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Press Release
SK Telecom achieved a net income of KRW 587.9 billion, an operating income of KRW 670.9 billion, and total sales of KRW 2.59 trillion, for the 3rd quarter of 2005. Total sales and net income were higher by 2.7% and 25.9% respectively, while operating in
wireless Internet service ARPU, and value-added service ARPU, have increased greatly. This highlights the fact that SK telecom stays focused on the Growth of new Data services beyond its voice cellular service.
SK Telecom announced on October 27th that the company achieved a net income of KRW 587.9 billion, an operating income of KRW 670.9 billion, and total sales of KRW 2.59 trillion, for the 3rd quarter of 2005. Total sales and net income were higher by 2.7% and 25.9% respectively, and operating income edged down by 6% over the 2nd quarter of 2005. Compared to the same period in 2004, net income and operating income increased 48.6% and 9.7% respectively, while the total sales figure was up by 6.6%.
An SK Telecom official revealed that the three-way number portability market that was launched in January of this year has stabilized as a whole. Amid this environment, our remarkable business results for the 3rd quarter have reconfirmed the market leadership position we have attained by bolstering our competitive-edge in voice and data products.
Revenue for the third quarter of 2005 rose 2.7% quarter on quarter, and 6.6% year on year to reach KRW 2.59 trillion. These figures were helped by an increase in value-added services such as global roaming, and wireless Internet revenue growth attributable to the elevated data call traffic volume of Mobile Cyworld and MelOn services. These are the highest results ever reached for any previous quarter.
The operating income was lower by 6% compared to the previous quarter due to increased labor costs, and an increase in depreciation. However, this quarter’s operating income of KRW 670.9 billion is still a growth of 9.7% year-on-year, and this represents a strong revenue performance. The net income for the quarter was 587.9 billion won, which was a 25.9% increase quarter on quarter, and a 48.6% hike year on year. The gain from the disposition of investment assets such as the sale of SKY Teletech shares, is reflected in this number.
The company’s wireless Internet revenue for the 3rd quarter reached KRW 653 billion. Much of this increase is due to the continuous growth of new services like ’Melon’ and ’Mobile Cyworld’, as well as increased usage of the data flat rate plans, e.g. unlimited usage of ’ting’ text messages, ’data free’, etc. This has led to a year-on-year increase of 38.8% and a quarter-on-quarter increase of 9.4%. A 27.6% portion of this revenue is sales revenue from the fast-growing mobile phone service.
In the meantime, the marketing expenses for the quarter came to KRW 452.9 billion. This is a year-on-year increase of only 3.9%, and a quarter-on-quarter increase of a mere 2.4%. These larger increases in sales, and smaller increases in expenses, were due to SK Telecom’s market stabilization efforts that were based on its strong competitive-edge, and efficient management of marketing expenses. As a percentage of total sales revenue, the marketing expenses remained at the same 17.4% level as the previous quarter. This figure stayed comfortably below the Annual Guidance of 18.5%. An SK Telecom official revealed that this has great significance in establishing a robust base for securing continued profitability.
The company’s average revenue per user (ARPU) stood at KRW 44,921, a 2% increase over the previous quarter, and up by 4% over the 3rd quarter of last year. This was largely due to the increase in data call volume caused by the diversification of wireless Internet services, and value-added service ARPU that can be attributed to the diversification of value-added services, as well as the constant growth in the number of subscribers.
The wireless Internet ARPU recorded KRW 11,301, and the value-added service ARPU came to KRW 1,833 in the 3rd quarter of 2005. This demonstrates a steady growth pattern.
In addition, monthly minutes of usage (MOU) posted 197 minutes, decreasing 3 minutes from 200 minutes recorded over the previous quarter. This was due to seasonal factors such as summer vacation and Thanks-Giving-Day. It was also up by 7 minutes compared to 190 minutes in the same quarter last year, thanks to an increase in working days, and the high-quality subscriber base.
CAPEX for the 3rd quarter totaled KRW 424.5 billion, and the CAPEX total from the 1st quarter to the 3rd quarter was KRW 792.4 billion, reaching 50% of the KRW 1.6 trillion Annual Guidance. In particular, the accumulated CAPEX for WCDMA came to KRW 364.4 billion, which was 60.7% of the KRW 600 billion annual target. This implies that SK Telecom’s investment in new businesses is in full swing.
