SK Telecom Ups Profit

SK Telecom reports 4.7% increase in sales and 25.2% growth in net income year on year

January 25, 2006

3 Min Read

SEOUL, South Korea --

  • SK Telecom achieved a net income of KRW 1.87 trillion, an operating income of KRW 2.65 trillion, and total sales of KRW 10.16 trillion, in 2005. The total sales and net income were higher by 4.7% and 25.2% respectively year on year, and operating income increased by 12.5% over the previous year.

  • Wireless Internet revenue represented 26.6% of the company's entire cellular service revenue.

  • The company will continue to sustain growth by diversifying its business portfolios, and reinforcing the competitive-edge of its wireless data services.

SK Telecom announced on January 24th that the company achieved a net income of KRW 1.87 trillion, an operating income of KRW 2.65 trillion, and total sales of KRW 10.16 trillion, for 2005. This represents the best results ever achieved in the company's history.

Total sales grew 4.7% year on year. This revenue increase was driven by steady subscriber and ARPU (average revenue per user) growth that was largely based on competitive data product offerings. Operating income rose 12.5% compared to the previous year, and net income increased 25.2%, year on year. The sharp increase in net income came from a gain on the sale of SK Teletech, which took place in May 2005.

Notably, wireless Internet revenue maintained a continuous growth, recording KRW 2.46 trillion, a 35% growth over the revenue of the previous year. This brought the wireless Internet revenue up to 26.6% of total sales if interconnection fees are not included. This is an increase of 6% point over the 20.6% recorded in 2004. Much of this increase is due to the continuous growth of new convergent services such as 'Melon' and 'Mobile Cyworld', as well as an increased usage of the data flat rate plans.

Marketing expenses came to KRW 1.75 trillion. This is a year-on-year decrease of 5.9%. Effective and efficient marketing activities helped the company achieve a marketing expense to sales revenue ratio of 17.2%, a 2% reduction from the 19.2% recorded a year earlier. In addition, this figure stayed comfortably below the Annual Guidance of 18.5%. The fact that the company achieved its revenue target with lower marketing expenses reflects the company's commitment to having a leading role in market stabilization, while still maintaining market leadership

The number of cellular service subscribers in 2005 reached 19.53 million, an increase of 750,000 over the previous year. The ARPU stood at KRW 44,167, a growth of 625 KRW over the results a year earlier. This was largely due to an increase in data call volume brought about by diversification of the wireless Internet services, and the strength in the high quality subscriber base. The monthly average call traffic volume per user (Minutes of Usage) was 197 minutes, a 3 minute increase over the 194 minute average in 2004. This robust subscriber base significantly accelerated the company's rapid progress toward achieving the ten billion plus mark in sales revenue, in 2005.

"We will make the utmost effort to solidify our leadership in the wireless Internet market by continuing to rapidly introduce new upgraded wireless data services. In line with this, SK Telecom plans to release a commercial High-Speed Downlink Packet Access (HSDPA) service, during the first half of 2006. We will also strengthen our global operations by maintaining a steady growth pattern in our penetration of overseas markets", said Shin Bae Kim, president of SK Telecom.

SK Telecom (Nasdaq: SKM)

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