SmarTone 1H profit falls 2%
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Hong Kong’s SmarTone has reported a 2% year-on-year decline in net profit for the six months ending in December to HK$393 million ($50.6 million).
Group service revenue fell 4% over the same period to HK$2.67 billion. SmarTone blamed the decline in part on on customers continuing to migrate to SIM only plans. This led to a 64% decline in handset and accessory sales to HK$7.45 billion.
Other factors contributing to the decline included well as weakness in the prepaid segment of the mobile market, as well as ongoing OTT substitution impacting voice roaming revenues.
SmarTone’s Hong Kong customer base grew to 2 million, with mobile postpaid ARPU stable at HK$299.
Announcing its results, the operator said a strong focus on efficiency during the period helped the operator control costs – operating costs grew just 1% year-on-year despite substantial growth in customers’ data consumption.
Looking ahead, SmarTone said it expects the pressures on profitability – including rising specrtum costs – to continue in the second half of the financial year.
The company also joined PCCW’s HKT in urging the government to accelerate the release of more spectrum to the industry and provide a clear spectrum supply roadmap.
HKT has expressed concern over the fact that no new spectrum is expected to be allocated for mobile use for the next three years, and has urged the government to start preparing now for the arrival of 5G.
Questions & Answers
Q.What was the main reason SmarTone gave for the decline in its net profit?
What was the main reason SmarTone gave for the decline in its net profit?
SmarTone attributed the decline partly to customers moving to SIM-only plans, which led to a significant fall in handset and accessory sales. Weakness in the prepaid mobile market and OTT substitution affecting voice roaming also contributed.
Q.Did the company manage to control its operating expenses during this period?
Did the company manage to control its operating expenses during this period?
Yes, SmarTone focused strongly on efficiency, which helped control costs. Operating costs increased by only 1% year-on-year, despite customers consuming substantially more data during the six-month period.
Q.What is SmarTone's outlook for its profitability in the second half of the financial year?
What is SmarTone's outlook for its profitability in the second half of the financial year?
SmarTone anticipates that the pressures impacting profitability, such as increasing spectrum costs, will persist in the second half of the financial year. The company expects these challenges to continue.
Q.What action has SmarTone taken regarding spectrum allocation?
What action has SmarTone taken regarding spectrum allocation?
SmarTone has joined PCCW's HKT in urging the government to release more spectrum to the industry faster and to provide a clear roadmap for its future supply. They are concerned about the lack of new spectrum for mobile use.
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