SmarTone Telecommunications is expected to pay a dividend for the first time in two years as it reverses a loss-making run and returns to profit. The SAR's third-largest mobile operator is poised to join its rivals which have already reported better operating results this year due to more rational pricing over the past 12 months. The full-year result is due to be unveiled tomorrow. For the period to June 30, SmarTone is expected to report profits of between HK$15 million and HK$106 million, according to eight analysts polled by the Business Post. The company, more than 29 per cent-owned by Sun Hung Kai Properties, reported an interim loss of HK$39.35 million. Half of the analysts projected that SmarTone could declare a final dividend, a move that is likely to cheer investors. SmarTone last declared a final dividend in September 2000 when it unveiled a loss of HK$363.32 million. 'We believe a dividend re-introduction would send a positive signal on the prospect of continued earnings growth,' JP Morgan wrote in a note to clients last week. Another brokerage, CSFB, echoed the view that SmarTone management was likely to pay a dividend as they 'appear to be very aware of the market's concern with a significant pile of cash on its balance sheet'. SmarTone is sitting on a cash balance of more than HK$3 billion, an amount which British Telecom agreed to pay it for a 20 per cent stake. SmarTone had a market capitalisation of HK$4.47 billion, based on Friday's closing price of HK$7.65. The counter has fallen 17.74 per cent this year to a near historic low of HK$7.55. Fierce competition in the local mobile market deprived operators of making profits in the past two years. SmarTone offered tariffs as low as HK$38 per month - a rate which was below its variable cost in 2000, in a defensive move against its rivals aimed at attracting more subscribers. But in the past 12 months operators have avoided such cut-throat pricing, which has resulted in a lower churn rate, higher average revenue per user and better profitability. Hutchison Telecom, New World Mobility, and Peoples Phone all claim to achieve profitability this year.