BUSINESS; Deals; Pg. 29
2001-04-13
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BY THE NUMBERS
PCCW's 2000 Financial Results (US$ million)
HKT had sales of $ 2.66 billion in all of 2000, although PCCW can only claim the portion after completing its purchase of the phone company in August. HKT's sales are under stress. Last year, IDD revenues fell 34%, and they are contributing a decreasing amount to HKT telecommunications revenues: 13% in 2000 compared with 17% in 1999. Residential telephone rates rose in late 1999, which helped boost 2000 fixed-line revenues. Both business and residential rates went up again this January
Had the company owned HKT the whole of 2000, EBITDA would have been $ 790 million. Subtract non-operating expenses from this to determine the key cash-flow figure. In 2001, expect EBITDA to be in excess of $ 1 billion
Analysts will be watching this number to make sure it is high enough to meet debt-service expense
These include provisions for the drop in value of PCCW investments assumed to be "other than temporary." For instance, PCCW owns a 3.4% share in U.S.-based Internet investment company CMGI, a stake once valued at $ 350 million but now worth less than $ 35 million
Mostly start-up costs of PCCW subsidiaries
At the time it bid on HKT 13 months ago, PCCW cemented $ 12 billion in short-term debt. Since then it has been paying that down and restructuring it. In December the company restructured debt down to $ 4.7 billion. Earlier this year it benefited from a Telstra cash infusion
The number wasn't disclosed by the company in recent results announcements. It is distinct from the write down in shareholder value of $ 22 billion taken by the company on its balance sheet, which left PCCW with negative stockholder equity
This includes PCCW's share in two joint ventures it has with Telstra: the IP Backbone business named Reach, owned equally by the two companies, and the wireless communications operation now owned 60% by Telstra and 40% by PCCW. They were considered two of HKT's most valuable assets
While investors and the public may be focused on this year's huge loss, analysts are more interested in the future. It may not be very bright, though many analysts expect PCCW can meet its debt service and record a profit in 2001. But finding the capital to invest in other of its fledgling businesses will be difficult
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