23 March 2018 – Hong Kong) – Comba Telecom Systems Holdings Limited (“Comba Telecom” or “the Group,” Hong Kong stock code: 2342), a leading global wireless solutions provider, has announced today its audited annual results for the year ended 31 December 2017.
In 2017, as China’s macroeconomic growth slowed, the 4G investment of the country’s telecommunications industry gradually approached saturation while 5G development was still in its infancy. Thus China’s telecommunications operators have been tightening their capital expenditures, exhibiting a cautious approach towards investment. Against this backdrop, the Group achieved HK$5,564 million in revenue, down 6.6% from 2016 and HK$27.37million in net profit.
Mr. Zhang Yuejun, Vice Chairman and President of Comba Telecom, said, “Despite construction of 4G networks approaching completion in Mainland China, the number of mobile telecommunications end users and the volume of mobile telecommunications traffic have been rising steadily, galvanizing demand for more extensive wireless telecommunications overage and better wireless network quality. Meanwhile, the exponential growth of mobile telecommunications will further accelerate the development of the 5G industry. Comba Telecom maintains an optimistic outlook about its business development. The Group will closely monitor market changes and adjust its strategies in due course to pave the way for another peak for its business.”
During the year, revenue generated from China Mobile Communications Corporation and its subsidiaries dropped by 5.3% year-on-year to HK$1,662.6 million, accounting for 29.9% of the Group’s revenue. Revenue from China Unicom Group decreased by 46.6% to HK$820 million, accounting for 14.7% of the Group’s revenue. Revenue from China Telecom Group increased by 9.3% to HK$1,287 million, accounting for 23.1% of the Group’s revenue. Revenue from other customers, including mainly China Tower Corporation Limited (“China Tower”) and special government and enterprise network customers, reduced slightly by 3.2% to HK$381 million and represented 6.9% of the Group’s revenue. In light of the growing demand for wireless solutions in specialized government and enterprise networks, the management has full confidence in the revenue contribution by customers of these networks in the future. On the international front, thanks to the global economic recovery together with the further strengthening of the Group’s strategic cooperation with its international partners, revenue generated from international customers and core equipment manufacturers scored a relatively significant increase of 21.1% in aggregate to HK$1,319 million, accounting for 23.7% of total revenue. Besides, the Group completed the acquisition of 51% equity interests in ETL Company Limited (“ETL”), the third-largest state-owned telecommunication operator in Laos at the end of July. Revenue from ETL reported HK$93.03 million, accounting for 1.7% of the Group’s revenue. The Group has actively initiated its network and investment planning, with an aim to commence businesses in Laos as soon as possible so as to achieve better performance at the earliest.
While the basic completion of 4G network build-outs in Mainland China has led to a decline in the overall market demand, benefiting from spectrum re-farming and NB-IoT projects carried out by mainland operators, revenue generated from the antennas and subsystems business slightly dropped by 4.2% year-on-year to HK$2,397 million, accounting for 43.1% of the Group’s revenue. Revenue from the network systems business (including wireless enhancement and wireless access) decreased by 7.1% year-on-year to HK$1,005 million, accounting for 18.1% of the Group’s revenue, amongst which revenue from the wireless access business increased significantly by 47.8% year-on-year to HK$291 million, which benefitted from the jump in revenue from Small Cell products by 53.2% year-on-year to HK$275 million. With enrichment of the content of mobile Internet applications, the demand for data traffic from mobile users has experienced exponential growth. Thus the management expects that the scale of the network system business, especially the wireless access business, will gradually expand. Revenue from services declined 14.3% year-on-year to HK$1,848 million, accounting for 33.2% of the Group’s revenue. In view of the increasingly competitive market environment, the Group will continue to secure new customers in the industry while penetrating the operators’ market, thereby boosting the Company’s market share.
The international business has grown rapidly due to global economic recovery and the Group is actively seeking business opportunities for its international marketing platform and strengthening strategic cooperation with leading international telecommunications operators and major equipment manufacturers. The Group has made significant breakthroughs in important areas, demonstrating its advanced technology and extensive experience in wireless solutions, as well as its capabilities and leading position while expanding its global business.
With rapid development of information and telecommunications technologies and applications as well as acceleration of 5G development globally, in order to better develop 5G solutions and keep abreast of technological advances in the industry, the Group has considerably increased its R&D investment by 45.6% year-on-year to HK$331 million, representing 6.0% of its revenue. On top of its own R&D investments, the Group has also sought to expand its strategic collaboration with other enterprises. During 2017, Comba Telecom has officially joined the China Mobile 5G Joint Innovation Center to work with industry partners in order to explore innovative solutions and future development trends and undertake joint efforts to accelerate the development of the 5G industry. Currently, the Group is playing an important role in 5G testing in various major cities across the globe.
As regards the network business for operators, the Group has enjoyed a long-held leading position in the antenna market and has been named as a global Tier 1 Supplier for six consecutive years since 2011 by industry analyst EJL Wireless Research. During the year, the Group has launched the smallest cross-section 4+4 port antenna in the industry and an industry-leading miniaturized “4488 antenna.” In addition, the technological innovation of the wireless access products represented by its Small Cell series has been at the forefront of the industry, with the Small Cell solutions provided by the Group put into commercial and trial use in a number of provinces across China. In the meantime, the Group has also launched several network product system solutions including a Small Cell-based Densified Networking Solution, Innovative Indoor Coverage System, MDAS (Multi-Service Fiber Optic Distributed Access System) and DAS (Distributed Antenna System), among others. The Group will continue to enhance the application of 5G technology in antennas and base station subsystems as well as network product system solutions, thereby sharpening its competitive edge in the 5G arena.
As for the specialized enterprise network business, the Group has made important breakthroughs in the railway communications market, secured a number of railway projects and successfully passed the LTE-M broadband cluster test for railway communications systems, further improving and expanding its industrial footprint in the specialized network communications market. The Group has also strived to promote the maritime Internet-of-vessels business in a bid to provide more and better products and solutions to maritime users. In addition, the application of the Internet-of-things has changed considerably, and vertical applications represented by the expanding smart cities, intelligent manufacturing, etc., are under comprehensive development. The Group has grasped the social and industry development trends, and successfully joined the “Industrial Internet Industry Ecological Supply Pool in Guangdong Province”(廣東省工業互聯網產業生態供給資源池) and strengthened the development of new technologies for vertical applications such as smart community and intelligent manufacturing. Through developing integrated information, communications and intelligent solutions, the Company strived to provide customized and more diversified professional services for customers based on the different applications.
Mr. Tony TL Fok, Chairman of Comba Telecom, concluded, “In 2018, as economic restructuring and social development continue, the information and telecommunications industry is set to be increasingly competitive. The hastening of technological advancement and industry revolution brings both opportunities and challenges to the Group. Prevailing trend of continuous evolution of 4G technology and especially the gradual establishment of the 5G standard, the Group will continue to uphold its customer-centered core value of “creating ideal value for customers” as it strengthens the development of new 5G technologies and products and advances the extent of automated and intelligent production, and going to great lengths to achieve its business objectives and strategic goals.