South Korea’s leading mobile carrier SK Telecom Co. saw reported weaker-than-expected operating profit for the fourth quarter and the full year of 2016 due to an increase in investments by its subsidiaries.

The company said Friday that operating profit on a consolidated basis dropped 28.8 percent to 302 billion ($263.7 million) in the fourth quarter ended December last year from a year ago, whereas revenue edged up 2.6 percent to 4.4 trillion won. Over the same period, net profit jumped 47.4 percent to 475 billion after reflecting the strong quarterly earnings of its affiliate SK Hynix Inc., South Korea`s second largest semiconductor manufacturer, in which the mobile carrier owns a 20.1 percent stake. For full 2016, its operating profit fell 10.1 percent to 1.5 trillion won from the previous year, coming in below market expectations of 1.6 trillion won. Over the cited period, sales also inched down 0.3 percent to 17.1 trillion won, while net profit rose 9.5 percent to 1.7 billion.

Shares of SK Telecom finished Friday at 219,500 won, up 0.69 percent from the previous session in Seoul trading.

According to the company, increased investment by its affiliates took a toll on its operating profit. Its platform unit SK Planet Co. posted an operating loss of more than 300 billion won last year after it has sharply upped investment in its e-commerce platform “11st.”

A growing number of subscribers who chose contract-based mobile fee discounts coupled with elimination of sign-up fees also dented its revenue last year, the company explained. Revenue from its mobile network operating business that accounts for a lion’s share of its overall sales fell 0.9 percent in 2016 from 2015.

But backed by the growth in its Long-Term Evolution (LTE) subscribers and mobile data usage per user, SK telecom’s mobile phone revenue during the fourth quarter of the year alone rose 0.4 percent, snapping its losing streak for four consecutive quarters.

As of the end of 2016, the number of SK Telecom’s LTE subscribers reached 21.08 million, rising 11.1% on year and making up over 70% of the company’s total mobile subscriber base of 29.6 million, which also expanded 3.4 percent on year.

By Kim Gyu-sik

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