SK Telecom Reports Q3

SK Telecom announces 3Q08 earnings

October 28, 2008

2 Min Read

SEOUL -- SK Telecom (NYSE:SKM) announced its earnings for the third quarter of 2008: revenue of KRW 2.899 trillion, operating income of KRW 504.1 billion and net income of KRW 333.6 billion.

Year on year, the revenue increased by 3% to record KRW 2.899 trillion backed by gradual increase in the number of subscribers. However, the figure declined by 1.1% quarter on quarter due to increase in subscribers of competition-aggravating tariff schemes including Family Discount Plan and decrease in new subscribers.

Marketing expenses in the third quarter marked KRW 727.7 billion, representing a 2.4% year-on-year rise, due to mandatory contracts and handset installment payment plans. Yet compared to the previous quarter the figure fell by 16.9% as market stabilizing efforts began to bear fruit.

Operating income recorded KRW 504.1 billion, contracting 6.1% year on year and 5.4% quarter on quarter, resulting from an increase in depreciation expenses with expanded investment in WCDMA. Net income in the third quarter stood at KRW 333.6 billion, representing a 57.1% year-on-year decrease, as one-time gain from the conversion of China Unicom’s convertible bonds (CB) into full shares (KRW 373.1 billion) and SK C&C’s equity method gain (KRW 243.2 billion) had been reflected in the same period last year. However barring these one-time effects, the figure actually represents an increase on a year-on-year basis. Quarter on quarter the number climbed by 12%.

With the 33% phone-mail tariff cut started this January, the wireless Internet revenue declined by 11.6% year on year to record KRW 619 billion. However, on a quarter-on-quarter basis, the wireless Internet revenue expanded by 3.1% from growth in flat-rate data plan subscribers.

The 2008 3Q cumulative number of subscribers was 22.87 million and average revenue per user (ARPU) recorded KRW 42,393, down by 3% year on year and 2% quarter on quarter.

SK Telecom's CFO Kyou Bin Lee said, "The third quarter of 2008 saw an overall stabilization in the marketplace as mandatory contracts and handset installment payment plans took hold. With subscriber increase in discount plans, the revenue slightly declined compared to the previous quarter. However it is expected to play a positive role in the longer term by strengthening the company’s core competitiveness, thereby enhancing its management efficiency."

SK Telecom (Nasdaq: SKM)

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