SK Telecom’s net profit dips on 5G costs, equity gainsSK Telecom, Korea’s top mobile carrier, said Thursday its net income dropped 17.9 percent on year due to reduced equity gains and investments related to its 5G service.
In a regulatory filing, the company reported a net income of 306.8 billion won ($250 million) during the January-March period on a consolidated basis, down from 373.6 billion won a year ago.
The company said operating profit for the first three months of the year fell 6.4 percent on year to 302 billion won, although its annual revenue increased 2.7 percent on year to 4.45 trillion won.
SK Telecom attributed its profit decline to equity ties with chip-making affiliate SK hynix. Equity gains from SK hynix dropped to 135 billion won from 232.1 billion won a year earlier, according to the company.
SK Telecom holds a 20 percent stake in SK hynix, which reported a 41 percent drop in net profit in the first quarter of the year.
Its increased marketing expenses for 5G service and depreciation costs also dragged down its bottom line, according to the mobile carrier.
Marketing expenses for its mobile business stood at 756.5 billion won, up 13.5 percent from a year ago.
In the first quarter, the company’s capital expenditures reached 306.6 billion won, down 7.5 percent from a year ago.
SK Telecom said in a conference call that it will not increase its capital expenditures for this year, but is considering making facility investments earlier than planned.
Due to the coronavirus, SK Telecom said sales from its roaming service declined, but subscriber growth in its 5G service led to an overall increase in mobile business revenue.
As of the first quarter, SK Telecom had 24.13 million subscribers, up from 23.95 million a year ago. Of them, 2.65 million were 5G users, accounting 45 percent of the country’s total 5G subscribers, it said.
Shares in SK Telecom advanced 0.24 percent to close at 207,000 won on the Seoul bourse, outperforming the broader Kospi’s 0.01 percent decline.