Its latest troubles stemmed from e-mails sent to rival CSL's customers that claimed its service would be affected by then-unconfirmed news of a change in its telecommunications infrastructure from Nokia to that of Shenzhen-based ZTE Corp.

A SmarTone-Vodafone account manager sent the e-mails in June last year to three subscribers of CSL, the largest mobile network operator in Hong Kong.

Ofta ruled that the assertions made by SmarTone, through its sales executive, were unsubstantiated at the time, although CSL confirmed the ZTE-led network revamp in February this year. The regulator also said SmarTone's claim in the e-mails of having a superior network failed to mention it was based on a test report and there were limitations to this test.

While it considered the breach as serious, Ofta said SmarTone's offence was mitigated by no other complaints having been received about the e-mail and that 'no customer was actually induced into severing contractual ties with CSL'.

Stephen Chau Kam-kun, the chief technology officer at SmarTone- Vodafone, said: 'Since this case has already been settled, we want to focus on what we can do to improve our service.'

David Aitken, the head of regulatory and corporate affairs at CSL, declined to comment about the conduct of the company's rival.