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Press Release
12 Mar 2003
Wharf T&T Reports Record Gain in Market Share & Net Profit

Defying the unfavourable business environment and intense competition, Wharf T&T today reported a record gain in market share in 2002 and a more than five-fold increase in net profit to $53 million for the year.

While the overall market continued to contract, Wharf T&T's installed base of fixed lines grew by over 100,000 (or 42%) to reach 340,000 lines.

- This represented a record gain in market share to 9% overall (and 15% in the business sector).

- Revenue from fixed lines rose by 6% to $833 million (or by 15% if non-recurrent revenue is excluded).

- IDD revenue fell by 6% to $284 million, but both volume and gross profit improved.

- Total revenue rose by 3% to $1,117 million, with fixed lines accounting for 75% of it.

- Gross profit rose by 20% to $729 million, with gross profit margin improving to 65% (from 56% in 2001).

- Operating expenses (excluding depreciation charges) increased by 5% to $399 million and represented 36% of total revenue.

- EBITDA rose by 45% to $330 million, with EBITDA margin improving to 30% (from 21% in 2001).

- Net profit increased by 540% to $53 million, with net profit margin improving to 5%.

Commenting on the Company's 2002 results, Mr. Stephen Ng, Chairman & CEO, said, "Wharf T&T's largely satisfactory performance in a very difficult marketplace in 2002 was primarily attributable to its strategic transformation since 1998 from predominantly an IDD focus to a company offering integrated fixed line telecommunications solutions comprising voice, data, broadband, internet and multimedia services."

He added, "For 2 consecutive years, in 2001 and 2002, Wharf T&T's installed base of fixed lines grew by 100,000 lines. In the context of the overall market, every net gain or loss of 100,000 lines represents a market share gain or loss of close to 3%. That momentum accelerated in 2003, with year-to-date performance running at more than twice the average in 2001 and 2002. This was achieved at a time when the overall market was steadily contracting."

As at the end of 2002, Wharf T&T's installed base stood at 340,000 lines, which was 42% higher than a year ago. This represented a market share of 9% overall. In the business sector, Wharf T&T's market share was over 15%.

Revenue from fixed lines in 2002 increased from 2001 by 6% to $833 million. This was a significant factor in the improvement of the Company's gross profit margin to 65%, from only 56% in 2001 and 51% in 2000. The achievement represents just reward for the Company's substantial investment over the years, particularly in capital and time intensive network infrastructure.

Wharf T&T's engine of growth does not only rely on voice services. The Company has been developing its data services aggressively and over 25% of the Company's fixed line revenue is now generated from data services. Wharf T&T is therefore well positioned to capitalize on the data and voice services market with a comprehensive range of telecommunication solutions to cater for different customers' different needs.

According to Mr. Ng, "Operational excellence is crucial to enable the Company to stay ahead of the competition in the highly competitive telecommunications market. In its transformation process, Wharf T&T has been steadily enhancing its product and service excellence to customers, while maintaining an efficient operation that is cost-effective. This has enabled the Company to improve its operating expenses to revenue ratio from 44% in 1999 to 36% in 2002 and its EBITDA margin consistently from 1% in 1999 to 30% in 2002. It has also put the Company on a firm course of profitability."

"Looking ahead at the now fully liberalized telecommunications market, Wharf T&T will continue to strengthen its competitive position and enhance value to its customers to ensure that the Company can sustain its growth in all critical respects," added Mr. Ng.

About Wharf T&T Limited

Wharf T&T, licensed in 1995, is the fastest growing network operator after the opening of Hong Kong's fixed telecommunication market, owning the second largest fully fibre-optic network in Hong Kong. Since its launch, 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 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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