SK Telecom Focused on Untact, Operating Profit Up 11.4% Despite COVID-19

[Asia Economy Reporter Seulgina Jo] SK Telecom recorded double-digit growth in operating profit in the second quarter despite the impact of the novel coronavirus infection (COVID-19). So-called untact (contactless) services have attracted attention, and rapid growth continues mainly in the media and other New Biz. sectors. Facility investment such as 5G network construction also increased by more than 50% compared to a year ago.

SK Telecom announced on the 6th that it recorded sales of 4.6028 trillion won and operating profit of 359.5 billion won in the second quarter on a consolidated financial statement basis. This is an increase of 3.7% and 11.4%, respectively, compared to the same period last year, exceeding market expectations. Net profit for the same period increased by 66.8% to 432.2 billion won due to the influence of equity method gains from SK Hynix.

This performance is analyzed as a result of proactively responding to customer demand in the untact era. The total sales of media, security, and commerce, the core businesses of the New Biz sector, increased by 13.4% compared to a year ago. The proportion of subsidiary profits in consolidated operating profit also expanded significantly from about 15% in the second quarter of last year to about 25% in the second quarter of this year. SK Telecom explained, "Despite the prolonged COVID-19 pandemic and increased 5G network investment, this is the result of establishing various new businesses specialized in untact as growth engines."

The media business recorded sales of 918.4 billion won, up 16.2% year-on-year, thanks to continuous IPTV subscriber growth and the impact of the TiBroad merger completed on April 30. Security business sales such as ADT Caps (323 billion won) and commerce business sales (192.6 billion won) also showed growth in the 8% range. Performance improvement is also noticeable in the core mobile communications sector. Wireless sales in the second quarter increased by 3.2% year-on-year to 2.9398 trillion won.

Due to 5G network investment, SK Telecom's facility investment in the second quarter increased by 56.7% compared to a year ago to 917.8 billion won. The cumulative investment amount for the first half of the year was 1.2244 trillion won, up 33.5% year-on-year.

Yoon Poong-young, head of SK Telecom Corporate1 Center, said, "Despite the prolonged COVID-19 pandemic, the diversified portfolio centered on New Biz is showing tangible results," and added, "We will continue to pursue change and innovation for the company's long-term growth and lead the post-COVID-19 era."