Wall Street Journal | January 25, 2011 | Jung-Ah Lee
SEOUL (Dow Jones)–Brisk sales of smart phones and proceeds from a stake sale helped SK Telecom Co. (017670.SE) Tuesday post a 48% jump in its fourth-quarter net profit, but South Korea’s largest mobile carrier still fell short of expectations due to one-off costs.
The mobile operator was, however, upbeat on its earnings prospects for this year, forecasting a 10% rise in operating profit and flagging plans to boost its capital investment to KRW2 trillion ($1.8 billion) from KRW1.85 trillion in 2010 to upgrade its network, as it expects the number of its smartphone users to more than double.
“The data traffic environment is changing (due to the rising number of smartphone users) and there’s a higher possibility for revenue growth going forward,” Ha Sung-min, SK Telecom’s president and chief executive said at a conference call after the company reported its fourth-quarter earnings. “We had around 3.91 million of smartphone subscribers by the end of 2010, and we are targeting to have 10 million subscribers by the end of this year.”
South Korean mobile carriers are making a big push into the wireless Internet services market in order to compensate for declining revenue from voice calls. The Korean mobile market is saturated with almost everyone carrying a cellphone.
But the country saw a sudden boom in smartphones in late 2009 with the entry of Apple Inc.’s (AAPL) iPhone in the domestic market through rival KT Corp. (KT). That forced SK Telecom to look at ways to stay competitive and it launched Samsung Electronics Co.’s popular smartphone, Galaxy S, in late June, which is based on Google Inc.’s Android operating system. The popularity of the smartphone has helped raise wireless Internet usage at SK Telecom.
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