3rd LD) SK Telecom reports drop in Q4 net, higher sales, profits targets in 2010

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By Lee Youkyung
SEOUL, Jan. 28 (Yonhap) -- SK Telecom Co., South Korea's largest mobile carrier
by subscribers, reported Thursday lower-than-expected fourth-quarter income on
higher marketing fees and a one-off loss from stake sales.

But the company said it is eying higher annual sales of 13 trillion won this
year, compared with 12.1 trillion won last year, with annual profit target also
slightly higher than 2009.
Analysts said that the company's profit increase will widen more in the second
half of this year than the first half, as SK Telecom bets on wireless data
service sales and steps up a smartphone line-up this year.
The company, which competes with KT Corp, the sole operator of Apple Inc.'s
iPhone, plans to place a high stake in wireless data services and the smartphone
sector in a bid to fuel growth in a saturated South Korean telecommunications
market.
It plans to release 15 new smartphone models, which will account for 30 percent
of its entire line-ups, including 13 powered by Google Inc.'s Android system. SK
Telecom said it will increase smartphone sales by five-fold from last year to 2
million units.
"Through securing our leadership in smartphone areas, revamping mobile contents
usage environment ... we aim to take a leading position in the wireless Internet
market this year," Cho Ki-haeng, president of SK Telecom's Global Management
Service told a conference call.
He added that SK Telecom allocated 1.75 trillion won as annual investment in
areas including wireless networks, compared with 1.77 trillion won it spent in
2009.
SK Telecom's revenues from wireless data service, which grew 12 percent from a
year ago to 2.66 trillion won in 2009, is expected to grow about 10 percent this
year to 2.8 trillion won, according to Kang Ji-hoon, an analyst at Samsung
Securities.
Earlier in the day, SK Telecom said in a filing that its net profit reached
244.24 billion won (US$210.1 million) in the three months to December, compared
with 263.1 billion won a year earlier.
Sales rose 3 percent from a year ago to 3.1 trillion won over the cited period,
while operating profit fell 5 percent to 443.15 billion won.
The fourth-quarter bottom line missed analysts' median forecast of 329.1 billion
won, released by the on-line financial service company Fn Guide.
The figures also disappointed investors. Shares of SK Telecom, which closed at
185,000 won on the Seoul bourse, down 1.07 percent from Wednesday's close.
SK Telecom said higher marketing costs and asset acquisition of its subsidiary SK
Networks weighed on its profits.
"Marketing fees rose from a year earlier though they diminished on-quarter,"
spokeswoman Lauren Kim said by phone. "The market competition heated up in 2009
than 2008."
Analysts said that SK Telecom's stake sale in a Chinese telecom company in
November also pared away its bottom line. SK Telecom posted 140 billion won in a
one-off loss after selling back its 3.8 percent stake in China Unicom Ltd.
In the first quarter this year, SK Telecom will post higher sales than a year
earlier, analysts predicted, but profit gains will be meager because of marketing
costs and device subsidies to subscribers.
"The introduction of smartphone models may drive sales but there is a burden from
marketing costs, as smartphone marketing fees tend to be expensive," said Hwang
Sung-jin, an analyst at Prudential Investment & Securities. "Profit gains will
not be significant."
But SK Telecom is expected to widen its profits in the second half of 2010 as
marketing expenses and device subsidies given to smartphone users diminish,
generating profits from wireless data usage.
"Wireless data sales will give a downside pressure to its profits in the first
half of this year as it requires heavy handset subsidies," said Yang Jong-in, an
analyst at Korea Investment & Securities. "But wireless data subscribers will
contribute to SK's profits after about 10 months, so the profits will go up from
the third quarter."
In a conference call, SK Telecom said it will pay a cash dividend of 8,400 won
per share for fiscal 2009, and its dividend for this year will be on par with
that of 2009.
ylee@yna.co.kr
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