Smartone Telecommunications Aktie

Good afternoon, ladies and gentlemen. Welcome to SmarTone Telecommunications Holdings Limited Annual Results Announcement and Management Presentation for the Financial Year 2025 and '26. First, may I introduce you to the executives with us here today: Ms. Fiona Lau, Executive Director and Chief Executive Officer; Mr. Stephen Chau, Executive Director and Chief Technology Officer; and finally, Ms. Ada Lam, Head of Finance. The briefing will first begin with a slide presentation by Ms. Fiona Lau and Mr. Stephen Chau covering the business review and outlook, while Ms. Ada Lam will cover the financial section, followed by a question-and-answer session. [Operator Instructions]

Now may I invite Ms. Lau to begin with the presentation, please.

Good afternoon, and welcome to SmarTone's FY '26 Annual Results Presentation. For today's presentation, Stephen and I will first take you through our business review. After that, Ada and I will take you through the financial review and outlook. In FY '25-'26, SmarTone delivered profitable growth despite an intensely competitive market. Our performance reflects disciplined execution, a more diversified revenue base and our continued focus on delivering quality growth. We are reporting stable revenue with a 10% growth in profit after tax. Mobile postpaid ARPU decreased slightly by 1% to HKD 220. Importantly, our 5G ARPU remained 2x that of our 4G, demonstrating the value customers continue to place on our premium network and service experience.

Our key growth drivers maintained good momentum. Consumer outbound data roaming revenue increased by 6%, while 5G Home Broadband revenue grew by 10% and EBIT increased by 31%. At the same time, operating expenses decreased by 6% and capital expenditure declined by 21%. Service EBITDA margin improved by 0.5 percentage points to 55%, demonstrating the benefits of disciplined cost and capital management. Our full year dividend per share is $0.32, same as last year. SmarTone total revenue increased by 5.6% to approximately $6.6 billion. Market competition remains very intense. Our underlying service revenue remained steady, while growth from more diversified revenue streams, including Enterprise Solutions, 5G Home Broadband, strengthened the overall revenue mix.

We will continue to make progress in scaling growth areas beyond traditional mobile connectivity. We continue to focus on growing a high-quality customer portfolio rather than pursuing volume at the expense of value. Our mobile postpaid customer base increased by 2% year-on-year. Mobile postpaid ARPU was $220, representing a modest decrease. This was achieved by both strengthening the proposition of our SmarTone PRIORITY premium customers at the top end as well as offering value for money bundles to retain and acquire new customers.

Our 5G stands at a premium to 4G. It proves that what we are offering as a superior network experience and service are well valued by our customers. Our strategy is not to compete on price alone, but to give customers clear and tangible reasons to move to higher-value plans. During the year, we introduced targeted propositions, including our 5G family sharing plan and Gen SmarT AI Plan, to address the different connectivity, lifestyle and digital needs of our customers. This value-driven approach paid off, effectively doubling our year-on-year 5G plan upgrades.

By translating our network strength into clear service tier benefits, we provide reasons for customers to upgrade. This supports ARPU resilience, deepens customer relationships and creates potential for more sustainable revenue growth over time. We also revamped our premium membership program to SmarTone PRIORITY, which contains more personalized service designed around customers' evolving digital connectivity and lifestyle needs. All SmarTone PRIORITY members are supported by dedicated relationship managers who can provide timely and customized solutions together with more personalized and attentive services. For customers traveling overseas, we have curated premium 5G roaming services across 23 destinations, covering more than 95% of our customers' travel traffic.

We work with leading overseas network providers to provide reliable connectivity and consistent SmarTone quality experience. We have strengthened emergency support for customers who lose their SIM card or mobile phone while traveling. Our assistance include SIM replacement and loan phone delivery in Tokyo and in Mainland China, helping our customers restore connectivity quickly when it matters the most. Together, these initiatives create a scalable premium service platform. They strengthen engagement and differentiation.

Beyond individual customers, we are developing a more integrated proposition for the entire family. The SmarTone Family Plan consolidates household connectivity under one account, allowing family members to share high-speed 5G data while simplifying account management through a single monthly bill. Customers can allocate data flexibly across connected SIM cards and upgrade to the Family Lite Plan as the household requirements grow. This has been one of our most successful propositions and customer acquisition channels. This will be a strength that we'll continue to build on.

