SEOUL, KOREA – SK Telecom (NYSE:SKM) announced its earnings on a K-IFRS consolidated basis for the first quarter of 2013: revenue of KRW 4.113 trillion, operating income of KRW 410.6 billion and net income of KRW 345.9 billion.
The revenue decreased by 2.0% quarter-on-quarter (QoQ) due to the impact of shorter business days and business suspension in February. However, on a year-on-year (YoY) basis, the revenue increased by 3.6% backed by strong growth of LTE subscribers and new businesses. SK Telecom secured a total of 9.33 million LTE subscribers as of the end of March and surpassed the 10 million LTE subscriber mark for the fourth time in the world on April 21.
The operating income decreased by 17.8% YoY affected by increased marketing costs and depreciation expenses, while the consolidated net income for the first quarter expanded 15.2% compared to the same period last year thanks to strong performance of SK Hynix.
SK Telecom has been leading a paradigm shift in the marketplace by providing measures that strengthen customer benefits rather than focusing on heavy handset subsidies. For instance, the company has introduced ‘T&T Sharing’ plans that provide customers with unlimited intra-network voice calls, and modified its existing ‘LTE Shareable Data’ plans to allow users to add one data-only device to use the same data pool for free. It is also providing strengthened membership benefits and offering discount for existing customers who wish to change their devices. Going forward, SK Telecom plans to keep introducing products and services to create a differentiated customer experience.
SK Telecom expects these customer retention measures focused on enhancing satisfaction of existing customers will lead to increased sales in the mid-to long-term and help improve its earnings backed by the stabilized market.
In fact, attracting 1 million customers in just one month, T&T Sharing plan has successful proven its effect on customer retention: 10 percent less subscribers switched to other carriers and 30 percent more subscribers renewed their contracts with SK Telecom.
SK Telecom expects to see continued growth in revenue propelled by rapid addition of LTE subscribers, the number of which is projected to reach 15 million by the end of 2013. In addition, dramatic increase in customers’ data usage will also have a positive impact on the company’s earnings in the mid-to long-term.
In this context, the company plans to commercialize LTE-Advanced service within September 2013 to enable customers to experience data communication at speeds faster than that of broadband Internet through their smartphones. To this end, in April, SK Telecom conducted a field test under real network environment using a smartphone, and started upgrading its existing LTE network to LTE-Advanced.
Moreover, SK Telecom expects new business areas – namely solution, media and healthcare – to begin producing tangible results in the coming quarters. The solution business marked 70% increased sales in the first quarter and the media business secured 600,000 paid subscribers for its mobile IPTV service. In healthcare business, the company has been laying a solid basis by commercializing Health-On service and smart hospital solutions.
Meanwhile, based on the synergies realized through its acquisition of SK M&C, SK Planet plans to improve competitiveness and value of its core platforms like big data, digital contents and integrated commerce in order to grow into a global platform company.
SK Telecom Chief Financial Officer Hwang Soo-cheol said, “Faced with new growth opportunities in the data-centered mobile market, SK Telecom will maintain its leadership in the ICT industry by offering innovative data services that bring positive changes to customers’ lives, while promoting service-oriented competition in the marketplace.”
