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Stock Exchange Stock Code: 00989

 The mobile communications services segment comprised of a licensed Mobile Virtual Network Operators (“MVNO”) business in Hong Kong which operates a mobile service under the brand “CM Mobile”. For the year ended 31 March 2013, turnover for the MVNO business, which accounted for 59.0% of the Group’s total turnover, was HK$86,334,000, representing 11-month of the fiscal year before its disposal. This compared to a turnover of HK$95,299,000 in the prior 12-month period. For the period before its disposal, MVNO business recorded an operating loss of HK$1,179,000 as compared to a previous full year operating loss of HK$5,043,000, which reflects a one-off allowance of HK$9,097,000 made for doubtful debt.

MVNO business continued to face difficulties in the extremely competitive market particularly in the  data access services and mobile communications applications. First and foremost was the rapid growth of alternative means of communications via social networking applications which had reduced the usage for traditional voice and short message services. Short message service sent and received in February 2013 for the entire industry in Hong Kong were down by more than 40.6% compared to February 2012 while data usage had gone up by more than 73.3%, according to Office of the Communications Authority. This trend was particularly severe in the cross border communications when the tariffs were higher and customers were taking advantages of the flat rate unlimited data services offered for Internet Protocol (IP) voice and messaging applications. Second, the launching of the popular smart phone devices in the market place continued to affect the decision to which services the customers subscribed to. The inability of MVNO to offer certain popular handset models and the heavy subsidies on some of these devices continued to negatively impact the MVNO performance during the period.

With price continuing to spiral downward in the foreseeable future even for the new 4G data service and the need to significantly invest to upgrade the mobile telecommunications core network, the Group believed the business risk outweighed the benefit derived from the MVNO business and thus it would not be the best interest for the Group to invest into the business in the long term. Given the opportunity, the Group had made a strategic decision to dispose its MVNO business during the year and the transaction had completed on 1 March 2013, resulting in a disposal gain of HK$41,996,000.

For further information, please refer to: http://www.cmmobile.com.hk/



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