Analysts said the ventures with Telstra could contribute more than HK$500 million net profit to CyberWorks, due to announce results this month.

Voon San Lai, analyst at BNP said: 'These sets of results are well above expectations. Anything growing for wireless is encouraging.'

Telstra yesterday said in its half-year results announcement that earnings before interest, tax, depreciation and amortisation (ebitda) of 60 per cent-owned CSL were HK$697 million for the second half, making full-year ebitda HK$1.36 billion.

The revenue of Hong Kong's second-largest local mobile operator, whose subscribers grew 7 per cent to 1.06 million at December 31 last year, was HK$4.69 billion - down 9.3 per cent compared with the previous year.

Although average revenue per user (Arpu) fell 10 per cent to HK$396 per month, CSL managed to keep its operating margin at 30 per cent because it cut its annual capital expenditure to HK$402 million from HK$605 million.

Telstra booked a A$30 million (about HK$121.9 million) after-tax net profit from CSL, reflecting a goodwill charge it made last year.

However, the CSL profit contribution to CyberWorks could be somewhat higher than it made to Telstra.

Sources familiar with the CSL operation suggested that CyberWorks could share up to HK$300 million from the mobile operation, given that the unit's depreciation charges were about HK$500 million.

CSL claims to have a 20 per cent market share, ranking behind Hutchison Telecom, and that is the only profit-making operator in Hong Kong.

CSL chief executive Hubert Ng Ching-wah said it was too early to forecast profitability.

'Our main focus this year is on cost reduction. We could not fight the worldwide trend of declining arpu, particularly the IDD roaming charges, but we hope to keep the cost down,' he said.

Meanwhile, Reach's 11-month net profit of US$48 million was on ebitda of US$398 million. On an annualised basis of US$434 million, analysts said it was better than their expectations.

Total revenue of Reach was US$1.28 billion, thanks to a better second half. For the six-months to December 31 it was US$663 million. The company, formed in February last year, did not provide a comparative figure for other financial data.

However, Reach cautioned that it was operating in an extremely difficult environment as it had continued to experience pricing pressure and lower than anticipated volume growth.

In light of the existing demand and the minimum earnings requirement under Reach's financial arrangement, CyberWorks and Telstra agreed to commit a combined A$800 million to Reach in excess of their historic capacity requirements, from this year.