The pandemic is weighing heavily on Hong Kong telcos, SmarTone's interim result shows.

It reported a 6% fall in first-half earnings and a 3% rise in revenue in what executive director Allen Fung described as "a quite difficult" period.

"There are a lot of headwinds still, so it's not an easy operating environment," he told an online briefing on Thursday.

Figure 1: Walk on: COVID-19 has proved stormy weather for Hong Kong's SmarTone, as profits drop.
(Source: Sipa US/Alamy Stock Photo)

But he says the underlying performance has shown SmarTone's resilience. Excluding the government COVID-19 subsidies last year, profit was up 34%, while EBITDA was higher than pre-COVID-19. He also pointed to strong growth in 5G takeup, 5G home broadband and enterprise.

5G now accounted for around a fifth of all postpaid mobile customers, while home broadband numbers grew 350% off a low base and was starting to contribute to profit.

ARPU had grown 4% to HK$210 ($27), with each 5G sub improving ARPU by HK$50-HK$100. "We do see a lot of momentum in terms of business growth," Fung said.

"We are cautious... I think we have shown our resilience and that we can bounce back to growth."

Fighting back

Besides the bottom line numbers, operators are compelled to prove to government officials they are pulling their weight in the fight against the virus as the COVID-19 fifth wave tears through the city.

SmarTone is offering material assistance in the form of devices and basic plans for senior citizens who don't already have a smartphone, which is now essential to access public buildings and travel across the city.

It is also offering a quarantine package, including a 5G router and free calls and data, for those undergoing the two- or three-week isolation period required for all who enter the city. Fung also said SmarTone would offer low-priced or free internet for those in need.

"There's a lot of people without high-speed internet. The situation is getting worse now with people working from home and kids not going to school," he said. "In the short run, we will work very hard to really serve the community to provide the necessary connectivity."

Besides these, Fung stressed SmarTone's 5G network as important infrastructure to help the city become a technology hub, as envisaged in the latest five-year plan.

Get what you pay for

Yet despite the work at the grassroots, SmarTone does not shy away from positioning its 5G as a premium network that commands premium pricing. Its 5G charges are well above its competitors, with a basic plan priced at HK$308 for 30GB, twice as much as Hutchison's $149/100GB package.

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But Fung said SmarTone had no plans to reduce its charges. Its surveys showed customers "don't really care about the small reduction in price," he said.

"The first question is: does it deliver a quality experience? That is the key. It's not a commodity offering."

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— Robert Clark, contributing editor, special to Light Reading