MTR Corporation explained

MTR Corporation Limited
Former Name:Mass Transit Railway Corporation (1972–2000)
Type:Public
Government-owned corporation
Location City:33 Wai Yip Street, Kowloon Bay, New Kowloon, Hong Kong
Area Served:Worldwide, including:
Revenue:HK$55.4 billion (December 2017)[1]
Profit:HK$10.5 billion (December 2017)
Assets:HK$263.768 billion (December 2017)
Num Employees:28,053 (June 2017)

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, Stockholm, Beijing, Hangzhou, Macao, Shenzhen, Sydney, and a suburban rail system in Melbourne.

History

The Mass Transit Railway Corporation 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,). 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.

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.[2] The offering was for one billion shares, but this was increased to 1.15 billion due to high demand.[3] 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.[4]

MTR–KCR merger

See main article: MTR–KCR 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.[5]

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[6] ("Hong Kong Railway Corporation Limited") after being granted the Service Concession while the English name will remain unchanged.[7] [8] 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.[9] Student and concessionary Octopus holders would also benefit from the merger by further reducing $0.1 from their 50% off fares.[10] 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).[11]

Revenue model

In July 2021, Liber Research Community, an NGO, produced a report which detailed the history of MTR's revenue model.[12] 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 the construction of new stations.

Senior leadership

List of former chairmen

  1. Sir Philip Haddon-Cave (1972–1974); project manager
  2. Sir Norman Thompson (1974–1983); first official Chairman
  3. Sir Wilfrid Newton (1983–1989)
  4. Hamish Mathers (1989–1995)
  5. Jack So (1995–2003)
  6. Raymond Ch'ien (2003–2015)
  7. Frederick Ma (2016–2019)

List of former chief executives

The position of Chief Executive was created in 1995.

  1. Jack So (1995–2003)
  2. Sir Chow Chung-kong (2003–2011)
  3. Jay Walder (2012–2014)
  4. Lincoln Leong (2015–2019)

Operations by market

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

See main article: MTR. Mass Transit Railway (MTR) is the rapid transit railway system in Hong Kong. Originally opened in 1979, the system currently (at August 2018) includes 221km (137miles) of rail with 159 stations, including 91 railway stations and 68 light rail stops.[13] There are also several future projects.

Property management

See main article: MTR Properties. Property is one of the main businesses of the MTR, generating most of its profits. In 2009, with a net profit of HK$7.3 billion, MTR made HK$3.55 billion from property and HK$2.12 billion from transport operations.[14] 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 owned by the MTR was developed into Union Square, a mixed-use development with residential, office, retail, and hotel space. The site includes the tallest commercial building in Hong Kong, the 118-storey International Commerce Centre.

Central's landmark International Finance Centre is managed by Premier Plus, MTR's elite property management brand.[15]

Shopping centres

The MTR Corporation invested heavily to develop large 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 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 transport hub for Tsing Yi, Maritime Square is also easily accessible by other transport means including buses and taxis. Other shopping centres developed and managed by the corporation include CityLink, Elements, Hanford Plaza, Ocean Walk, Paradise Mall, Plaza Ascot, Sun Tuen Mun Shopping Centre, Telford Plaza, The Lane, the LOHAS, and Luk Yeung Galleria.

As of 2023, MTR Corporation owns 13 shopping malls across Hong Kong, classified into luxury, regional, and neighbourhood malls.[16]

United Kingdom

Current operations

In May 2015, TfL Rail began an eight-year contract to operate the Crossrail concession in London, with an option for a further two years.[17] Before the new railway lines opened, MTR already operated Liverpool Street–Shenfield and Paddington–Heathrow Airport services branded as TfL Rail. In May 2022 services commenced between Paddington and Abbey Wood via Liverpool Street, and all services were renamed Elizabeth line.

