SmarTone shares fall after cut in payout ratio

SmarTone Telecommunications saw its shares drop 15 per cent in Hong Kong trading yesterday after announcing a cut in its payout ratio on Wednesday, citing the need to invest in its network to meet consumers' growing data demands.

SmarTone closed at HK$10.36 yesterday, its lowest price this year. The city's benchmark Hang Seng Index remained stable.

VC Brokerage director Louis Tse Ming-kwong said there were some uncertainties about SmarTone in the near term and he would not encourage investors to accumulate the stock right now.

"Competition within the industry is intense, and it's unclear if the government will withdraw some of the 3G spectrum for re-auction," Tse said.

On Wednesday SmarTone, a subsidiary of Sun Hung Kai Properties, posted a 18 per cent fall in net profit to HK$843 million for the fiscal year ended June 30. Service revenue lost 1 per cent to hit HK$5.66 billion, after a 18 per cent decline in roaming business was offset by a 4 per cent gain in local mobile service.

Tse said the results were disappointing, with monthly average revenue per user (arpu) falling 5 per cent to HK$262.