MTR Corporation Limited

MTR Corporation

MTR Corporation Limited (abbreviated as 港鐵公司) is a company listed on the Hong Kong Exchange and included in the Hang Seng Index. It is the company that owns and runs the MTR metro system. It also invests and builds railways in different parts in the world.

History of the Corporation

The Mass Transit Railway Corporation (Chinese: 地下鐵路公司) was established in 1975 as a government-owned statutory corporation in order to oversee the initial construction of the Hong Kong Mass Transport System, and later to run and manage the functioning transport system. On 30 June 2000 the MTRC was succeeded by the MTR Corporation Limited (MTRCL, Chinese: 地鐵有限公司). As with the MTRC, the MTRCL's principal business is to operate the mass transit railway system. Following a successful initial public offering, the MTRCL was listed on the Hong Kong Stock Exchange on 5 October 2000, however the government maintains a majority stake in the MTRCL.

On December 2 2007, the company started operating the original KCRC railway system, which the plan is commonly known as the MTRCL-KCRC merger. The Chinese name of the company changed to 香港鐵路有限公司 (literally translated as Hong Kong Railway Corporation Limited) but English equivalent stays the same, as Mass Transit Railway (MTR).

Privatisation

On 5 October 2000, the MTR Corporation Limited became Hong Kong's first privatised rail and metro company, which marked the start of the Hong Kong government's planned initiative to wind down its interests in various public utilities. Prior to its listing on the Hong Kong Stock Exchange, the Mass Transit Railway Corporation was wholly owned by the Hong Kong Government. The offering involved the sale of around one billion shares, and the company now has the largest shareholder base of any company listed in Hong Kong. In June, 2001, MTR was transferred to Hang Seng Index.

At the time of the initial public offering, the company was operating with a budget surplus of HK$360 million, which had increased from a surplus of HK$278 million in 1997. However, after the IPO profits decreased as the company lost much of its subsidies (mainly development rights of lands) from the government, dropping to HK$139 million. Yet, this trend seems to have reversed, as profits grew more than tenfold in the fourth quarter of 2004, making it one of the few profitable public transport systems in the world.

MTR Corporation has always been reliant on developing properties next to railway stations for its profits (although the rail lines are profitable themselves); many recently built stations are incorporated into large housing estates or shopping complexes. Examples of this type of construction can be seen at Tsing Yi station, which is built next to the Maritime Square shopping centre, and directly underneath the Tierra Verde housing estate.

Operations

The MTR Corporation Limited is responsible for the operation of MTR (and KCR since December 2 2007) in Hong Kong. Besides railway operations, the MTRCL is also actively involved in the development of key residential and commercial projects above existing stations and along new line extensions as well as many other commercial activities associated with the railway. The most recent of such developments was the large Maritime Square shopping centre development which was built in conjunction with Tsing Yi station. The MTRCL is also involved in the letting of retail and poster advertising space, ATM banking facilities, and personal telecommunication services. It also provides consultancy services to organizations worldwide.

Property management

Property is one of the main businesses of the MTR. The MTR tries to develop suitable sites related to their new railway projects and their existing railway. For instance, the reclaimed land situated in West Kowloon that is owned by the MTR will be developed into an area with residential, office and retail space. Two of Hong Kong's largest banks, HSBC and the Bank of China are to have office towers there. Furthermore, will be more than 7,000 housing units in the development. The MTR also owns several shopping centres, as well as the new International Finance Centre.

Shopping centres

The MTR Corporation invested heavily to develop large scale shopping centres around MTR stations. An example of such a shopping centre is Maritime Square (青衣城) located at Tsing Yi station. Maritime Square is a nautical-themed mall in which there are supermarkets, boutiques, bookstores, a cinema, and restaurants. Since Tsing Yi station serves as the transportation hub for Tsing Yi, Maritime Square is also easily accessible by other transportation means including buses and taxis. Other shopping centers developed and managed by the corporation include Paradise Mall (杏花新城), Telford Plaza (德福廣場), Luk Yeung Galleria (綠楊坊) and The Lane (連理街).

Operations outside Hong Kong

On 24 November 2004, it was revealed that the MTRC (together with GNER) is one of the main players in acquiring the South Eastern Trains franchise in the United Kingdom. However, Govia has been selected as the operator.

