Hong Kong’s SmarTone expects boost in revenue in bringing more bandwidth to city’s mobile users

PUBLISHED : Tuesday, 02 February, 2016, 8:21pm
UPDATED : Tuesday, 02 February, 2016, 8:21pm

SmarTone Telecommunications Holdings, which runs the No 3 mobile network operator in Hong Kong, expects a steady rise in revenue as it takes the lead in bringing more bandwidth for the city’s data-hungry 4G mobile users.

“Continuous increase in customer data usage offers opportunities for sustainable growth,” SmarTone interim chief executive Stephen Chau Kam-kun said on Tuesday at the announcement of the company’s latest financial results.

SmarTone, a subsidiary of Sun Hung Kai Properties, saw its revenue for the six months ended December 31 increase 18 per cent to HK$10.23 billion, up from HK$8.67 billion in the same period in 2014, on the back of higher smartphone and accessory sales.

Income from services, however, was nearly flat. It advanced just 1 per cent to HK$2.78 billion, up from HK$2.74 billion the previous year, because of lower roaming revenue.

“Customers’ migration to SIM-only plans masked a stronger improvement in underlying revenue as there was a corresponding reduction in handset subsidy amortisation,” Chau said.

Earnings before interest and tax for SmarTone’s handset business for its fiscal first-half ended December 31 fell 81 per cent to HK$47 million from HK$252 million a year earlier.

That resulted in a 14 per cent decline in net profit to HK$403 million from HK$466 million a year ago.

“The handset business is a volatile business. Everything depends on the popularity of the smartphone,” SmarTone executive director Patrick Chan Kai-lung said.

Total subscriber numbers for SmarTone rose to 1.97 million, compared with 1.96 million at the end of June. Post-paid monthly average revenue per user improved to HK$301.

According to a Barclays report, capital expenditure is trending lower for SmarTone.

The operator expected its capital spending this year to range from HK$600 million to HK$650 million, which is less than Barclays’ previous estimate of HK$670 million.

Despite the company’s stringent cost discipline, Chau said SmarTone will not compromise on service quality.

He pointed out that SmarTone has commenced the deployment of equipment called small cells in selected mobile “high-traffic” locations in Hong Kong, ahead of tests for 4G Long-Term Evolution technology in unlicensed spectrum (LTE-U).

This is a new technology that enables mobile network operators to boost coverage and data speeds over short distances by using the unlicensed 5-gigahertz band, which is commonly used by Wi-fi devices.

“Our trial of LTE-U with small cells will start this year,” Chau said. “This initiative will further increase both the capacity and speed of the company’s high-performance network.”

He added that smartphones supporting this technology will likely be available by 2018.

SmarTone’s share price rose as high as HK$12.26 in early trading, but slipped 1.64 per cent to close at HK$12 on Tuesday.