By Kim Yoo-chul
SK Telecom, the nation's biggest mobile carrier, is being urged to find breakthroughs for growth as it sees a fall in average revenue per user (ARPU).
ARPU is considered as a key barometer in the telecom industry. It represents the average of how much money the company collects from its subscriber base.
On Wednesday, SK Telecom said its ARPU as of the end of the first quarter of this year was down to 40,393 won, a decrease of 1,040 won from a year earlier, despite rising smartphone customers.
"More of our customers are using packaged services and the trend is quite negative in terms of ARPU," said a company spokesman.
Mirae Asset Securities, a leading local brokerage, has presented a "hold" view for SK Telecom stocks and maintained its target for SK Telecom of 200,000 won per share.
The research house said SK Telecom's ARPU will slide further to 36,540 won by the end of this year, casting some doubts over SK Telecom’s long-term sustainability.
SK Telecom officials said the telecommunication firm will increase its ARPU, as the firm is clinching more smartphone customers amid the steady and healthy boom for the devices.
SK Telecom said the operating profit for the first three months of this year that ended March 31 rose 29 percent from a year earlier to 614.3 billion won helped by constructive smartphone sales and a decrease in marketing expenses.
Sales were also up by 4 percent to 3.9 trillion won from a year earlier, while the net profit for the first quarter also increased by 56.5 percent because of a rise in the number of smartphone customers.
SK Telecom has secured six million smartphone customers as of Wednesday and forecasted those numbers will rise to over 10 million by the end of the year.
SK Telecom is a close corporate friend of Samsung Electronics in the local market, while it also started providing Apple’s iPad tablets from last week, just a month after it began selling the iPhone 4 with an aim to curb its biggest local rival KT.
SK Telecom announced the first quarter results based on the International Financial Reporting Standards or IFRS.
"Marketing costs have decreased," said SK spokeswoman Kim Ji-won. The number of new customers for SK as of the end of the latest quarter was 2.23 million from 2.42 million a year earlier.
Net debts by SK Telecom were 2.24 trillion won during the first quarter from 3.4 trillion won that it had received late last year.
Despite the positive results, shares of SK Telecom rose just 0.6 percent to end at 166,000 won per share on the nation’s main bourse, according to data from the Korea Exchange.
Explosive demand for value-added handsets and the steady release of new tablet PCs are expected to help improve carriers' earnings in the near future, analysts said, although they insisted that inconsistencies in government regulations and increasing pressure for telecom companies to upgrade their infrastructure could dent profitability.
Seoul is urging telecom companies to lower their rates in an apparent scheme to tame inflation, which could cut profit margins, and consumer demand for faster data service networks may increase pressure on Korean telecos to set aside more capital expenditure, which will also restrict profitability, analysts said.