We further expanded our family connectivity ecosystem with Kids Watch, a SmarTone exclusive solution that combines secure communication, seamless connectivity and greater independence for children. With a built-in SmarTone eSIM, children can stay connected at home, on the move and while traveling. Through our proprietary applications, families can create a private communication circle without relying on open social media or third-party messaging platforms. Calls, conversations and photo sharing remain within an approved group of family members. This gives children greater freedom while providing parents with more control and peace of mind. Together with our other family services, Kids Watch strengthens SmarTone's differentiated family proposition and creates a scalable platform for future connectivity, safety and digital lifestyle solutions.

We also have Kids CARE. This proposition is complemented by helping parents manage their children's digital health across different devices and operating system across both iOS and Android. Through one application, parents can stay connected with and protect the children even when the family members are using a mix of iOS and Android. The service supports up to 20 devices, allowing parents to manage digital assets across the family in a simple and a coordinated manner. Customers also have access to expert support when assistance is needed. Together, Kids Watch and Kids CARE enable us to serve families beyond basic mobile connectivity, supporting safer digital habits, closer family connections and greater peace of mind.

Building upon our kids-related services, our Family segment becomes much more complete when we expand our ecosystem to support elderly care. We recognize that modern households manage multigenerational needs, so we have to build a comprehensive safety and wellness network for seniors. Through our SmartHome Solutions, we enable the older family members to stay connected with their loved ones anywhere. To address critical safety concerns, the platform features automated emergency response triggers for physical accidents paired with continuous remote health monitoring to detect health risks.

Lastly, intelligent location mapping provides a dependable safety net if they ever get lost. By covering both child care and elderly care, we deliver total household peace of mind and significantly deepen our value to the entire family unit. 5G Home Broadband remained one of our key structural growth engines during the year. Revenue increased by 10% year-on-year, while EBIT rose by 31%. The strong profit growth reflects the attractive incremental margins and scalability of the business. The segment benefits from the accelerating adoption of premium 5G connectivity, synergistic customer acquisition through our existing subscriber base and a capital-efficient operating model. The strength give us confidence in the continued growth potential of 5G Home Broadband.

The sustained momentum was supported by continuous improvement in both our product and customer proposition. Wi-Fi 7 accounted for 45% of new subscriptions during the year. This supported ARPU growth and demonstrated strong demand for premium home connectivity experience. We also expanded our home service portfolio by introducing AI Connect on 5G Home Broadband, enabling families to access ChatGPT or Claude without a VPN. Together with Disney+ entertainment and HomePhone+, which is a fixed line substitute, this creates a more compelling and integrated proposition for the household.

In addition, we deepened our strategic collaboration with Sun Hung Kai Properties through tailored mobile and broadband offerings, enhancing the overall customer experience and supporting efficient customer acquisition. Taken together, these initiatives reinforce the competitiveness of our home proposition and its role as a scalable and profitable growth driver. For Mainland newcomer market, our strategy moves through 3 phases. We build awareness before departure by engaging specialty students at the Mainland orientations and highlighting our Call Guard anti-scam protection as a key differentiator.

Second, we strengthened post-arrival engagement by providing Mandarin language in-store support and launching dedicated cross-border plans tailored for the demographic. Furthermore, we expand our strategic partnerships by deepening ties with student housing operators and leveraging our group Sun Hung Kai synergies across the properties to offer exclusive onboarding privileges. Roaming. Our Roaming business continued to deliver solid momentum during the year. Consumer outbound data roaming revenue increased by 6% year-on-year, while the consumer roamer penetration rate reached 72%, representing an increase of 5 percentage points.

This performance was driven by our continued focus on effortless subscription and meticulous services designed around customers' changing international travel needs. Our objective is to support the customer throughout the entire travel journey rather than provide connectivity alone. For frequent and long-stay travelers, we introduced larger multi-day roaming passes, reducing the need for repeated purchases and making the experience more convenient. We also created a more complete travel proposition by combining roaming with year-round travel insurance, payment benefits and airport food and beverage privileges. This provides customers with greater value throughout their journey.

