Douglas Li, chief executive of SmarTone Telecommunications, is looking to close or sell the firm's loss-making broadband unit. Hong Kong's third-largest mobile operator, which last year received a local multi-point distribution system licence, made a HK$167 million provision for its broadband and teleport assets, the main factor contributing to its HK$284 million loss for the year, a 21 per cent improvement year- on-year. 'We have to match costs with the revenue trend in this broadband business unit, and it is impossible to sustain [its presence] for the long term,' said Mr Li yesterday. 'We have not decided whether to sell it or simply close it down but will definitely look for ways to lower operating costs.' Broadband losses before interest, tax, depreciation and amortisation (ebitda) were HK$153 million, although the second-half loss was almost halved to HK$52 million from the first half HK$101 million. However, revenue was just HK$48 million from its 6,000 broadband subscribers and 215,000 dial-up users. Mr Li said the company, which is believed to have invested more than HK$200 million in broadband, had made conservative provisions. It was still committed to its three-year pledge to the Office of the Telecommunications Authority (Ofta) under the licence contract. SmarTone still had HK$100 million outstanding in performance bonds after completing the first phase. Analysts supported the company's decision to cut losses. Meanwhile, SmarTone's overall loss of HK$284 million million masked an improved performance by its core mobile business, which reported ebitda earnings of HK$228 million. However, revenue fell 14.13 per cent to HK$2.48 billion after SmarTone was forced to maintain lower mobile tariffs in order to protect market share. Subscriber numbers rose 13.03 per cent to 980,000 on a lower monthly average revenue per user (apru) of HK$200, dropping 11.5 per cent from the previous year. Mr Li expected a stable and improved apru towards the end of this year, as evidenced by a HK$10 improvement since July - mainly through the implementation of a tunnel charge. But the company is looking more to contain costs than to expand revenue under the present economic difficulties. Asked whether this meant redundancies were in the wind, Mr Li indicated it was a possibility.