'Telecom-New Business Dual Drive' SK Telecom, Q3 Operating Profit Up 11.7% (Update)

[Asia Economy Reporter Seulgina Cho] SK Telecom continued its double-digit operating profit growth in the third quarter, driven by the expansion of 5G subscribers and the effects of new businesses.

SK Telecom announced on the 10th that it recorded consolidated sales of 4.9675 trillion KRW and operating profit of 400 billion KRW in the third quarter of 2021. Compared to the same period last year, consolidated sales and operating profit increased by 5.0% and 11.7%, respectively.

All business areas, including the core mobile network operator (MNO) business and new ICT businesses, showed balanced growth. The MNO business solidified its leadership in the telecommunications market, recording sales of 3.0274 trillion KRW, up 2.9% from the same period last year. New ICT sales grew 6.9% year-on-year to 1.6309 trillion KRW, driven mainly by the media business and S&C business (converged security).

Net profit reached 736.5 billion KRW, an 88.0% increase from the same period last year, influenced by equity method gains from SK Hynix shares.

◆ Third Quarter 5G Cumulative Subscribers Reach 8.65 Million, Subscription and Metaverse Services Progress Smoothly

The MNO business strengthened its leadership in the mobile communication sector, including 5G, with sales increasing 2.9% year-on-year to 3.0274 trillion KRW and operating profit rising 21.9% to 319.6 billion KRW.

As of the end of September, SK Telecom’s 5G subscribers totaled 8.65 million, an increase of 950,000 from the previous quarter (end of June). SK Telecom is providing new customer experiences through the newly launched subscription service ‘T Wooju’ and metaverse service ‘Ifland’ in the third quarter, while expanding infrastructure services centered on data centers and cloud businesses.

SK Telecom is delivering new customer experiences through the newly launched subscription service ‘T Wooju’ and metaverse service ‘Ifland’ in the third quarter, while expanding infrastructure services centered on data centers and cloud businesses.

Launched in July, ‘Ifland’ is planned to evolve into an open platform and grow into Korea’s representative metaverse service by expanding entertainment options through partnerships with various industries such as gaming and entertainment.

The subscription service T Wooju aims to lead the subscription service market by continuously adding products tailored to customer needs to broaden benefits, expanding distribution channels specialized for subscription products, and securing global store products and price competitiveness to enhance customer value.

The cloud business, based on differentiated competitiveness through AI and DT-based 5G MEC and dedicated line infrastructure, aims to become a top global cloud provider. It is also expanding its industrial Internet of Things (IoT) business targeting various industries such as manufacturing, security, and finance, establishing data services as a new growth engine.

◆ Continued Growth in New ICT... SK Broadband Achieves Highest Quarterly Sales

The new ICT business grew 6.9% year-on-year due to growth in the media and S&C (converged security) businesses, accounting for 32.8% of total sales.

First, the media business achieved record-high quarterly sales of 1.0244 trillion KRW, a 6.1% increase year-on-year, driven by net increases in IPTV subscribers. Operating profit rose 21.3% to 78.6 billion KRW. SK Broadband secured 115,000 IPTV subscribers in the third quarter, reaching a total of 8.91 million paid broadcasting subscribers, and achieved the highest net subscriber increase from January to September this year.

Wave continued to release original content such as ‘Wonder Woman’ and ‘Black Sun,’ and thanks to exclusive HBO content acquisition, recorded a record-high monthly active users (MAU) of 4.43 million in September.

Meanwhile, the S&C business (converged security) recorded sales and operating profit of 397 billion KRW and 37.7 billion KRW, growing 12.4% and 11.8% year-on-year, respectively. To become a life care platform, the S&C business changed ADT Caps’ name to ‘SK Shielders’ last month.

The commerce business recorded sales of 209.5 billion KRW, a 1.4% increase year-on-year, despite intensified competition, thanks to growth in the e-commerce market and efforts to differentiate delivery services. SK Stoa also maintained solid profitability with continued sales growth of 15.5%.

T map Mobility secured growth momentum by sequentially launching services such as Safe Proxy, Plus Membership, and Pickup Service. One Store recorded 13 consecutive quarters of transaction growth and presented a goal to evolve from a ‘Korean mobile app market’ to a ‘global multi-OS content platform.’

◆ Successful Split Completed... SK Telecom and SK Square Announce New Leap Forward

On November 1, SKT successfully completed a spin-off for a new leap forward, launching SK Telecom as an AI & digital infrastructure service company and SK Square as a semiconductor and ICT investment specialist company.

SK Telecom aims to increase its annual sales from about 15 trillion KRW in 2020 to 22 trillion KRW by 2025, focusing on three core businesses: wired and wireless communication, AI services, and digital infrastructure services.

SK Square plans to invigorate the Korean ICT industry through bold and proactive investments based on major portfolio assets such as semiconductors, media, security, and commerce. It has set a vision to grow its net asset value from the current 26 trillion KRW to about 75 trillion KRW by 2025, nearly tripling.

Additionally, SK Telecom has increased market dividend predictability by implementing its first quarterly dividend from the end of the second quarter this year, based on stable profits and cash flow. It strengthened shareholder-friendly management by introducing a mid-to-long-term dividend guideline linked to performance.

With a 5-for-1 stock split, trading will resume on the 29th, significantly improving shareholders’ investment accessibility due to the increased number of circulating shares. SK Telecom expects to transform into a ‘national stock’ easily accessible to everyone, activating trading among small shareholders.

Kim Jin-won, CFO of SK Telecom, said, “SK Telecom and SK Square have laid the foundation for a new leap forward through a successful spin-off,” adding, “We plan to grow into a company that receives greater love from customers by enhancing corporate value based on solid market leadership and innovation.”

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