When unexpected incidents occur, our support teams also help customers restore the connectivity quickly. At the same time, we accelerated the expansion of our VoLTE Roaming footprint in response to the retirement of 2G and 3G networks in the overseas markets. This helps safeguard voice service continuity and to maintain a reliable experience for customers while they are abroad. These initiatives demonstrate our commitment, taking end-to-end ownership of the customers' Roaming experience. Beyond connectivity, we're driving digital adoption by bringing top-tier AI right to our customers' fingerprints.

With AI Connect, users enjoy seamless high-privacy access to leading tools like ChatGPT right over our network. To complement this, our one-on-one AI consultation service provides personalized guidance while our information hub provides and delivers real-world use cases for AI, making it truly accessible, safe and actionable for everyday life.

I will now pass over to Stephen to take you through the Enterprise Solutions initiatives and our latest network developments. Thank you, Stephen.

Thank you, Fiona. I will now walk you through our latest progress across Enterprise Solutions and the network developments. During the period under review, Enterprise Solutions revenue increased by 17% year-on-year, reflecting growing demand for integrated connectivity and smart technology solutions. Building on our network capabilities, SmarTone Solutions continue to support the digital transformation of enterprises across Hong Kong, leveraging on 5G, AI as well as IoT technologies. Our Enterprise Solutions team continues to unlock the digital potential of Hong Kong industry. This is essential to support digital transformation and help to position Hong Kong as a leading innovation and technology hub.

Over the years, we have expand our Enterprise Solution portfolio to different sectors, ranging from SmartHome, SmartMall, SmarTransport to Smart Construction. Tapping into this smart living trend, our SmartHome Solutions bring automated convenience to everyday living, while our SmartMall applications drive footfall and customer engagement for commercial clients. In the construction sector, our 5G-enabled smart site safety system, what we call 4S, allows site teams to monitor workers, equipment and environmental conditions in real time, upholding strict safety standards without compromising operational efficiency.

This versatility allows us to address specific industry demands while deploying scalable capabilities across the wider market. During the year, we deployed these capabilities around diverse sectors, enabling Telemedicine in health care, upgrading hospitality with smart guest experiences, power-boosting residential developments and bringing 5G monitoring to critical infrastructure and primary industries. As shown in the slide, our solution continue to empower enterprises and transform city operations. For the Pui O project, SmarTone Solutions deployed an end-to-end 5G smart monitoring setup to overcome harsh environmental and power constraints along the South Lantau Road.

This solution delivers secure, high-speed connectivity and real-time video oversight, ensures continuous operational resilience, faster response time and effective risk management. In hospitality, we partnered with The Bauhinia Hotel in Central to blend luxury with a smart technology. SmarTone Solutions built a carrier-grade Wi-Fi backbone that powers high-speed guest connectivity while running critical operations like PMS and CCTV surveillance. We also allow guests to seamlessly control lighting and curtain with a single touch while optimizing energy efficiency behind the scenes.

In the health care sector, we newly launched the TeleCare SmartHub, serving as the technology enabler to Gleneagles Hospital Hong Kong's telemedicine services. These projects demonstrate how our network, IoT and digital capabilities can be adapted to different sectors and improving customer experience, operational efficiency, safety and service accessibilities. Going into AI and to complement AI Connect individual users, we developed SmarTone AI Workspace specifically to meet the needs of SMEs operations. It integrates top international and mainland multimodal LLMs with powerful content creation and document tools.

Designed for seamless access across web and mobile, it caters to everybody from individual power users to commercial and enterprise operations with the added convenience of direct Telco billing. By delivering target solution for both individual power users and SMEs, we solidify SmarTone as a complete technology enabler, which clearly differentiates us from all our competitors. Our network strategy is purpose-built around the locations and moments where performance matters most to customers. During high demand occasions such as Fireworks over Victoria Harbour, the Lunar New Year Fair at Victoria Park and major event at Kai Tak Main Stadium, customers are actively uploading photo and live streaming at once.

Having a fast, stable and seamless network during these moments is extremely critical. Therefore, we have deployed our exclusive SmarTone small cells at critical hotspots and high-traffic venues to strengthen capacity and service assurance, supported by our advanced 5G capabilities and intelligent network operations. This targeted investment allow us to deliver best-in-class performance and reliability even during peak demand periods. This is how we translate network leadership into a consistent and differentiated customer experience.

