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Despite profit surge, gloomy outlook for SK Telecom

July 28, 2016 - 16:20 By Korea Herald
[THE INVESTOR] SK Telecom, the nation’s largest telecom carrier, on July 28 posted its second-quarter operating profit of 478.2 billion won (US$425 million), a 20.73 percent surge from a year ago. Revenue was also up 11.25 percent to 3.92 trillion won.

But the upbeat results included huge cost cuts following an earlier retirement program during the cited period. Industry watchers estimate about 9.04 percent on-year decline in its operating profit. 




In a saturated telecom market, the company with almost 50 percent of the market share has yet to find its next growth engine business while its platform businesses such as those using the Internet of Things technology are still in their infancy.

In a move to seek a breakthrough, the company attempted to acquire the nation’s No. 1 cable TV operator but the merger plan failed to get the regulatory approval due to monopoly concerns.

In the April-June period, the number of new subscribers was 29.15 million people, up 3 percent from a year ago. Average revenue per user, or ARPU, was down 396 won to 36,205 won.

The company said it is using about 23 percent of its sales into marketing activities. In the second quarter, it spent 721 billion won.

By Lee Ji-yoon (jylee@heraldcorp.com)