SK Telecom posts strong result
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SK Telecom has 18.3 million wireless customers.
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SEOUL, South Korea (Reuters) -- SK Telecom Co., South Korea's largest mobile carrier, has beaten expectations to triple fourth-quarter profits.
The strong result was spurred by booming mobile data services.
SK earned 430 billion won ($367 million) in net profit in the fourth quarter, beating the consensus forecast of 344 billion won and up from 163 billion won in the same period a year ago.
Sales grew 4.6 percent to 2.48 trillion won. However, the fourth-quarter number was down from a net profit of 510 billion won in the third quarter.
For the full year, SK's net profit totalled 1.94 trillion won against 1.5 trillion won a year ago. Sales rose to 9.5 trillion won versus 8.6 trillion won.
Analysts said Friday gains from SK's popular wireless Internet business would be offset in future by hefty spending on advertising to retain customers.
"There is a lack of momentum in its top-line growth as voice revenue growth will be slim without drastic tariff cuts, which are unlikely this year, and as the company braces for a net loss in subscribers for the first time," said Lee Ho-joon, an analyst at JP Morgan.
Most analysts predicted SK's market share would shrink because of the launch of number portability this year, which allows mobile users to switch to other operators without changing their phone number.
The new system has already taken a toll on SK, which handles 18.31 million customers, or 54 percent of Asia's third-largest wireless market.
About 273,000 SK Telecom customers have shifted to smaller rivals KTF Corp and LG Telecom Co so far this year, government data shows.
Analysts also said the number compared favorably with fourth-quarter 2002 when the company took a one-time loss from asset disposals and stock investments.
Analysts forecast SK Telecom would lose more than 600,000 subscribers to smaller rivals this year. The company itself is projecting a net loss of about 300,000 customers.
In 2003, SK customer numbers grew 6.35 percent to 18.31 million at the end of December, exceeding a 1.1 percent rise for the second-largest operator KTF, which has 10.44 million subscribers.
Shares in SK Telecom are up 1.17 percent to 216,500 won. The main Kospi index is down 0.58 percent.
Copyright 2004
Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