In August 2017, South Western Railway, in which MTR has a 30% shareholding in a joint venture with FirstGroup, began operating the South Western franchise.[18]

Former operations

MTR and Laing Rail established a 50/50 joint venture (MTR Laing) to bid for the London Overground concession. MTR Laing won the bid and trading as London Overground Rail Operations operated the concession from November 2007.[19] After Laing Rail and Arriva UK Trains were brought under the ownership of Deutsche Bahn in 2007 and 2010 respectively, Arriva took over the Laing Rail's share of the concession. In June 2015, MTR was shortlisted to bid for the next London Overground concession in its own right, but lost out to its previous partner, Arriva.[20] [21] [22] [23] Arriva Rail London took over full operation in November 2016.

Unsuccessful or withdrawn bids

Sweden

MTR Nordic AB is a subsidiary of MTR Corporation UK based in Stockholm[35] that operates in the public transportation sector through four subsidiaries. The CEO of MTR Nordic is Henrik Dahlin.[36]

Australia

Mainland China

Logo Name Founded Website
Beijing MTR Corporation Limited mtr.bj.cn
Hangzhou MTR Corporation Limited mtrhz.com.cn
MTR Corporation (Shenzhen) Limited mtrsz.com.cn

Beijing

The company has also formed a joint-venture Beijing MTR Corporation Limited (Jinggang MTR) (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, Line 14, Line 16 and Line 17[61] [62] of the Beijing Subway.

Hangzhou

The company formed a new joint-venture Hangzhou MTR (Hanggang 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. Line 5 of the Hangzhou Metro is operated by Hangzhou MTR Line 5 Ltd., which MTR holds 60% of the stock.

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. Line 13, which is currently under construction, is also confirmed to be operated by MTR Corporation (Shenzhen).[63]

Macau

MTR Railway Operations (Macau)
 Company Limited
Type:Public company
Location City:Taipa
Location Country:Macau
Area Served:Taipa
Industry:Transport
Homepage:MTR (Macau)

MTR Railway Operations (Macau) Company Limited, a wholly owned subsidiary of MTR Corporation, operates the Taipa Line of the Macau Light Rapid Transit (MLRT or MLM) in Macau since the line's opening on 10 December 2019. MTR will operate and maintain the line for 80 months.[64]

