May 10, 2022
Business is humming at SK Telecom.
The Korean telco has reported a 15.5% hike in Q1 operating income, driven by revenue growth across the business and aided by a big fall in 5G marketing cost.
Total sales rose 4% to 4.28 trillion won (US$3.35 billion), with media and enterprise units posting the biggest growth.
The core mobile business expanded just 2.2% but the maturing of the 5G market meant it was able to shave 36 billion won ($28.5 million) off marketing expense, helping contain total opex growth to less than 2%.
Net profit was down 61.5%, a result of the spin-off of non-core companies including chip firm SK Hynix last November.
CFO Kim Jin-won told an earnings call Tuesday that mobile revenue was lower due to seasonal factors and the limited use of discounts during the quarter.
The operator added another 1 million 5G customers for the quarter to take its total to 10.9 million, accounting for 46% of its 5G handset subscribers. It said it is on track to exceed its full-year target of 13 million.
Kim foreshadowed new price plans and services this year as 5G "becomes mainstream and customer needs become more diversified."
He said 5G had delivered ARPU growth since launch three years ago, and the company expected that would continue much longer than five years of growth brought by LTE.
Strong AI businesses
The new AI businesses, which debuted just last year, are already clocking up some strong numbers. The Ifland metaverse platform has 1.35 million MAUs while subscription service T Universe has just reached the 1 million user mark.
SKT has set a target of 2 trillion won ($1.6 billion) in revenue from the two businesses in 2025 – up from 200 billion won ($222.2 million) last year.
The operator, which aims to launch Ifland in 80 countries this year, has just struck an alliance with Deutsche Telekom to take its metaverse capabilities to Europe. The two companies will carry out a field test and create fresh content for the virtual world during 2022, Korea Economic Daily reported.
Want to know more? Sign up to get our dedicated newsletters direct to your inbox. Yang Maeng-seok, head of SKT's metaverse business, said Ifland would seek local partners for joint marketing and localization efforts as it expanded around the world. He said both Ifland and T Universe were important growth and profit drivers for the core telecom business. "They do not require massive capex," he said. "They are growth businesses built on the strong foundation of our 5G infrastructure and marketing assets, including contact centres and billing systems. "We believe the expanded user base will lead to better profitability, and in the long run we expect that the subscription and metaverse business will become key sources of profit for SKT along with the fixed and mobile businesses." Related posts: SKT cruises to $340M operating profit on mobile, media growth Asian operators plunge into chip market SKT 2.0 forecasts growth surge from new businesses SKT cybersecurity spin-off pulls plug on $2.8B IPO Is Korean profit bump sign of 5G turning the corner? — Robert Clark, contributing editor, special to Light Reading
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