STOCKWATCH: SmarTone sharply lower; may be affected by 3G concerns/BT overhang

HONG KONG (AFX-ASIA) - SmarTone Telecommunications Holdings Ltd shares were sharply lower in late morning trade, with dealers seeing no particular reason for the decline expect for possible worries over the company's 3G strategy.	    They said the stock has also been pressured for some time by uncertainty over a possible stake disposal by British Telecom, which has indicated its intentions to sell down its Asian assets.	    At 12:13 pm, SmarTone was down 0.45 hkd or 4.61 pct at 9.30 on volume of 3.74 mln shares.	    Major sellers included Merrill Lynch, Deutsche Securities and Celestial Asia Securities, dealers said.	    The Hang Seng Index was down 23.39 points at 12,737.25.	    Jack Tsui, an analyst with South China Brokerage, said he is not aware of any specific reason for SmarTone's weak performance this morning.	    "It could be related to uncertainty over its 3G investment plan," he said.	    The company has stated that it will take part in the bidding for 3G licences in Hong Kong but has not given details about its investment plan.	    Tsui said investors could also be unsettled by the continued possibility of a stake disposal by British Telecom.	    SmarTone is 20 pct owned by British Telecom, which has expressed it desire to sell interests in its Asian portfolio to reduce debt. SmarTone has not ruled out the possibility of buying back the shares from British Telecom.	    Tsui said SmarTone is likely to suffer a lower average revenue per user (ARPU) in its mobile business because of its failure to obtain higher-end customers.	    "At present, it has an APRU of around 280 hkd per month. It will be falling this year," he said.	    "The effective ARPU will be around 230-240 hkd, if we take into account of its pre-paid subscribers," he said.	    However, Tsui said his house rates SmarTone a "buy", because of its strong cash on hand of 3.86 bln hkd. 

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