External links

MTR Properties and MTR Property Management

Documentaries

Notes and References

  1. http://www.mtr.com.hk/archive/corporate/en/investor/annual2017/E107.pdf 2017 Financial Highlights MTR Annual Report 2017, Retrieved 2018-05-24
  2. MTR Privatisation Share Offer (NOT for distribution outside Hong Kong). Hong Kong SAR Government. 11 September 2000. 11 February 2017.
  3. Web site: Executive Management's Report – Business Overview. Hong Kong Exchanges and Clearing Limited. 11 February 2017.
  4. Web site: How Hong Kong's subway turns a $2 billion annual profit. CNN. 30 March 2015. 11 February 2017.
  5. Web site: Press Release: Government has reached understanding with MTRCL on the terms for merging the MTR and KCR systems. Hong Kong SAR Government. 11 April 2006. 17 November 2007.
  6. Web site: Rail Merger Bill. Legislation Council of the Hong Kong SAR. 8 November 2007.
  7. Appointments announced for post-merger MTR Corporation Limited . . 8 August 2007 . 10 November 2007. (Comparing with the Chinese version)
  8. Rail Merger Bill to be introduced into Legco (English name remain MTR) . . 8 June 2006 . 15 November 2007 . (Comparing with the Chinese version)
  9. https://web.archive.org/web/20070601232023/http://www.hketousa.gov.hk/usa/press/2006/apr06/041106.htm Railway Merger Proposal in Hong Kong Gets Green Light
  10. http://www.thb.gov.hk/eng/policy/transport/issues/pmmks/Fact%20Sheet%20(Eng).pdf Fact Sheet (Eng)
  11. http://www.mtr.com.hk/eng/whatsnew/fare10tips/elder$2_e.pdf Elders ride on the MTR on Sundays and public holidays for just $2 for the whole journey
  12. Web site: lrcresearcher. 還原「物業帶動鐵路」的歷史時空. 2021-08-04. Liber Research Community. 6 July 2021 . zh-HK.
  13. Web site: MTR Railway Network. MTR. 3 August 2018.
  14. News: MTR Posts 16% Rise in Profit, Plans to Offer 5,000 Apartments. Jeffery . Ng . The Wall Street Journal. 9 March 2010 .
  15. Web site: Two ifc services International Finance Centre, Hong Kong . 2023-07-03 . ifc.com.hk . en-US.
  16. Web site: MTR > Shopping Malls . 2023-07-03 . www.mtr.com.hk . en.
  17. News: MTR selected to operate Crossrail services . 18 July 2014 . Railway Gazette International.
  18. FirstGroup and MTR welcome South Western rail franchise award . https://web.archive.org/web/20180626083149/http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/FGP/13171647.html . 26 June 2018 . London Stock Exchange . 27 March 2017.
  19. "MTR Laing wins London Overground" Railway Gazette International July 2007 page 408
  20. http://www.railwaygazette.com/news/passenger/single-view/view/four-bidders-shortlisted-for-london-overground-operating-concession.html Four bidders shortlisted for London Overground operating concesssion
  21. http://www.railnews.co.uk/news/2015/06/30-tfl-announces-overground-shortlist.html TfL announces Overground Shortlist
  22. https://www.bbc.co.uk/news/business-35841733 Arriva wins £1.5bn London Overground contract
  23. http://www.arriva.co.uk/media/news/2016/18-03-2016 Transport for London announces intention to award London Overground contract to Arriva
  24. "GNER joins Hong Kong's MTR to bid for new Kent rail franchise" Rail issue 502 8 December 2004 page 6
  25. "MTR pulls out of West Midlands bid" The Railway Magazine issue 1269 January 2007 page 6
  26. News: Foreign bids for Metro contract . BBC News . 2 February 2009 . 3 February 2009.
  27. News: ScotRail franchise shortlist named . BBC News . 1 November 2013 . 3 February 2009.
  28. http://www.railwaygazette.com/news/passenger/single-view/view/east-japan-railway-on-west-midlands-franchise-shortlist.html East Japan Railway on West Midlands franchise shortlist
  29. "MTR withdraws from West Midlands bidding"Modern Railways issue 815 August 2016 page 21
  30. http://www.railwaygazette.com/news/policy/single-view/view/wales-borders-bidders-asked-to-submit-metro-options.html Wales & Borders bidders asked to propose Metro options
  31. https://www.gov.uk/government/speeches/west-coast-partnership-and-south-eastern-rail-franchise-bidders West Coast Partnership and South Eastern rail franchise bidders
  32. http://www.railwaygazette.com/news/single-view/view/three-shortlisted-for-west-coast-partnership-franchise.html Three shortlisted for West Coast Partnership franchise
