OREANDA-NEWS. All business performance figures are based on Korean International Financial Reporting Standards (K-IFRS).

Seoul, Korea, July 30, 2013 - SK Telecom (NYSE:SKM) today announced its earnings on a K-IFRS consolidated basis for the second quarter of 2013: revenue of KRW 4.164 trillion, operating income of KRW 553.4 billion and net income of KRW 467.7 billion.

The revenue increased by 1.3% quarter-on-quarter (QoQ) and 3.9% year-on-year (YoY) backed by the sustained growth of its LTE subscribers and strong performance of its enterprise solutions business, which has been designated as one of its three new growth engines. As of the end of June 2013, SK Telecom has secured over 11 million LTE subscribers, which accounts for more than 40% of its total mobile subscriber base. Moreover, the company has already attracted around 300,000 LTE-Advanced subscribers within just a month after launching the service on June 26, 2013 for the first time in the world.

The operating income expanded by 34.8% QoQ and 33.2% YoY due to reduced marketing costs. SK Telecom has been making constant efforts to create a new market paradigm by promoting a product/service-oriented competition rather than adhering to cost-oriented customer acquisition activities. In fact, the company’s non-consolidated marketing costs decreased by 5.9% compared to the previous quarter and 11.2% compared to the same period last year.

The consolidated net income grew by 35.2% QoQ due to expanded operating income realized through its market stabilization efforts and improved performance of SK Hynix, recording KRW 196.9 billion from the gain on valuation using the equity method of accounting. SK Hynix posted record earnings results in the second quarter of 2013: Revenue of KRW 3.933 trillion, operating income of KRW 1.114 trillion and net income of KRW 947 billion.

In the second quarter, SK Telecom has continued to lead the development of the ICT industry by commercializing the world’s first LTE-Advanced network and promoting a service-oriented competition. Moreover, the company has been making strenuous efforts to increase customer benefits and achieve mutual growth with its partners to further enrich the ICT ecosystem.

As a result, for the second quarter of 2013, the average churn rate - an indicator that reflects the level of customer satisfaction and the intensity of market competition - marked 2.27%, remaining below 2.4% for three consecutive years for the first time since 2006. According to the company’s analysis, price plans and services - i.e. T&T Sharing Plans, Unlimited Voice Plans, Device Discount Service, Data Refill Service, Membership Point Refill Service, etc. - implemented in line with its strategy to stabilize the market via strengthened customer retention turned out to be highly effective. Going forward, the churn rate is projected to be further reduced as over 70% of the customers are buying new mobile phones through the Device Discount Service, which offers discount benefits for existing customers who wish to change their devices.

Furthermore, SK Telecom expects to sustain its earnings improvements by maintaining its focus on market stabilizing measures that enhance customer value and strengthen customer retention.

Meanwhile, the company has expanded the coverage of its LTE-Advanced network to the entire Seoul area and central areas of 84 cities nationwide on July 30, a month ahead of the schedule. Moreover, within the end of this year, it plans to further expand its LTE-Advanced coverage by deploying a total of 32,000 units of base stations, which will also cover 300 university areas. SK Telecom is also preparing to launch new and differentiated price plans and services designed to allow customers to experience the true benefits of LTE-Advanced. Armed with the highest coverage and service quality, SK Telecom is expected to secure even greater competitiveness in LTE-Advanced in the second half of this year.

In addition, the popularization of the ultra-fast LTE-Advanced service will likely accelerate the development and spread of diverse mobile-based convergence business models. For instance, the growth of SK Telecom’s new convergence businesses, including solution, healthcare and media, are expected to gain momentum.

In the meantime, SK Planet’s revenue increased by 33% compared to the same period last year due to synergies generated from its merger with SK M&C. In particular, SK Planet is strengthening its competitiveness in web-mobile commerce business through 11st and OK Cashbag, and is expected to successfully expand its business to the overseas markets like Turkey and Indonesia.

“SK Telecom has achieved increased revenues and net income in the second quarter of 2013 as a result of its efforts to increase customer benefits, provide innovative data services optimized for the LTE network, and stabilize the market by moving away from excessive competition,” said Hwang Soo-cheol, Chief Financial Officer of SK Telecom. “Going forward, SK Telecom will continue to offer the most advanced services to attract more customers and do its best to promote the growth of the overall ICT industry.”