SK Telecom has received an unfavorable report card last year in the mobile communications (MNO) business due to price cuts such as selective contract discounts. The mobile communications business is expected to continue to decline Year on Year this year. The company`s overall sales turned to growth in three years due to growth in new businesses such as media and IoT (Internet of Things).

SK Telecom, on February 5, revealed that its consolidated sales grew by 2.5 % year-on-year to KRW 17.52 trillion, while its operating profit rose 0.1 % to KRW 1.33 trillion. Operating profit fell off in 4 years due to improved profitability at its subsidiaries.

However, the report cards that SK Telecom received from its main telecom business were sluggish. Separate sales excluding subsidiaries amounted to KRW 12.46 trillion, up 1.0% from the previous year, but operating profit fell 4.7% to 1.69 trillion won. Revenue for the fourth quarter was KRW 3.8 trillion, up 1.8 % from the same period last year, but operating profit fell 5.5 % to KRW 375.3 billion. The average ARPU for wireless subscribers dropped to KRW 40,520 in the fourth quarter, down 0.4% from the same period of last year and 0.8% from the previous quarter.

Meanwhile, this is attributable to the full-scale impact of a 25% discount in the fourth quarter. This situation is expected to continue this year. "It is inevitable that mobile phone sales will decline from the previous year due to the 25% discount rate and other factors," stated Yoo Young-sang, CFO chief financial officer.

SK Telecom has been preparing for a service that customers can feel as the market environment is uncertain due to 25% discount on mobile communication (MNO) business this year. It is a way to improve customer service rather than short-term competition. Mr. Yu said, "To strengthen the competitiveness of the MNO project, we will make a drastic change, such as evolving the overall distribution system, and provide a systemized payment system to minimize the negative impact." "We will strive for quality growth of the customer base rather than expanding the top line through competitive competition," said Yang Yang-suk, head of the MNO business support group. "In 2017, we will develop various products and services that can catch customers and develop future growth potential.”

Besides, SK Telecom plans to focus on securing 5G competitiveness. "We will build a commercial network based on the NSA standard that is linked to the existing LTE network at the end of the year, and will be able to commercialize it in line with the launch of the 5G terminal by early next year," stated Mr. Yoo.

Expectations were also raised regarding joint use of essential facilities. Lee Sang-heon, CR Strategic Chief, said, "The government has suggested that early construction of 5G will help operators to build efficient and efficient facilities in order to implement the national agenda, and as a follow-up measure, "We are expecting 5G competitiveness to be reconsidered by efficiently and rapidly building 5G networks through utilization."

However, the new ICT-based new businesses such as media and IoT are contributing to sales growth. SK Broadband, a subsidiary in charge of the media business, recorded sales of KRW 3.051 billion, up 3.6% from the previous year, due to the expansion of Giga Internet and IPTV subscribers and the increase in VOD sales. Other sales of SK Telecom including IoT solution also increased 10.8% to KRW 978.7 billion.

The number of AI users `Nugu`s monthly actual users recorded 2.11 million in December. The company aims to exceed 5 million by the end of this year.

By Kim Ji Young kjy@


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