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Press Release
24 Mar 2004
Wharf T&T Sustains Steady Growth
Wharf T&T today announced operating results for the year 2003. In spite of the weak economy and keen competition through most of the year, the Company reported steady growth in market share and revenue, as well as sustained operating profit.

- Its installed base of fixed lines grew by 94,000 to reach 433,000.

- Its market share rose to 11% overall (and 17% in the business sector).

- Total revenue rose by 11% to $1,235 million.

- Fixed lines accounted for 80% of total revenue, and rose by 16% to $982 million.

- 22% of fixed line revenue was derived from data services.

- Gross profit rose by 5% to $763 million, for a gross profit margin of 62%.

- Operating expenses (excluding depreciation charges) decreased by 6% to $376 million and represented 30% of total revenue.

- EBITDA rose to $387 million, with EBITDA margin improving to 31%.

- Operating profit was steady at $54 million.

In the context of 2003, Wharf T&T achieved satisfactory operating performance, recording revenue, profit and cash flow gains. Despite adverse and challenging economic conditions brought on by the outbreak of SARS and keen competition, Wharf T&T's fixed-line business emerged in healthy condition. This sector also saw an improved competitive positioning with substantially enhanced levels of customer service and innovative product offerings.

Mr. Stephen Ng, Chairman and CEO commented on the results saying, "Due to poor economic conditions and an increasingly competitive telecom market, Wharf T&T missed some of its key objectives in 2003 but still turned in steady growth from the preceding year. This respectable performance underscores the value of our development strategy, bolstered by a strong belief in customer service, which has contributed significantly towards our on-going expansion."

Mr. Ng added, "Wharf T&T's installed base of fixed lines has recorded substantial growth for three consecutive years since 2001. We saw an increase of 94,000 lines in 2003 despite a widely anticipated slowdown in the incumbent's loss of market share along with fierce overall market competition."

By the end of 2003, Wharf T&T's installed base had grown to 433,000 lines. This represented a market share of 11% overall. In the business sector, Wharf T&T's market share rose to 17%.

Revenue from fixed lines in 2003 increased to $982 million, accounting for 80% of total revenue with a substantial share (22%) generated from the solid growth of data services. This was a significant contributing factor to the Company's gross profit margin, which stabilized at 62%. The reason for this stemmed primarily from the Company's strategy of focusing on higher margin services in the telecom sector.

Mr. Ng also commented that, "We have shown excellent operating performance along with strong customer growth, stable ARPU and a continued focus on cost management. Our primary aim has been the maintenance of a strong and stable blue-chip customer base, which serves as a powerful revenue stream for us. Moreover, tight control of operating expenses has enabled the Company to achieve an operating expenses to revenue ratio of 30% in 2003, and our EBITDA margin rose from 30% in 2002 to 31% in 2003."

"Despite today's harsh operating environment, Wharf T&T is confident that it can continue to bolster its competitiveness from a strong operating and financial position to introduce innovative products and services. We are also preparing to implement an upgrade of our customer-oriented services to help further sustain Company growth," Mr. Ng added.

Wharf T&T's substantial customer base and strong financial position form a solid foundation for growth in other market sectors as well, in particular business broadband and other local voice and data access services.
About Wharf T&T Limited

Wharf T&T, licensed in 1995, is one of the fastest growing fixed-line operators with significant investment in its own telecommunications network infrastructure in Hong Kong. Since its debut when the Hong Kong fixed telecommunications market was liberalized, Wharf T&T has continually sought to upgrade its services and deliver competitive products at competitive prices to Hong Kong businesses and consumers.

Wharf T&T is a member of The Wharf Group, one of the largest groups of companies in Hong Kong. The Wharf Group also owns i-CABLE Communications Limited, the No. 1 Television Station in Hong Kong for news, movies and sports, as well as being a leading Internet access service provider.

For further information about both Wharf T&T and The Wharf Group, please visit the Wharf T&T website at www.wharftt.com.

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