South Korea’s SK Telecom (SKT) reported a sharp fall in Q3 net income as well as a decline in revenue as it felt the impact of the government’s move to eliminate activation fees and a cut in interconnection fees.

The operator, with a 49 per cent market share, saw its net income for the quarter ending 30 September decline 28 per cent to KRW381.8 billion ($335 million) year-on-year and EBITDA fall 1 per cent to KRW1.25 trillion. The company said its profit was also impacted by lower equity gains from SK Hynix.

With network interconnection revenue dropping 22 per cent from a year ago, its revenue fell 2.4 per cent to KRW4.261 trillion. Mobile revenue also fell during the quarter, off 2.8 per cent to KRW2.74 trillion, due to more subscribers choosing mobile fee discounts based on their contracts, the company said.

On the positive side, it added almost 2.3 million 4G subscribers over the past year, with 4G customers accounting for almost 65 per cent (18.46 million) of its total use base of 28.4 million – up from 57 per cent in Q3 2014.

ARPU edged up marginally from KRW36,417 ($31.97) a year ago to KRW36,729 ($32.24) in Q3 2015. Its customer churn rate remained at 1.4 per cent – the same level as a year ago. It also added more than one million smartphone users over the past year, taking its total to 20.3 million.

Capex for the period fell 32 per cent to KRW400 billion, and marketing expenses declined 9.2 per cent to KRW749 billion and represented 23.8 per cent of operating revenue, down from 25.2 per cent a year ago.

To strengthen its media platform, the company said it plans to integrate the media-related capabilities of its subsidiaries. Its first move is to expand its investment in content production by merging SK Broadband and CJ Hellovision as well as strengthening its partnership and cooperation with CJ Corp.

$440M cable stake acquisition
SK Telecom today announced it will acquire CJ O Shopping’s 30 per cent stake in CJ Hellovision – South Korea’s largest cable TV company – for KRW500 billion ($440 million). CJ O Shopping’s remaining stake (23.9 per cent) in CJ Hellovision can be later acquired by SKT through call and put options between the two firms.

SKT said it will also boost CJ’s Corp’s paid-in capital by KRW150 billion and the firms will create two KRW50 billion funds to boost the media and ICT industries’ ecosystem.