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

SK Telecom (NYSE:SKM) announced its earnings on a K-IFRS consolidated basis for the year 2015: revenue of KRW 17.137 trillion, operating income of KRW 1.708 trillion and net income of KRW 1.516 trillion.

Despite strong performance of its subsidiaries, the revenue decreased by 0.2% year-on-year (YoY) due to the elimination of sign-up fees, decreased network interconnection revenue caused by interconnection fee reduction, and increased number of subscribers who choose contract-based mobile fee discounts.

The operating income dropped 6.4% YoY reflecting the one-off labor costs from the company’s special retirement plan and increased overall costs resulting from expanded business activities of its subsidiaries. The consolidated net income for the year 2015 decreased by 15.8% YoY to stand at KRW 1.516 trillion affected by reduced equity method gain from SK Hynix.

◇   Analysis for 2015

To overcome stalled growth of the telecommunications market, SK Telecom has been focusing on strengthening its core competitiveness in mobile network operation business, while laying the groundwork for its ‘Next-Generation Platform’ business to secure new growth engines.

As of the end of December 2015, the number of SK Telecom’s LTE subscribers marked 18.98 million, taking up over 66.3% of the company’s total mobile subscriber base.

‘Band Data’ plans, launched in May 2015, have become the mainstream price plan in the data-centric era, successfully attracting around 7 million subscribers as of the end of the fourth quarter of 2015. Also, with the success of its exclusive Luna smartphone, SK Telecom has achieved meaningful growth in the niche market for budget smartphones.

Average churn rate for the year 2015 marked 1.5% backed by the company’s strengthened benefits for its long-term customers and market stabilization efforts.

Moreover, moving beyond its mobile network operation business, SK Telecom has launched services in areas of lifestyle, media and IoT to secure basis for growth for its Next-Generation Platforms.

Diverse customer segment products - including ‘T Kids Phone’ and ‘T Outdoor’ – have secured a combined total of 600,000 subscribers and plans are underway to interconnect these services to the company’s Lifestyle Enhancement Platform. ‘T Phone’ has established itself as an innovative call platform by surpassing the 7 million user mark.

SK Telecom is also making aggressive efforts to strengthen its Media Platform by pushing for acquisition of CJ Hellovision, while securing basis for future growth by maximizing synergies between media businesses of its affiliates.

In the area of IoT Platform, the company has introduced an open Smart Home service platform and, as of the end of 2015, launched 25 different Smart Home-compatible home appliances under cooperation with 34 companies.

◇   Plans for 2016     

While firmly maintaining its market leadership, SK Telecom will continue to improve performance by offering products and services in a preemptive and flexible manner as a response to changes in the marketplace. Moreover, its strategy is to make an enterprise-wide effort to fortify its Next-Generation Platform business to achieve sustainable growth.

SK Telecom plans to expand its exclusive mobile handset lineup following Luna and Sol, and lead the introduction of total package products – including price plans and affiliate products - designed to maximize customer value.

The company is set to begin generating tangible results this year in its Next-Generation Platform business, which it kicked off last year, by providing customer-oriented services and content.

For Media Platform business, SK Telecom plans to strengthen its competitiveness in fixed and mobile media services and build an ecosystem by acquiring CJ Hellovision. In addition, through Oksusu, a mobile media platform launched in January 2016, the company will boost the consumption of high-quality media content and proactively respond to changing trends in the media industry such as personalization, thus accelerating its transformation into a leading integrated media platform company.

The home IoT market in Korea has seen an emergence of a wide variety of services and products in 2015. This year, competition will increase in the market with the growing number of users and popularization of services.

SK Telecom plans to increase the number of its smart home-compatible products to 70 by the end of 2016 by partnering with over 50 different companies. It will also create new revenue streams by expanding its IoT business areas to connected car, energy, security and public services.

The company will strengthen its growth engine based on Lifestyle Enhancement Platform by combining its traditional competitiveness in mobile network operation and SK Planet’s competence. In December 2015, SK Telecom announced plans to reorganize SK Planet’s business structure to add momentum to the growth of its Next-Generation Platform business. The company plans to strengthen its lineup of products and services that combine optimal content, community and commerce by analyzing segment product subscribers’ needs and consumption patterns.

“Last year, SK Telecom focused on securing new economic growth engines amid economic uncertainties, including stalled growth of the telecommunications market and subscribers,” said Hwang Keun-joo, CFO and Head of Strategy and Planning Division at SK Telecom. “In the year 2016, we will reap tangible results in the next-generation platform business based on our unrivalled strength in telecommunications.”