Filipino mobile operator Smart Communications says it is reducing its investment in 3G technologies as a result of weaker than expected demand and the government’s decision to withhold tax incentives. Smart President Napoleon Nazareno said that he was looking to ‘moderate’ capex moving forward to ‘keep it in pace with the demand growth’, and admitted that 3G uptake had been disappointing. Smart launched its UMTS network in February but estimates that only around 350,000 subscribers are potential 3G customers. Nazareno said his company had entered the 3G arena ‘prematurely’ in the face of pressure from the government, which had promised tax incentives to support the technology’s rollout. However, the lack of a killer application for 3G and the high price of handsets, coupled with the government’s Board of Investments’ decision to remove income tax holiday incentives, have proved too burdensome. Smart, the mobile arm of Philippine Long Distance Telephone and the country’s largest mobile phone operator, was orignally planning to spend PHP33 billion (USD655.5 million) over the next six years to expand its 3G network. Of that figure, only PHP3 billion has been spent so far.