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SK Telecom's net income drops 26% on marketing costs

SK Telecom saw its net income drop by 26 percent in the second quarter on high marketing expenses. Revenues went up by 3 percent to KRW 2.93 trillion, from KRW 2.84 trillion in Q2 2007, boosted by continued subscriber growth. Operating income was KRW 533 billion, down by 20 percent due to the introduction of mandatory contract plans and handset instalment plans along with increased marketing expenses due to increased WCDMA subscribers. Net income fell by 26 percent to KRW 298 billion from KRW 403 billion. EBITDA fell 12 percent to KRW 969 billion versus KRW 1.10 trillion in the second quarter last year. Capex in the quarter was lower by 23 percent at KRW 327 billion.

Marketing expenses in the second quarter were KRW 876 billion, up 25 percent year-on-year. Marketing expenses were 30 percent of the company’s revenues. During the first half of this year, the handset subsidy ban was lifted and the level of market competition was at a record high, CFO Kyou Bin Lee said. For the second half, SK Telecom plans to promote its bundled products with Hanarotelecom, hoping to raise marketing efficiency.

Mobile internet revenues fell by 15 percent to KRW 600 billion, although sequentially the company saw a 0.5 percent increase due to a growth in flat-rate data plan subscribers. Of the total mobile revenues, mobile internet revenues accounted for 23 percent, down from 28 percent.

SK Telecom ended the quarter with a total of 22.74 million subscribers, up 6 percent year-on-year. During the three-month period the company added 370,000 new customers. ARPU was down 4 percent year-on-year to KRW 43,341.


http://www.telecompaper.com/news/article.aspx?cid=628915

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