South Korea’s largest mobile operator SK Telecom reported a 74 percent decline in profit for Q2 as lower tariffs and increased marketing costs hit the bottom line.

SK reported net income of KRW120.6 billion (US$106.8 million) for the three months ended 30 June, down from KRW465.4 billion a year earlier and below most analyst forecasts. Sales fell by 0.6 percent to KRW4.015 trillion; EBITDA fell by 22.7 percent to KRW1.003 trillion.

In a statement, the operator noted the impact of “diverse mobile tariff cut measures” – including the lowering of its basic monthly rate by KRW1,000, which took effect in September 2011.

It also cited “increased marketing expenses for LTE subscriber acquisition” and other LTE investment costs.

SK launched LTE in July 2011 and says it hit 4.22 million LTE subscribers at the end of July 2012. The firm says it is on track to achieve its target of 7 million LTE subscribers by the end of 2012.

“With wider adoption of LTE smartphones backed by a wide range of attractive LTE services, SK Telecom expects to achieve stronger growth in the mid-to long-term.” said CFO Ahn Seung-yun.

ARPU fell to KRW39,729 in the quarter from KRW40,738 a year earlier, but the firm said ARPU had recently started growing again on the back of the uptake of LTE services.