As more subscribers moved onto higher tariff plans.
Solid 1H results, due August 2015, are expected from mobile operators.
According to a research note from Barclays, this is on account of a higher proportion of subscribers moving onto higher tariff plans that were instituted in Sep-14.
While it is largely expected by the market in our view, Barclays sees further upward earnings revisions hinging on further tariff increases and higher discipline in reining in low-end SIM only plans that then raise average realisation across the board.
On the latter, Barclays notes SmarTone has recently increased the price of its low-tier SIM only plan (3G unlimited data speed cap plan) to HK$88 (from HK$78 previously).
This move, if matched by other operators, would be a positive catalyst in Barclays' view, and is supportive of further earnings growth.
Here's more from Barclays:
Fixed line broadband competitive dynamics are not structurally worsening: As highlighted in our recent note, market noise has increased in the residential broadband segment, but we do not see this as further deteriorating or driving structural challenges for the sector.
We believe that the competition ante will stay contained and is unlikely to lead into a price war on two accounts:
HKBN will likely remain tactical on fulfilling its higher market share ambition (HKBN aims for 45% from the current 35% in 5 years), rather than igniting a price war with HKT which would then result in a lose-lose situation, since their combined subscriber market share is more than 80%, and both companies are paying out 100% FCF as dividends, hence focusing on cash flow and profitability as well.
The higher competition ante is likely limited to pockets of the market given broadband pricing in HK is location-based and most subscribers are locked down to 2-year contracts (if not longer).
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