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Hong Kong mobile operators declare price war in bid for new customers as Apple launches iPhone X

During annual build up to release of new iPhone, city’s mobile service operators launch data plans in bid to lure customers

PUBLISHED : Tuesday, 12 September, 2017, 9:02pm
UPDATED : Wednesday, 13 September, 2017, 3:41pm

China Mobile, one of the four major mobile operators in Hong Kong, cut its monthly package fee by 25 per cent on Tuesday – the last one to jump into the price war ahead of the latest iPhone launch.

CSL fired the first shot last week by offering discounts, aiming to poach customers from SmarTone and Hong Kong Broadband network.

Before China Mobile joined the fray, the other two major operators – SmarTone and 3HK – followed suit and rolled out aggressive promotions to retain customers at risk of switching to a rival to buy the new Apple products.

China Mobile, the mainland-backed mobile operator, offers an exemption from its “4.5G Full Speed Local Service Plan” charge for the first six months if a mobile user joins its network by the end of October. Existing users of its 50GB data plan are also eligible for unlimited data usage.

During the now-annual iPhone season, local mobile service operators launch data plans, in which new customers are given a free iPhone by signing a long-term contract with the provider.

But this is also a sensitive time when operators experience great waves of customer migration, as many switch to new providers to get the best prices, analysts say.

Mobile operators were forced to react quickly to price cuts initiated by rivals in the build up to new Apple products, Marvin Lo Ming-hung, head of telecoms research at Mizuho Securities, said.

On the top of that, the aggressive promotions of HKBN – a new operator that obtained a mobile virtual network operator licence last year – also intensified the rivalry between firms, he added.

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“The telecom sector in Hong Kong has entered a downcycle. It would be much harder for operators to raise prices in future,” he said.

The price war was triggered by CSL, the city’s oldest telecommunication operator, last Wednesday. It is offering unlimited data usage at the same price as its 6GB data plan to certain customers with SmarTone and HKBN by the end of October. Existing users are also given the same offer when renewing their contracts, amounting to a 30 per cent cut from its previous offerings.

“The Hong Kong mobile market is very competitive and various promotional offers are in the market from time to time – CSL will compete as it sees fit,” a company spokeswoman said.

The next day, SmarTone fought back with a similar offer which is valid until this Friday. One day after that, 3HK, the mobile service operator owned by Hong Kong’s richest man Li Ka-shing, joined the fray and slashed the price of its unlimited data plan by about 20 per cent to HK$288 for a limited period of time.

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While price cuts across the board have allowed users to pay less for the same mobile and data services, Francis Fong Po-kiu, honorary president of the Information Technology Federation, said the profit squeeze might lead to higher fees for the coming iPhone data plans, as operators would seek to make money in other ways.

“Once the new iPhone and Note 8 are released, the subscription fee for these new phones will be much higher – say HK$600 to HK$800 with a 24-month contract,” Fong said.

“People tend to be less sensitive about a price rise on big-ticket products,” he said, adding operators would be able to sell more high-value added services in the future by aggressively expanding their customer base.