SK Telecom (US:SKM)2019-11-01 21:36Financial Data and Key Metrics Changes - Consolidated revenue for Q3 2019 was KRW 4,561.2 billion, representing a 9% year-on-year increase and a 2.8% quarter-on-quarter increase [4] - Consolidated operating income was KRW 302.1 billion, remaining stable compared to the previous year, with growth in non-MNO businesses offsetting increased 5G-related marketing and depreciation costs [5] - Net income was KRW 274.4 billion, down 73.9% year-on-year due to equity method income on SK Hynix, but up 5.9% quarter-on-quarter [6] Business Line Data and Key Metrics Changes - MNO revenue reached KRW 2,486.4 billion, up 0.1% year-on-year and 2.1% quarter-on-quarter, driven by an increase in 5G subscribers and data usage [9] - Media business generated IPTV revenue of KRW 333.7 billion, with a 14% year-on-year increase and a 3.6% quarter-on-quarter increase [11] - Security business revenue increased by 3% quarter-on-quarter to KRW 306 billion, with stable operating income of KRW 41.4 billion [13] - Commerce business recorded revenue of KRW 188.5 billion and operating income of KRW 1.5 billion, marking three consecutive quarters of surplus [14] Market Data and Key Metrics Changes - The number of 5G subscribers exceeded 1.54 million by the end of September, with expectations to reach 2 million by year-end [10] - SK Telecom holds approximately 44% market share in 5G, with plans to increase penetration to 48% of the total subscriber base [41] Company Strategy and Development Direction - The company launched the new OTT service "wavve" on September 18, aiming to acquire 5 million paying subscribers by 2023 [12] - A strategic partnership with Kakao was established, focusing on MNO, commerce, digital content, and future ICT [15] - The company aims to maintain a stable level of shareholder returns while managing cash demands due to the 5G launch [62] Management's Comments on Operating Environment and Future Outlook - Management noted a stable market operation beginning in September, with a focus on quality service rather than price competition [45] - The company expects ARPU growth to continue into Q4 2019 and into 2020, driven by the growth of 5G subscribers opting for higher-tier plans [52] Other Important Information - SK Telecom became the first Asian company to be included in the DJSI World Index for 12 consecutive years [16] - The merger with t-broad is pending FTC approval, with expectations to conclude the process in Q1 2020 [58] Q&A Session Summary Question: Update on wavve subscribers and partnership with Kakao - As of the end of October, wavve has 1.4 million subscribers, on track to reach 5 million by 2023, with a KRW 200 billion investment for content acquisition [23][24] Question: 5G coverage outlook - The company plans to expand 5G coverage to 70 clusters by year-end, focusing on densely populated areas and in-building coverage [30][31] Question: Marketing costs and ARPU outlook - Marketing costs will focus on service quality rather than price competition, with ARPU expected to see growth in Q4 and into 2020 [45][52] Question: Status of t-broad merger and year-end dividend - The merger is pending regulatory approval, expected to conclude in Q1 2020, with stable dividend policies maintained despite cash demands from 5G [58][62] Question: Project xCloud partnership with Microsoft - The partnership is based on a subscription model, with details on revenue sharing to be determined post-public preview [70][72]