SK Telecom (NYSE:SKM) today announced its earnings on a K-IFRS consolidated basis for the second quarter of 2015: revenue of KRW 4.256 trillion, operating income of KRW 412.9 billion and net income of KRW 397.9 billion.
The revenue stood at KRW 4.256 trillion, edging down 1.2% year-on-year(YoY) due to the elimination of sign-up fees and decreased network interconnection revenue caused by interconnection fee reduction. Compared to the previous quarter, the revenue grew 0.4% backed by increased sales of its subsidiaries.
With the continuous spread of LTE services, as of the end of June 2015, the number of SK Telecom’s LTE subscribers marked 17.94 million, taking up over 62.6% of the company’s total mobile subscriber base. In addition, monthly average data usage per LTE subscriber grew from 3.0GB in March to 3.3GB in June, showing sustained growth of the wireless internet business.
The operating income dropped 24.4% YoY to KRW 412.9 billion due to one-off labor costs and decreased revenue. Compared to the previous quarter, the operating income grew 2.5% affected by reduced cost of sales of its subsidiaries as well as lower marketing costs achieved through market stabilization efforts.
The net income went down by 20.0% YoY to stand at KRW 397.9 billion caused by lower operating profit. It also decreased by 10.1% quarter-on-quarter (QoQ) due to reduced equity method gain from SK Hynix.
In the second quarter of 2015, SK Telecom led the paradigm shift towards customer value- oriented competition: Based on its competitiveness in products and services, the company strengthened benefits of its existing customers and carried out healthy and sound marketing activities to earn their trust.
Introduced in May, the company’s ‘Band Data’ plans are highly popular among customers, attracting 2.13 million subscribers as of the end of the second quarter of 2015. Moreover, SK Telecom has strengthened customer benefits in the second quarter by launching differentiated services such as ‘Personalized T Membership’ and ‘T Phone 2.0.’ The company also met the needs of specific customers through segmented products like ‘T Kids Phone 2’ and ‘T Pet.’
As the result of these efforts, SK Telecom’s churn rate, which represents the level of satisfaction of its existing/long-term customers, marked 1.3% on average in the second quarter of 2015, which is the lowest figure since 2003. Moreover, in March 2015, the company ranked number one, for 18 consecutive years, in the category of mobile telecommunications service by National Customer Satisfaction Index (NCSI). In June 2015, it also ranked number one, for 16 years in a row, in the category of mobile telecommunications service by Korean Standard - Service Quality Index (KS-SQI).
In April 2015, SK Telecom announced new growth strategies focused on three innovative Next-Generation Platforms namely ‘Lifestyle Enhancement Platform,’ ‘Advanced Media Platform,’ and ‘IoT Service Platform.’ In July 2015, SK Telecom launched the first Lifestyle Enhancement Platform named ‘Club T Kids’ by combining content, community and commerce services. SK Telecom also acquired the remaining 49.4 percent stake in SK Broadband to make the company its wholly-owned subsidiary as a means to fortify its media platform and further developed its IoT platforms in both B2C (Smart Home, Lifeware, etc.) and B2B (security, energy, etc.) areas.
“SK Telecom will maximize customer value and secure new growth momentum by building an open ecosystem based on its outstanding telecommunications capabilities and successfully shaping into a next-generation platform player that provides innovative products and services that meet customers’ varying needs,” said Lee Yong-hwan, Chief Financial Officer of SK Telecom.