SK Telecom : Announces 2016 1Q Earnings Results

• Revenue of KRW 4.229 trillion, operating income of KRW 402.1 billion and net income of KRW 572.3 billion
• Compared to the same period last year, the revenue and operating income decreased by 0.3% and 0.1%, respectively, due to elimination of sign-up fees and increased number of subscribers who choose contract-based mobile fee discounts
• The net income increased by 29.3% year-on-year, reflecting SK Planet's sale of its stake in Loen Entertainment
• Plans to continue realizing innovations in its Next-Generation Platform business - i.e., Lifestyle Enhancement Platform, Media Platform and IoT Platform - to generate tangible results and build a new growth engine

※All business performance figures are based on Korean International Financial Reporting Standards (K-IFRS).

SK Telecom (NYSE:SKM) today announced its earnings on a K-IFRS consolidated basis for the first quarter of 2016: revenue of KRW 4.229 trillion, operating income of KRW 402.1 billion and net income of KRW 572.3 billion.

The revenue stood at KRW 4.229 trillion, edging down 0.3% year-on-year(YoY) due to the elimination of sign-up fees and increased number of subscribers who choose contract-based mobile fee discounts.

The operating income dropped 0.1% YoY to KRW 402.1 billion due to expanded expenses caused by growth in subsidiaries' business activities.

Despite reduced equity method gain from SK Hynix, the net income increased by 29.3% YoY to stand at KRW 572.3 billion as SK Planet sold its controlling stake in Loen Entertainment in the first quarter of 2016.

With the continuous spread of its differentiated LTE services, as of the end of March 2016, the number of SK Telecom's LTE subscribers marked 19.53 million, taking up over 67.5% of the company's total mobile subscriber base.

In the first quarter of 2016, SK Telecom has focused on strengthening its core competitiveness as a mobile carrier through customer-oriented innovations, differentiated services/products and enhanced mobile network quality. The company said that it is concentrating on shifting the market paradigm by promoting a product/service-oriented competition through the launch of many new differentiated services in the areas of Lifestyle Enhancement Platform, Media Platform and IoT Platform.

SK Telecom has led the popularity of budget smartphones by introducing its exclusive mobile handset Luna and its follow-up model Sol. In addition, launched in March 2016, Luna Watch has become an instant hit thanks to its high cost-effectiveness and sophisticated design.

Moreover, SK Telecom has been making efforts to provide differentiated customer benefits by introducing new Lifestyle Enhancement Platforms including 'T Pay,' a hands-free & barcode mobile payment service, and 'T Life,' a mobile app that offers special time-specific discount benefits at shopping malls, coffee shops and restaurants.

As the result of these efforts, in March 2016, the company ranked number one, for 19 consecutive years, in the category of mobile telecommunications service by National Customer Satisfaction Index (NCSI). SK Broadband has also ranked number one, for six years in a row, in the categories of broadband Internet and IPTV by NCSI.

SK Telecom has reorganized SK Planet's business structure. In particular, through the split and merging of SK Planet's LBS business division including the T Map service*, SK Telecom aims to create synergies in diverse Lifestyle Enhancement Platform businesses such as online-to-offline(O2O), location-based services (LBS) and big data.

* The LBS division has been split from SK Planet and merged into SK Telecom on April 5, 2016.

The company also plans to secure a competitive edge in the media market through 'oksusu,' a mobile media platform that offers differentiated content and personalized video-watching environment for users.

Furthermore, SK Telecom has been making constant efforts to expand the ecosystem surrounding Smart Home, the company's representative service in the IoT Platform business, by joining hands with diverse partners to expand distribution channels for its Smart Home products. The company will also build networks dedicated for the Internet of Things (IoT) and develop new IoT business models through cooperation with small and medium-sized enterprises (SMEs) and startups.

"SK Telecom will continue to enhance its competitiveness and profitability through innovative products and services to maximize customer and shareholder value, while achieving a successful transformation into a next-generation platform player to further drive up its enterprise value," said Hwang Keun-joo, CFO and Head of Strategy and Planning Division at SK Telecom.