SmarTone pulls out of Macau

The operator, whose core business is the provision of mobile services in its home market of Hong Kong, announced on its website this week that it had made the decision to cease operations in Macau "after thorough business consideration," but it did not elaborate further.

We can glean a little more from a statement issued by Macanese regulator, the aptly named Bureau of Telecommunications Regulation, or CTT, on Thursday.

Having confirmed the previous day that SmarTone had applied to hand back its 4G licence and indicated that it would not renew its 3G licence upon expiry, the regulator issued a new statement on the matter.

"According to the information available to the Bureau, SmarTone's market share is relatively low, accounting for only a single percentage," it said, in a Chinese language announcement, translation courtesy of Google.

Whether that means SmarTone serves just 1% of the market or whether it should read 'single-digit percentage' is almost irrelevant. It's clear that the operator is very small and its exit will not have a huge impact on the competitive landscape.

And that could well be why it has made the decision to exit.

SmarTone's own financial reports do not provide subscriber figures for the Macau business. Its latest interim report covering the six months to the end of December shows that it served 2.65 million customers as of end-2023, but it is not wholly clear whether that figure refers solely to its Hong Kong business or to the Macau operation as well.

Either way, it's pretty obvious that Macau is – or rather was – a very small part of the whole. The telco does split out revenue figures; it generated 99% of its turnover, or HK$3.37 billion (US$432 million) in its home market in the second half of last year and just HK$34 million in Macau.

In addition, that Macau revenue figure represented a massive decline on the year-earlier period, equating to just over a fifth of the 2H 2022 total. And the business is still in the red. It posted some improvement in its operating loss and negative EBITDA, but still turned in an operating loss of HK$12.6 million.

The decision to walk away from Macau is therefore not wholly surprising, although doubtless the handful of customers it served were not expecting to have switch mobile operator in short order.

SmarTone said it has brokered a deal whereby its customers will move to CITIC Telecom-owned Companhia de Telecomunicações de Macau (CTM) for the remainder of their contracts. Or they can switch to another CTM plan, should they so desire.

It said it will notify customers individually by SMS of the transition arrangements, including SIM card replacement, which will take place between 22 August and 31 October. The regulator has pledged to oversee the transition to make sure it takes place in a timely and orderly fashion, without leaving customers disconnected.

Their new operator CTM is now one of three remaining mobile network operators in Macau, the other two being China Telecom's local operation and Hutchison's Three Macau. None are particularly forthcoming with sector data, so it's difficult to get a clear picture of the market competition.

It's safe to say that it was likely too much for SmarTone to handle though.