Number of 5G Subscribers at End-2Q21 Reaches 7.7mn
The author is an analyst of KB Securities. He can be reached at joonsop.analyst@kbfg.com. -- Ed.
2Q21 earnings in line with consensus
— SK telecom posted 2Q21 consolidated revenue of KRW4.82tn (+4.7% YoY), OP of KRW396.6bn (+10.8% YoY) and NP (attributable to controlling interests) of KRW765.8bn (+79.2% YoY).
— OP was in line with our estimate (KRW387.0bn) and the market consensus (KRW406.8bn; FnGuide, 3m basis).
— The company saw continued improvements in MNO earnings, as well as top-line growth continued at Media, S&C and Commerce.
MNO earnings improve on revenue growth from 5G subscriber gains, decline in D&A expenses
— MNO fueled the growth of consolidated earnings, posting standalone OP of KRW328.4bn (+21.7% YoY, +6.9% QoQ).
— Despite the absence of any new flagship handsets, the number of 5G subscribers at end-2Q21 reached 7.7mn (net increase of 0.96mn). The rise in subscribers sustained the rise in ARPU (+0.8% QoQ), and mobile service revenue amounted to KRW2.56tn (+1.1% QoQ, +3.0% YoY).
— A decrease in 5G capex helped cut D&A expenses to KRW729.4bn (-4.3% YoY; standalone basis).
— However, marketing expenses jumped to KRW805.3bn (+3.1% QoQ) as the exceptionally high purchase subsidies granted in 1Q19 were no longer a factor. Under IFRS 15, purchase subsidies are recorded as assets (liabilities) and written off over the life of the customer’s subscription contract.
Non-MNO revenue at KRW1.58tn (+3.7% QoQ) and OP at KRW86.2bn (-16.6% QoQ)
— Media (e.g., SK broadband) saw revenue reach KRW997.1bn (+3.1% QoQ) thanks to an increase in IPTV subscribers (5.9mn, +1.7% QoQ) and an increase in pay TV ARPU (subscribers switching over from CATV to IPTV).
— S&C revenue came in at KRW369.8bn (+5.5% QoQ) thanks to the improving performances of new businesses (e.g., cloud security, home security).
— Commerce registered revenue of KRW211.0bn (+3.6% QoQ) as SK stoa boosted sales by expanding external partnerships and 11st actively responded to escalating competition in the e-commerce market.
— However, non-MNO OP took a hit from an increase in expenses due to investments—Media in infrastructure and contents, and Commerce in PB products released in joint effort with other brands.