Hong Kong mobile sector expected to see better days after 3G spectrum auction
SmarTone and China Mobile's local subsidiary emerge as biggest spenders in bidding for radio spectrum, with improved earnings to follow
Hong Kong's incumbent mobile network operators could see improved financial performance next year, after the government concluded its much-anticipated public auction of radio spectrum on Monday.
SmarTone Telecommunications, China Mobile Hong Kong and Hutchison Telecommunications Hong Kong were the winning bidders, paying a combined HK$2.42 billion in spectrum utilisation fees from 2016.
"The completion of the 3G spectrum renewal auction has taken away uncertainties [in the city's telecommunications sector]," Anand Ramachandran, Barclays' head of telecommunications, internet and media equity research for Asia, excluding Japan, said in a report.
"We reiterate our positive stance on the Hong Kong telecommunications sector as we expect better pricing in mobile to start to be reflected in operators' financial results this second half of the year and drive higher earnings and cash flow growth … we see upside to dividend delivery post-auction as well."
The Office of the Communications Authority (Ofca), the executive arm of the industry regulator, said on Monday that a total of 49.2 megahertz of paired radio spectrum in the 1.9 gigahertz to 2.2GHz band was auctioned off.
HKT, the city's biggest telecommunications network operator, did not take part in the bidding as part of the conditions for its US$2.43 billion acquisition of CSL New World Mobility. HKT had also agreed to divest 29.6MHz of its 3G mobile spectrum, which was made available in the auction.