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SK Telecom profit rises 48%, led by smartphone demand

Jan. 25, 2011 - 18:09 By 황장진
SK Telecom Co., Korea’s largest mobile-phone operator, has reported fourth-quarter profits which climbed 48 percent, helped by demand from smartphone users.

Net income rose to 361.4 billion won ($323 million) from 244.2 billion won a year earlier, the Seoul-based company said in a statement Tuesday. That compares with the 405.4 billion won average of 13 analyst estimates compiled by Bloomberg in the past four weeks.

The phone company benefited from surging demand for handsets ― such as Samsung Electronics Co.’s Galaxy S ― that let users connect to the Internet and download applications. Smartphone subscribers surged to 3.92 million by the end of last year, SK said.

“Revenue increased thanks to smartphones,” Choi Nam-kon, an analyst at Tong Yang Securities Inc. in Seoul, said before the announcement.

“In the first quarter also, profits won’t be too bad unless marketing competition gets too heated.”

Operating profits rose by 2.3 percent to 453.1 billion won on sales of 3.17 trillion won.

SK Telecom controls around half of the country’s near-saturated mobile phone market.

But the company was hit by sales of the Apple iPhone, launched by second-ranked operator KT, in late 2009. KT has sold more than 2 million iPhones so far in Korea.

In late June, SK Telecom launched the Galaxy S smarpthone to take on the iPhone, and has sold more than 2 million units.

SK Telecom’s 2010 operating profits dropped 7 percent from 2009, while its total sales edged up 3 percent. Its wireless Internet sales climbed 13 percent, driven by smartphone subscriber growth.

SK Telecom replaced its chief executive, Jung Man-won, and named Ha Sung-min along with So Jin-woo to lead the company on Christmas Eve last year.

The carrier is expected to step up its challenge against KT this year, as it plans to roll out a wide range of smartphones, including Samsung’s Galaxy S sequel and LG Electronics’ Optimus 2X.

But an SK Telecom executive indicated that the carrier has no immediate plan to introduce the iPhone despite the launch of the gadget by Verizon in the United States.

“There is no change in our stance (regarding the iPhone),” Jang Dong-hyun, SK Telecom’s chief marketing officer, told reporters on Jan. 12.

Korea’s smartphone subscribers are expected to more than double to 15.8 million this year, after jumping more than 14-fold in 2010, triggered by the iPhone rollout by KT in late 2009, according to forecast from CSLA.

SK Telecom plans to launch commercial Long-term Evolution networks in Seoul in the third quarter of this year to cope with surging data demand from users of smartphones and tablet PCs and to better compete with KT, an integrated wireline-wireless operator.

(From news reports)