SEOUL, Oct. 31 (Korea Bizwire) — SK Telecom Co. said Thursday its third-quarter net income plunged due to equity losses of its chip-making subsidiary, while its operating profit remained mostly unchanged from the previous year.
Its net income tumbled 73.9 percent to 274.4 billion won (US$236 million) in the July-September period compared with a year ago, the nation’s largest mobile carrier said in a regulatory briefing.
The losses were mainly from equity ties with chipmaking affiliate SK hynix Inc. The telecom operator holds a controlling 20 percent stake in the major chip maker, which posted lackluster earnings in the third quarter.
SK Telecom said its sales gained 8.95 percent on-year to 4.6 trillion won in the third quarter, led by solid profit growth from its media business.
Its operating profit slipped 0.66 percent to 302.1 billion won over the period due to increased spending for 5G service marketing and infrastructure buildup, the firm said.
The carrier launched commercial 5G service in early April and has aggressively marketed it to attract premium users in the early stage of the new service.
SK Telecom said it generated 2.5 trillion won of revenue from the mobile business, mostly the same from a year earlier, saying it had attracted some 1.54 million 5G subscribers as of the end of September.
Revenue of the media business gained 14 percent on-year to 333.7 billion won in the third quarter, led by strong internet protocol television and ultra-high definition business.
The company said sales ratio from its non-telecom service has risen this year as it has focused on media and content business to diversify its portfolio.
In September, SK Telecom launched an integrated over-the-top service (OTT) with the nation’s three terrestrial broadcasters to take on global media giants such as Netflix Inc.
The new OTT platform, dubbed WAVVE, has attracted 1.4 million paid subscribers as of the end of October, the company said, noting it aims to have 5 million users and annual sales of 500 billion won by 2023.
SK Telecom said it has signed 200 billion won of investment contracts to create original content in collaboration with other partners.
As part of efforts to expand its media business, SK Telecom on Monday signed a 300 billion-won share swap deal with Kakao Corp., the country’s largest messenger operator, to boost their partnership.
“In light of the partnership deal, we plan to link Kakao’s IT assets with SK Telecom’s paid platform to create synergy,” a company official during a conference call.
The company said it will continue to expand 5G coverage in 85 cities and 76 clusters to improve network service, while scaling up in-building coverage in major shopping malls, airports and exhibition halls.
While this year’s capital expenditure is estimated at around 3 trillion won on aggressive infrastructure buildup in major cities, the company said the investment amount will be lower in 2020.
Shares in SK Telecom rose 1.28 percent to 237,000 won, outperforming KOSPI’s 0.15 percent gain Thursday. The earnings report was released after the market opened.