Chip affiliate boosts SK Telecom profits

By Kim Yoo-chul

SK Telecom posted 1.80 trillion won in net profit in 2014, up 11.8 percent from a year ago.

Its net profit increased as it reflected profits accrued from its stake in its affiliate SK hynix, which posted record earnings last year on its strong semiconductor business.

The company’s sales grew 3.4 percent to 17.16 trillion won. Its operating profit dropped 9.2 percent to 1.82 trillion won.

"Our decision to scrap our registration fee and to expand services for our customers were the main reasons behind the decreased operating profit," it said.

SK Telecom scrapped a one-time registration fee in November at the request of the Ministry of Science, ICT and Future Planning.

SK Telecom owns a 20.57 percent stake in SK hynix, the world's second-biggest memory chip manufacturer. SK hynix reported 17.12 trillion won and 4.2 trillion won as sales and net profits last year. Both were records thanks to a new market order.

SK Telecom said its average revenue per user (ARPU), a barometer to gauge the profitability of mobile carriers, was 36,100 won last year, a marginal increase of 4.5 percent from the previous year.

By last year, SK Telecom had 16.7 million customers using its LTE network services, taking up 58.85 percent of the total.

"SK Telecom is still on a track to shift our priority toward services and products. In that perception, our performance last year wasn't that bad," said Hwang Keun-joo, a senior executive at the company, stressing that it will increase its spending on new business projects to diversify its revenue streams.

"This year will be another tough year. Calls are running high to cut telecom bills and the local telecommunications market is already saturated. We have no option but to find what's next beyond telecommunications," said an SK Telecom official.

The filing said the SK Group's telecommunications unit created 960 billion won in sales from new businesses, 27 percent compared to its spending for marketing activities in 2014.