SKT grows operating income 11% thanks to media, commerce units

Forget 5G: media and commerce are making the gains for Asian operators right now.

Robert Clark, Contributing Editor

August 6, 2020

3 Min Read
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South Korea's SK Telecom has boosted quarterly operating income by 11.4% – its first increase since 2017 – and EBITDA 7.4% thanks to its media, security and e-commerce businesses.

Its core mobile unit, which accounts for less than two-thirds of total revenue, grew 3.2%, aided by the addition of 700,000 5G subs.

The company is weighing IPOs for some of its subsidiaries, in particular online mall One Store and security firm ADT Caps.

It's also considering a listing for streaming venture Wavve, and is hoping to explore offshore expansion with NBC-Universal, Ha Hyoung-il, head of SKT corporate center II, told an earnings briefing Thursday.

Long tail wagging
It's not a new trend, but with COVID-19 crushing economic activity, and with consumers not yet enthused about 5G, the non-core investments are showing their worth.

In the past week NTT DoCoMo has just reported a profit powered by its content and payment services, while payments also drove KDDI's ARPU higher.

Hong Kong's PCCW Thursday reported a turnaround in its media business despite a decline in its telecom and corporate services.

SK Telecom CFO Yoon Poong-young told the briefing that the 5G subscriber increase was weaker than expected due to the effects of COVID-19.

But he said that in contrast to the aggressive start to 5G competition last year, the market was now quite stable with a "low possibility" of a revival of price discounts and handset giveaways.

He expects competition that will be based "not on price but on service" in the second half.

"You can see the telecommunication market is seeing a very stable market without any excessive competition," he said.

Broad support
The completion of the merger of cable operator T-broad with SK Broadband subsidiary helped grow the broadband and media business by 16%, and deliver efficiency gains to improve margins by two percentage points.

SKT's security unit, led by ADT Caps, grew revenue 8.7%, while the commerce business grew 8.4% respectively.

The telco revealed it had increased 5G capex for the quarter by 56% to 918 billion won (US$774 million) to drive 5G rollout.

Yoon said going forward the 5G investment would be drawn from other capital spending items.

"The proportion of 5G capex against total capex will continue to increase," he said.

Meanwhile, HKT said EBITDA fell 3% in the first half, as service revenue declined 1% to $1.87 billion due mainly to COVID-19 factors.

Want to know more about 5G? Check out our dedicated 5G content channel here on Light Reading.

It recorded higher broadband and international calling revenue as a result of the virus, but it also experienced a 48% drop in roaming revenue.

HKT's 5G service, launched in April, has racked up 100,000 customers out of a total customer base of 3.50 million.

However, the media business, which includes the pay-TV service NOW and regional streaming service Viu, reported positive EBITDA of $3 million, up from a $22 million loss a year ago. The unit operates as a subsidiary of HKT parent PCCW.

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— Robert Clark, contributing editor, special to Light Reading

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About the Author

Robert Clark

Contributing Editor, Light Reading

Robert Clark is an independent technology editor and researcher based in Hong Kong. 

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