South Korea’s SK Telecom (SKT) reported its net income for Q2 fell 20 per cent to KRW398 billion ($340 million) due to a 1.2 per cent drop in revenue and a 24.4 per cent decline in operating income compared to a year ago.
The sharp drop in operating income was due mainly to a one-off labour expense, related to the company’s retirement programme, of about KRW100 billion. Its operating profit margin dropped to 9.7 per cent during the quarter from 12.7 per cent a year ago. But the margin was up from 9.5 per cent in Q1. Revenue fell to KRW4.25 trillion.
On the positive side, its marketing expenses were down 10.3 per cent year-on-year and 12.5 per cent quarter-on-quarter. Operating expenses increased just 2.2 per cent to KRW2.84 trillion.
SKT’s total subscriber base rose 1 per cent from a year ago to 28.6 million. LTE penetration rose 7.4 points to 62.6 per cent during the quarter, and ARPU was almost flat at KRW44,071 ($37.66).
Its capex decreased 32.7 per cent to KRW348 billion.
The company’s debt rose to KRW7.6 trillion at the end of June from KRW6.8 trillion at end-2014, according to Moody’s.
While the company reported a seasonally high level of debt in the second quarter due to tax and dividend payments, almost KRW300 billion of the additional increase last quarter was due to the one-off labour expenses as well as the SK Broadband acquisition.
SKT is the largest mobile operator in South Korea, with 47 per cent market share, according to GSMA Intelligence.
Its EBITDA margin fell 2.3 points to 27.1 per cent from a year ago.