SK Telecom Q1 net up 10.5% on data services
By Nam In-soo, Reuters
06 May 2002
South Korean mobile operator reports net profit of 442bn won with sales up 36%.
South Korea's top mobile carrier SK Telecom Co on Monday posted a better-than-expected net profit of 442 billion won ($344.2 million) for the first quarter, powered by wireless data services.
Net profit rose 10.5 percent from 400 billion won a year ago, but was down from 499 billion won in the previous quarter. Sales rose 36 percent to 1.93 trillion won, SK said in a statement.
SK's stellar growth has been largely driven by the fact that South Korea is one of the world's busiest mobile Internet markets. Almost 40 percent of cellular users subscribe to some form of mobile data service.
SK's results exceeded the expectations of analysts who had reckoned that cuts in call rates and interconnection fees would eat into its earnings. Dongwon Securities had estimated SK's first quarter net at 409 billion won, while others had put it at less than 400 billion.
SK's shares finished down three percent at 239,000 won on Monday versus a 3.5 percent fall on the benchmark index.
Shinsegi merger
Revenues from Internet services rose 131 percent to 129.8 billion won from the combined revenues of SK and Shinsegi Telecomm Inc, SK said.
SK's takeover of Shinsegi became official in January.
Net profit and sales for the first quarter excluded those of Shinsegi for the first 13 days of this year as it officially launched the merged entity on January 14.
An inclusion of those figures would put its first-quarter net profit at 447 billion won on sales of 1.97 trillion won.
SK's growth has continued since the merger, with subscribers rising to 16 million or 52.9 percent of the market at end-March, up 5.4 percent from their combined number of users at the end of December.
First-quarter average revenue per user (ARPU) rose five percent year on year to 42,315 won, despite an 8.3 percent cut in call rates and a 28 percent reduction in interconnection fees, SK said.
Analysts said SK's revenues and profits were expected to rise in the coming years as wireless data service drives up ARPU.
Wireless data sales
"SK still dominates the 2.5G market with more than a 70 percent share, which should bode well for its wireless data sales going forward," said Joel Kim, analyst at ING Barings in Seoul.
SK said as of the end of March it had 7.28 million users of its cdma2000 1x or 2.5G services, which ensure higher data transmission speeds.
Kim forecast that South Korea would have more than 15.1 million 2.5G subscribers by the end of 2002, with SK's market share at 57.9 percent or 8.8 million users.
SK gave a more bullish outlook on the 2.5G users.
"We target nine million 1x users by the end of this year," Cho Sung-hae, vice president at SK's investor relations team, told a conference call later on Monday.
Cho said last month its full-year earnings would rise by 10 or 20 percent, while meeting its 2002 sales target of 8.8 trillion won.
SK spent a quarter of the 1.2 trillion won it had earmarked for 2002 marketing in the first three months to attract subscribers in the fiercely competitive mobile market.
That was up sharply from 114 billion won spent in the first quarter of last year.
SK posted a 1.14 trillion won net profit for 2001 on sales of 6.23 trillion won, excluding Shinsegi's revenues.
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