SK Telecom, South Korea's top mobile service carrier, Thursday posted an 8 percent rise in second-quarter earnings on increased subscribers and improved profitability.
Net income reached 403.27 billion won ($440.25 million) during the three months ending June 30, compared with 373.39 billion won a year earlier, the company said in a regulatory filing.
Sales grew 7.74 percent year-on-year to 2.84 trillion won and operating profit improved 6.93 percent to 662.23 billion won, it said.
The quarterly earnings were slightly lower than a market consensus of 411.2 billion won forecast by FnGuide Inc., a financial information service provider. Shares of SK Telecom were trading at 218,000 won, up 1.16 percent, in the morning.
The company attributed the performance to a steady increase in its customer base and improved profitability despite higher marketing costs.
Amid intensifying competition to attract new subscribers in the second quarter, SK Telecom reported that it spent 703.1 billion won in marketing efforts, up 17.3 percent from a year earlier and up 19.9 percent from the previous quarter. The ratio of marketing expenses to revenue stood at 24.7 percent.
The company reported that it attracted a net 625,000 customers, up 149 percent from a year earlier, bringing its total subscription base to 21.36 million at the end of June.
Thanks to an increase in premium plan subscribers, profitability also improved. The monthly revenue per user or ARPU, a key indicator of profitability, grew 2.2 percent from the previous quarter to 45,108 won.
SK Telecom's quarterly results come on the heels of a somewhat disappointing earnings report by its smaller rival KTF the previous day.
KTF posted a 36.5 percent drop in second-quarter earnings to 51.13 billion won, affected by increased spending on marketing.
The two rivals have been facing a tough race especially after they commenced the three-generation (3G) mobile service nationwide in March. The move is apparently intended to create new cash flows at a time when their voice-centered 2G market is nearly saturated.
South Korea has more than 40 million mobile phone users among its population of 49 million. SK Telecom makes up more than 50 percent of the market, while KTF is far behind with less than 35 percent.