SK Telecom Gets a Slight 5G Bump

For those seeking a view of how 5G might play out, the South Korean market offers some early glimpses.

After two full quarters, the biggest South Korean operator, SK Telecom, today reported some mildly encouraging 5G numbers.

Its third-quarter results, released Thursday, show positive improvements in average revenue per user (ARPU) and sales.

ARPU is up 1.3% for the quarter and has risen 1.7% since the launch of 5G in April, while 5G sales have stopped a slide in revenues, the company said.

After four quarters of decline, mobile services revenue grew 2.1% sequentially and 0.1% year-on-year -- a result of both increased data consumption and subs growth, the company said.

Given that 5G subs account for less than 5% of the customer base, that's a positive -- but it's worth noting that the main driver of this bump in revenue is mobile data.

All those impressive new 5G services, like AR and cloud gaming, not to mention the much-vaunted enterprise and IoT apps, are either in their early stages or are yet to debut.

The other good news is that 5G take-up is still brisk.

Following the launch in April, it took SKT four months to clock up 1 million 5G subs and then just six weeks to add another half a million. As of September 30, it had 1.54 million 5G customers.

The simultaneous plunge into 5G by all three South Korean operators has driven up marketing costs, however.

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Marketing expenses were up 8.1% sequentially and 7% year-on-year, and now account for 27.1% of revenues, an increase of 2.2 percentage points since the first quarter.

SKT reported a healthy 17.5% hike in earnings (before interest, tax, depreciation and amortization) and a 9% increase in revenues for the quarter, but those numbers have little to do with 5G.

Much of the growth has come from its media unit, which has 5 million IPTV subs and grew 14% year-on-year.

SKT's security unit also recorded higher sales and earnings while the commerce group increased profit despite a slip in sales.

The biggest impact on SKT's bottom line was the 90% fall in contribution from its 20% stake in SK Hynix, the world's number-two memory chip-maker.

The chip firm has been hit by the slump in memory sales and dragged SKT earnings down 73%, to KRW274.4 billion ($230 million), on operating revenues of KRW4.56 trillion ($3.9 billion).

— Robert Clark, contributing editor, special to Light Reading

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