MTR expands UK presence

Hong Kong-based MTR Corp has significantly expanded its presence in the United Kingdom rail sector, as a partner in a consortium that won a seven-year and 2.6 billion pound ($3.3 billion) contract to run one of Britain's busiest and largest commuter networks.

The consortium, First MTR, was awarded the franchise to run South Western Trains by British Transport Minister Chris Grayling on Monday.

The South Western Trains franchise operates services out of London's Waterloo station, serving the south and west of London and as far as Bristol, Exeter, Southampton and Portsmouth.

First MTR is a consortium consisting of MTR, which owns 30 percent, and UK's First Group, which owns the remainder.

MTR runs the transport system in Hong Kong and other services in the Chinese mainland. It already runs TfL Rail in the UK and will run the new trans-London underground service Crossrail when it opens in 2018.

MTR, founded in the 1970s as the city's sole train operator, is controlled by the Hong Kong government with a 75.09 percent stake. First MTR will take over the running of South Western Trains from August.

First MTR will oversee a 1.2 billion pound investment program, adding 22,000 extra seats into London Waterloo station each morning and 30,000 extra seats out of Waterloo each evening, as well as buying a fleet of 90 new trains.

The deal puts MTR on course to beef up its presence in the UK after being chosen in July 2014 to run the forthcoming Crossrail, recently rechristened the Elizabeth Line, that spans London.

It also followed the company's reported participation in the bidding in Australia for part of the Sydney Metro City & Southwest rail contract, worth up to HK$20 billion ($2.57 billion).

"MTR, whose railway service in Hong Kong is known for a 99.9 percent punctuality record, stands as the poster child of how public service products can be offered in a highly efficient and profit-making manner in Hong Kong and elsewhere," said Fielding Chen Shiyuan, Hong Kong-based Asia economist at Bloomberg Intelligence.

The UK move comes amid talk about how the Asian financial hub could play a bigger part in the Belt and Road Initiative.

Chen said projects along the Belt and Road route, such as the high-speed railway between China and Thailand, could spell opportunities for Hong Kong to make a difference.

"MTR, with its prominent global recognition, is surely one of the flagship brands that (Hong Kong) should promote," he added.

Earlier this month, the mass transit operator posted a 3.2 percent jump in profit from its Hong Kong transport operations to HK$2.57 billion for 2016. Local transport operations continued to make the biggest revenue contributor, accounting for roughly 40 percent of total revenue.

Jacob Zhou, a Hong Kong-based analyst at a major accounting firm, said that as one of the few profit-making railway operators in the world, whose ticket revenues easily cover operating costs, MTR also set an example for cities in the Chinese mainland.