SKT's Q4 profit plunges 28.8% on heavy subsidiary investment

By Yoon Sung-won

SK Telecom posted 301.9 billion won ($263.57 million) operating profit in the fourth quarter last year, down 28.8 percent year-on-year, the nation’s largest telcom company said Friday.

The mobile carrier said the fall was largely due to heavy investment in subsidiaries. These included its online shopping service SK Planet, which is estimated to have invested about 300 billion won in its e-commerce platform “11st Street” last year.

With its subsidiaries excluded, SK Telecom’s annual operating profit reached 1.78 trillion won in the fourth quarter, up 7.5 percent year-on-year.

“We continued to make progress in the mobile telecommunications business last year, while thoroughly preparing ourselves for the future,” said SK Telecom chief financial officer Ryu Young-sang.

According to its regulatory filing on Friday, SK Telecom recorded 4.35 trillion won in sales in the quarter, up 2.7 percent from the previous year. Net profit reached 474.7 billion won, up 47.4 percent year-on-year, on increased gain from affiliate SK hynix.

Throughout 2016, the telecom company recorded 17.92 trillion won in sales and 1.53 trillion won operating profit, down 0.3 percent and 10.1 percent from a year before, respectively.

SK Telecom said it would push to foster media platform, e-commerce, artificial intelligence (AI) and the internet of things (IoT) businesses this year. It aims to record 17.8 trillion won in sales, up 2 trillion won.

In the next three years, it plans to invest 5 trillion won in new growth sectors such as AI, self-driving vehicles and IoT, with its subsidiaries SK Broadband and SK Planet.

“In 2017, we will not only strengthen our competitiveness in the area of mobile telecommunications, but will also generate tangible results in the field of new information and communication technology,” Ryu said.

The company also expected its subsidiaries’ performance to improve this year.

SK Broadband provides fixed-line internet and internet protocol television (IPTV) services. Its IPTV business sales reached 844.4 billion won last year, up 33.3 percent year-on-year.

Meanwhile, SK Telecom had 29.6 million subscribers as of the end of last year, up 3.4 percent from the previous year.

Average revenue per user, the key index for a telecom business, settled at 35,355 won in the fourth quarter, down 0.3 percent quarter-on-quarter, the fifth consecutive quarterly decrease.