MTR Corporation

History

The Mass Transit Railway Corporation (Chinese: 地下鐵路公司) was established in 1975 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, 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 is still the major stakeholder in the MTRCL.

Privatisation

On 11 September 2000, the Financial Secretary of the Hong Kong Government, Mr 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 budget surplus of HK$360 million ($46.1 million), which had increased from a surplus of HK$278 million ($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

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 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 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 was approved by shareholders of the MTRCL on 9 October 2007. The merger is effective for 50 years.

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).

Hong Kong

MTR Corporation is responsible for the operation of MTR (and the Kowloon–Canton Railway since 2 December 2007). The rail lines are profitable, but the MTR Corporation derives most of its profits from property development (usually adjacent to railway stations) and other commercial activities in Hong Kong, including the letting of retail and poster advertising space, ATM banking facilities, and personal telecommunication services.

Rail services

Mass Transit Railway (MTR) is the rapid transit railway system in Hong Kong. Originally opened in 1979, the system now includes 221 km of rail with 155 stations, including 89 railway stations and 68 light rail stops. There are also several Future projects of the MTR

Property management

Property is one of the main businesses of the MTR generating most of the profits. In 2009 of a net profit of HK$7.3 billion, MTR made HK$3.55 billion from property and HK$2.12 billion from transport operations. 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 International Finance Centre.

Shopping centres

The MTR Corporation invested heavily to develop large-scale shopping centres around MTR stations. The most recent example is the PopCorn mall located at Tseung Kwan O station. It is connected to the adjacent malls, high-end housing and hotels. Another 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 centres developed and managed by the corporation include Elements, Paradise Mall, Telford Plaza, Luk Yeung Galleria and The Lane.

United Kingdom

In 2004, MTR in a joint venture with Sea Containers unsuccessfully bid for the Integrated Kent franchise. In 2007, MTR was shortlisted to bid for the West Midlands franchise, but did not lodge a bid.

MTR and Laing Rail established a 50/50 joint venture (MTR Laing) to bid for the London Overground concession. From November 2007 until November 2016, MTR Laing trading as London Overground Rail Operations operated the concession. It was mainly managed by Laing Rail Group Management moved from its Chiltern Railways division with MTR providing specialists as needed.

In February 2009, MTR Corporation were shortlisted to operate the Tyne & Wear Metro concession in Newcastle upon Tyne, and in November 2013 were announced as a bidder for the ScotRail franchise.

In May 2015, MTR Crossrail commenced an eight-year contract to operate the Crossrail concession, with an option for a further two years. In June 2015, MTR was shortlisted to bid for the next London Overground concession in its own right, but lost out to Arriva Rail London.

In April 2016, MTR was again shortlisted to bid for the West Midlands franchise, however again withdrew. In June 2016, MTR took a 30% shareholding in FirstGroup's bid for the South Western franchise. In October 2016, MTR was shortlsted to bid for the Wales & Borders franchise.

Sweden

In January 2009, Tunnelbanan Teknik Stockholm, a 50/50 joint venture between MTR and Mantena, was awarded the contract to operate the Stockholm Metro. The contract is for eight years with an option to extend for another six years. MTR started operating the metro on 2 November 2009. In September 2015 the six year extension was granted. In January 2016, MTR bought out its joint venture partner.

On 21 March 2015, MTR began operating fast long distance traffic between Stockholm and Gothenburg with own ticket sales using the brand name MTR Express. It has purchased six Stadler Flirt electric multiple units.

On 11 December 2016, MTR will commence operating the Stockholm commuter rail network. The contract is for 10 years with an option to extend for another four years.

Australia

In June 2009, the Metro Trains Melbourne consortium of MTR (60%), John Holland and United Rail (20% each) were selected to operate the Melbourne suburban railway network, taking over from Connex Melbourne on 30 November 2009. In September 2016, the government opened negotiations with Metro Trains Melbourne to extend the contract for seven years until November 2014.

In June 2014, Northwest Rapid Transit, a consortium consisting of MTR (60%), John Holland, Leighton Contractors, Plenary Group and UGL Rail, was selected as the preferred operator to deliver the Sydney North West Rail Link operations contract. The North West Rail Link is scheduled to open in 2019.

Beijing

The company has also formed a joint-venture Beijing MTR Corporation Limited (49%) with Beijing Capital Group ("BCG") (49%) and the Beijing Infrastructure Investment Co ("BIIC") (2%) to build and operate for 30 years Line 4, Daxing Line, and Line 14, and has also signed an agreement to build and operate Line 16 of the Beijing Subway.

Shenzhen

The company concluded initials concession agreement to build phase 2 of the Line 4 of the Shenzhen Metro, and to operate the whole line on a BOT basis for 30 years from 1 July 2010. The phase 2 of Line 4 have been in operation for passengers since 16 June 2011.

Hangzhou

The company formed a new joint-venture Hangzhou MTR with Hangzhou Metro Group in 2012 to operate Line 1 of the Hangzhou Metro for 28 years, in which MTR holds 49% of the stock, while Hangzhou Metro Group holds the other 51% of the stock.