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SUNDAY Communications Limited: Annual Results 2003 SUNDAY announces first annual net profit of HK$27 million for 2003 (Hong Kong Dollar is Translated to United States Dollar At a Rate of HK$7.764 to US$1) HONG KONG, April 1 /PRNewswire-FirstCall/ -- SUNDAY Communications Limited today announced its first annual net profit. The HK$27 million net profit for the year ended 31st December 2003 compared to a net loss of HK$117 million in 2002. Earnings before interest, tax, depreciation, amortisation and share of loss of a joint venture (EBITDA) rose 47% over the corresponding period of 2002 to HK$315 million. The strong rise in EBITDA reflected an improvement in EBITDA margin, which rose to 25% in 2003 from 16% in 2002. The strong cash flows allowed the Group to continue to reduce its debt, which on a net basis fell by 29% from 31st December 2002. "We have passed many important milestones during a difficult year that testify to our sound management and strategy. In this newmultimedia era, the mobile telecommunications industry is resembling more and more a fast-moving consumer goods market, where aspects such as branding and product differentiation are critical to success," said Group Managing Director Bruce Hicks. "It is also a new era for SUNDAY. We are profitable, achieving the target we set for ourselves at the beginning of the year. We are fully funded for our continuing operations and 3G roll-out. We have what has been the most consistent strategy in this marketplace to address the evolution of the industry. We have a new customer centred organisational structure and an infrastructure that is among the most efficient in the industry. We are backed by some of the best technology in the world. I look forwardto building on our success in 2004 as we prepare for our 3G launch." The milestone result came despite the challenging circumstances involving a highly competitive marketplace, a weak economic environment and the impact of SARS during the first six months. SUNDAY's profitability testifies to its ability to compete as a unique operator in a very competitive marketplace, with a management team of seasoned professionals that have shown consistency of vision and the ability to implement strategy. The Group also enjoys the benefits of the highly efficient cost structure it put in place during 2002 that allows it to match or exceed the tariff, service quality and product offerings of competitors. Revenues for the year showed a modest decline, in linewith the Group's strategy during the year to focus on profitability. Due to the weak economy, price-based competition and the impact of SARS, the Group's monthly postpaid average revenue per user (ARPU) declined by 4% to HK$201. This was partially offset by an increase in its mobile subscriber base by 9% to 660,000 and an improvement in the average churn rate to 5.0%, compared to 5.4% in 2002. As a result, revenues for mobile service business declined by a relatively modest 6% to HK$1,150 million. Higher Efficiency and Service Quality The benefits of the various initiatives implemented in 2002 to reduce costs and increase efficiency became apparent in 2003. Overall operating costs (excluding depreciation) declined by 22% to HK$619 million as compared with the corresponding period of 2002. SUNDAY's strong management enables it to operate with a lean and efficient structure well ahead of the industry that is regarded as an important competitive advantage. At the same time, SUNDAY made further improvements to service quality, helping the Group to attract subscribers. On coverage, during the past three years the Group has increased the number of cell sites by 25%. This and other initiatives have given SUNDAY among the best coverage in the industry, according to an independent study released at the end of 2003 by the Chinese University of Hong Kong. The sales force has been reorganised under new management that combines traditional mobile telecommunications expertise with an understanding of the needs of fast moving consumer markets. Increased emphasis has been put on quality assurance and training, while changed management systems have improved customer care and monitoring. Creative Approach To New Era in Telecommunications The mobilecommunications market in Hong Kong is mature. The Office of the Telecommunications Authority (OFTA) now estimates mobile penetration in Hong Kong at over 106%. SUNDAY is serving this market through a creative strategy focused on market segmentation and launching innovative services. It has consistently pursued this strategy, rather than volume and price based alternatives, in the belief that it represents the only way to extract more revenue from the technology and consumers in the longer term. This strategy is now coinciding with a noticeable shift in consumer attitudes as users begin increasingly to value innovation and quality, as technology widens the range of service choice. 