5G Investment Costs and COVID-19 Impact... SK Telecom's Q1 Operating Profit Decreases by 6.4% (Update)

[Asia Economy Reporter Seulgina Jo] SK Telecom announced on the 7th that it recorded Q1 2020 consolidated financial results with sales of KRW 4.4504 trillion and operating profit of KRW 302 billion.

Growth continued centered on new growth sectors such as media and security, with sales increasing 2.7% compared to the same period last year. However, operating profit decreased by 6.4%. Amid ongoing 5G network investment burdens, the spread of COVID-19 dealt a direct blow to the roaming segment, one of the core businesses, and virtually halted distribution channels.

Net profit for the period recorded KRW 306.8 billion, down 17.9% due to the impact of equity method gains from SK Hynix.

With the combined burden of 5G investment and the COVID-19 shock, operating profit in the Mobile Network Operator (MNO) segment fell by double digits. SK Telecom’s standalone sales increased 3.9% year-on-year to KRW 2.9228 trillion, while operating profit decreased 15.7% to KRW 257.9 billion. However, despite declines in roaming sales and a slowdown in the mobile market growth, SK Telecom added that mobile sales have been on the rise since Q2 last year, supported by an increase in 5G subscribers.

Sales growth continues in new business areas such as media, security, and commerce. SK Broadband’s Q1 sales rose 8.2% from a year earlier to KRW 823.5 billion. Following the launch of the merged corporation at the end of last month, it plans to achieve annual sales exceeding KRW 4 trillion this year.

Security business sales, combining ADT Caps and SK Infosec, increased 5.4% year-on-year to KRW 291.4 billion. Commerce business sales, consisting of 11st and SK Stoa, decreased 4.5% due to accounting standard changes applied from Q4 last year, but excluding the accounting changes, sales grew approximately 3%.

Yoon Poong-young, Corporate Center Head of SK Telecom, stated, “For the company’s sustainable and long-term growth, we have built a diversified portfolio centered on MNO, media, security, and commerce over the past three years,” and added, “We will strategically overcome the crisis through balanced growth across the four major business areas.”

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