Roaming rebound and 5G FWA save SmarTone blushes

This may be the era of AI and cloud-native but it was old-school services that rescued SmarTone's annual result.

The Hong Kong telco posted a flat operating profit of 700 million Hong Kong dollars (US$89.8 million) in the face of an 8% decline in revenue - mostly due to weaker handset sales – and a 0.8% dip in service revenue.

Net earnings were HK$470 million ($60.3 million), up 75%, thanks to a HK$201 million ($25.8 million) write-off that depressed last year's result. But it was the strong demand for roaming and home broadband that ensured the underlying business remained profitable. 

Roaming revenue rebounded 44% to HK$613 million ($78.6 million), finally returning to pre-covid levels, the company said. The proportion of customers using roaming has also doubled compared to the pre-pandemic period.

CEO Fiona Lau told an earnings briefing the company had adopted a series of measures to support the roaming business, like real-time monitoring of network roaming partners, because of its growing importance.

The 5G home broadband business grew 33% in revenue and 70% in EBITDA, making it "a core business pillar," Lau said.

Market gap 

The service addresses the gap left by the two big fiber players, HKBN and HKT, who serve only about 70% of the city's 2.76 million households. The demand is primarily from customers in older buildings that don't have fiber, from rural areas and from those who prefer the flexibility of FWA, Lau said. 

SmarTone didn't disclose details of its core mobile business, but it revealed postpaid ARPU was HK$224 ($28.7 million), the same as a year ago, with 5G ARPU twice as high as 4G ARPU. 5G customers now account for 39% of the customer base.

The company kept a lid on spending, shaving 23% off finance cost, 2% off opex and 1% off capex. It also took the decision to exit the Macau market so it can focus its resources on Hong Kong. Lau said this was because of the small market size and the "many constraints" the operator faced.

"If we are not able to deliver satisfactory network performance, then we'd rather make an exit," she said, adding that customers and employees would be migrated to another operator.

CTO Stephen Chau said SmarTone's 5G network was "5G Advanced-ready" but said it was not likely to carry commercial services for another two or three years.

The SmarTone stock on the Hong Kong bourse closed 2.60% higher Wednesday.