SmarTone cuts payout ratio to boost network

Firm books 18pc profit fall and says it has to invest to meet rising demand for mobile data

PUBLISHED : Thursday, 12 September, 2013, 12:00am
UPDATED : Thursday, 12 September, 2013, 3:31am

SmarTone Telecommunications has lowered its payout ratio to 60 per cent from 100 per cent, saying the move was prompted by the need to invest large sums in its networks to meet consumers' growing demand for mobile data and the government's 3G spectrum renewal policy.

The company yesterday proposed a final dividend of 22 HK cents per share, representing 60 per cent of the net profit for the second half of the year to June.

It said the payout ratio was cut to reserve cash for future investment to meet data-usage demand and improve networks.

SmarTone, a subsidiary of Sun Hung Kai Properties, said net profit for the year fell 18 per cent to HK$843 million.

Overall revenue rose 21 per cent to HK$12.1 billion, although service revenue fell 1 per cent to HK$5.66 billion. Revenue from handset and accessory sales grew 52 per cent to HK$6.4 billion.

Chief executive Douglas Li said the company was under pressure to increase service prices, but did not elaborate.

Li said the company had invested large amounts in 3G and 4G networks to meet rising data consumption but had not adequately monetised the service. "Over the past 18 months we saw data usage rise 80 per cent," he said.

SmarTone said the number of mobile and wireless fixed broadband users increased 11 per cent to 1.82 million.

Comprehensive monthly average revenue per user (arpu) fell 5 per cent to HK$262. Local mobile arpu dropped 3 per cent due to dilution from its 3G speed-capped plan, a lower-priced, integrated 3G voice and data plan designed to boost market share.

Li said capital expenditure for the next financial year would be "no more than HK$1 billion", compared with HK$1.2 billion for the past year.

The firm launched its 4G network in August last year. It also acquired spectrum for future capacity expansion.

The government plans to seize and reassign chunks of 3G spectrum now in use, and will announce its decision next month.

Li said the company would be interested in the re-auction of spectrum, but buying spectrum was not a "must-do" for the firm. "There will be a limit, and beyond a certain limit I think I'd rather spend on equipment," he said.