SKT Also Achieves Double-Digit Growth... Q2 Operating Profit of 396.6 Billion Won (Update)

[Asia Economy Reporter Seulgina Jo] SK Telecom showed growth across all business areas in the second quarter, from its core mobile network operator (MNO) business to new business sectors such as media, commerce, and security.

On the 11th, SK Telecom, the last of the three major domestic telecom companies to announce its earnings, reported consolidated sales of KRW 4.8183 trillion and operating profit of KRW 396.6 billion for the second quarter. Compared to the same period last year, sales increased by 4.7% and operating profit rose by 10.8%. Net profit for the same period surged 84.0% year-on-year to KRW 795.7 billion, influenced by equity method gains from SK Hynix.

New ICT sales reached KRW 1.5779 trillion, growing 10.1% year-on-year. This marks five consecutive quarters of double-digit growth compared to the same period last year, starting from Q2 last year. The MNO business recorded sales of KRW 3.0216 trillion, up 2.7% year-on-year, driven by the expansion of 5G subscribers.

◆ New ICT Grows for 5 Consecutive Quarters... Media +8.7%, Converged Security +14.5%, Commerce +9.6%

The quarterly sales of the New ICT business showed stable growth, achieving double-digit growth for five consecutive quarters compared to the same period last year, indicating entry into a stable growth trajectory. During the same period, the New ICT business consistently accounted for 31-32% of total sales, approaching one-third of total revenue.

The media business continued its growth with sales increasing 8.7% year-on-year to KRW 997.1 billion and operating profit rising 4.9% to KRW 64.2 billion, driven by the net increase in IPTV subscribers.

SK Broadband achieved the highest net increase in IPTV subscribers in the first half of the year, and as of the end of Q2, its paid broadcasting subscribers expanded to 8.81 million. MediaS, a subsidiary of SK Broadband operating an entertainment-focused channel, has quickly established itself in the market since launching regular broadcasts in April, thanks to differentiated content through partnerships with top domestic production companies and CP operators.

The online video service (OTT) Wave established the planning studio ‘Studio Wave’ in May and is accelerating investment and production of original content. It also recently signed an exclusive content supply contract with HBO in the U.S., strengthening its content competitiveness.

The S&C business (converged security) recorded sales of KRW 369.8 billion, up 14.5% year-on-year, supported by steady growth in unmanned security and information security, as well as high growth in new businesses based on technological differentiation. Operating profit decreased 3.1% to KRW 28.6 billion due to increased costs from proactive investments related to new businesses.

ADT Caps signed a strategic business agreement with AWS to strengthen its cloud security business capabilities and has newly launched AI home security products capable of recognizing people and objects, mobile vaccines, and total care solutions for unmanned stores, accelerating the expansion of new businesses. ADT Caps ranked first in the unmanned security service category with the highest score ever in the 2021 Korea Service Quality Index (KS-SQI) survey and has completed selecting underwriters in Q2, officially preparing for its IPO.

The commerce business recorded sales of KRW 211 billion, up 9.6% year-on-year, driven by growth in the e-commerce market and efforts to differentiate delivery services. 11st started a fast delivery service in collaboration with the Korea Post and SLX Courier and is smoothly preparing to open the Amazon Global Store. SK Stoa maintained its high growth trend in Q2 by expanding mobile partnership channels.

T map Mobility expanded its mobility footprint by entering the freight transportation market through the acquisition of logistics IT company YLP. T map Mobility plans to grow by providing differentiated services to users while cooperating with stakeholders.

The app market One Store continued its 12th consecutive quarter of transaction volume growth and attracted investments from MS and Deutsche Telekom Capital Partners in Q2, raising expectations for increased corporate value and IPO. It is also expanding investments in content, including acquiring Rock Media, the largest genre content publisher in Korea.

◆ 5G Subscribers Increased by 960,000 from Previous Quarter to 7.7 Million

As of the end of June, SK Telecom’s 5G subscribers reached 7.7 million, an increase of 960,000 from the previous quarter (end of March), maintaining its 5G leadership.

The MNO business recorded sales of KRW 328.4 billion, up 2.7% year-on-year, and operating profit of KRW 328.4 billion, up 21.7%, driven by the expansion of 5G subscribers, customer-friendly product development, and cost stabilization.

SK Telecom continues to advance its infrastructure by early deployment of a nationwide 5G network. SK Telecom and its subsidiary SK Broadband invested KRW 849.2 billion in capital expenditures (CAPEX) in Q2, a 285.3% increase from the previous quarter. This year, they plan to maintain wired and wireless facility investments at last year’s level.

In particular, SK Telecom took its first step toward popularizing the metaverse by launching a new metaverse platform, ifland, in July. Strengthening the social community function on top of ifland’s core features of ‘gathering’ and ‘communication,’ it is focusing on expanding its user base and plans to develop it further by linking with various services such as sports, commerce, and entertainment. Additionally, it plans to launch a marketing platform that packages various highly user-friendly services and connects subscription products and customers based on AI.

◆ Dividend Guidelines Linked to Performance Announced

Since officially announcing the spin-off through a board resolution in June, SK Telecom is proceeding with a spin-off into a surviving company based on telecommunications, AI, and digital infrastructure, and a newly established company specializing in semiconductor and ICT investments, with final approval scheduled at the shareholders’ meeting on October 12.

The surviving company, SK Telecom, plans to continuously discover new growth engines in subscription, metaverse, and enterprise sectors based on its core 5G and home media businesses. The newly established company, a tech-focused investment firm, aims to grow its net asset value from approximately KRW 26 trillion currently to KRW 75 trillion by 2025 through investments in semiconductors, platforms, and future innovative technologies.

SK Telecom introduced quarterly dividends for the first time to strengthen shareholder-friendly management and presented mid-to-long-term dividend guidelines linked to performance. It implemented the first quarterly dividend (KRW 2,500) in Q2 and set the dividend source for the surviving company at 30-40% of ‘EBITDA (earnings before interest, taxes, depreciation, and amortization) ? CapEx’ over the next three years to enhance transparency and predictability.

Yoon Poong-young, CFO of SK Telecom, said, “We will maximize shareholder and corporate value by continuing growth in New ICT and MNO sectors while continuously discovering new growth engines. We will prepare thoroughly so that the spin-off becomes a starting point for greater growth of both the surviving and newly established companies.”

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