SmarTone FY13 profit shrinks 18%

Fiona Chau
12 Sep 2013
00:00

Hong Kong mobile carrier SmarTone said net profit for the year ended June 30 fell 18% to HK$843 million ($108.7 million), as 3G and 4G network developments led to higher depreciation and amortization costs.

Overall revenue rose 21% to HK$12.1 billion in the 12 months to June, while revenue from handset and accessory sales grew 52% to HK$6.4 billion. Yet service revenue fell 1% to HK$5.657 billion, with local mobile service increasing 4%, though this was offset by an 18% decline in roaming and the continuing scaling down of its wireless fixed broadband business.

The operator has lowered its dividend payout ratio for the fiscal second-half to 60% or HK$0.22 per share.

Chief executive Douglas Li said the payout was cut to ensure sufficient financial resources for future investment in order to meet increasing data usage demand and bear the cost of a possible reauction of a portion of operators' 3G spectrum by the government.

“The industry continues to face challenges in adequately monetizing increasing data usage as we invest heavily in 3G and 4G. The government’s proposed 3G spectrum renewal policy is likely to further increase spectrum fees, capex and opex,” Li said.

Li also warned of a price hike, saying the company is under pressure to increase service prices, but he didn’t elaborate the details. He said data usage has soared 80% over the past 18 months.

As of end-June, the number of mobile and wireless fixed broadband users increased 11% to 1.82 million. Hong Kong customer numbers grew 11% to 1.82 million, with a 13% increase in mobile customer numbers partly offset by a decline in fixed wireless broadband customers.

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