SmarTone cheap rate sparks fear of price war

PUBLISHED : Friday, 28 February, 2003, 12:00am
UPDATED : Friday, 28 February, 2003, 12:00am

SmarTone Telecommunications has launched a new service it says guarantees Hong Kong's lowest monthly tariff plan, sparking industry fears a new price war may be looming.

The No 3 mobile operator said the monthly tariff for its 'Go' service was set initially at HK$50, with a per-minute rate of 25 cents for the first 300 minutes of talk time and 80 cents a minute after that.

However, the Sun Hung Kai Properties' arm said the monthly fee and per-minute rate would be adjusted automatically in accordance with market changes, to make sure it offered the best value for subscribers.

The initiative was seen by rivals as a bid by SmarTone to undercut the market, where prices have mostly stabilised in the past year.

SmarTone had about 984,000 users last June, but analysts and rivals said its subscriber base could have dropped to less than 950,000 because of aggressive promotions by Peoples Telephone and New World Mobility.

SmarTone chief executive Douglas Li admitted there had been a slight fall in SmarTone's subscriber base, and said the new tariff plan aimed to broaden its reach to low-end users.

'This is a market we have not previously served,' Mr Li said. 'We are not concerned that additional users will lower our arpu [average revenue per user]. We are looking at revenue growth.'

SmarTone will report its first-half result for the six months to December 31 last year on March 11.

Spokesmen for Hutchison Telecom and New World Mobility said that while they monitored market developments, they had no plans to cut their tariffs.