South Korea’s largest operator SK Telecom reported a sharp drop in its net profit last year as revenue fell very slightly (0.2 per cent) due to the elimination of sign-up fees and a reduction in interconnection fees.

Its net income last year dropped 15.8 per cent to KRW1.5 trillion ($1.22 billion) on consolidated revenue of KRW17.1 trillion. The company said the large profit dropped was affected by lower equity gains from SK Hynix. EBITDA was down 0.3 per cent to KRW4.7 trillion.

Operating income dropped 6.4 per cent year-on-year due to a one-off labour expense from a special retirement offer and increased overall costs resulting from expanded business activities of its subsidiaries. Operating revenue fell 3.5 per cent to KRW12.6 trillion, while mobile revenue declined 2.4 per cent to KRW10.9 trillion. Interconnection turnover dropped 14.3 per cent to KRW748 billion.

Operating expenses edged down 0.6 per cent to KRW15.4 trillion, and marketing costs fell 14.5 per cent to KRW3.06 trillion.

ARPU declined 0.3 per cent to KRW43,970 ($35.66) from a year ago.

On the positive side, LTE connections rose 13.4 per cent to almost 19 million, accounting for 66.3 per cent of its total user base of 28.6 million (up 1.2 per cent year-on-year).

Hwang Keun-joo, SKT’s CFO and head of strategy and planning, said last year the company focused on “securing new economic growth engines amid economic uncertainties, including stalled growth of the telecommunications market and subscribers”. Moving beyond its mobile network business, SKT launched media and Internet of Things (IoT) services designed to generate growth for its next-generation platforms, he said.

The operator aims to strengthen its media platform by pushing for the acquisition of CJ Hellovision. In the area of IoT, the company introduced an open smart-home service platform and, as of the end of 2015, launched 25 different smart home-compatible home appliances under cooperation with 34 companies.

Capex last year fell 12 per cent to KRW1.89 trillion and was slightly below the KRW2 trillion budgeted.