SKT earnings drop due to sluggish mobile sales

SK Telecom, Korea’s top mobile carrier, said Thursday its net earnings plummeted in the fourth quarter of 2018 on year due to sluggish mobile business and increased investment in the 5G network.

The company’s net income stood at 474.5 billion won ($426.3 million) in the October-December period, nose-diving 54.8 percent from a year earlier, the company said in a consolidated financial statement.

Operating profit sank 25.9 percent on year to 225.3 billion won, and sales reached 4.3 trillion won in the last three months of 2018.

For the whole of 2018, the company’s net profit rose 17.9 percent to 3.1 trillion won, as its financial statements reflected equity gains from its subsidiary, SK Hynix. The telecom giant holds a controlling 20 percent stake in the major chipmaker, which posted record-high earnings last year.

However, SK Telecom’s operating profits fell 21.8 percent on-year to 1.2 trillion won last year, and sales shrank 3.7 percent to 16.9 trillion won, the company said.

“Operating profit decreased in 2018 in line with the drop in sales, while net earnings rose thanks to equity gains from [SK Hynix],” the company said.

The dismal quarterly earnings came from the mobile division, as the company widened discount rates for new subscribers to comply with government policy and sales of high-end smartphones like iPhones fell below market expectation.

Its increased capital spending on 5G infrastructure also ate into its gains in the final quarter.

To improve profit, SK Telecom vowed to shift its focus to 5G.

On Thursday, shares of SK Telecom fell 0.19 percent to 258,000 won on the Kospi. The earnings report was announced before the market opening.

Yonhap