Our collaboration with Sun Hung Kai Group continues to create unique opportunities across its flagship developments. From International Gateway Centre in West Kowloon, Cullinan Sky and Cullinan Harbour in Kai Tak to GO PARK and Sierra Sea in Sai Sha as well as YOHO West, we are integrating all the advanced connectivity into the next generation of living and working environments. Our 5G advanced solution provides comprehensive coverage across the entire properties from car park, lift lobbies, office, clubhouse to all the private residences. SmartConnect 5G Wi-Fi also offer fast, stable and cable-free access, allowing every user to connect immediately without the limitation of traditional wiring.

At the same time, 5G smart IoT enables real-time security management and automated fault detection while connecting devices such as lighting, climate control system, cameras and smart mirrors through one intelligent ecosystem. We continue to expand our 5G footprint across the infrastructure and development areas that will shape Hong Kong's future. We deployed the Golden Spectrum 3.3 and 3.5 gigahertz in the key urban locations and all the transport hubs to maximize capacity and ensure faster download and upload data speed for our users.

Across the MTR station, we prioritize high-capacity 5G spectrum at 24 major stations, strengthening coverage and performance as well as a sufficient capacity to accommodate their daily needs. We also expand coverage across major developments, including, again, GO PARK, Hong Kong International Airport, Kai Tak Sports Park and also the Northern Metropolis. In parallel, AI-enabled network operations allow us to monitor the network around the clock, predict potential issues and optimize performance dynamically. Our investment approach remains targeted and disciplined, focusing resources where they have the greatest impact on customer experience and Hong Kong future connectivity needs.

To further expand our network leadership, we are empowering the future by unlocking more 5G capacity by reallocating spectrum from our 3G sunset directly into our 5G network. We maximize spectrum efficiency to deliver superior data speeds, low latency as well as enhanced overall customer experience. To ensure service continuity and safeguard customer retention, our dedicated team are proactively guiding clients step by step through the device and SIM upgrade via targeted communication channels. Ultimately, this transition will allow us to deliver a seamless, high-speed network experience for our customers.

Looking ahead, this migration set the foundation of our next stage of network evolution, pioneering AI native technologies to deliver an unmatched hyper-optimized experience to our customers. We also continue to advance our ESG efforts with a focus on responsible technology, community inclusion, employee well-being and environmental protections. Cybersecurity remains a priority. Through the Anti-Scam Consumer Protection Charter 3.0 and adaptive machine learning models, we are strengthening our ability to identify and block cyber threats, malware and network intrusions. In the community, we support youth development through the Strive and Rise mentorship program.

We also promote digital inclusion and safety among senior citizens through training on smartphone use and scam prevention. For our employees, we continue to foster an inclusive and supportive workplace through various wellness and ongoing health awareness initiatives. This year, we organized sport event to bring our team together alongside health seminars to support everyone's physical and mental well-being. We also use high-speed connectivity and smart technology to support sports, arts and cultural activities, helping to strengthen connection across the community. These efforts reflect our commitment to applying technology responsibly and creating sustainable value for the communities we serve.

At the core of our business, our ultimate goal is to continuously provide premium service to our customers. We strive every single day to give our customers the absolute best experience where they are interacting with our frontline staff or using our network services. At the same time, we know that a premium experience require complete peace of mind. We deeply concern ourselves with cybersecurity to ensure our customers and their data are fully protected in an increasingly complex digital landscape. We are incredibly happy and humble that our ongoing effort across customer service, team excellence and cyber safety have been recognized by the industry. It gives us our stakeholders clear confidence that SmarTone remains a trusted premium brand in the market.

I will now pass the presentation to Ada for the financial review.

Thank you, Stephen. I will now take you through the financial performance for the fiscal year 2026. SmarTone reported a growth in both revenue and profit. Total revenue increased by 5.6% to $6.6 billion. Excluding the prior year one-off income from our Macau operations, underlying revenue increased by 6.5%, driven by our diversified product portfolio that is mentioned in the beginning of our presentation as well as increasing demand on the handset. Underlying EBIT increased by 6.9%, reaching $749 million, while the underlying EBIT margin remained stable at 11%. Reported profit after tax increased by 9.6% to $525 million.

