(2nd LD) SK Telecom Q2 net up 16.8 pct on lower marketing fees

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SEOUL, July 29 (Yonhap) -- SK Telecom Co., South Korea's leading mobile carrier,
said Thursday its second-quarter earnings rose 16.8 percent from a year ago on
reduced promotional spending to retain subscribers.
Net profit reached 364 billion won (US$307 million) in the April-June period,
compared with 312 billion won a year ago, the company said in a regulatory
filing.
The bottom line was lower than a median estimate of 409 billion won by 11
analysts polled by Yonhap Infomax, the financial news arm of Yonhap News Agency.
Sales inched up 0.7 percent to 3.09 trillion won, while operating profit climbed
5.2 percent to 582 billion won, it said.
Shares of SK Telecom closed at 167,000 won on the Seoul bourse, up 0.6 percent
from Wednesday's close.
SK Telecom said its second-quarter marketing costs, including handset subsidies,
fell 12.9 percent from a year ago to 772 billion won, after the country's
regulator introduced a marketing fee guideline in May.
The non-binding guideline suggests mobile operators spend less than 22 percent of
wireless revenues on marketing, as the competition to steal subscribers in the
saturated telecom market intensifies.
Data-heavy smartphone users drove up the company's wireless data sales, which
rose 6.4 percent from a year ago, it said.
"Average revenue per user was especially high among smartphone customers and they
were a key driver of revenue growth," Jang Dong-hyun, company's chief financial
officer, said in a conference call. "We expect data sales will continue to grow
as we increase the number of smartphone subscribers."
SK Telecom secured 1.7 million smartphone users as of Thursday and eyes a revised
3 million smartphone sales target this year, up from its earlier 2.5 million.
South Korea's smartphone market, still nascent but quickly growing, will reach
4.8 million users and account for 22 percent of the wireless market, research
firm IDC Korea said in July.
The company exclusively introduced the Galaxy S, Samsung Electronics Co.'s
flagship smartphone model, in South Korea on June 24, with sales topping 500,000
units within about one month of its local debut. The model is scheduled to be
launched through two other carriers in coming months.
In the second half of this year, costs of promoting premium smartphones and
subsidizing handset buyers will likely rise, analysts said, as South Korean
mobile operators are scheduled to introduce a slew of new smartphone models.
"Compared with a year ago, the competition in the wireless market is going to get
intense. SK Telecom will spend more on marketing to keep rivals from luring its
subscribers with new models," said Kim Hong-sik, an analyst at NH Securities &
Investment.
SK Telecom plans to launch 10 additional smartphones in the third quarter,
according to the company. It expects to meet its annual revenue target of 13
trillion won.
Its key rival KT Corp., which sold about 850,000 units of the iPhone since its
local debut eight months ago, is experiencing a delay in the release of the
latest model of the best-selling iPhone 4. The country's largest telecom operator
and No. 2 mobile carrier plans to launch the model in a couple of months.
SK Telecom accounted for 50.7 percent of the country's wireless market at the end
of April, followed by KT's 31.4 percent and LG Uplus Corp.'s 17.9 percent,
according to government data.
ylee@yna.co.kr
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