SK Telecom (US:SKM)2020-05-09 19:10Financial Data and Key Metrics Changes - Consolidated revenue for Q1 2020 was KRW 4,450.4 billion, representing a 2.7% year-on-year increase and a 0.9% quarter-on-quarter increase, driven by MNO revenue growth from 5G subscribers and new businesses [6][7] - Operating income was KRW 302 billion, a 6.4% year-on-year decrease, but an 85.9% increase quarter-on-quarter due to reduced seasonal costs [7] - Net income decreased by 17.9% year-on-year but turned to profit quarter-on-quarter [7] Business Line Data and Key Metrics Changes - Non-consolidated MNO revenue for Q1 was KRW 2,922.8 billion, up 3.9% year-on-year and 2.7% quarter-on-quarter, despite a decline in roaming revenue due to COVID-19 [8] - MNO operating income was KRW 257.9 billion, a 15.7% year-on-year increase and a 121.6% quarter-on-quarter increase [9] - Media business revenue from SK Broadband was KRW 823.5 billion, an 8.2% year-on-year increase and a 0.3% quarter-on-quarter increase [11] - Security business revenue was KRW 291.4 billion, a 5.4% year-on-year increase, while commerce business revenue was KRW 190.3 billion, down 4.4% year-on-year but up 31.3% quarter-on-quarter [13][14] Market Data and Key Metrics Changes - As of Q1 2020, SK Telecom had 2.65 million 5G subscribers, marking a significant milestone in its MNO leadership in the 5G era [10] - The overall e-commerce market is gradually growing, with 11st seeing a 9% year-on-year increase in transaction volume [22] Company Strategy and Development Direction - The company aims to continue growing its 5G subscriber base and discover new services to fully leverage 5G technology [10] - SK Broadband plans to strengthen its competitiveness through an advanced media platform and a wider business model following the merger with t-broad [17][45] - The security business is focusing on tech-based new business portfolios and aims for KRW 1.3 trillion in annual revenue [20] Management's Comments on Operating Environment and Future Outlook - The COVID-19 pandemic has posed challenges, but the company believes its diversified portfolio positions it well to adapt [27] - Management is optimistic about achieving growth in enterprise value and is committed to creating synergies among its various business lines [28] Other Important Information - The merged entity of SK Broadband and t-broad launched with over 8.2 million pay TV subscribers, aiming for KRW 4 trillion in revenue this year [44] - The company is investing KRW 60 billion in original content for Wavve to enhance its competitiveness in the OTT market [18][56] Q&A Session Summary Question: Dividend policy and CapEx - The company is reviewing its dividend policy to align with its diversified portfolio and shareholder preferences, with potential changes to be announced during the interim dividend [30][33] - Regarding CapEx, the company is considering early spending but does not expect an overall increase in CapEx due to this [35][36] Question: Market competition and subscriber acquisition strategy - Management noted that while there is some promotional activity, the market has stabilized and does not indicate overheated competition [42] - The merged entity plans to enhance subscriber acquisition through new services and partnerships [45] Question: 5G subscriber guidance and operating income outlook - The company expects 5G subscriber numbers to be 10% to 15% lower than previously guided due to COVID-19 impacts [49][50] - Management is focused on maintaining a stabilizing trend in MNO income despite uncertainties [52] Question: Wavve's growth strategies - Wavve aims to reach 5 million subscribers by 2023, with significant investments in original content and an expanded film library [55][56] Question: Earnings improvement in the second half - Management believes that subsidiary earnings will improve year-on-year, and they are focused on efficient investments to turn profits around in the second half of the year [62]