[Photo by Lee Seung-hwan]

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South Korea’s leading wireless carrier SK Telecom Co. reported an 11 percent on-year growth in operating profit in the second quarter ended June, like its two other smaller peers as they benefited from sprawling business on 5G and reduced costs.

SKT estimated its operating profit on a consolidated basis from April to June at 396.6 billion won ($343.8 million), up 2 percent from the previous quarter and 10.8 percent from last year, in its earnings guidance released on Wednesday.

Sales grew 0.8 percent on quarter and 4.7 percent on year. Net income reached 795.7 billion won, up 39.1 percent on quarter and 84 percent on year. The rapid growth in net profit was owed to the strong performance of SK Hynix, its chip making affiliate in which SKT owns a 20 percent stake, the company said.

On Wednesday, shares of SKT fell 2.98 percent to end at 293,500 won.

Its non-wireless businesses called ‘new ICT’ business including media, security and commerce raked in 10.1 percent higher revenue compared with a year ago at 1.58 trillion won.

The media business posted a 4.9 percent rise in on-year operating profit to 64.2 billion won and 8.7 percent growth in sales to 997.1 billion won thanks to the net gain in the number of IPTV subscribers.

SK Broadband ranked top in the number of IPTV subscribers in the first half, with the number of its IPTV and cable TV users reaching 8.81 million as of the end of June.

Operating profit of its security business fell 3.1 percent to 28.6 billion won, but its revenue rose 14.5 percent to 369.8 billion won.

The commerce business including its online shopping platform 11st Street and SK Stoa delivered a 9.6 percent year-over-year gain in revenue to 211 billion won.

[Graphics by Song Ji-yoon]

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The wireless business posted a 21.7 percent rise in operating profit to 328.4 billion won and 2.7 percent growth in sales to 3.02 trillion won. The number of 5G subscribers came at 7.7 million as of the end of June, up 960,000 from the previous quarter.

SKT announced in June that it will separate its business into an operating entity focusing on its existing businesses including telecommunications, artificial intelligence and digital infrastructure, and a new investment entity for semiconductor and ICT industries. The plan will be confirmed at its shareholders’ meeting scheduled on October 12.

“We will maintain the growth momentum of new ICT and wireless communication division and keep looking for new growth engines to maximize corporate and shareholders’ value,” said SKT chief financial officer Yoon Poong-young, adding that the spin-off will be a starting point for a huge leap for both of the existing and new entities.

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The steady growth in the number of 5G subscribers and a variety of value services has been boosting earnings of all three mobile carriers during the Covid-19 environment and accelerated digital migration.

A combined operating profit of the three wireless carriers during the April-June period reached 1.14 trillion won, exceeding the 1 trillion won mark for the second consecutive quarter. KT posted 475.8 billion won in operating profit during the period and LG Uplus 268.4 billion won.

The telcos will continue to deliver sound earnings on the back of the rising demand for their non-wireless businesses and reduced marketing cost for the mobile business. KT’s capital expenditure decreased 11 percent in the first six months of the year compared with the same period last year when the telcos spent much for 5G marketing. LG Uplus’ capex also declined 23 percent on year in the second quarter.

[ⓒ Maeil Business Newspaper & mk.co.kr, All rights reserved]