SKT, KT report strong growth in first quarter

Industry

Published: 11 May. 2021, 19:52

SKT, KT report strong growth in first quarter

SK Telecom and KT reported strong growth in quarterly net profit thanks to good performance in businesses other than telecom subscriptions.

SK Telecom’s net profit increased 86.9 percent on year in the first quarter to 572 billion won ($511.6 million). Operating profit during the same period increased 29 percent on year to 388.8 billion won, while quarterly revenue was up 7.4 percent on year to 4.78 trillion won.

The higher on-year growth in net profit came from dividends from SK’s chip-making subsidiary SK hynix, which reported a 53 percent jump on year in first-quarter net profit last month, and gains from selling off its baseball team, formerly the SK Wyverns, to Shinsegae.

The mobile telecommunication business remained a cash cow, generating operating profit of approximately 307.3 billion won, up 19 percent on year.

Non-telecom businesses reported even stronger growth. Its media business, which includes over-the-top service Wavve and SK Broadband, saw quarterly operating profit almost double to 75.4 billion won.

The largest ongoing issue at the leading telecom operator is the split announced last month. The company plans to divide the current organization into two companies: One for telecom assets including SK Broadband, and the other to take on SK’s interests in 11st, T Map Mobility, ADT Caps and SK hynix.

During a Tuesday conference call, an SK official said details of the spin-off would be finalized by the year’s first half. If everything goes as planned, the split entities would be relisted on the stock exchange by November.

KT and its subsidiaries also announced upbeat performance: a 43.7 percent on year increase in quarterly net profit at 326.5 billion won.

Operating profit during the same period increased 15.4 percent to 444.2 billion won and revenue was up 3.4 percent on year to 6.03 trillion won, the company reported Tuesday.

KT alone saw operating profit jump 21.4 percent on year to 366 billion won while revenue grew 3.3 percent to 4.57 trillion won. The company attributed the growth to its data center and the artificial intelligence unit which revenue grow 7.5 percent on year. Sales from providing IT solutions to corporate clients increased as well by 2.3 percent.

KT largely refers to these businesses as “Digico” units, as opposed to its previous model based on network subscriptions, and counts them as the company’s future growth engines.

“We confirmed the potential of KT’s transition into an operator of digital platforms,” said Kim Young-jin, KT’s chief financial officer during a Tuesday conference call. “Pushing that transformation will be the core of our strategy this year. The goal is to reach 25 trillion won in consolidated revenue for 2020.”

Revenue from KT’s content business also rose 12.2 percent on year. This includes its music streaming service and online advertising sales. Last year, BC Card was KT’s only subsidiary that pulled down the entire group’s profits as tourists stop coming into the country. During this year’s first quarter, however, revenue increased 5 percent on year as domestic customers used their credit cards more.

BY SONG KYOUNG-SON [song.kyoungson@joongang.co.kr]