Sung Min Ha, CFO of SK Telecom commented, "Our wireless Internet business is consistently expanding through the qualitative and quantitative growth of wired and wireless convergent services. ’Mobile Cyworld’ has grown impressively to reach an accumulated user base of 1.1 million. The wired and wireless convergent music portal, ’Melon’, has a membership of 3.5 million. In addition, the number of subscribers for satellite DMB service has reached about 250,000. With the participation of KTF and LG Telecom in the Satellite DMB service, the prospects for future subscriber acquisition are quite positive. SK Telecom will continue to maintain a solid growth pattern by developing new telecom services. SK Telecom has announced its intention to offer Caller ID service free of charge, starting in January 2006. Although such an adjustment will have some impact on the revenue and profit beyond 2006, we will do our utmost to minimize the negative impact through improved core competitiveness, and offering new Value-added services and Wireless Internet services, that meet the customers’ needs".
An SK Telecom official revealed that the three-way number portability market that was launched in January of this year has stabilized as a whole. Amid this environment, our remarkable business results for the 3rd quarter have reconfirmed the market leadership position we have attained by bolstering our competitive-edge in voice and data products.
Revenue for the third quarter of 2005 rose 2.7% quarter on quarter, and 6.6% year on year to reach KRW 2.59 trillion. These figures were helped by an increase in value-added services such as global roaming, and wireless Internet revenue growth attributable to the elevated data call traffic volume of Mobile Cyworld and MelOn services. These are the highest results ever reached for any previous quarter.
The operating income was lower by 6% compared to the previous quarter due to increased labor costs, and an increase in depreciation. However, this quarter’s operating income of KRW 670.9 billion is still a growth of 9.7% year-on-year, and this represents a strong revenue performance. The net income for the quarter was 587.9 billion won, which was a 25.9% increase quarter on quarter, and a 48.6% hike year on year. The gain from the disposition of investment assets such as the sale of SKY Teletech shares, is reflected in this number.
The company’s wireless Internet revenue for the 3rd quarter reached KRW 653 billion. Much of this increase is due to the continuous growth of new services like ’Melon’ and ’Mobile Cyworld’, as well as increased usage of the data flat rate plans, e.g. unlimited usage of ’ting’ text messages, ’data free’, etc. This has led to a year-on-year increase of 38.8% and a quarter-on-quarter increase of 9.4%. A 27.6% portion of this revenue is sales revenue from the fast-growing mobile phone service.
In the meantime, the marketing expenses for the quarter came to KRW 452.9 billion. This is a year-on-year increase of only 3.9%, and a quarter-on-quarter increase of a mere 2.4%. These larger increases in sales, and smaller increases in expenses, were due to SK Telecom’s market stabilization efforts that were based on its strong competitive-edge, and efficient management of marketing expenses. As a percentage of total sales revenue, the marketing expenses remained at the same 17.4% level as the previous quarter. This figure stayed comfortably below the Annual Guidance of 18.5%. An SK Telecom official revealed that this has great significance in establishing a robust base for securing continued profitability.
The company’s average revenue per user (ARPU) stood at KRW 44,921, a 2% increase over the previous quarter, and up by 4% over the 3rd quarter of last year. This was largely due to the increase in data call volume caused by the diversification of wireless Internet services, and value-added service ARPU that can be attributed to the diversification of value-added services, as well as the constant growth in the number of subscribers.
The wireless Internet ARPU recorded KRW 11,301, and the value-added service ARPU came to KRW 1,833 in the 3rd quarter of 2005. This demonstrates a steady growth pattern.
In addition, monthly minutes of usage (MOU) posted 197 minutes, decreasing 3 minutes from 200 minutes recorded over the previous quarter. This was due to seasonal factors such as summer vacation and Thanks-Giving-Day. It was also up by 7 minutes compared to 190 minutes in the same quarter last year, thanks to an increase in working days, and the high-quality subscriber base.
CAPEX for the 3rd quarter totaled KRW 424.5 billion, and the CAPEX total from the 1st quarter to the 3rd quarter was KRW 792.4 billion, reaching 50% of the KRW 1.6 trillion Annual Guidance. In particular, the accumulated CAPEX for WCDMA came to KRW 364.4 billion, which was 60.7% of the KRW 600 billion annual target. This implies that SK Telecom’s investment in new businesses is in full swing.
Sung Min Ha, CFO of SK Telecom commented, "Our wireless Internet business is consistently expanding through the qualitative and quantitative growth of wired and wireless convergent services. ’Mobile Cyworld’ has grown impressively to reach an accumulated user base of 1.1 million. The wired and wireless convergent music portal, ’Melon’, has a membership of 3.5 million. In addition, the number of subscribers for satellite DMB service has reached about 250,000. With the participation of KTF and LG Telecom in the Satellite DMB service, the prospects for future subscriber acquisition are quite positive. SK Telecom will continue to maintain a solid growth pattern by developing new telecom services. SK Telecom has announced its intention to offer Caller ID service free of charge, starting in January 2006. Although such an adjustment will have some impact on the revenue and profit beyond 2006, we will do our utmost to minimize the negative impact through improved core competitiveness, and offering new Value-added services and Wireless Internet services, that meet the customers’ needs".