SEOUL, KOREA - SK Telecom recorded a double-digit decline in operating profits in the first quarter of this year primarily due to a huge amount of subsidies it injected to attract LTE subscribers.
The company announced on May 2 that its first-quarter sales amounted to 4,112 billion won, up 3.6 percent from the same period last year.
Operating profits, however, fell by 17.8 percent year-on-year to 410.6 billion won and net profits up by 15.2 percent to 345.9 billion won.
SK Telecom blamed the double-digit decline in operating profits on a sharp increase in marketing expenses. During the January-March period of this year, SK Telecom spent 907 billion won to attract LTE subscribers. Its LTE-related marketing expenses grew by about 25 percent compared to a year ago.
Driven by an increase in the number of LTE subscribers and the growth in new business, SK Telecom posted a 3.6-percent growth in sales in the first quarter. SK Telecom's LTE subscribers reached 9.33 million as of the end of March and more recently surpassed 10 million LTE subscribers, for the fourth time among the world's major telecom companies.