Capital expenditure, it's decreased by 20.9% to $464 million, reflecting our disciplined and targeted approach to investments. At the same time, net cash increased by 29% to $2.5 billion, further strengthening our financial position, bearing in mind that we have a committed obligations in spectrum cost of around $2.6 billion. As a result, the Board was pleased to propose a final dividend of $0.175 per share, making a full year dividends of $0.32 per share, which is consistent with last year.

We maintained a strict cost and capital discipline throughout the year. Operating costs decreased by $94 million or 6% to $1.5 billion. This improvement was driven by targeted optimizations and AI-enabled efficiency programs across the organization. Importantly, these savings were achieved while we continue to invest in customer experience, digital transformation and future growth. Capital expenditure reduced by 21% to $464 million. This reflects a more efficient and selective approach to investments without compromising the quality and consistency of our network. Spectrum costs decreased by 2% to $526 million. We also expect a further full year benefit in the coming year as these costs continue to decline. Together, these results demonstrate our continued focus on improving efficiency and directing capital towards areas with the strongest strategic and financial returns.

Now, as you can see, the benefits of these efficiency initiatives are reflected in our profitability. Our underlying service EBITDA margin increased by 0.5 percentage points to 55% in fiscal year '26. And our profit after tax increased by $46 million or approximately 10% to $500 million. And again, this improvement was achieved while we continue to improve in network quality, customer experience and our key growth platforms.

Operating cash inflow increased by 5% to over $2.2 billion, supported by our core business as well as results from our diversified product portfolio and disciplined working capital management. This financial strength provides us with flexibility to sustain our network leadership and invest selectively in high-return growth opportunities. At the same time, we keep in mind a prudent and strong balance sheet is important to meet the future spectrum obligations. Dividends amounted to $352 million, which will be paid to the shareholders with a full year dividends of $0.32 per share.

I will now pass the floor back to Fiona to take us through the outlook.

Thank you, Ada. Now, looking ahead, the operating environment remains highly competitive. We do not expect market conditions to become any less demanding. However, we remain confident in our proposition, and we are clear about our priorities. On the growth front, we will continue to pursue value-driven growth rather than volume expansion. Our focus remains on delivering differentiated services and quality customer relationships, not competing on price alone. When it comes to operational excellence, we will maintain diligent cost discipline and deepen the adoption of AI to deliver further productivity gains and optimize capital expenditure.

Furthermore, we will accelerate the growth of 5G Home Broadband by strengthening our premium home proposition and leveraging the scalability of the businesses. We will also continue to make targeted network investments that reinforce our market leadership through consistent quality, particularly in the locations and moments where performance matters most to our customers. From a customer experience standpoint, we will advance AI-powered transformation across our operations to improve customer engagement, sharpen business insights and enhance productivity. We will continue to tailor our product suite to serve emerging customer segments and deepen our relationship with the premium customer base.

And finally, we will continue to leverage the strength and the ecosystem of our Sun Hung Kai Properties Group to deliver value to customers. SmarTone strategy is built for durability, balancing growth, efficiency and disciplined capital management. We are building a sustainable competitive advantage and will remain committed to delivering consistent earnings and long-term value for our shareholders.

This concludes our presentation today. Thank you for your attention, and we will now move on to Q&A session.

Thank you, Ms. Lau, Mr. Chau and Ms. Lam. Now we will have the Q&A session. [Operator Instructions] To make the best use of time, similar or repetitive questions will be grouped together for management to answer.

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Second question is, could you unpack the specific drivers behind your capital CapEx discipline?

Thank you for the question. So from a cost perspective, I think as I just mentioned, it is one of our very important levers for our overall financial health and financial performance. We will continue AI adoption. I think this is one thing that is an enormous lever in terms of helping us to improve our productivity. We are not saying that we will replace human with AI. I think, what we are saying is that we will increase the productivity of our staff in order to capture the cost saving opportunities.

One more thing. I think we have announced that we will be retiring our 3G network in October this year. So next month, we'll be retiring sunsetting our 3G. It has now a very low single-digit percentage point of customers still using 3G. We are very confident that we'll be able to migrate our customers to 4G and 5G, respectively. I think with that, we will be able to capture better cost saving as well as to optimize the network efficiency.

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We will now take the last question before concluding the briefing today.

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This will conclude today's briefing. Thank you very much for joining us today.

