SmarTone 2H net falls 14% on handset margin slump

03 Feb 2016

Hong Kong mobile operator SmarTone has reported a 14% slump in net profit for the six months ending in December due to falling handset margins.

Net profit fell to HK$403 million ($51.7 million), despite an 18% increase in revenue to HK$10.22 billion.

Service revenue increased a slim 1% year-on-year to HK$2.78 billion as higher local mobile service revenue made up for lower roaming revenue.

While handset and accessory sales grew 26%, pre-tax earnings from the segment fell 81% year-on-year to HK$47 million due to lower margins.

The operator increased its customer base by 1% sequentially to 1.97 million, with mobile postpaid churn improving year-on-year to 0.9%.

During the six month period, SmarTone implemented tri-band LTE-A CA over the 900-MHz, 1,800-MHz and 2,600-MHz bands, and commenced the deployment of small cells in high-traffic locations.

“Despite increasing economic uncertainties, continuous increase in customer data usage offers opportunities for sustainable growth. SmarTone continues to invest in its network to provide customers with an outstanding user experience,” SmarTone chairman Rayond Kwok Ping-luen commented in the company's financial report.

“In particular, the company will extend its deployment of small cells in anticipation of customers’ increasing demand for data services. Coupled with other state-of-the-art LTE-A technologies, small cells deployment is an essential element of the company’s high-capacity network.”

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