Related News:
SK Telecom Profit Rises 17% as Smartphone Demands Drives Up Wireless Bills
SK Telecom Co., South Korea’s largest mobile-phone operator, reported second-quarter profit climbed 17 percent as demand for computer-like smartphones drove up wireless Internet bills.
Net income increased to 364 billion won ($306 million) in the three months ended June 30 from 311.6 billion won a year earlier, while sales rose 0.7 percent, Seoul-based SK Telecom said today. Analysts expected profit of 410 billion won, according to the average of nine estimates in the last 28 days compiled by Bloomberg.
Wireless-Internet sales increased 6.4 percent, led by demand from customers switching to smartphones that send e- mails, download mapping data and surf websites. Earnings may extend their gains after the company became the nation’s exclusive carrier offering Samsung Electronics Co.’s Galaxy S phone, which is selling faster than Apple Inc.’s iPhone in Korea, according to analysts including Yang Jong In.
“The Galaxy S is getting a lot of attention, and we expect the momentum to continue to boost earnings in the third and fourth quarters,” Yang at Korea Investment & Securities Co. in Seoul said before the earnings announcement. “Smartphones, including the Galaxy S were definitely a positive factor last quarter.”
SK Telecom is betting on wireless Internet sales and new businesses to help offset stalling revenue growth in a market where more than 95 percent of people own a mobile phone.
Shares Rise
The carrier rose 1.5 percent to 168,500 won at 12:03 p.m. in Seoul trading, trimming the stock’s loss this year to 0.6 percent. The benchmark Kospi index declined 0.2 percent.
SK Telecom said July 14 it plans to roll out the nation’s first fourth-generation services next year to give smartphone customers faster access to the Internet.
The company sold 500,000 Galaxy S handsets within a month of being offered on June 24, four times faster than it took rival KT Corp. to sell the same number of iPhone 3GS phones, Kim Dae Woong, SK’s public relations manager, said by phone yesterday. SK Telecom also started selling smartphones such as Samsung’s Galaxy A and Pantech Co Ltd’s Sirius phones during the second quarter.
KT will offer the iPhone 4 within one or two months, the company said last week. The new model’s popularity will probably help boost overall demand for smartphones, including those offered by SK Telecom, instead of prompting customers to leave the carrier to switch to the iPhone, Daishin Securities Co. said in a report on July 8.
Selling Smartphones
SK Telecom plans to sell 2.5 million smartphones this year, up from a previous estimate of 2 million, the company said on July 14.
Smartphones sales in South Korea may reach 5 million units this year compared with less than 1 million in 2009, according to Baek Jong Suk, an analyst at Hyundai Securities Co. in Seoul.
Second-quarter operating profit rose 5.2 percent to 582.1 billion won as revenue increased 0.7 percent to 3.09 trillion won, SK Telecom said.
Marketing spending, which includes the cost of advertising and subsidizing users’ handset payments, rose 6.5 percent to 887 billion won, SK Telecom said. Analysts in a Bloomberg News survey projected the expenses would be 845.6 billion won.
The Korea Communications Commission said in March it will require phone companies to limit marketing spending to 22 percent of total revenue in 2010 and 20 percent from next year to help ease competition. The company’s operating profit fell in the past two quarters after marketing costs rose.
“Smartphone-driven data revenue growth and more rational marketing competition under government regulation should serve as share price drivers going forward,” Stanley Yang, a Seoul- based analyst at Nomura Holdings Inc. in Seoul, wrote in a report July 16. Yang has a buy rating on SK Telecom’s stock.
SK Telecom accounted for 51 percent of the Korean mobile- phone market at the end of June, compared with KT’s 31 percent and LG Telecom Ltd.’s 18 percent, according to monthly government data.
To contact the reporters on this story: Frances Yoon in Seoul at fyoon2@bloomberg.net.
Rate These Stories
Rate this Page