SK Telecom President Park Jung-ho. (Photo:SK Telecom)

On Feb. 7, SK Telecom announced that the company posted 17,743.7 billion won in annual sales, 1,110 billion won in operating profit and 861.9 billion won in net profit in 2019. Its sales hit an all-time high, up 5.2 percent from a year before.

The results were attributable mainly to the growth of new businesses such as media and security and a slowing-down decrease in mobile network operator (MNO) business’ sales that arose from the expansion of 5G services.

Its operating profit slid 7.6 percent and its net profit 72.5 percent year on year mainly due to an increase in 5G network investment and equity-method gains from SK Hynix.

“The expansion of profit from the 5G business minimized a decrease in sales,” said Yoon Poong-young, Chief Financial Officer of SKT in a conference call on the same day.

“A big spike in the growth of new businesses such as media, security and commerce contributed to the expansion of sales, showing new aspects of SK Telecom transforming into a new ICT player.”

SK Telecom's sales in the MNO business have been on a sharp decline recently.

Continued pressure to lower telecommunication charges and the expansion of optional agreements have had a big impact on the MNO business. In 2019, it posted 11,416.2 trillion won, down 2.5 percent from a year earlier.

An increase in the number of subscribers with selective contract discounts continued to affect the MNO business.

However, as the MNO business’ sales continued to increase from the second quarter of 2019 when the commercialization of 5G services began, slowing the drop in annual sales.

This is attributable to increased data usage by users and 5G subscribers using expensive plans. Last year, the number of SK Telecom’s 5G subscribers reached 2.12 million.

SK Telecom expects MNO sales to rebound in 2020. SK Telecom expects its 5G subscribers to climb to six million to seven million by the end of this year.

SK Telecom’s new growth businesses are media, commerce and security. Sales hit 5,126.6 billion won, up 21.6 percent from a year before. SK Broadband, ADT Caps, SK Infosec, 11st, and SK Store significantly contributed to the results.

SK Broadband’s sales in the IPTV business increased 10.7 percent on year to 1,298.5 billion on the back of increased premium subscribers and content use. Last year, net subscribers grew by 464,000, pushing up the number of total IPTV subscribers to 5.19 million.

Sales of the security business by ADT Caps and SK Infosec, posted sales of 1,192.3 billion, up 17.4 percent year-on-year, and operating profit of 1535 billion, up 21.9 percent. In the commerce business, 11st and SK Store both turned to annual operating profit.

SK Telecom explained that it was the result of avoiding discount coupon-based bleeding competition and creating a sustainable market.

SK Telecom expects consolidated revenue to reach 19.2 trillion won this year based on the MNO business, which is expected to turn around with the expansion of the 5G market, and the solid growth of new businesses such as media, security and commerce businesses.

SK Telecom plans to sharpen the competitiveness of 5G services and crystallize its B2B model by collaborating with various domestic and overseas operators in the MNO business in 2020.

In the media business, a new corporation will be established out of a merger between SK Broadband and T-Broad at the end of this April. The new corporation is expected to generate more than 4 trillion won in sales based on eight million pay-TV subscribers.

In addition, WAVVE jointly introduced with three domestic broadcasters plans to secure competitiveness by focusing on strengthening premium content capabilities such as production of original contents.

In the security business, SK Telecom plans to expand convergence security services, autonomous parking, and home security and accelerate the growth by introducing advanced technology-based services such as care services for senior citizens based on synergies with the SK ICT family.

Its commerce business which succeeded in turning to the black will maintain sound management instead of waging a price war, responding to changes in the market environment.