5G and new businesses drive SK Telecom profit

Growth in 5G and its non-mobile businesses have helped SK Telecom to a 21.8% spike in full-year operating profit.

The South Korean telco posted operating income of 1.35 trillion won ($1.21 billion) on 5% higher revenue of 18.6 trillion won ($16.69 billion) for 2020, it announced Wednesday.

Net income rose 74.3% mainly because of a change in treatment of 20%-owned chip unit SK Hynix.

Figure 1: Beyond the shopfront: Growth in 5G and non-mobile service have pushed profits at SK Telecom.
(Source: Ryan Pikkel on Flickr CC2.0)

In a strong last quarter, operating income more than doubled over the previous year to 331 billion won ($296 million), with revenue up 9.7%. Net income was 371 billion won ($332 million) compared to a loss of 45.4 billion won ($40.6 million).

Lucky number five

The steady improvement in 5G helped the core mobile business to rebound from a decline in 2019, with revenue up 2.7% to 9.98 trillion won ($8.9 billion).

5G subscription growth and data consumption also arrested the slide in ARPU after three successive quarterly falls, though at 30,269 won ARPU is still below where it was a year ago.

The operator added 1.21 million 5G subs for the quarter to take its total to 5.48 million. It expects to reach 9 million by the end of this year.

Once again, the non-mobile units were a major contributor.

SK Broadband, which includes its OTT business wavve, grew revenue 17.2% and operating income 59.2% following the completion of its merger with t-broad.

The security group boosted sales 12.2% after merging its two units, while the commerce group grew 12.1%.

Lead the way

SKT is also building out a promising mobility business based on its mapping business, South Korea's biggest.

In December it spun it off into a new unit, T Map Mobility, which is to become a "mobility-as-a-service" provider.

It has struck a joint venture with Uber to start a ride-hailing service in April. Uber has committed to invest at least $100 million in the new JV and $50 million in T Map Mobility.

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SKT's e-commerce unit 11st has forged a partnership with Amazon which would allow consumers to buy Amazon products through the SKT subsidiary.

The operator also is pushing ahead with IPO plans for online mall ONE store and security company ADT Caps.

CFO Yoon Poong-young noted that SKT now had five core business areas – mobile, media, security, commerce and mobility.

He said in 2021 the company aimed to achieve record total revenue of 20 trillion won ($17.9 billion).

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— Robert Clark, contributing editor, special to Light Reading