LONDON (ShareCast) - Expansion problems have prompted Asia-focused mobile phone group e-pay Asia to warn results for both the six months to June and full year to December will be significantly below expectations.

Trading in its core reload business in Malaysia continues to grow, but e-pay has experienced a series of challenges in Indonesia and China. It will now make a loss in Indonesia with higher than expected financing costs to have a significant impact on the group's results for 2007.

E-pay has also decided to move into China via a joint venture with a licensed operator and move away from the existing practice of selling licences on an individual basis.

It believes this strategy will secure better long term returns for the business, but in the short term the group will sacrifice its direct software licensing sales, which generated A$3.6m of net profit in 2006, the statement said.

• News Channel