  33. Web site: MTR teams up with operator of Europe's largest high speed rail network for West Coast Partnership bid. 20 December 2018. MTR Europe. en. 25 December 2018.
  34. https://www.theguardian.com/business/2019/aug/14/firstgroup-consortium-to-replace-virgin-on-west-coast-mainline FirstGroup consortium to replace Virgin on west coast mainline
  35. Web site: Contact us. MTR Nordic. sv. 8 December 2019.
  36. Web site: Henrik Dahlin ny vd för MTR Nordic AB. MTR Nordic (mynewsdesk). 20 January 2021 . sv. 20 January 2021. 13 April 2021.
  37. News: Hongkong-bolag vann t-banekontrakt värt 36 miljarder (Swedish). Svenska Dagbladet. 20 January 2009. E24.se.
  38. "Hong Kong operator in Stockholm" The Railway Magazine issue 1296 April 2009 page 93
  39. http://www.railwaygazette.com/news/urban/single-view/view/mtrs-stockholm-metro-contract-extended.html? MTR's Stockholm metro contract extended
  40. Web site: MTR får förlängt förtroende till 2023 . 2022-07-06 . Mynewsdesk . 8 September 2015 . sv.
  41. https://www.mtr.com.hk/archive/corporate/en/press_release/PR-16-010-E.pdf MTR Brings Stockholm Metro Rolling Stock Maintenance Fully in House
  42. http://www.railway-technology.com/news/newsmtr-to-take-full-ownership-of-stockholm-metro-in-sweden-4793375 MTR to take full ownership of Stockholm Metro in Sweden
  43. Web site: Nya t-banechefens mål 99,7 procents punktlighet. 28 October 2009. DN.SE. sv. 8 December 2019.
  44. Web site: Caroline Åstrand ny VD för MTR Tunnelbanan. MTR Nordic (mynewsdesk). 16 January 2020 . sv. 16 January 2020. 13 April 2021.
  45. http://www.mtrexpress.se/en Home
  46. http://www.railwaygazette.com/news/passenger/single-view/view/mtr-launches-open-access-inter-city-service.html MTR launches open access inter-city service
  47. http://www.railwaygazette.com/news/passenger/single-view/view/mtr-express-orders-flirts-for-stockholm-goeteborg-open-access-service.html? MTR Express orders Flirts for Stockholm-Goteborg open access service
  48. Web site: VD-byten inom MTR-koncernen – Mats Johannesson tar över vd-rollen på MTR Pendeltågen och Joakim Sundh blir ny vd på MTRX. MTR Nordic (mynewsdesk). 21 January 2021 . sv. 21 January 2021. 13 April 2021.
  49. Web site: MTR Express takes on SJ in Sweden. International Railway Journal. en. 8 December 2019.
  50. https://web.archive.org/web/20240606174950/https://www.railjournal.com/financial/vr-completes-mtr-express-acquisition/ VR Group completes MTR acquisition
  51. https://web.archive.org/web/20240607104458/https://mtrx.travel/en/mtrx-blir-vr Hello there, we are VR
  52. Web site: MTR Gamma AB tar över pendeltågstrafiken. 8 December 2015. Stockholm Region. sv. 8 December 2019.
  53. http://www.railwaygazette.com/news/passenger/single-view/view/mtr-to-operate-stockholm-pendeltaag.html MTR to operate Stockholm Pendeltåg
  54. Web site: Burroughs . David . 1 November 2023 . SJ awarded emergency contract for Stockholm commuter network . 1 November 2023 . International Railway Journal.
  55. http://www.theage.com.au/national/new-train-tram-operators-for-melbourne-20090625-cxgx.html New train, tram operators for Melbourne
  56. "Full steam ahead: Government offers Metro and Yarra Trams contract extensions" The Age 29 September 2016
  57. http://www.urbanalyst.com/in-the-news/victoria/4165-victorian-government-begins-negotiations-with-metro-trains-melbourne-and-yarra-trams-for-new-contracts.html Victorian government begins negotiations with Metro Trains Melbourne and Yarra Trams for new contracts
  58. http://www.transport.nsw.gov.au/media-releases/major-milestones-reached-north-west-rail-link-preferred-operator-selected Major milestones reached on North West Rail Link as preferred operator selected
  59. https://www.mtr.com.hk/en/corporate/consultancy/sydneynorthwest.html Sydney Metro North West
  60. http://www.sydneymetro.info/northwest/project-overview Project Overview
  61. Web site: 确定了！北京地铁17号线，京港地铁公司运营. 30 December 2019. 31 December 2019. 26 July 2020. https://web.archive.org/web/20200726181059/http://www.bjd.com.cn/a/201912/30/WS5e097dd8e4b0e6e58393623f.html. dead.
  62. http://www.mtr.bj.cn/en/about/profile.html website of Beijing MTR Corporation Limited
  63. Web site: 港铁咨询公司联合体中标深圳市轨道交通13号线公私合营项目. 2020-08-03.
  64. Web site: About Macao Light Rapid Transit (Macao LRT). MTR Macau. 11 December 2019.

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