SK Telecom (SKT), South Korea’s largest mobile operator by subscribers, reported strong profit growth in Q1, due mostly to equity gains at chipmaker SK Hynix, but mobile service revenue fell as a result of an increase in tariff discounts.

The operator’s net profit for the quarter increased 18.8 per cent year-on-year to KRW693 billion ($646 million), which the company said was boosted by a KRW642 billion gain from its stake in SK Hynix.

Operating revenue dipped 1.2 per cent to KRW4.18 trillion, dragged down by a 3.5 per cent drop in mobile service turnover to KRW2.57 trillion. ARPU fell 3.8 per cent to KRW33,299, due to an increase in tariff discounts mandated by the government in September.

LTE penetration rose to 84.3 per cent at end-March from 79 per cent in March 2017. The operator’s mobile subscriber base increased by 173,000 over the past year to end Q1 with 24.7 million subs.

SK Planet, its e-commerce platform, suffered a 10 per cent drop in revenue in Q1 to KRW205 billion, which SKT attributed to a change in accounting for OK Cashbag and a restructuring.

The operator said monthly active users of its NUGU artificial intelligence speaker, launched in 2016, reached 3.7 million in Q1 and expects the number to grow to 5 million by end 2018.

SKT’s capex in Q1 was just KRW87 billion – its 2018 capex budget is KRW2.1 trillion.

Rival KT also reported mixed results for Q1, with its net profit rising 12.6 per cent year-on-year to KRW252.5 billion and service revenue declining 0.5 per cent to KRW4.92 trillion.