"Decoupling from Telecom Worked" SK Telecom's Operating Profit Increased by 21.8% Last Year... Growing Share of New Businesses (Update)

[Asia Economy Reporter Joselgina] Despite the impact of COVID-19 last year, SK Telecom recorded a 20% range growth in operating profit. So-called ‘untact’ services gained attention, leading new business sectors such as media and security to achieve record-high performance, while the core mobile network operator (MNO) segment also turned around thanks to the expansion of 5G subscribers.

SK Telecom announced on the 3rd that it posted consolidated financial statements for last year with sales of KRW 18.6247 trillion and operating profit of KRW 1.3493 trillion. Compared to a year earlier, sales increased by 5% and operating profit by 21.8%. Net profit during the same period rose 74.3% to KRW 1.5005 trillion, influenced by equity method gains from SK Hynix shares and others.

By segment, sales in New ICT businesses such as media and commerce grew 15.3% year-on-year, maintaining double-digit growth. In particular, New ICT businesses saw operating profit rise 27.5%, driven by increased media subscribers, new security businesses like home and parking, and growth in commerce transaction volume.

SK Telecom plans to introduce artificial intelligence (AI) into all products and services this year to accelerate its evolution into a ‘big tech company,’ while starting with the app market One Store and promoting IPOs of subsidiaries. SK Telecom’s sales forecast for this year is KRW 19.5 trillion, challenging to surpass KRW 20 trillion for the first time ever.

The core mobile communications segment succeeded in turning around, supported by the expansion of 5G subscribers and increased data usage. SK Telecom’s standalone annual sales amounted to KRW 11.7466 trillion, and operating profit was KRW 1.0231 trillion, up 2.8% and 7.5% respectively from the previous year.

The MNO business solidified its 5G leadership in 2020. The number of 5G subscribers reached approximately 5.48 million by the end of 2020, and is expected to exceed 9 million by the end of this year. SK Telecom plans to introduce various subscription services this year targeting not only its own customers but the entire nation.

The year 2020 highlighted achievements in New ICT areas such as media. Operating profit from new growth businesses including media, security, and commerce totaled KRW 326.2 billion, accounting for 24% of total operating profit. This is 10 percentage points higher than a year earlier, indicating that efforts invested in new businesses are now being reflected in performance.

Within new businesses, growth in the media segment was particularly notable. Subsidiary SK Broadband recorded sales of KRW 3.7135 trillion, up 17.2% year-on-year, influenced by increased IPTV subscribers and the merger with T-Broad. Operating profit growth (KRW 230.9 billion) reached 59.2%.

The security business recorded sales of KRW 1.3386 trillion, up 12.2% year-on-year, as core businesses such as dispatch security and information security, along with new businesses like home and parking untact solutions, grew steadily.

Commerce businesses such as 11st and SK Stoa achieved double-digit growth and operating profit surplus based on the trend of online shopping activation and increased transaction volume. Sales increased 12.1% year-on-year to KRW 814.2 billion, and operating profit reached KRW 11 billion, marking two consecutive years of profitability.

T map Mobility, launched in December last year, is preparing to grow as an ‘all-in-one (MaaS, Mobility-as-a-Service) operator’ encompassing public transportation, rental cars, car sharing, and taxis. Additionally, T map Mobility plans to establish a joint venture (JV) with Uber for a taxi-hailing joint business in the first half of this year.

Last year, SK Telecom strengthened its growth engine by establishing a five-division system in the New ICT area through ▲ the merger of SK Broadband and T-Broad ▲ the establishment of T map Mobility ▲ the merger of ADT Caps and SK Infosec. This year, the company plans to innovate all products and services based on AI and accelerate its evolution into a ‘big tech company’ by expanding ultra-collaboration with domestic and global companies.

CFO Yoon Poong-young said, “With the completion of the five divisions in 2020, SK Telecom sustained balanced growth across all business areas including MNO and New ICT,” and added, “2021 will be a year to accelerate evolution into an AI-based big tech company while challenging the first-ever KRW 20 trillion in sales.”

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