3G will accelerate these trends. Market segmentation brings value to customers by providing tailor-made services to meet their specific lifestyle needs. SUNDAY has been well ahead of the competition in Hong Kong in recognising this fact and reorienting its operations to implement effective segmentation programmes.During 2003, the Group reorganised its operations according to four distinct customer segments -- youth, ethnic, corporate, and the mass market. Each is run as a sub-business, responsible for products, pricing, promotion and place of business, with separate targets for subscribers, ARPU, churn and other metrics. To support these segments, SUNDAY introduced more innovative services, especially its proprietary Location Based Services (LBS). In the business segment, the Group made good progress as the market leader in enterprise LBS applications for logistics and field service dispatch. In the youth segment, we launched interactive LBS games. In the mass market, SUNDAY launched Family Watch and SARS updates, applications which attracted considerable attention. SUNDAY also launched other innovative services, including wireless LAN roaming services for business customers, which allows customers to access Internet via GPRS or wireless LAN. Although SUNDAY's data and market segmentation initiatives are still in their early stages, they are therefore beginning to contribute, as they will do much more forcefully in future, to overall customer acquisition and retention. Data services revenues grew by 55% in 2003. Preparing for 3G The segmentation services already introduced by SUNDAY are an important precursor to its 3G services, since 3G technology will move the industry and consumers even further away from the commoditised mass market of mobile voice communications towards ever more tailored multi-media mobile services. In December 2003, SUNDAY signed Heads of Agreements with Huawei Technologies Co., Ltd. (Huawei) to provide the turnkey solution for SUNDAY's 3G mobile telecommunications business. Huawei was chosen through a rigorous selection process that focused on technical capabilities, pricing and financing, in which it outperformed some of the world's leading mobile telecommunications vendors. The financing associated with the supply contract means that SUNDAY is fully funded for its 3G-roll out and continuing operations. Prospects Looking forward, Mr. Hicks said that he expects 2004 to continue to be a competitive year but that SUNDAY will focus on growing its revenues through the launch of more services based on its creative approach to segmenting the market. It will also continue to benefit from the highly cost-effective and efficient operating structure now in place, through which it aims to achieve further incremental cost savings in areas such as transmission costs.This will help mitigate any impact on earnings from a possible roll-out of 3G during the year. Preparation will continue for the launch of 3G services in the fourth quarter of 2004, although its partnership with Huawei offers the flexibility to reschedule the launch date if market acceptance is different from that anticipated. SUNDAY's 3G partnership offers tremendous strengths and synergies as a world class technology developer in this field, with geographic proximity in Shenzhen, just one hour's drive from SUNDAY's offices. "Huawei's 3G technology is among the world's best, and the company has one of the largest R&D establishments of any network equipment manufacturers in the world, including 3,500 engineers working specifically on 3G. It hasstrengths in areas that will be critical to success in 3G, including the IP platform and service creation. It offers an end-to-end solution. Huawei's base in Shenzhen also means that we will enjoy a very close working relationship on technology development and product introduction, giving SUNDAY a significant edge over its rivals in developing creative, tailor-made services and bringing them to market quickly," said Mr. Hicks. SUNDAY further believes the future of Hong Kong's mobile communicationsindustry will be closely linked to China and other markets. In 2004, SUNDAY will strategically build upon its China vision in a manner that provides additional cost efficiencies for its current operations and creates a strong foundation to capitalise upon opportunities that will develop as the mainland's telecommunications industry opens. In this regard, the Closer Economic Partnership Arrangement (CEPA) may provide an early entry for Hong Kong mobile operators. "SUNDAY's competitive strengths areextremely relevant today as a new generation of technologies becomes more ingrained in the way people use and think about mobile communications. The scope of what everyone regards as mobile services is set to expand dramatically, which will lead to a consequent growth in opportunity for SUNDAY. We have the right infrastructure, strategy, partners, people and vision to succeed in this new era," said Mr. Hicks. About SUNDAY SUNDAY is an innovative developer and provider of wireless communications and data services in Hong Kong. SUNDAY began commercial operations in 1997. The company's core strategy is to capitalise on the convergence of wireless communications and data technologies to develop innovative services and solutions. Today, SUNDAY enhances people's lives by delivering wireless data applications and services to meet the lifestyle needs of specific customer segments. Owning a 3G mobile license, SUNDAY is well positioned to develop a more advanced range of 3G wireless services to furtherenhance people's lives by providing innovative, relevant and value-driven services. For more information, please visit http://www.sunday.com/. This and other information about SUNDAY can be accessed via http://www.sunday.com/, http://www.irasia.com/listco/hk/sunday, and http://www.quamnet.com/. For enquiries, please contact: Media Investor Relations Stella Wong Email: Corporate Communications Manager Tel: (852) -2113-8251 / 9230-5501 Email: DATASOURCE: SUNDAY Communications Limited CONTACT: Media, Stella Wong, Corporate Communications Manager of SUNDAY Communications Limited, +852-2113-8251, or +852-9230-5501, or Web site: http://www.sunday.com/

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