PCCW reports falling profits and overseas losses

Hong Kong based telco, broadband and internet TV operator PCCW has reported a 17 per cent drop in net profits to $102m for the first half of the year. 

However, revenue from the company's core telecoms business grew slightly, despite competition from new VoIP services.

"Liberalisation of VoIP services did not hurt the company's fixed-line business," said Kevin Lee, a Hong Kong based senior analyst with research consultancy Ovum. 

PCCW's fixed-line market share in Hong Kong remained at 68 per cent in mid-2006, far ahead of its smaller competitors.

Despite a rapid increase in subscribers to PCCW's IPTV services, which saw revenue growth of 66 per cent, the company continued to lose money from its TV and content businesses. Subscribers increased to 608,000, but losses rose to $24m.

PCCW operates the NOW TV channel, and is therefore in the somewhat unusual position of investing heavily in IPTV content as well as infrastructure. 

The company is attempting to generate more revenue from its content services by reselling them to customers of its mobile phone network.

"The move makes good use of its premium content on the NOW TV platform such as 24-hour local news, business news, CNNI and mobile ESPN," said Lee.

"But the capacity of its 3G network to deliver a satisfactory user experience for this bandwidth-hungry application is a major concern."