SK Telecom’s profit fell sharply in Q2, despite government limits on marketing spending, and mobile service revenue was down nearly 1 per cent year-on-year.

Its net income in Q2 dropped 27 per cent year-on-year to KRW291 billion ($252 million), which it said was due to lower equity gains from its affiliate SK Hynix as well as a rise in costs among its subsidiaries, including SK Planet, despite efforts to reduce costs. Its EBITDA fell 0.7 per cent to KRW1.16 trillion.

Despite eliminating sign-up fees and a higher number of subscribers choosing contract-based mobile fee discounts, total revenue inched up 0.3 per cent year-on-year to KRW 4.27 trillion.

Mobile service revenue dropped 0.9 per cent to KRW2.7 trillion.

Its LTE subscriber base passed the 20-million mark and accounted for 68.7 per cent of its total subscribers. ARPU fell 1.1 per cent year-on-year to KRW36,205 ($31.30).

Marketing expenses declined 2.5 per cent to KRW721 billion, and capex dropped 33 per cent to KRW234 billion. However, it raised its capex guidance slightly for the year from KRW2 trillion to KRW 2.1 trillion.

Overall operating expenses edged up 0.4 per cent to KRW3.86 trillion, with double-digit declines in labour and advertising costs offset by higher commission and interconnection fees.

Future plans
After acquiring 30MHz of 2.6GHz spectrum in the May auction, the company plans to actively roll-out an LTE network on that band, covering Seoul and six cities by the end of the year and 90 per cent of the population by the end of 2018.

But its failure to acquire South Korea’s largest cable television operator, CJ HelloVision, will leave it a distant second behind KT in the fixed-line market, according to Fitch Ratings. The agency suggests SKT will need to change its long-term strategy for fixed-line and media to help to offset slowing growth in wireless.