SmarTone Telecommunications Holdings yesterday said pressure on profits would remain intense in the next six months as it reported a worse than expected 83.4 per cent plunge in interim net profit on the back of heated competition and rising 3G-related costs.
Net profit for the six months to December fell to $37.04 million from $224.02 million a year earlier, despite a 1.5 per cent increase in turnover to $1.85 billion.
SmarTone chief executive Douglas Li said intense competition had driven up handset subsidies and marketing costs as the company sought to retain market share. Amortisation in handset subsidies reached $64 million during the period, more than double the $31 million in the entire previous financial year.
Overall operating expenses rose $79 million to $714 million mainly because of 3G network roll-out costs.
'We expect competition in the market to maintain its intensity, if not increase in the second half,' Mr Li said.
Hong Kong's mobile-phone sector has undergone both a period of consolidation and intense competition in the past year as operators attempt to increase market share and convert users to 3G services.