Hong Kong company reporting season

SmarTone eyes early 5G trial as profit falls

Network operator hopes the technology will open up opportunities in VR, machine-to-machine apps

PUBLISHED : Friday, 26 August, 2016, 10:34pm
UPDATED : Friday, 26 August, 2016, 10:34pm

SmarTone Telecommunications, the No 3 mobile network operator in Hong Kong, plans to conduct network trials for 5G technology in the fourth quarter after posting lower earnings in its fiscal year ended June 30.

In a webcast briefing on Friday, SmarTone chief executive Anna Yip said the company “will continue to exercise vigilant cost control to improve productivity, while upholding quality service”.

Yip said 5G technology, which is under fast-track development by major telecommunications equipment suppliers, is expected to “improve data speed, capacity density and latency

performance for mobile services.

[5G] will enable SmarTone to capture business opportunities from new types of applications
Anna Yip, chief executive, SmarTone

“The new technology will enable SmarTone to capture business opportunities from new types of applications, such as virtual reality and machine-to-machine applications like the Internet of Things.”

SmarTone, a subsidiary of Sun Hung Kai Properties, runs mobile network operations in Hong Kong and Macau.

In its filing to the Hong Kong stock exchange on Friday, SmarTone reported a 15 per cent decrease in net profit for the fiscal year ended June 30 to HK$797 million, down from HK935 million in the previous fiscal year.

The decline was attributed to the continued shift by subscribers to SIM (subscriber identity module)-only plans from handset-bundled tariff programmes, as well as the decline in international voice roaming and prepaid subscription revenue.

Total revenue slid 2 per cent to HK$18.35 billion from HK$18.66 billion a year ago.

SmarTone’s Hong Kong customer numbers gained a modest 1 per cent year-on-year to 1.97 million.

Mobile postpaid monthly average revenue per user advanced 2 per cent to HK$301.

SmarTone chief financial officer Patrick Chan Kwai-lung said “customers’ migration to SIM-only plans masked an improvement in underlying service revenue, as there was a corresponding reduction in handset subsidy amortisation”.

He said handset subsidy amortisation fell 13 per cent year-on-year to HK$676 million, down from

HK$774 million in the previous fiscal year.

Chan said the company estimated that revenue for the current fiscal year to June 2017 would come in between HK$550 million and HK$600 million.

A report by Nomura estimated that SmarTone had a 13 per cent share of the mobile services market in Hong Kong.

“The overall competitive intensity in the market is relatively stable, and SmarTone could

be a beneficiary if underlying prices improve,” the report said.