Despite Cutthroat Competition in the First Year of 5G... SK Telecom Achieves the Largest Revenue of 17.7 Trillion Won (Comprehensive)

Growth of New Businesses Including Media
Revenue Target of 19.2 Trillion Won This Year

[Asia Economy Reporter Seulgina Jo] SK Telecom achieved a record-breaking revenue of KRW 17.7437 trillion last year, the first year of 5G commercialization.

This achievement came despite large-scale investments and fierce competition. The growth in new business sectors such as media and security, which are expected to become 5G killer contents, is particularly remarkable. With the full-scale popularization of 5G this year, the goal is to tighten profitability in the Mobile Network Operator (MNO) sector as well. This year’s revenue is expected to break the record again, reaching KRW 19.2 trillion.

◆ Operating profit decreased by 7.6% compared to the previous year = SK Telecom announced on the 7th that it recorded KRW 17.7437 trillion in revenue and KRW 1.11 trillion in operating profit in 2019 (consolidated basis), the first year of 5G commercialization. The new growth sectors such as media and security led the increase in performance, resulting in a 5.2% rise in total revenue compared to the previous year. This is the highest annual revenue ever recorded. Leading the world’s first 5G commercialization, SK Telecom solidified its leadership as the number one operator by attracting the largest number of 5G subscribers (2.08 million) among the three major telecom companies.

On the other hand, operating profit decreased by 7.6% compared to the previous year due to increased 5G network investments, including 5G frequency costs. Net profit also fell sharply to KRW 861.9 billion, down 72.5%, influenced by equity method gains from SK Hynix. SK Telecom’s capital expenditure (CAPEX) for 5G network construction and other investments last year was KRW 2.92 trillion, about KRW 800 billion more than the previous year.

SK Telecom’s standalone annual revenue recorded KRW 11.4162 trillion, a 2.5% decrease compared to the previous year. The company expects revenue to rebound this year as mobile phone revenue has been rising since the second quarter of last year, supported by increasing data usage and 5G subscriber growth trends.

◆ Expectations for growth in new media business = By sector, the growth in new business areas such as media is clear. The IPTV business revenue of subsidiary SK Broadband (KRW 1.2985 trillion) increased by 10.7% year-on-year as premium subscribers grew. IPTV subscribers increased by 464,000 net additions over the year, surpassing a cumulative total of 5.19 million subscribers. Security businesses such as ADT Caps and SK Infosec also recorded revenue of KRW 1.1932 trillion and operating profit of KRW 153.5 billion, growing by 17.4% and 21.9%, respectively. In the commerce sector, 11st and SK Stoa successfully turned their annual operating profit positive.

The growth led by media and new businesses shows a similar pattern to KT, which announced its results first among the three major telecom companies the day before. Revenue increased due to the expansion of 5G subscribers and growth in the media business, but the heavy burden of large-scale 5G investments and marketing costs negatively impacted operating profit. However, considering the high cost of lessons in the first year of commercialization, SK Telecom’s initial 5G performance is regarded as a solid achievement. An improvement in the average revenue per user (ARPU), a profitability indicator for telecom services, has been confirmed.

SK Telecom expects to achieve a record-high revenue of KRW 19.2 trillion this year, driven by the expected full-scale influx of 5G subscribers. The number of 5G subscribers is anticipated to increase to between 6 million and 7 million by the end of the year.

In the media business, the SK Broadband-T-Broad merged corporation, which has 8 million paid broadcasting subscribers, will be launched at the end of April. WAVVE, launched in partnership with the three major domestic broadcasters, plans to strengthen its competitiveness by focusing on premium content capabilities such as original content production. In the security business, SK Telecom plans to expand integrated security products, unmanned parking, and home security services based on synergies with the SK ICT family.

Yoon Poong-young, SK Telecom’s Chief Financial Officer (CFO), said, "This year, we will be re-evaluated for corporate value with MNO and new businesses as the two major growth engines."

This content was produced with the assistance of AI translation services.