By Kim Tae-gyu
Staff Reporter
Korea's top mobile carrier SK Telecom is smiling while its rival KT, the country's No. 1 fixed-line operator, is grimacing after unveiling second-quarter performances.
KT said Friday that it topped 3 trillion won in sales during the three months ending June 30. However, its bottom line substantially worsened with the firm's operating profit remaining at 377.6 billion won, down 33.9 percent from a year ago.
``The company spent roughly 330 billion won in marketing during the April-June period, up about 60 percent from last year,'' said Stan Jung, an analyst at Woori Securities.
``The marketing costs weighed heavily on KT while generating disappointing operating profits, which fell short of market expectations,'' Jung said.
In response, KT refuted that the Bundang, Gyeonggi Province-based outfit is on pace to reach its 2007 guidance _ 11.9 trillion won in revenue and 1.4 trillion won in operating profit.
``Increased marketing costs were intended to promote a set of new businesses like portable Internet and Internet protocol TV,'' KT spokesman Lee In-won said.
``The spending is a kind of investment and it will help us boost our performances in the latter half of this year,'' he said.
KT accounts for more than 90 percent of the country's fixed-line telephone subscribers while carving out about half of the high-speed Internet market.
In comparison, SK Telecom chalked up a 7.7 percent gain in second-quarter sales at 2.84 trillion won. Its operating income also rose 6.9 percent year-on-year to 662 billion won.
``SK Telecom racked up impressive results despite high marketing expenses of 703 billion won, up 17.3 percent from the same period last year,'' Jung said.
``However, the prospects are uncertain late this year because the operator seeks to shell out big bucks for third-generation services of wideband code division multiple access (W-CDMA),'' he said.
In response, SK Telecom chief financial officer Ha Sung-min said it will channel funds to W-CDMA in tune with the market situation.
``SK Telecom has no fixed plan for complete migration to W-CDMA, but this will depend on future market demand and customer acceptance,'' Ma said.
``We will launch a combined mobile and high-speed Internet product under the partnership with fixed-line broadcasting networks,'' he said.
SK Telecom explains about half of the country's 42 million wireless telephony service market.