※  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 2016: revenue of KRW 17.092 trillion, operating income of KRW 1.536 trillion, and net income of KRW 1.660 trillion.

The revenue decreased by 0.3% year-on-year (YoY) affected by the revenues of its subsidiaries including PS&M, and increased number of subscribers who choose contract-based mobile fee discounts. The operating income dropped 10.1% YoY reflecting a rise in depreciation expenses caused by its purchase of new spectrum blocks, as well as increased overall costs resulting from SK Planet’s activities to expand business base. The consolidated net income for the year 2016 grew 9.5% YoY to stand at KRW 1.660 trillion affected by SK Planet’s sale of its stake in Loen Entertainment in the first quarter of 2016.

Despite revenue-decreasing factors, including the increased number of subscribers who choose contract-based mobile fee discounts, elimination of sign-up fees, and reduction of interconnection fees, SK Telecom’s mobile network operation business sustained its steady performance backed by the growth of its LTE subscribers and mobile data usage per user.

As of the end of 2016, the number of SK Telecom’s LTE subscribers marked 21.08 million, representing an 11.1% YoY growth and taking up over 70% of the company’s total mobile subscriber base. SK Telecom’s total number of mobile subscribers also grew 3.4% YoY to 29.6 million. In addition to the increased number of subscribers, mobile data usage per user also continued to rise, resulting in the growth of mobile telephony revenue. The company’s mobile telephony revenue for the fourth quarter has increased by 0.4% QoQ, breaking its four consecutive quarter streak of declining revenues.

* For the month of December, the average mobile data usage per LTE subscriber stood at 5.2GB.

Moreover, SK Telecom has strengthened its number one position in the Korean market by drawing in an increased number of subscribers for specialized price plans such as ‘T Signature (high-end price plan)’ and ‘Band Play Pack (video content price plan)’; expanding sales of affordable phones like ‘Luna S’ and ‘Galaxy Wide’; and surpassing the one million subscriber mark for wearable devices including kids’ phones and smart watches.

Besides the mobile telecommunications business, SK Telecom has also achieved fruitful results in its new business areas.

For instance, its mobile navigation ‘T Map’ and dialer platform ‘T Phone’ have secured more than 10.62 million and 11 million subscribers, respectively, gaining an unrivalled status in their respective markets. Moreover, the company has led the popularization of artificial intelligence (AI) by selling over 40,000 units of NUGU, the first-ever AI-based virtual assistant service that supports the Korean language, within just five months of its launch.

Backed by these efforts, SK Telecom has posted an operating profit of KRW 1.782 trillion for the year 2016, representing a 7.4% growth compared to the year 2015, based on separate financial statement.

Meanwhile, although SK Telecom’s subsidiaries have posted operating losses as they experienced some growing pains while expanding their business bases, its main subsidiaries including SK Broadband and SK Planet have already started to generate tangible results from their business development.

Backed by the growth of IPTV and broadband businesses, SK Broadband saw its 2016 revenue increased by 7.7% YoY. In particular, the IPTV business posted revenue of KRW 84.4 billion, which is 33.4% higher than the previous year backed by increase in subscribers and sales of paid video content. And with the growth of giga internet subscribers, the company’s broadband business has achieved an impressive revenue turnaround, after five straight years of revenue decline.  

The revenue of SK Planet, which has transformed itself into a commerce platform company through business restructuring, has continued its growth. In particular, the monthly average number of users who access 11st via mobile has expanded by 22.7% YoY to reach 12.74 million, making it the unrivalled leader in the field of mobile shopping for two consecutive years. Also, in terms of transaction volume, 11st witnessed a whopping 33% YoY growth, setting a new record high.

*The above figures are according to data from Nielsen-KoreanClick

This year, SK Telecom will continue to create more value in the media and IoT business areas based on its leadership in the mobile network operation business. At the same time, the company plans to secure new growth engines by converging AI platform and commerce with other industries. Furthermore, in the era of Fourth Industrial Revolution, SK Telecom will make all-out-efforts to build a new ICT ecosystem that can generate new and innovative business models.

“The year 2016 was a year when we continued to make progress in the mobile telecommunications business, while thoroughly preparing ourselves for the future,” said Ryu Young-sang, Head of Strategy and Planning Division and CFO of SK Telecom. “In 2017, we will not only strengthen our competitiveness in the area of mobile telecommunications, but will also generate tangible results in the field of new ICT.”

Summary of Consolidated Income Statement

(Unit: KRW 1 Billion)  

Summary of Separate Income Statement

(Unit: KRW 1 Billion)  

※ The conference call is scheduled today at 15:00 and is available via the following URL.

http://cc.onoffjoin.com/webcast/skt/skt2016Q4_en.php