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SmarTone Telecommunications: Core Business Remains Resilient with Services Revenue Growth of 3% Despite Continuing Pandemic Challenge







SmarTone Core Business Remains Resilient with Services Revenue Growth of 3%

despite the persistent challenge of the pandemic

  • Reported profit attributable to shareholders was $251 million, down 6% from $267 million in the first half of FY21
  • The core business remained resilient; service revenue increased by 3% to €2,242 million
  • Mobile postpaid egress ARPU increased 4% to $210; 0.7% postpaid churn rate
  • Additional spectrum acquired to improve 5G coverage and performance
  • Board declares interim dividend of 14.5 cents per share, same as last year

(Hong Kong, February 23, 2022) SmarTone Telecommunications Holdings Limited (“SmarTone”; SEHK: 315), the telecommunications subsidiary of Sun Hung Kai Properties (SEHK: 0016), todayannounced its financial results for the six months ended December 31, 2021.

Despite a continued challenging operating environment due to the lingering pandemic, subdued roaming revenues and a highly competitive mobile market, SmarTone reported earnings attributable to shareholders of $251 million, down 6% from compared to $267 million in the same period last year. . Discounting the impact of government subsidies to 1H FY21, the profitfor the current period has actually increased.

Over the last six months, SmarTone’s service revenue increased 3% and mobile postpaid egress ARPU increased 4% to $210. The growth was driven by several factors, including strong customer uptake since the launch of 5G in May 2020, with 5G service subscribers now representing approximately 20% of the postpaid MNO base; the higher ARPU of 5G plans compared to 4G plans and strong subscriber growth in its 5G home broadband services, providing high-speed connectivity at lower cost. Benefiting from the dynamics of digitalisation of companies, the Enterprise Solution activity was also a key contributor to revenue growth.

SmarTone has launched a profitability program to manage the impact of the pandemic without compromising service quality. It has achieved recurring improvement in material productivity and cost savings. As part of the ongoing digitalization of SmarTone, further measures have been planned to improve efficiency. Savings from these programs have allowed SmarTone to reinvest in other priority areas, such as improving its network and customer service.

Since the launch of its 5G network, SmarTone has worked tirelessly to deliver a world-class 5G network experience. To date, the SmarTone network extends to 99% of the population, covering all MTR lines, major roads, highways and tunnels. The company is also expanding its coverage in major hiking trails and nature parks to meet changing customer needs. In response to the COVID situation in the city, SmarTone’s 5G network coverage has been extended to the Penny’s Bay Quarantine Center. In October 2021, SmarTone also successfully acquired additional spectrum at a reasonable cost and now has the most spectrum resources per subscriber among all carriers.

The SmarTone 5G home broadband service has received very positive customer feedback since its launch, providing a super-fast and often cheaper choice for consumers who suffer from very slow internet speeds or very high charges compared to existing dominant fixed line operators. It even comes with a free trial guarantee that allows customers to try before committing, in which over 90% of users have ended up subscribing to the service long term.

To accelerate 5G adoption over time, SmarTone launched the 5G Lab in May 2021. It hosted nearly 400,000 visitors and students from over 200 high schools, to raise awareness of 5G and demonstrate how the 5G infrastructure can support the development of Hong Kong.

With an increasing number of enterprises launching their digitization efforts, SmarTone’s Enterprise Solution business has seen strong double-digital growth over the past six months. Many leading construction companies have adopted SmarTone’s award-winning Smart Construction offering, which enables on-site worker safety monitoring and detection using 5G, IoT and AI video analytics technology.

There are many other applications in other sectors such as retail, healthcare, education, property management, etc., where digitalization brings huge efficiency gains. Digitization is an important pillar for Hong Kong to become a thriving technology hub and SmarTone will continue to play a key role in providing solutions for businesses to enhance their digital capabilities, which is expected to accelerate.

SmarTone is also using digital channels and data with the support of AI to improve customer service, as part of their digital transformation. For example, by expanding its customer service channels in conjunction with machine learning, SmarTone is able to better understand its customers and identify areas for improvement in the network, call centers, services as well as improving productivity.

In this critical pandemic time, SmarTone is committed to using its resources to fight the pandemic. The “Quarantine without losing contact” initiative was launched to provide free data and calls as well as broadband access to quarantined customers to help them stay in touch with colleagues and family members. A special offer of 5G home broadband contract for 6 months has also been introduced to meet the needs of families for working from home and e-learning. SmarTone also provided smartphones and a free basic mobile service to help senior citizens facilitate downloads and use of the “LeaveHomeSafe” app as support for the “Jockey Club Digital Support Project for the Elderly”.

Mr. Norman Tam, Executive Director and Deputy Managing Director of SmarTone Telecommunications Holdings Ltd., said: “Although the fifth wave of the pandemic has added uncertainty to the business outlook, strong customer adoption of 5G and 5G in the home, as well as the growing Enterprise Solutions business is resulting in resilient profitability and strong commercial momentum for the company. SmarTone is committed to investing in building world-class digital infrastructure in 5G and beyond. We believe this is important both for Hong Kong’s aspiration to become a technology hub and for its integration with China and more specifically with the Greater Bay Area.”

The board declared an interim dividend of 14.5 cents per share, the same as last year. The Company intends to continue to pay a dividend equivalent to 75% of the profit attributable to shareholders for a full year.

For more details on the 2021/2022 interim results, please visit the website: https://www.smartoneholdings.com/jsp/site/investor_relations/results/english/index.jsp

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Smartone Telecommunications Holdings Ltd. published this content on February 23, 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unmodified, on February 23, 2022 10:18:08 AM UTC.

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Net income 2022 455 million
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Net cash 2022 745 million
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PER 2022 ratio 13.5x
2022 return 6.14%
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EV / Sales 2022 0.61x
EV / Sales 2023 0.56x
# of employees 1,665
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