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Smartone - Customer Growth Improves but Remains Sluggish
Smartone is Hong Kong's smallest mobile network by customer numbers, with 11.0% market share at the end of 2008. Its total customer base reached 1.14m, up from 1.11m at the end of 2007, with proportionate growth of 2.8% in the year. This was double the 1.4% rate recorded in 2007, but it looks set to be well below the growth rate of PCCW Mobile, its closest competitor. In fact, at the end of 2007 Smartone had more customers than PCCW, but the positions were reversed during Q1 08.
Moreover, recently released figures from the Hong Kong regulator OFTA show that the total market grew by 7.4% in 2008 to a total of 10.34m customers. This demonstrates that Smartone lagged behind the average 2008 growth rate in Hong Kong by a considerable distance.
The fourth-quarter performance offered little grounds for optimism. Quarterly net additions stood at 14k compared to 26k in Q4 07. In fact, this was the worst fourth-quarter gain in real terms since 2004.
In addition, the half-yearly average ARPU figure was down 3.4% to HKD 230 per month. For the first time, data revenue accounted for more than a quarter of total service revenue, with a half-yearly average of 26.7%. The only other KPI reported by Smartone is contract churn, and this did provide some good news: a 0.2pp fall took the half-yearly average for H1 of the 2008/9 financial year to 2.1%. However, this was 0.3pp higher than the rate recorded in the six months ended 30th June 2008.
The company's financial figures demonstrated the effect of sluggish customer growth and lower ARPU. Service revenues were down by 0.6% to HKD 1,696m for the half-year, while EBITDA fell even further, a 12.5% drop taking the figure to HKD 482m.
Posted to the site on 12th March 2009
This article was extracted from The Mobile World Briefing, the weekly newsletter from The Mobile World.
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