• Comba Telecom Systems (Comba) has a global customer base including major telecommunication operators such as Vodafone, Ooredoo, Airtel, Telenor, China Mobile, China Telecom, China Unicom, and other major telecommunication equipment providers. The company owns over 5,500 patents globally, and offers a comprehensive suite of innovative products and services including base station antennas, network products and wireless transmission services.
   
• The Group expects to see continued strong demand from operators constructing indoor 5G networks globally and to ride on the growth in consumer and infrastructure spending in emerging markets, especially those with relatively young demographics but relatively low 5G network coverage.
   
• It strives to build a green industry supply chain by reducing the carbon footprint and environmental pollution in the manufacturing process and products. For instance, it has launched a high-end 4G/5G (8TR) integrated Base Station Antenna, which achieves energy saving and lower carbon emission while meeting the capacity and coverage requirement.

Market leader in wireless and information communications systems

Comba Telecom Systems (Comba) made its debut on the SGX Mainboard through a secondary listing on 4 January 2023. Comba is primary listed in Hong Kong, and has a diverse customer base of over 1,300 customers globally including major telecommunication operators such as Vodafone, Ooredoo, Airtel, Telenor, China Mobile, China Telecom, China Unicom, as well as other major telecommunication equipment providers. The Group has R&D headquarters in Guangzhou Science City and owns over 5,500 patents (including approximately 900 patents under application) globally. These include patents winning Golden Prize of the Chinese Patent Award – the highest honour in China’s patent field, and have been recognised by the United Nations World Intellectual Property Organization (WIPO).

The Group’s operations are organised into 2 business segments:

1. Wireless telecommunications network system equipment and services

• R&D, production, sales and marketing of wireless coverage products, and the provision of related engineering services.
   
• Base station antennas and subsystems:
  • mainly supplies new 700MHz/900MHz low frequency band and 1.8/2.1/2.6/3.5GHz intermediate frequency band GHz antenna products
  • combination of multi-band shared antenna products required for 5G NR construction
  • developed the industry-leading multi-antenna common-calibre wave transmission technology platform as well as the AP antenna in strategic cooperation with the main equipment vendors (4G/5G integrated antenna requirements)
• Network products:
  • Small cells - diversified products with the deep coverage capacities covering the entirely scenario-based high-power base sites, micro base sites, pico sites, Femto sites and the co-constructing and sharing of indoor coverage DAS products and Open RAN products of mobile telecommunication.
     
  • 5G fundamental network platform solutions for 5G industry applications - implementation of 5G in vertical industries such as industrial, mining, medical and education sectors and empower the intelligent upgrading of the telecommunications equipment industry.
     
  • Remote radio unit (RRU) products: launched the standardised and platform-based high-power RRU product series, which has the advantage of supporting advanced technologies such as multi-carrier and multi-mode, large bandwidth and high efficiency.
• Services:
  • provide mobile communication network product development, planning and design, engineering construction, project management, network maintenance, optimisation and other comprehensive, professional, full-cycle services, for operators to reduce the cost of network construction and maintenance, improve the overall service efficiency.

2. Operator telecommunication services

• Provision of operator telecommunication services and related value-added services by a subsidiary in Laos, ETL. The Group has a shareholding ratio of 51% in ETL.
   
• ETL’s principal business includes the provision of:
  • mobile communication services;
  • fixed line communication services;
  • Wi-Fi/internet services; and
  • other types of telecommunication value-added services.

 Highlights from Introductory Document

A. Industry Prospects (Refer to page 117 of the Introductory Document for complete list)

• 5G technology - The current wave of 5G is reshaping both the professional and personal lives of consumers by enabling new use cases like connective vehicles, augmented reality and enhanced video and gaming.
  • The Group expects to see continued strong demand for its products and services from operators constructing indoor 5G networks globally.
  • The stage of development of wireless networks in different parts of the world is very uneven and Comba expects to ride on the growth in consumer and infrastructure spending in emerging markets, especially those with relatively young demographics but relatively low 5G network coverage.
• Innovative green design and green manufacturing - With the mission to support net-zero goals, there will be an increase in demand from telecommunication operators for green, low-carbon, intelligent and highly efficient 5G networks with mobile antenna systems designed based on new architectures, solutions and technologies.
  • Rapid urbanisation and the shift towards a more sustainable living environment have also resulted in smart cities which can be made possible by highly efficient, embeddable antennas made specifically for smart living.
  • As China adopts low-carbon environmental protection as a national strategy, there is an increase in demand from the 3 largest telecommunication operators in China (which are China Mobile, China Telecom and China Unicorn) for more energy efficient green antennas and integrated high-power base stations to extend coverage.
• Base station antenna (BSA) - A base station antenna is a fundamental component in a wireless communication network. These antennas are base stations mounted on base station towers to provide cellular connectivity to users.
  • In China, the demand for 5G base station antennas is driven by the deployment of 5G medium-frequency network and stable demand from the 3 largest telecommunication operators in China.
• Network system - The outlook for the international indoor coverage and Open RAN industry is positive and shared indoor wireless network coverage solutions have achieved significant growth in APAC, North America, South America and other regions.

