SmarTone 1H17 profit falls 17%

Hong Kong’s SmarTone has reported a 17% year-on-year decline in net profit for the last six months of 2017, due largely to intense competition, increased spectrum expenses and lower handset sales.

Profit for the six-month period fell to HK$328 million ($41.9 million), with revenue declining 23.5% to HK$4.1 billion.

Service revenue fell 6% year-on-year but improved 1% sequentially to HK$2.52 billion, as a result of ongoing migration to SIM only plans.

This and lengthening handset replacement cycles led to a steep 41% year-on-year decline in handset and accessory sales to HK$1.58 billion, although this was an 85% improvement on the previous half-year period.

Net of handset subsidy amortisation, postpaid service revenue was flat year on year and increased 3% from 1H17.

SmarTone increased its Hong Kong customer base by 7% over the course of the six-month period to 2.2 million, while postpaid customer churn fell to a low of 0.8%. But mobile postpaid ARPU fell 13% year-on-year to HK$262.

During a presentation announcing the company’s results, SmarTone CEO Anna Yip detailed plans to roll out licensed assisted access (LAA) five component carrier aggregation (5CC CA) and improve its network speed to over 1Gbps in mid-2018, and deploy FDD Massive MIMO in 2H18.

But she warned that the challenges facing Hong Kong’s mobile industry are expected to continue, including ongoing price pressure from the intense competitive environment and ongoing declines in voice roaming revenues.