SmarTone Telecommunications Holdings (315) H2 2024 earnings summary

Executive summary

• Profit increased 75% year-over-year to HK$470 million, with resilient business performance despite a challenging macro environment and intense competition.

• Service revenue excluding MVNO, SMS, and prepaid grew 2% year-over-year, driven by 5G Home Broadband and Enterprise Solutions.

• 5G penetration reached nearly 40% as of June 2024, with 5G ARPU double that of 4G and customer base at 2.71 million.

• 5G Home Broadband and Enterprise Solutions emerged as core growth drivers, with strong revenue and EBITDA growth.

• Full-year dividend per share maintained at HKD 0.32, representing a 75% payout ratio and yield of 8.4%.

Financial highlights

• Total revenue declined 8% year-over-year to HK$6,221 million, mainly due to lower handset and accessory sales.

• Core service revenue (excluding MVNO, SMS, prepaid) grew 2% year-over-year to HK$3,977 million.

• EBITDA margin improved to 39%, with EBITDA at HK$2,442 million and operating profit stable at HK$701 million.

• Net cash position increased 39% year-over-year to HK$1,513 million.

• Earnings per share rose to 42.6 cents from 24.3 cents.

Outlook and guidance

• Challenging operating environment and intense competition expected to persist.

• 5G Home Broadband and Enterprise Solutions expected to be key growth drivers.

• CapEx has peaked and is expected to decline, with continued focus on efficient investment.

• Ongoing commitment to customer service, network quality, and cybersecurity initiatives.

• Advocacy for spectrum fees to be tax-deductible to support network investment.