SK Telecom Q3 OP down 6.4% on qtr due to high 5G marketing cost

South Korea’s leading mobile carrier SK Telecom Co. reported a dip in operating profit for the third quarter due to marketing spending for 5G, but received a strong relief from non-telecom sectors – media, commerce, and security.

SK Telecom in a regulatory filing on Thursday reported its consolidated operating profit for the third quarter ended September came at 302.1 billion won ($259.8 million), contracting 6.41 percent from the previous quarter and 0.66 percent from the same period last year. Revenue totaled 4.56 trillion won, gaining 2.80 percent on quarter and 8.95 percent on year.

Net profit rose 5.91 percent compared to the previous quarter to 274.4 billion won but slipped 73.16 percent from a year-ago period due to equity losses from its holding in SK Hynix, its semiconductor affiliate whose third-quarter operating profit nearly halved from previous year’s record performance.

On Thursday, SK Telecom shares gained 1.28 percent to finish at 237,000 won.

The company’s mainstay wireless business earned 2.49 trillion won in revenue, expanding 2.1 percent from the previous quarter and 0.1 percent from the same period last year, on a rise in 5G network service subscribers. The number of subscribers to SK Telecom’s 5G wireless service topped 1.54 million as of the end of September.

But still high marketing cost to promote the 5G network ate into its operating profit, the company said.

Rising costs were, however, partly offset by the solid performance of SK Telecom’s non-telecom service businesses such as media, security, and commerce whose combined revenue has jumped to cover nearly half of the company’s total revenue.

The media business delivered 333.7 billion won in revenue, up 3.6 percent on quarter and 14.0 percent on year. The number of subscribers to its internet protocol TV (IPTV) service grew by 109,000 in the third quarter to bring the accumulated total at 5.08 million.

Moreover, it has become buoyant on raving response to video streaming service platform Wavve launched recently after the merger between its mobile video streaming app Oksusu and the country’s over-the-top (OTT) service platform Pooq, which offers programs on the country’s three major terrestrial TV channels.

The security business recorded 306.0 billion won in revenue, up 3.0 percent from the second quarter, thanks to the strong performance by ADT Caps and SK Infosec, the country’s leading security service providers that SK Telecom acquired last year.

The commerce business posted an operating profit of 1.5 billion won and kept the bottom line in black for the third quarter in a row, as its online shopping platforms 11st Street and SK Stoa delivered improvement in business.

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