(2nd LD) SK Telecom logs 4.6 pct rise in Q2 earnings

(ATTN: UPDATES stock price; ADDS more details in last seven paras)
SEOUL, July 28 (Yonhap) -- SK Telecom Co., South Korea's leading mobile carrier,
said Tuesday its net profit rose 4.6 percent on-year in the second quarter on a
broader customer base and higher revenue from wireless Internet services.
Net income stood at 311.6 billion won (US$251 million) in the April-June period,
compared with 298 billion won a year earlier, the company said in a regulatory
filing. Compared with the previous quarter, earnings dropped 1.6 percent.
Sales rose 4.7 percent to 3.07 trillion won, while operating profit rose 3.8
percent to 553 billion won, it said.
Shares of SK Telecom were trading at 181,000 won on the main bourse as of 11:50
a.m., up 0.56 percent from the previous session.
The company attributed the rise in the bottom line to an increase in the number
of subscribers and more wireless Internet revenue.
The total number of SK Telecom subscribers climbed 5 percent on-year to reach
23.83 million as of the end of June. Its wireless Internet revenue rose 11.8
percent on-year to 671.2 billion won due to strong growth in flat-rate data plan
subscribers.
Due to intense competition to draw customers, marketing expenses climbed 8.3
percent from a year earlier to 948.6 billion won, the company said.
"Local mobile carriers engaged in fierce competition in the second quarter as
they scrambled to attract more customers," said Jang Dong-hyun, chief financial
officer of SK Telecom.
SK Telecom said it invested 319 billion won in the second quarter to secure
third-generation capacity and improve call quality. Cumulative capital
expenditure in the first half of 2009 gained 10 percent on-year to 667.4 billion
won.
SK Telecom offered an upbeat outlook for the third quarter, expecting the market
to stabilize in the second half of 2009.
SK Telecom's second-quarter results met analysts' forecasts.
"Higher marketing spending raised costs and eroded profit margins," said Hwang
Seung-taek, a researcher at Hana Daetoo Securities.
Hwang, however, expected the earnings in the third quarter to improve as
marketing expenses will start to reduce.
The South Korean government recently urged telecom operators to refrain from
competing to attract more new subscribers.
South Korea boasts one of the world's highest mobile subscription rates, with
45.6 million cell phone users in the country as of the end of 2008. Considering
the nation's population of 48.62 million, 93 percent of Koreans use cell phones,
while every Korean household has an average of 2.73 mobile phones.
Kim Jang-won, a researcher at IBK Investment and Securities, also agreed the
revenue will improve in the latter half of the year.
"The growth rate of the number of subscribers has started to stabilize in July,"
said Kim. "As the marketing expense reduces, profits will rise."
ygkim@yna.co.kr
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