All eyes are on PCCW's margin trend ahead of results

It unexpectedly fell in 1H14.

As the financial results for 2H/FY14 are being awaited, a key watch point that's being watched for PCCW is on its media side.

According to a research note from Barclays, it expects PCCW's robust revenue growth to continue -- Barclays projected 9.4% y/y in 2H14 -- thanks to the availability of Barclays Premier League to drive ARPU upgrades and subscriber base expansion.

Nonetheless, Barclays noted that it will watch for PCCW's margin trend, which has unexpectedly deteriorated in 1H14 (Barclays estimates 15% for 2H14).

Barclays noted that it will seek more updates on NOW TV operations, content development progress in China as well as further plans on launching free TV services in HK.

Here's more from Barclays:

Solution: we expect management to talk more on the future development plan for the business given the strong IT credential of current CEO.

For 2H14 results, we expect robust growth to continue (we estimate 15% y/y) and the margin to rebound to 19.3% given the seasonality in the business.

Dividend: we continue to expect PCCW to pass on 70% of the dividend it receives from HKT.

This underpins our 2014E total DPS forecast of HK$23.5 cents, implying a yield of 4.5% on current share price.