New Businesses Post Solid Growth
SK Telecom announced on Aug. 6 that its earnings for the second quarter of 2020 on a K-IFRS consolidated basis: revenue of 4.603 trillion won, operating income of 359.5 billion won, and net income of 432.2 billion won.
Compared to the same period last year, SK Telecom’s revenue and operating income increased by 3.7 percent and 11.4 percent, respectively. The earnings improvement was backed by steady growth of its new businesses and improved performance of its mobile communication business. Net income grew by 66.8 percent driven by factors including increased equity method gains from SK Hynix.
SK Telecom’s new businesses have continued their growth by proactively responding to customers’ demands in the new era brought by the COVID-19 pandemic. The combined total revenue of key new businesses, namely media, security and commerce, have increased by 13.4 percent compared to the same period last year. In addition, in the second quarter, SK Telecom’s subsidiaries generated 25 percent of SK Telecom’s consolidated operating income, rising from 15 percent recorded in 2Q 2019.
SK Telecom’s media business posted 918.4 billion won in revenue, up 16.2% year-on-year. The increase was led by the growth of IPTV subscribers and SK Broadband’s merger with T-broad, which completed on April 30, 2020. As part of its strategy for the new era of non-face-to-face contact, SK Broadband recently reorganized its services and is planning to speed up its growth through strengthened competitiveness in contents and expanded line-up of bundled products.
The company’s security business - ADT Caps and SK Infosec – posted a quarterly revenue of 323.0 billion won, representing an 8.7 percent YoY increase. ADT Caps and SK Infosec plan to accelerate the development of services tailored to the current non-contact trend such as intelligent thermal imaging cameras and walk-through access security solution, while creating new business models based on the latest ICT, including cloud and convergence security.
The commerce business reported 192.6 billion won in revenue for the second quarter, expanding by 8.5 percent YoY backed by increased total transaction volume of 11st and strong growth of SK Stoa. 11st will continue to expand partnerships to meet the current non-face-to-face consumption trend and SK Stoa aims to become the leader in the T-commerce industry by strengthening its product sourcing capabilities and sales channels.
Aimed at securing new growth engines in the post-COVID-19 era, SK Telecom is also actively promoting innovations for T1, a global e-sports joint venture it established with Comcast Spectacor, One Store, a Korean app store, and Wavve, a video streaming platform in Korea.
SK Telecom’s revenue for its mobile communication business increased by 3.2 percent YoY to 2.940 trillion won. Despite increased investment in 5G and continuous impact of the pandemic, the company further solidified its leadership in the 5G market with its unrivaled technology competitiveness and specialized services.
The company launched the Galaxy A Quantum, the world’s first 5G smartphone equipped with a quantum random number generator chipset, in May 2020 and announced innovative measures to reinforce online and non-face-to-face sales channels. It will also work closely with diverse companies of both home and abroad to offer new communication experiences, which includes the launch of Xbox cloud gaming with Microsoft in September 2020.
Moreover, to join the national efforts to overcome the economic crisis caused by COVID-19, SK Telecom made a total investment of 917.8 billion won in network infrastructure in 2Q 2020 alone, which is 56.7 percent greater than 2Q of last year. The company’s accumulated total investment in the first half of this year amounts to 1.224 trillion won, representing a 33.5 percent YoY increase.
“Our diversified business portfolio centered around new businesses is delivering tangible results even as the COVID-19 continues to grip the nation,” said Yoon Poong-young, Chief Financial Officer of SK Telecom. “We will continue to change and innovate to create new opportunities in the post-COVID-19 era and achieve sustainable long-term growth.”