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Mobile carriers' Q1 profit to improve on marketing cut

All News 10:57 April 07, 2016

SEOUL, April 7 (Yonhap) -- South Korea's three mobile carriers are expected to enjoy improved performances in the first quarter of 2016 from a year earlier, industry data showed Thursday, on the back of reduced marketing expenditures.

According to the data compiled by financial tracker FnGuide, the country's three mobile carriers -- SK Telecom Co., KT Corp., and LG Uplus Corp. -- are expected to post a combined operating profit of 976.3 billion won in the January-March period, up 11.2 percent from a year earlier.

Sales are estimated at 12.5 trillion won, up 3 percent on-year, the data also showed. All three players are believed to post operating profits.

SK Telecom, the leading player, is expected to post an operating profit of 456 billion won in the January-March period, up 13.3 percent from a year earlier. Its smaller rival KT is set to post 353.6 billion won, up 10.2 percent over the cited period.

FnGuide added it expects No. 3 LG Uplus to post an operating profit of 166.7 billion won in the first quarter, up 7.8 percent on-year.

Industry watchers said the overall improvement in earnings is attributable to reduced marketing spending, especially as the government banned the three firms from rolling out excessive discounts to lure customers from each other.

In October 2014, the Ministry of Science, ICT, and Future Planning allowed customers to choose between discounts in monthly subscriptions or mobile devices in line with the so-called mobile retail act.

Industry watchers added SK Telecom may continue to enjoy favorable earnings if the government gives a final nod to its plan to buy South Korea's top operator of cable channels.

SK Telecom offered to buy CJ Hellovision from CJ O Shopping Co. in November of last year with a plan to merge it with its wholly owned subsidiary SK Broadband Co.

The mobile carrier intends to buy additional shares from CJ O Shopping, which owns around 54 percent stake in CJ Hellovision. SK Telecom offered to purchase a 30 percent in CJ Hellovision, and buy the remaining later through options.


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