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SK Telecom Profits Plunge by Three-Quarters on LTE Start-Up Costs
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South Korea's SK Telecom has reported a slight drop in second-quarter revenues of KRW 4.015 trillion (US$3.55 billion), which it put down to diverse mobile tariff cut measures including lowering of the monthly basic rate by KRW 1,000 that took effect in September 2011.
Net profit fell by 74.1% to KRW 120.6 billion (US$106.5 million) due to factors including increased marketing expenses for LTE subscriber acquisition, expanded LTE network investment cost as well as mobile tariff reduction measures.
EBITDA fell by 22.7% to KRW 1.003 trillion, which translates into an EBITDA margin of 24.9%, 7.1 percentage points lower than the same period last year.
SK Telecom surpassed 3.4 million LTE subscriber mark in the year after launching commercial LTE service in July 2011 and exceeded 4.22 million LTE subscribers as of the end of July 2012. The company said that it is on track to achieve its target of 7 million LTE subscribers by the end of 2012.
SK Telecom said that ARPU also started growing again thanks to the increase of LTE subscribers. The billing ARPU (excluding sign-up fee from mobile service revenues) expanded by 1.8% quarter-on-quarter (QoQ) to KRW 33,700.
SK Telecom's Chief Financial Officer Ahn Seung-yun said, "Although a fierce competition took place among mobile operators in the second quarter to gain an upper hand in the LTE market, SK Telecom has been focusing on providing differentiated network quality and service to se-cure and maintain a solid market leadership. With wider adoption of LTE smartphones backed by a wide range of attractive LTE services, SK Telecom expects to achieve stronger growth in the mid-to long-term and contribute to expansion of SK Planet's platform business."
Tags: [sk telecom] [Korea]
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