B. Competitive Strengths (Refer to page 172 of the Introductory Document for complete list)

• Operates own R&D facilities and manufacturing base and has a long track record of operating in the telecommunications equipment industry which has high barriers to entry. The manufacturing base occupies an area of approximately 80,000 sqm while the R&D lab occupies approximately 3,500 sqm in Guangzhou.
   
• Modern manufacturing technology to produce innovative products and for product testing, such as automotive manufacturing capabilities and has a fully-equipped antenna testing environment with advanced testing equipment and near-field and far-field antenna testing chamber.
   
• Replicable business model that is built on green initiatives. It strives to build a green industry supply chain by reducing the carbon footprint and environmental pollution in the manufacturing process and products. For instance, it has launched a high-end 4G/5G (8TR) integrated Base Station Antenna, which achieves energy saving and lower carbon emission while meeting the capacity and coverage requirement.
   
• Capability to offer customised solutions to meet specific needs and requirements of our customers efficiently and effectively, such as the “green and innovative antenna and subsystem solution”.

C. Business Strategies & Future Plans (Refer to page 174 of the Introductory Document for complete list)

• Expansion into Singapore and APAC - In order to support the development of the APAC business (11.4% of revenue in 6M2022), it intends to increase its resources in Singapore and its surrounding regions, and to establish Singapore as an important hub in the APAC region. Aside from APAC, Comba generates revenue from other regions such as China (71%), Americas (8.7%), European Union (7%) etc.
   
• Enhancement of R&D capabilities to ride on trends and business opportunities arising from digitalisation of the telecommunications industry;
   
• Expansion of product range, which includes the continual development and launch of eco-friendly and ESG products such as “green and innovative antenna and subsystem solution”;
   
• Expansion of the 5G vertical industry, including working with telecom operators to expand 5G+ industrial control applications and launching 5G wireless intelligent cloud network products;
   
• Continue to increase market share in shared indoor wireless network coverage solutions and 5G+ vertical industries, particularly through the expansion of the Group’s 5G+Smart Mining business and the improvement of technical support;
   
• Continue to expand base station antenna product portfolio and maintain Comba’s position as the technology and market leader in the base station antenna market. Partnering with international mobile operators and world-leading manufacturers of core equipment vendors and supporting partners to build efficient wireless network globally;
   
• Grow the Open RAN business and ecosystem by seeking strategic partners, exploring new sales channel and conducting joint product R&D to address both the macro and private network markets;

D. Key Risk Factors (Refer to page 42 of the Introductory Document for a complete list of Risk Factors)

• Business operations may be materially and adversely affected if the Group fails to comply with laws, regulations and conditions stipulated in any licences, permits, registrations or approvals, and/or are unable to obtain, maintain and/or renew the required licences, permits, registrations and approvals.
   
• Like most business-to-business (B2B) businesses in the telecommunications equipment industry, it is exposed to concentration risk of reliance on major customers, and may be adversely affected by any disruption or termination of business relationships with major customers or fluctuations in their demand for Comba’s products.
   
• The Group is dependent on its ability to continuously introduce new innovative products through R&D efforts and to adapt to changes in engineering and production technologies.
   
• The Group may be required to purchase key components from a limited number of suppliers and may be affected by changes in raw material costs. There could be inventory risks that, if not properly managed, could adversely affect financial condition and operating results.

Financials

• Comba’s revenue amounted to HK$5,057.2 million, HK$5,869.7 million, HK$2,418.1 million and HK$3,042.5 million in FY2020, FY2021, 6M2021 and 6M2022 respectively. Majority of the Group’s revenue comes from customers in China, of which China comprises 69.2% and 71% of the Group’s revenue in FY2021 and 6M2022 respectively.
   
• The Group recorded a loss (before tax) of HK$268.1 million, HK$656.5 million in FY2020 and FY2021 but turnaround in 6M2022 with a profit before tax of 82.1 million.
  • This was mainly due to the impact of the COVID-19 pandemic, which affected the market demand and caused a varying degree of delays in the construction of the telecommunication network across the world in FY2020 and an increase in provision for receivables and inventories, and research and development expenses in FY2021.
     
  • In 6M2022, there was a significant increase in revenue due to successful project tenders and deliveries, as well as a reduction in the operating expenses ratio resulting from effective cost and expenses control measures.

SGX’s Largest Telecommunications-related Plays

The three largest telecommunications service providers on SGX – Singtel, NetLink NBN Trust and StarHub – have a combined market cap of about S$47 billion. Together, they received a combined net institutional inflows of over S$690 million in 2022.

 Source: SGX, Bloomberg (3 Jan 2023)

Did You know?