Good afternoon, ladies and gentlemen. Welcome to the SmarTone Telecommunications Holdings Limited Interim Results Announcement for the 6 months Ended the 31st of December 2025. First, may I introduce the management team presenting today, Ms. Fiona Lau, Executive Director and Chief Executive Officer; and Mr. Stephen Chau, Executive Director and Chief Technology Officer. The presentation will begin with a business review and key initiatives, followed by a financial review presented by Ms. Lau. [Operator Instructions]

Now may I invite Ms. Lau and Mr. Chau to begin with the presentation, please.

Good afternoon. During the first half of FY '26, SmarTone delivered a solid business performance. Our disciplined execution and strategic clarity create durable value even in a highly competitive market. Total revenue increased by 2% year-on-year, while profit after tax increased by 8%. Mobile postpaid ARPU increased by 1% year-on-year, and our 5G ARPU continued to be 2x that of 4G, reflecting continued strength in the premium segment. Our key growth drivers continue to perform well with consumer outbound roaming delivering solid year-on-year growth and 5G home broadband and enterprise solutions delivering strong year-on-year growth.

At the same time, operating expenses decreased by 6% and capital expenditure decreased by 3%. Service EBITDA margin remained stable at 54%, demonstrating disciplined cost and capital management. The Board declared an interim dividend per share at HKD 0.145, same as last year. Stephen and I will now take you through the business review, starting with our core growth engines, customer-centric initiatives and followed by updates on our latest network developments.

SmarTone continues to maintain leadership position in the premium segment, delivering quality growth during the period. Mobile postpaid ARPU increased by 1% year-on-year, demonstrating resilience despite intense competition. Our customer base continued to expand with total customer number increasing by 10% year-on-year. Importantly, our 5G ARPU continued to be 2x that of 4G, proving the premium value customers placed on our superior network quality and customer experience. Our 5G home broadband sustained strong momentum during the period. This performance was underpinned by the rapid adoption of Wi-Fi 7 penetration, which not only enhanced the customer experience, but also contributed to a higher ARPU, reflecting growing demand for the premium home connectivity.

We further strengthened our home proposition by introducing attractive bundle offerings, including Disney+ video content and our fixed telephony service, HomePhone+. These enhancements have made our services more compelling and integrated for everyday life. Additionally, strategic partnerships, particularly our tailored offerings for Sun Hung Kai properties have enabled us to deliver superb customer experience in a high-value residential development. 5G home broadband is one of our structural growth. Revenue increased 12% year-on-year, while EBIT rose 36%. This segment benefits from growing demand from flexible broadband alternatives, efficient acquisition economics as well as attractive incremental margins. We see continued expansion potential as the household digital consumption increase.

On roaming, roaming services maintained stable and resilient with consistent service quality maintained throughout the period. This performance was supported by a growing base of cross-border and international travelers. With greater mobility in the Greater China Bay Area, we are offering subscription plans that include GBA data, enabling customers to roam in the Mainland with a seamless experience. Customers can also choose between services such as 1 card 2 number or a virtual easy number to enhance cross-border convenience.

Consumer roaming experience experienced a consistent and robust 7% year-on-year increase, driven by customer-focused roaming products and bundled packages. Roamer penetration continued its steady rise, reaching 70% in December 2025, an improvement of 6 percentage points compared to last year. Underpinning our set of solid results and strong growth drivers is our obsession in our customer-centric services, which I'm going to talk through.

Number one, we continue to differentiate ourselves through network leadership. Building on this commitment, we became the first operator in Hong Kong to leverage 5G advanced technology, offering network priority for selected valued customers, reinforcing our service differentiation and premium experience. This is one of the industry's first commercialized applications of network slicing technology, whereby a customer is guaranteed to be among the best no matter how crowded data traffic is in a given location and a given time. It serves as a fast lane for our most premium customers.

Number two, from a customer servicing perspective, we also enhanced the device purchase journey with industry-leading transparency and convenience. During peak phone seasons, we are the only operator in Hong Kong to provide customers with clear stock availability dates, reinforcing trust and purchase confidence. We also upgraded our retail queuing system to enable seamless device pickup. When eSIM is introduced in the mainstream phone models, we introduced a customer-friendly one-click eSIM migration assistance, which received great feedback. Now when you visit our stores, you may notice that we have launched an AI and tech corner to help our customers maximize the value of their devices and to provide consultation services for the device or on AI usage.

