CITIC 1616, the telecom unit of CITIC Pacific, which posted a 11 percent increase in first-half net profits, said the company will benefit from the mainland's telecom restructuring and overseas expansion.

Chairman Shi Cuiming said the company will be able to benefit from the rapid growth of CDMA networks after the acquisition by China Telecom, which plans to boost the number of users to over 100 million from the current above 40 million.

"We expect 3G licenses to be issued after the restructuring by the end of the year and our service platforms are well-prepared," Shi said.

The company's net profits jumped 11 percent to HK$151.1 million in the first half, driven by strong turnover growth of 63 percent to HK$1.13 billion. Profits from core operation jumped 58.2 percent after excluding the HK$40.5 million IPO-related interest earnings in 2007.

The mainland-based mobile value-added service provider has benefited from the strong growth in its core business, including voice traffic, SMS hubbing services and mobile value-added services (VAS), which jumped 32 percent, 38 percent and 54 percent in turnover, respectively.

The three businesses accounted for 65 percent, 10 percent and 54 percent of the turnover respectively.

The company has substantially boosted its Internet virtual private network (VPN) service through acquiring CPCNet last December, which contributed 26.6 million in net profits and accounted for 21.5 percent of total turnover in the first half.

"We will continue to strengthen our coverage through connections with overseas operators given the strong demand for international telecom services," said Shi.

"After CPCNet, we are still looking for acquisition overseas targeting similar type of companies as CITIC 1616 with disposable cash," he added.

The group has aggressively tapped into new and overseas markets. For voice hubbing services, it reached a number of cooperative framework agreements with local telecom operators in Vietnam and Indonesia while setting up a subsidiary in Japan.

Meanwhile, the company has tapped into five new markets for SMS hubbing services including Italy and Greece while building up a roaming network of mobile operator in up to 30 countries to back up its Mobile VAS services.

The company has doubled the interim dividend to HK$0.02 per share as it has HK$875.3 million in cash without any debt. Its capital expenditure for the second half will be similar to that of the first half, which was HK$51.6 million.

Chief Executive Officer Norman Yuen said the company will be able to sustain its growth momentum after the Olympic Games, given the positive outlook of mainland's economic growth.

(HK Edition 08/01/2008 page3)