[ET Net News Agency, 13 October 2017] HSBC Global Research has recently hosted SmarTone
Telecommunications (00315) management for two days of investor meetings in London.
It noted that the main point of investor concern related to price cuts dating from
September. SmarTone management said it has been the main number portability winner over
the past nine months.
SmarTone is expanding its enterprise service areas, with a particular focus on
construction, transportation, real estate and logistics. It is open to partnering to roll
out an NB-IOT platform. It is looking to develop partnerships in these areas, as well as
work more closely with its parent company.
While there is strong demand for iPhone X, supply is uncertain, and there is
correspondingly less interest in the iPhone 8. Neither handset looks likely to drive
the type of volume that has resulted in windfall gains for SmarTone previously.
Meanwhile, the first auction to renew the 900/1800MHz spectrum is likely at end 2018.
Prices have yet to be fixed, and the roadmap for allocation of new spectrum is still
uncertain. HSBC said SmarTone has a strong balance sheet and can borrow to acquire
spectrum, but a new instalment programme to pay for spectrum should reduce the need for
this.
The research house remains concerned about potential high spectrum costs as a result of
both government pricing and new entrants bidding for the spectrum. HSBC maintained its
"hold" rating and HK$10.4 target price. (KL)