SKT to Invest 3 Tril. Won in 5G Network in 2019
SK Telecom said on May 7 that it is planning to secure up to 7 million 5G subscribers next year by expanding its handset lineup and the deployment of 5G base stations.
SK Telecom has not yet disclosed the size of its 5G subscribers. According to the Ministry of Science, Technology, Information and Communication, the total number of 5G users in Korea stood at 260,000 as of April 29. KT announced on April 30 that its 5G subscribers have exceeded 100,000. Market watchers say SK Telecom, which is the largest mobile operator in Korea, is behind KT in 5G services.
"It has been a month since 5G was commercialized. We don't think that the market shares of the three mobile operators at this time are significant," said Yoon Poong-young, the company’s CFO, at a conference call he hosted to disclose its first quarter performance.
"We expect that the number of 5G users will increase rapidly next year as our coverage expands and more smartphone lineups are available. We are targeting at least 6 million to 7 million users next year, accounting for more than 40 percent of the 5G market," Yoon said. "Our 2020 subscriber estimate is based on the trend of LTE subscribers one year after commercialization."
Yoon said that SK Telecom’s wireless sales, which have been on the decline, would rebound in the second half of this year based on 5G subscribers.
According to Yoon, the company's sales reached 4.33 trillion won (US$3.71 billion) in the first quarter, up 3.7 percent from a year ago, while its operating profit fell 0.9 percent to 322.6 billion won (US$275.96 million).
SK Telecom's mobile phone revenue came to 2.41 trillion won in the first quarter of this year, down 6.1 percent on-year. Revenue from mobile fell from 2.57 trillion won in the first quarter of last year to 2.5 trillion won in the second quarter, 2.48 trillion won in the third quarter and 2.45 trillion won in the fourth quarter.
The carrier’s capital expenditure in 2019 is expected to increase by 30 percent to 40 percent compared to last year due to investments in 5G base stations. The company’s annual facility investments are estimated at between 2.73 trillion won and 2.94 trillion won in 2019. In 2018, it invested 2.1 trillion won in telecom facilities.
The drop in the company’s mobile revenue was offset by a surge in sales from the security business. Sales of the security business totaled 276.5 billion won in the first quarter, up 27.2 percent from a year ago, due to increased number of ADT Caps subscribers, growth of new businesses, and connection effects with SK Infosec.
"ADT Caps will focus on parking services and home security to grow new businesses," Yoon said, adding that the company is improving its sales and product strength by utilizing the assets of the SK ICT family. New subscriptions through SK Telecom's distribution network are expanding across all security products," Yoon said.
He added that SK Telecom is continuing efforts to turn itself into an intermediate holding company of SK Group. “We are working hard to secure subsidiaries that are large and have high growth potential in order to maximize SK Telecom’s corporate value as an intermediate holding company," Yoon said. "We are planning to promote the conversion at the most optimal time."