MTR Corporation - A

MTR Corporation - A

MTR Corporation Limited is a majority government-owned public transport operator and property developer in Hong Kong which operates the Mass Transit Railway, the most popular public transport network in Hong Kong. It is listed on the Hong Kong Exchange and is a component of the Hang Seng Index. The MTR additionally invests in railways across different parts of the world, including franchised contracts to operate rapid transit systems in London, Sweden (Stockholm Metro and the MTRX Stockholm–Gothenburg rail link), Beijing, Hangzhou, Macau, Shenzhen, Sydney, and a suburban rail system in Melbourne.

MTR Corporation History

The Mass Transit Railway Corporation (Chinese: 地下鐵路公司) was established on 22 September 1972 as a government-owned statutory corporation to build and operate a mass transit railway system to meet Hong Kong's public transport needs. On 30 June 2000, the MTRC was succeeded by the MTR Corporation Limited (MTRCL, 地下鐵路有限公司). 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 is still the majority stakeholder in the MTRCL.

MTR Corporation Partial Privatisation

On 11 September 2000, the financial secretary of the Hong Kong Government, Sir Donald Tsang, announced the partial privatisation of MTR Corporation Limited. The offering was for one billion shares, but this was increased to 1.15 billion due to high demand. On 5 October 2000, the company was listed on the Hong Kong Stock Exchange with 600,000 shareholders. In June 2001, MTR was added to the Hang Seng Index.

At the time of the initial public offering, the company was operating with a surplus of HK$360 million (US$46.1 million), which had increased from a surplus of HK$278 million (US$35.6 million) in 1997. The MTR has continued to be one of the few profitable public transport systems in the world.

MTR–KCR Merger

MTR Corporation Railway Network after Merger

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

On 11 April 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 Kowloon–Canton Railway (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 KCRC's lines were less profitable than those of 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 for an unreasonably low price. Leasing the operation rights of the KCR system to the MTRCL avoided 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 was approved by shareholders of the MTRCL on 9 October 2007. The merger is effective for 50 years. This also resulted in changing the system's Chinese name from "地鐵" ("Subway") to "港鐵" "(Hong Kong Railway").

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).

MTR Corporation Revenue Model

In July 2021, Liber Research Community, an NGO, produced a report which detailed the history of MTR's revenue model. In it, it reported that the "Rail + Property" development model was originally formed to offset unexpected financial difficulties with creating the original MTR lines, with original estimates that MTR's property would account for approximately 20 per cent of its total revenue.

The Executive Council also determined that since MTR had to apply for land grants from the government, it was the government's decision on how land above MTR stations should be allocated, stating "the grant of comprehensive development rights on land affected by railway installations will be discretionary".

Land above stations would not necessarily be used to build private housing to maximize MTR's revenue, but could be used to solve issues of housing in Hong Kong, such as by developing public housing instead.

The Executive Council also noted that "revenue from property development was not originally envisaged as being used as a means of financing the capital cost of the railway itself" and that revenue from property development was to be used for a "contingency reserve", such as for offsetting excessive construction costs.

The report noted that 40 per cent of MTR's revenue is currently from property, and that the original intent of using property revenue for contingency purposes had shifted into a different, unsustainable model where property is used to subsidise operations and construction of new stations.

MTR Corporation Senior Leadership

  • Chairman: Rex Auyeung (since July 2019)
  • Chief Executive: Jacob Kam (since April 2019)

List of Former Chairmen

  • Sir Philip Haddon-Cave (1972–1974), project manager
  • Sir Norman Thompson (1974–1983), first official Chairman
  • Sir Wilfrid Newton (1983–1989)
  • Hamish Mathers (1989–1995)
  • Jack So (1995–2003)
  • Raymond Ch'ien (2003–2015)
  • Frederick Ma (2016–2019)

MTR Corporation List of Former Chief Executives

The position of Chief Executive was created in 1995.

  • Jack So (1995–2003)
  • Sir Chow Chung-kong (2003–2011)
  • Jay Walder (2012–2014)
  • Lincoln Leong (2015–2019)

MTR Corporation Limited Overview

Headquarters: Kowloon Bay, Hong Kong
Formerly: Mass Transit Railway Corporation (1972–2000)
Type: Public, Government-owned corporation
Traded as:
SEHK: 66
Hang Seng Index component

Public transport
Real estate

Founded: 22 September 1972
Headquarters: 33 Wai Yip Street, Kowloon Bay, New Kowloon, Hong Kong
Area Served: Worldwide, including:
Hong Kong
Melbourne, Victoria
Sydney, NSW

mainland China:
Shenzhen, Guangdong
Hangzhou, Zhejiang
United Kingdom
London, England

Key People:
Rex Auyeung (chairman)
Jacob Kam (CEO)

Revenue: HK$55.4 billion (December 2017)
Net Income: HK$10.5 billion (December 2017)
Total Assets: HK$263.768 billion (December 2017)
Hong Kong Government 75.09%
Others 24.91%

Number of Employees: 28,053 (June 2017)
MTR Corporation:
Traditional Chinese: 香港鐵路有限公司
Simplified Chinese: 香港铁路有限公司
Literal Meaning: Hong Kong Railway Corporation Limited


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