SK Telecom beats estimates as SK hynix stake pays off
SK Telecom delivered better-than-expected results in 2020 as it booked strong gains on its SK hynix shares.
The company’s net income was up 74.3 percent to 1.5 trillion won ($1.3 billion), overshooting market consensus of 1.3 trillion won.
The annual operating profit advanced 21.8 percent to reach 1.3 trillion won and revenue was up 5 percent to 18.6 trillion won.
SK Telecom’s results were largely driven by a strong year for SK hynix, a semiconductor maker in which SK Telecom has a 20 percent stake.
“Net income for 2020 was up 74.3 percent due to higher equity method income from SK hynix,” the company wrote in its investor briefing.
Operating profit at the mobile network business, which is the backbone of the company, climbed 7.5 percent to 1.2 trillion won over the previous year as the 5G subscriptions grew rapidly. Average revenue per user was down 3 percent on year in the fourth quarter, according to the business report.
“The number of SK Telecom’s 5G subscribers was around 5.48 million as of the end of 2020 and is expect to reach 9 million by the end of this year,” the telecom operator said.
SK Telecom has almost half all 5G users in Korea, which stood at 11.9 million as of the end of last year according to the ICT Ministry.
Some businesses, including IPTV, security and e-commerce, achieved double digit growth in revenues.
The company set a target of expanding its revenue to 20 trillion won this year as it looks to offer a wide variety of subscription-based services.
“This year, we will accelerate our evolution towards becoming a global ICT company with unrivalled competitiveness in AI, and make efforts to achieve a record annual revenue of 20 trillion won,” said Yoon Poong-young, CFO of SK Telecom.
LG U+ reported lower than forecast earnings as heavy marketing costs in the final quarter eroded profit.
The company posted 478.1 billion won in net profit for 2020, up 9 percent from the previous year. The operating profit for the year jumped 29.1 percent to 886.2 billion won, while sales rose 8.4 percent to 13.41 trillion won.
The net fell short of market expectations 738.5 billion won as the poor fourth quarter weighed on results.
In the fourth quarter alone, LG U+ reported a net loss of 224.7 billion won from a profit of 103.3 billion won a year earlier. The company cited 5G promotions and the sale of the iPhone 12 as major drags on results.
5G subscriber numbers jumped by 136.6 percent to 2.76 million last year, helping boost the sales of U+’s mobile network business to 5.8 trillion won, up 5.4 percent from a year earlier.
The IPTV business brought in 1.15 trillion won in sales, up 10.9 percent compared to 2019.
BY PARK EUN-JEE [email@example.com]