Next, we launched Kids Care, an integrated parental control solution, tailored for the needs of today's families. Kids Care supports parents in providing a safe and enriching and digital environment for children by offering features such as screen time management and customizable website filtering. It is the first cross-platform solution in Hong Kong, supporting both iOS and Android. To stay connected, communicating seamlessly among family members and knowing the whereabout in case of dangers are essential and useful functions of a mobile technology. Now on the other hand, with rising cybersecurity threats and increasing exposure to social media, it is our responsibility to support families in protecting the young generation. Launching this as an example of serving our customers beyond the basic mobile connectivity. It is also our CSR effort to support families in protecting the younger generation.

Taking innovation a step further, we've also pioneered AI Connect, a first in Hong Kong service that provides assets to leading global AI platforms via SmarTone's mobile network. This provides customers with effortless access without the need for complicated setup such as VPN, while offering safe and trustworthy connectivity through our dedicated network. We've achieved a key milestone this year by becoming the first mobile network operator to obtain approval under CEPA to distribute telecom service cards in Mainland China. Leveraging the Sun Hung Kai Group's resources and network in Mainland China, we are building more brand presence and market awareness. Our recent collaborations with Guangzhou Parc Central represent the initial phase of this strategy, serving as a launch pad to showcase our brand, products and differentiated service offerings.

Looking ahead, we plan to progressively expand partnership and engagement channels to strengthen brand visibility and product distribution across Mainland China.

I will now pass on to Stephen to talk about our latest developments in network and AI adoption.

Thank you, Fiona. At the heart of our strategy is the SmarTone 5G Advanced Network, recognized for its outstanding performance and major venues such as Kai Tak Main Stadium. With SmarTone Priority, we harness the power of 5G Advanced and network slicing to deliver up to 3x more dedicated network resources for users who really demand speed and reliability. That means even in the business environment like the stadium, the concerts, transport hubs and city districts, our customers can enjoy always fast and stable connectivity.

Whether it's ticketing, HD streaming, gaming, our network ensures seamless experience for all high-demand applications. Our advanced architecture, including the 5G stand-alone and mobile edge computing delivers ultra-low latency, enhanced security and efficient infrastructure. AI-driven automation empowers us to optimize the network, predict issues and orchestrate traffic dynamically. We are also deploying the next-generation massive MIMO radios to further enhance performance while improving the energy consumption.

We are proactively enhancing the 5G capabilities across Hong Kong's key infrastructures. The Central Kowloon route is boosting east-to-west connectivity. The Northern Metropolis is emerging as a new strategic economic hub, driving innovation and future development. SmarTone has delivered the highest speed hour speeds across all MTL stations, consistently recognized by our customers. By deploying the Golden Spectrum 3.3 and 3.5 gigahertz, we further enhanced the capacity, especially during the peak traffic hours. So far, 15 key MTL stations have already been in service with more to come, ensuring reliable 5G service through tunnels, platforms and concourses.

Our collaboration with Sun Hung Kai Properties brings comprehensive 5G Advanced coverage to Hong Kong's reliability, most prestigious landmarks, including the International Gateway Center, the IGC in West Kowloon, the Cullinan Sky and Cullinan Harbour in Kai Tak. GOPA and CORC [indiscernible]. We deliver comprehensive indoor coverage and seamless connectivity from car parks to lobbies, live offices, car house, everywhere within the properties.

Our 724 AI-enabled quality assurance system ensure quality mobile service performance across the whole and entire properties, while real-time fraud and security management through the 5G IoT devices ensure utmost reliable. Our market-leading Smart Connect 5G Wi-Fi delivers fast cable 3 connectivity, supporting a wide ecosystem of smart devices. We are committed to delivering superior experiences, supporting innovation and drive sustainable growth.

With our cooperation, we have won the Best Smartphone Customer Experience Award by Network X in 2025, recognizing our leadership in innovation and user-first experiences. We continue to support Hong Kong as a mega event hub, delivering advanced connectivity and smart solutions for major sports and cultural initiatives. A recent example is the FIP Silver REAP tournament 2025, a prestigious international event held in Hong Kong for the first time. Our carrier-grade infrastructure provides robust connectivities, supporting seamless official live streaming throughout the tournament.

