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Press Release
Net income of KRW298.7 billion was realized on total sales of KRW2.4 trillion. Net income and total sales were reduced 34% and 1% respectively over the 1st quarter of 2004.
Retroactive application of the adjustment of the interconnection ratio, and increase in marketing expenses after the introduction of the Mobile Number Portability System, are the main reasons for the reduction in net income.
Wireless Internet service sales recorded KRW417.2 billion. This represents 19% of the cellular phone service sales that do not include the interconnection revenue.
On July 29, SK Telecom announced that the company achieved total sales of KRW2.4 trillion for the 2nd quarter of 2004. Its total sales were reduced 1% over the 1st quarter of 2004 largely due to the fact that interconnection revenue was KRW49.4 billion less than in the 1st quarter of 2004. The reduction of interconnection revenue was caused by the retroactive application of the reduced portion of the interconnection ratio.
However, if the interconnection revenue is not included in the Company’s sales, SK Telecom’s cellular phone service sales came to KRW2.2 trillion, an increase of 3.2% over the 1st quarter of 2004. In particular, wireless Internet service sales recorded KRW417.2 billion, up 7% over the 1st quarter. This represents 19% of the cellular phone service sales when interconnection revenue is not included.
In addition, SK Telecom’s net income of KRW298.7 billion was realized on operating income of KRW462.7 billion for the 2nd quarter of 2004. Net income and operating income were reduced 34% and 39% respectively over the 1st quarter of 2004. The EBITDA margin that shows the Company’s capability of cash generation, recorded KRW868.0 billion, a decrease of KRW195.0 billion from the 1st quarter.
In the 2nd quarter, SK Telecom’s interconnection revenue was reduced due to the retroactive application of the reduced portion of the interconnection ratio, and interconnection expenses have also increased. Moreover, the competition in the marketplace became more intensified after the introduction of the Mobile Number Portability System. Under these circumstances, SK Telecom has been putting forth its best efforts to maximize Company value on a mid and long-term basis by maintaining a market leadership position, as well as strengthening the subscriber base. To this end, the Company has experienced increased marketing expenses due to expanding cellular service membership programs, upgrading subscribers’ handsets, and diversifying service distribution channels. These are the primary factors that explain the decrease in total business and net income results for the 2nd quarter of 2004.
An SK Telecom official revealed that excessive competition in the market would be relieved in the 2nd part of 2004 due to the service providers’ efforts toward cleaner marketing approaches. This includes the announcement of self-regulated market share maintenance. As a result, the Company’s business results are expected to improve through the Company’s efforts to tightly manage overall expenses.
However, if the interconnection revenue is not included in the Company’s sales, SK Telecom’s cellular phone service sales came to KRW2.2 trillion, an increase of 3.2% over the 1st quarter of 2004. In particular, wireless Internet service sales recorded KRW417.2 billion, up 7% over the 1st quarter. This represents 19% of the cellular phone service sales when interconnection revenue is not included.
In addition, SK Telecom’s net income of KRW298.7 billion was realized on operating income of KRW462.7 billion for the 2nd quarter of 2004. Net income and operating income were reduced 34% and 39% respectively over the 1st quarter of 2004. The EBITDA margin that shows the Company’s capability of cash generation, recorded KRW868.0 billion, a decrease of KRW195.0 billion from the 1st quarter.
In the 2nd quarter, SK Telecom’s interconnection revenue was reduced due to the retroactive application of the reduced portion of the interconnection ratio, and interconnection expenses have also increased. Moreover, the competition in the marketplace became more intensified after the introduction of the Mobile Number Portability System. Under these circumstances, SK Telecom has been putting forth its best efforts to maximize Company value on a mid and long-term basis by maintaining a market leadership position, as well as strengthening the subscriber base. To this end, the Company has experienced increased marketing expenses due to expanding cellular service membership programs, upgrading subscribers’ handsets, and diversifying service distribution channels. These are the primary factors that explain the decrease in total business and net income results for the 2nd quarter of 2004.
An SK Telecom official revealed that excessive competition in the market would be relieved in the 2nd part of 2004 due to the service providers’ efforts toward cleaner marketing approaches. This includes the announcement of self-regulated market share maintenance. As a result, the Company’s business results are expected to improve through the Company’s efforts to tightly manage overall expenses.