The company conducted a feasibility report to build a light rail in Macau. The company concluded initials concession agreement to build phase 2 of the Line 4 of Shenzhen Metro, and to operate the whole line on a BOT basis. The company is also exploring business opportunities in Beijing Subway and a metro system in Wuhan.

MTR corporation were bidding for the West Midlands Train route in England, but have since withdrawn their bid.

They are also interested to take over the Öresund trains in Sweden and Denmark together with SJ AB.

The company and Laing Rail established a joint venture for the London Overground franchise. In December 2006, Govia and MTR Laing were selected to submit "best and final offers" for the franchise. On 19 June 2007, MTR Laing successfully won the London Overground franchise. MTR Laing has since changed its name to London Overground Rail Operations Limited (LOROL), as Laing Rail Group has become acquired by Germany's Deutsche Bahn. LOROL is mainly managed by Laing Rail Group Management moved from their Chiltern Railways division with MTR providing specialists as needed.

In July 2008 there were reports that they are bidding to have the right to operate Melbourne's extensive metropolitan train network, aligned with United Group. In August 2008 it was confirmed that they had been shortlisted.

MTR-KCR merger

There had been some discussion of merging the Kowloon-Canton Railway Corporation (KCRC), which was also government-owned, and the MTR to make the territory's transport system more efficient. The MTRCL backed such a merge while the KCRC opposed the plan. In March 2004, the Hong Kong Government officially encouraged the two companies to merge.

On April 11, 2006, the Hong Kong Government officially announced the details of the proposed merger. Under the non-binding Memorandum of Understanding the Government has signed with KCRC, KCRC would grant a Service Concession to the MTRCL to operate the KCR system, with an initial period of 50 years. The KCRC would receive a one-time upfront payment of HK$4.25 billion, a fixed annual payment of HK$750 million and a variable annual payment based on revenues generated from operation of the KCR system. In addition, MTRCL would make a payment of $7.79 billion for the acquisition of property and other related commercial interests.

The railway lines the KCRC operated were less profitable than the MTRC, and the KCRC was less active in property development. It was widely considered that the Government's choice was to avoid being criticised for selling assets of the KCRC, which it wholly owned to MTRCL at an underpriced level. Leasing the operation right of the KCR system to the MTRCL could avoid actually selling the KCRC.

On 2 December 2007, the Chinese name of the MTRCL was changed to 香港鐵路有限公司 (literal translation: Hong Kong Railway Corporation Limited) after being granted the Service Concession while the English name will remain unchanged. The KCRC is now a holding company of the KCR system, without actual railway operations. The merger had been approved by shareholders of the MTRCL on October 9, 2007. The merger is effective for 50 years.

Fare reductions

All adult Octopus Card holders would be the first to benefit from the merger. Student and Concessionary Octopus holders would also benefit from the merger by further reducing $0.1 from their 50% off fares. Student Octopus holders would continue to pay the current reduced concessionary fares on the MTR network. Elderly Octopus holders would be introduced to a new fare system which only the elderly can enjoy a $2 fare to anywhere on the MTR network (excluding Airport Express, Light Rail, and Cross-Boundary Stations).

Future expansion

The following railway links are being constructed or planned by MTR currently:

  • Kowloon Southern Link (West Rail Line to Hung Hom; under construction, to be completed in 2009)
  • Tseung Kwan O Line South Extension (Tseung Kwan O Line to Tseung Kwan O South (Lohas Park residential area); under construction, to be completed in 2009)
  • West Island Line (Island Line extended westward to Kennedy Town; under planning, to be completed in 2013 or 2014)
  • South Island Line (East and West) (Two lines to the south of Island Line, to South Horizons residential area and Wong Chuk Hang; under planning, South Island Line (West) to be completed in 2014)
  • Kwun Tong Line Extension (to Ho Man Tin and Whampoa; under planning)
  • Sha Tin to Central Link (extension of Ma On Shan Line to Tsim Sha Tsui, Kwun Tong Line extension to Whampoa, and East Rail Line to Admiralty; under planning; construction starts by 2010)
  • Northern Link (New Territories) (Line from Kam Sheung Road to Chau Tau and Lok Ma Chau; under planning)
  • North Island Line (absorption of Island Line by the Tung Chung and Tseung Kwan O lines; proposal deferred to 2016)

See also

References

External links

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