On the cultural front, we partnered with the Bridge+ UOB Art Academy, a century old heritage property transformed into a connected arts and cultural center. Our smart building solutions include intelligent automation control for lighting and integrated AV systems, enhancing ambient comfort and operation efficiency. This scalable smart building backbone is already ready for supporting our building-wise smart technology ecosystem.

I touched about AI. AI is central to our transformation journey. We are harnessing the power of AI to deliver customer service and operational excellence. AI enables every customer interaction into actionable insight, driving smarter knowledge engagement and effective governance. We have developed multiple AI agents to automate process across vehicle, HR, market research and content review, achieving significant time and cost savings. Our enterprise AI agent platform also enhanced the productivity, streamline operations and fostering collaboration across the organization.

With this, I will end my part of the presentation. And now I will hand back to Fiona to continue on the financial review session.

I will now walk you through the financial performance for the first half of FY '26. Revenue: Revenue for the first half of the year rose 2% to HKD 3,561 million or 3.5%, excluding last year's one-off income. EBIT was up 6.2%, excluding the one-off, with margin steady at 11%. Profit after tax has grew 8.4% to HKD 278 million. Capital expenditures slightly declined by 3% to HKD 179 million. Net cash increased 50% to HKD 2,376 million. And the interim dividend stayed at HKD 0.145 per share.

We maintained strict cost discipline through targeted optimization and AI-enabled efficiency programs, resulting in operating cost savings of 6% compared to the previous year, which enabled us to invest in better customer experience, digital transformation and future growth. As a result, our service EBITDA margin is maintained steady at a healthy level of 54%. We continued to reduce capital expenditure without compromising network quality. CapEx decreased year-on-year by 3%, and spectrum costs have been gradually declining following the peak in FY '23, reflecting a disciplined approach to capital management.

Due to rigorous management of costs and capital expenditures, our net cash grew by HKD 788 million, representing a 50% year-on-year increase, reaching approximately HKD 2.4 billion as of December 2025. Our capital allocation priorities remain clear. We're here to sustain network leadership. We want to invest selectively in high-return growth areas, and we will maintain financial strength and stable dividend distribution. We operate with a strong balance sheet and a disciplined financial management. The financial strength allow us to sustain consistent dividends for our shareholders.

Looking forward, we're feeling focused and confident. The competitive environment remains intense. We do not expect conditions to ease. However, we're confident in our positioning. Our priorities for the second half of FY '25 and '26 are clear: Quality growth, not volume growth, scaled 5G home broadband business, cost and CapEx discipline, deepened AI-driven operational transformation and better customer experience, targeted network investment to maintain leadership because we compete on consistency.

SmarTone strategy is built for durability with balance between growth, efficiency and disciplined capital management. We're not pursuing short-term gains. We're building sustainable competitive advantage. We will remain committed to delivering consistent earnings and long-term value creation for the shareholders. Thank you.

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We will now take the last question before concluding the briefing today.

You have HKD 2.3 billion of cash at the interim stage and cash seems to be increasing at the rate of HKD 500 million a year. How do you plan to use the cash?

Thank you for the question. We are generating a healthy level of cash. We are, I think, in a telecom business, in the infrastructure business. We are here for the very long term. So while we are maintaining a healthy level of cash, we will be very cautious in the way we spend. We have -- as Stephen mentioned, we selectively invest in our network. I think that's our #1 priority. We invest in the network where it matters the most. We compete on consistency. We're not competing on headlines, maximum speed. We are really competing on consistency. And that includes indoor, outdoor, above the ground, under the ground, especially in MTR. And we also noticed that there are a lot of new developments coming up in Hong Kong over the next decades, especially the Northern Metropolis. So these are all the investments that we will need to continue for our long-term sustainability of business in Hong Kong. Apart from network, obviously, we will invest into our platform. I mentioned AI. So AI, we will invest selectively and smartly to ensure that the investment will pay off. Apart from that, we will also invest in areas of growth. You would have seen that we have quite successfully grow our 5G home broadband business. We really grew from zero to quite a meaningful segment of our profit today. So we'll continue to look for these opportunities and invest in those areas. Thank you.

This will conclude today's briefing. Thank you all for joining us today.