SK Telecom’s (SKT) Q1 profit dropped sharply, caused by a loss from its stake in SK Hynix and another drop in ARPU related to a government push to make mobile tariffs more affordable.
The operator holds a 20 per cent stake in chipmaker SK Hynix and felt the impact of a falling semiconductor market in the form of a decline in equity gains from the business.
SKT’s net profit fell 46.1 per cent year-on-year to KRW374 billion ($320 million).
Consolidated revenue increased 3.7 per cent to KRW4.33 trillion. In a statement, the company said solid growth in its subscriber base and data demand, along with improved marketing efficiency and the performance of subsidiaries helped offset declining mobile service revenue, which fell 6.1 per cent to KRW2.41 trillion due to continued tariff discounts.
It said the mobile revenue decline began slowing and earnings will gradually improve with the spread of 5G service. Operating income from the business remained similar to Q1 2018.
The company did not reveal how many subscribers had signed up to the 5G service so far, with a representative stating only it expects between 5 million and 6 million to be on board by end-2020.
South Korea’s govenment last week estimated 260,000 subscribers had chosen 5G services, but didn’t provide a breakdown by operator.
SKT CFO Yoon Poong-young said the company will continue to improve its earnings performance and secure a solid basis to grow into a “new ICT company by achieving balanced growth of its four main business areas and developing new business opportunities in areas such as AI, IoT, big data and mobility”.
Mobile ARPU fell 8 per cent year-on-year to KRW30,645. It added 127,000 mobile subscribers in Q1, ending March with 31 million. LTE penetration rose to 81.2 per cent from 77.1 per cent at end-March 2018.
Revenue from its 11st an SK stoa e-commerce brands increased 8.1 per cent to KRW199 billion and IPTV revenue rose 17.9 per cent to KRW316 billion as subscriptions rose 8.6 per cent to 4.8 million.
The company estimates 2019 capex will increase between 30 per cent to 40 per cent over 2018 as it invests to widen 5G coverage: the figure jumped from KRW87 billion in Q1 2018 to KRW331 billion.Subscribe to our daily newsletter Back