By Kim Yoo-chul
SK Telecom saw its net profit halved in the third quarter amid heated competition with rival KT in the smartphone race using Long-Term Evolution (LTE) network technology.
The nation’s top mobile carrier said Thursday that its net profit stood at 175 billion won ($160.8 million) between July and September, down from 383.9 billion won a year before. Its revenue rose by 2 percent to 4.1 trillion won, during the same period, while operating profit dropped by 46.4 percent to 300.7 billion won.
Despite the slight improvement in sales, it still remains uncertain whether the company will see a significant rebound in profit in the last quarter as the Seoul-based outfit will have to spend more to achieve this year’s LTE customer target of 7 million.
``We expect SK Telecom’s cash-burning promotional campaign for more LTE customers to continue in the remainder of this year. Rival KT, which was late in the booming local market for smartphones, is threatening SK Telecom,’’ said a senior fund manager from a Europe-based investment bank in Seoul over the phone.
For the third quarter, marketing expenses totaled 1.04 trillion won, sharply up from 781 billion won it spent a year earlier.
SK Telecom has seen its profit squeezed over the past year, largely because of spending on ultra-fast network technology nationwide and to attract subscribers to the new service. The quarterly report announced by SK disappointed stock analysts.
``A huge cash-burden is weighing on SK Telecom. The carrier is also being asked to lower its increased leverage after the parent group acquired Hynix Semiconductor, now SK hynix,’’ said Choi Yoon-mi, an analyst at ShinYoung Securities.
SK Telecom said its overall average revenue per user (ARPU) ― a key barometer to gauge the profitability of carriers ― fell to 40,265 won in the latest quarter from 40,503 won a year ago.
``We are still confident to achieve our earlier LTE customer target of 7 million by the end of 2012. As of the end of October, our subscribers for LTE services exceeded 6 million, making us the world’s third-biggest LTE operator,’’ said Ahn Seung-yoon, the company’s chief financial officer.
Shares of SK Telecom closed at 156,000 won on the Seoul bourse, down 0.32 percent from Monday.
In contrast, rival KT said Monday its net profit during the quarter rose 45 percent propelled by stronger performances at its non-telecom affiliates and in spite of increased network-upgrade spending and marketing costs for LTE services.