SmarTone refocuses on 4G expansion

Customers can finally look forward to even faster services after mobile provider finally joins the long-term evolution

PUBLISHED : Monday, 03 September, 2012, 12:00am
UPDATED : Monday, 03 September, 2012, 3:30am

In August last year, SmarTone Telecommunications' chief executive Douglas Li adamantly expressed the view that Hong Kong mobile users were not ready to embrace high-speed 4G services.

CSL was the sole mobile network operator in Hong Kong at that time to operate a 4G network, based on the technology called Long-Term Evolution (LTE). The firm introduced its 4G service in November 2010, the first carrier in Asia to do so.

Unfazed by CSL's lead, Li said SmarTone management was "more focused on improving customer experience than letting our subscribers be guinea pigs for a technology that is not yet ready".

Li declared that the plan was for SmarTone to further develop its 3G infrastructure and bide its time in launching a 4G LTE network.

His main arguments were the lack of 4G smartphones from the major handset makers and that the existing 3G networks, based on the Evolved High-Speed Packet Access (HSPA+) wireless broadband standard, delivered enough speed and capacity to satisfy local consumers' needs.

On 4G networks, users can get theoretical internet download speeds of up to 100 megabits per second. The fastest existing 3G HSPA+ networks run at 42Mbps.

But SmarTone has since decided to shift gears and last week launched its own 4G network, which will substantially boost overall capacity when combined with its 3G network.

The company, which will report its fiscal year to June results tomorrow, was the last of the city's wireless network operators to toss its hat into the 4G arena.

China Mobile Hong Kong, PCCW Mobile, and Three Hong Kong, unveiled their respective 4G network operations over the first five months of this year.

Lisa Soh, an analyst at Macquarie Capital Securities, expected the first few months of 4G network operations to have "only a limited impact" on SmarTone's business.

SmarTone, which had 1.62 million mobile subscribers at the end of December, is initially offering its 4G services to selected customers by invitation.

Public availability starts September 11. The firm's 4G tariff plans are the same as its 3G rates.

Macquarie forecasts SmarTone will report HK$1.1 billion in net profit and HK$11.5 billion of revenue in its fiscal year ended June, which would represent the third consecutive year of significant gains for the Sun Hung Kai Properties subsidiary.

The operator, which also runs a mobile network in Macau, posted net profit of HK$754 million and revenue of HK$6.6 billion in its previous fiscal year.

"My capital expenditure forecast for SmarTone in its current fiscal year is HK$800 million," Soh said. "Its capital expenditure guidance for the past fiscal year was between HK$750 million and HK$800 million."

In an interview with the South China Morning Post earlier last month, Li said capital spending for its current fiscal year will be geared more to further developments in its 4G LTE network and services.

Li said SmarTone's 4G LTE operations covered about 90 per cent of Hong Kong, but assured users that this will continue to expand and improve.

He added that negotiations were under way to provide 4G coverage to the MTR's underground railway system.