SK Telecom’s revenue, profit decline in Q4

SK Telecom, the No. 1 telecommunications provider in Korea, said Thursday its operating profit for the fourth quarter declined 3.9 percent from a year earlier to post 490 billion won ($448 million). Its revenue also fell 0.1 percent from a year earlier to 4.28 trillion won.

On the other hand, its quarterly net income soared 71.4 percent to 503 billion won.

“This fourth-quarter operating profit was widely expected by the market. The decline in quarterly operating profit year-on-year was partially due to the seasonal effect, in which cost in advertising and marketing increases in the fourth quarter,” said Yang Seung-woo, an analyst at Samsung Securities. “It was also affected by the cancellation of subscription fees in accordance with the Mobile Device Distribution Improvement Act.”

However, SK Telecom’s annual revenue increased 3.4 percent year-on-year to 17.1 trillion won as its number of LTE subscribers increased, as did sales at its new businesses and subsidiaries.

As of December, the telecom company had 16.7 million LTE subscribers, accounting for about 58 percent of its subscriber base.

But its earnings fell in the fourth quarter due to increased marketing expenses in tangent with bigger membership benefits and lower sign-up fees.

“To alleviate the household burden of communications costs, SK Telecom reduced its sign-up fee by 50 percent in August and scrapped it all together in November,” said a spokesman for SK Telecom.

“Also, in December we eliminated cancellation fees for customers who were receiving a monthly discount and who did not complete their contracts.”

With the emergence of the Internet of Things, SK Telecom said last year that it would create a new IoT business model focused on promoting IoT business platforms based on its existing M2M (machine-to-machine) business.

“[Last year] was a special year for SK Telecom because it successfully moved toward product and service-oriented competition and achieved meaningful results through the growth of its businesses,” said Hwang Keun-joo, executive vice president and head of strategy and planning at the company.

“This year, SK Telecom will continue to strengthen the competitiveness of its products and services by expanding customer benefits.”

kjy@joongang.co.kr [BY KIM JUNG-YOON]