaker #1: We have already put together the 15 five year plan so that we can transform ourselves into an AI consolidated service. Provider we will continue to perfect our products.
Speaker #1: And spend all effort in terms of marketing in Q4 this year. We believe we can totally commercialize this product. In addition to this direction we understand there will be great challenges and difficulties but we are confident with concerted efforts at the group level we will be able to unleash our capability in the market.
Speaker #1: CTM as an operator in terms of model plus computing power CTM will play a very important role in the Macau market as well. Thank you.
Speaker #1: Can we take a second question? Thank you for the opportunity we can see attributable profit is stable but dividend has been downward adjusted from six Hong Kong cents to five Hong Kong cents.
Speaker #1: What are the major considerations for this downward adjustment? Is it because of your capex or cash flow arrangements? How can the media present this dividend payout direction?
Speaker #1: Thank you for the question. First of all I would like to state that the company and the management attach great importance to return for our shareholders.
Speaker #1: For a very long period of time we the payout level is actually very high around 75%. There's been no major capex or M&A in recent years.
Speaker #1: So when you ask the question I have forgotten to answer. About AI direction M&A so I can take you through that now very quickly.
Speaker #1: When we attach great importance to return to our shareholders in order to allow good growth of a company and create even greater return to our shareholders in the future we must strengthen investment into capex including actively looking for M&A opportunities.
Speaker #1: At the moment our cash level is very sufficient including our overall debt level is rather low. So we have made a downward adjustment. A difference of one Hong Kong cent.
Speaker #1: Later on we hope to have sufficient cash flow to support our new business development. I would like to state one more time. Our company attaches great importance to return to our shareholders.
Speaker #1: So despite this downward adjustment it is still at a relatively high level. Looking ahead we will maintain a relatively high payout ratio but they will definitely be lower compared to previous years.
Speaker #1: If in the future we have major investments according to our revenue level we will further consider downward adjustment of the payout level. Any other questions?
Speaker #1: Any other onsite questions? I would like to ask about the CTM's situation. And its contribution. Since we acquired the entity we have been working very hard to improve our cost.
Speaker #1: And quality of our services. In the near future we'll be able to reduce complaint level towards 100% Macau to a satisfactory level of course in the past six to seven months we have done a lot of work.
Speaker #1: When our customers make the decision they can freely choose between staying with 100% or CTM. We have seen nearly half of them have chosen to switch to 5G network under CTM.
Speaker #1: For the time to come. Because 100% doesn't have 5G. So for the longer term we will need our customers for them to receive the best services.
Speaker #1: They should switch over to 5G. We will adhere to the ultimate interest of the users. Then in terms of service quality of course and integration further advantages will be revealed.
Speaker #1: At the moment I can say that the acquisition compared to our expectation things are outperforming. According to our expectation it was not a losing business.
Speaker #1: So it is better and I'm answering your question with a smile on my face.已经有一般的客户他们已经成功的转到这个5G的服务。那希望就是未来的时候可以越来越多的客户转到这个5G。还有就是这个他们的表现还是比这个预期的好的。那希望可以这个回到给你一个回答。那 do we have any other onsite questions? If not we will check with participants calling in.
Speaker #1: They whose channel online is only for listening. If you have questions please call the Chinese line. If you would like to ask a question please press star one.
Speaker #1: If you would like to ask a question please press star one. 下面有请手机尾号3978的投资者提问。谢谢。 Investor may pose your question now. Good afternoon. Can you hear me?
Speaker #1: I would like to ask your net debt level is rather low other than investment into technology. So you're going to think about M&A or collaboration joint venture to create greater returns to your shareholders.
Speaker #1: Concerning the cash flow at the moment which is rather solid. Previously I was talking about why we have further adjusted downward the dividend payout ratio because we are actively seeking suitable M&A targets or investment targets in the market.
Speaker #1: The direction may include computing centers in terms of telecom services investments and better integration with other players and also existing customers. We have been very active in identifying suitable targets we will come up with the most prudent investment decisions.
Speaker #1: Any new questions? I think I heard two questions. What was the other one? Do we have other questions coming from we do not have any pending questions.
Speaker #1: So anything else from our onsite participants? Since we do not have any further questions. So we will conclude Q&A session. Thank you very much for your attendance.
