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Marketing expenses hit SK Telecom Co.

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Aug 01,2006
SK Telecom Co., Korea’s largest mobile phone operator, had its biggest profit drop in seven quarters as the lifting of a ban on handset subsidies drove up marketing costs. Net income fell 20 percent to 373.3 billion won ($390 million) in the second quarter, from 467.1 billion won a year earlier, the Seoul-based company said in a regulatory filing yesterday. Sales rose 4.4 percent to 2.6 trillion won. SK Telecom joins rival KT Freetel Co. in reporting lower-than-expected profit in the latest quarter, underscoring how competition has intensified since the end of March, when wireless operators began offering handset subsidies. Japan’s largest mobile phone company, NTT DoCoMo Inc., also reported a profit drop in its latest quarter on rising costs of retaining customers. “In the short term, it doesn’t look as though there’s going to be much investor optimism in this sector,” said Kim Young-hwan, who helps manage the equivalent of $1.6 billion, including SK Telecom shares, at Mirae Asset Investment Management Co. in Seoul. “The results were disappointing.” Operating profit, or sales minus the cost of goods sold and administrative expenses, fell 13 percent to 619.3 billion won.


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