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Korea's SK Telecom may delay 3G

The top mobile carrier in South Korea, one of the world's most enthusiastic users of mobile Internet, has said it might delay its third-generation (3G) mobile services by a year to 2004 as it had yet to sound out subscriber interest in the advanced services. "We will discuss the delay in our 3G services with the government as it requires its approval," Song Sung-ho, of SK Telecom said on Thursday. "Japan's DoCoMo has seen little success in its 3G services," he said.

Almost 40 percent of the country's cellular users subscribe to some form of mobile data services. SK also said it expected first-quarter net profit to rise as strong growth in wireless data services offset heavy marketing costs. Underlining its firm status as market leader, SK said its full-year earnings would rise by 10 or 20 percent, while meeting its 2002 sales target of 8.8 trillion won (4.7 billion pounds).

"Our first-quarter earnings will be slightly better than the same period a year ago," Cho Sung-hae, vice president at SK's investor relations team, told analysts. "EBITDA (earnings before interest, taxation, depreciation and amortisation) margin remains at around 50 percent." SK is to announce its first-quarter results on May 6.

SLOW START FOR 3G SERVICE

NTT DoCoMo, Japan's top mobile carrier, has seen a slow start for its 3G service, signing up about 89,000 3G users since its October launch, the world's first, instead of its planned 150,000 customers. J-Phone, the Japanese unit of mobile giant Vodafone, also said on Wednesday it was delaying the launch of its 3G service to December from June, its second such delay.

Cho added that SK spent a fourth of 1.2 trillion won it had earmarked for this year's marketing costs in the first three months to lure subscribers in the fiercely competitive mobile market. The company used 114 billion won in marketing costs in the first quarter of last year as it was ordered to lower its market share below 50 percent by last June after acquiring rival Shinsegi Telecomm. Cho said mobile carriers were expected to cut their marketing costs beginning in the second quarter after the government vowed to crack down on practices of providing handset subsidies to subscribers. "We expect our marketing costs to decline by 200 billion won this year," he said.

SK posted 1.14 trillion won net profit for full 2001 on sales of 6.23 trillion won. The figures were without Shinsegi. Shares of SK finished down 1.5 percent at 261,000 won versus the 4.7 percent fall on the benchmark index.

ROBUST 2.5G UPTAKE

Analysts said SK's revenues and profits were expected to rise in coming years as wireless data service drives up its monthly average revenue per user (ARPU). "SK still dominates the 2.5G market with more than a 70 percent share, which should bode well for its wireless data sales going forward," said Joel Kim, an analyst at ING Barings in Seoul. He said Korea would have more than 15.1 million 2.5G subscribers by the end of this year, with SK's market share at 57.9 percent or 8.8 million users.

SK said users of its cdma2000 1x or 2.5G services, which ensure higher data transmission speeds, were 7.28 million at end-March, accounting for 32 percent of its total subscribers. The company said the impact of interconnection fee cuts on its profit would also be limited by strong earnings from increased subscriber growth and service sales, it said. SK was ordered by the government to chop by 28 percent the interconnection fees it charges other operators to connect with its much larger network beginning this year.

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