SK Telecom records net profit drop in 1Q14 on increased marketing expenses

30 Apr 2014

Echoing the results of rival LG Uplus, which yesterday revealed a lower net profit for 1Q 2014 as a result of higher marketing costs, South Korea’s largest cellco by subscribers SK Telecom (SKT) has reported similar fortunes for the first three months of this year. In the quarter ended 31 March 2014 SKT recorded a 22.7% drop in consolidated net income to KRW267 billion (USD240 million), down from KRW346 billion a year earlier, while operating income declined by 37.6% year-on-year (and 50.5% quarter-on-quarter), mainly as a result of an increased marketing spend. Citing increased competition in the sector, SKT reported marketing expenses of KRW1.10 trillion in 1Q14, up from KRW907 billion in the year-ago period, while capital expenditures totalled KRW265 billion, down from KRW351 billion in 1Q13.

Operating revenue for the period under review meanwhile stood at KRW4.202 trillion, representing a 3.4% increase from the first quarter of 2013, led by the growth of the company’s LTE-based services and its new businesses, including business-to-business solutions. Earnings before interest, tax, depreciation and amortisation (EBTIDA) totalled KRW956 billion, down from KRW1.08 trillion a year earlier.

In operational terms, with SKT’s 4G subscriber base having continued to increase in the first quarter, at end-March 2014 it totalled 14.773 million, representing year-on-year growth of 58.3%. Total mobile accesses also rose, climbing to 27.814 million, from 27.030 million a year earlier. Meanwhile, 67.7% of the operator’s mobile customers are now smartphone subscribers (18.8 million), up from 66.9% (18.3 million) at end-March 2013, and 59.3% (16.0 million) the year before that.

South Korea, SK Telecom (SKT),

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