Investor Presentation. February 2018

Transcription

1 Investor Presentation February 2018

2 Disclaimer This presentation contains forward-looking statements with respect to the financial condition, results of operations and business of SK Telecom and its subsidiaries (the Company ) and plans and objectives of the management of the Company. The aforementioned forward-looking statements are influenced by unknown risks, uncertainties and other factors which may change the actual results or performance of the Company. The Company does not make any representation or warranty, expressed or implied, as to the accuracy or completeness of the information contained in this management presentation, and nothing contained herein is, or shall be relied upon as, a promise or representation, whether as to the past or the future. Therefore, this presentation contained herein should not be utilized for any legal purposes in regards to investors investment results. The Company hereby expressly disclaims any and all liability for any loss or damage resulting from the investors reliance on the information contained herein. This presentation only speaks the informations as of the date they are made, and the Company undertakes no obligation to update publicly any of them in light of new information or future events.

3 Table of Contents Ⅰ. Financial Metrics 3 Ⅱ. Key Takeaways 9 Ⅲ. Appendix 12

4 I. Financial Metrics Operating Revenue Turnaround in operating revenue due to the growth of major subsidiaries Operating Revenue (KRW tn) 2.1% 1.3% 2.9% 3.4% -0.2% -0.3% 2.5% % Q16 3Q17 4Q % Mobile service revenue % Consolidated OR YoY% SK Planet revenue* * 11st s revenue increased by +18.7% Media revenue 3

5 I. Financial Metrics EBITDA/CAPEX 17 EBITDA recorded KRW 4.8tn, first turnaround in four years Network investment to be reduced while investment for new business to rise EBITDA CAPEX (KRW tn) 12.4% (KRW tn) 5.6% 3.9% % -2.4% -0.3% -2.1% F EBITDA YoY% Network Non-Network 4

6 I. Financial Metrics Operating Income/EPS 17 operating income recorded KRW 1.5tn, first turnaround in 4 years 17 EPS hiked by 56% YoY due to the increase in equity method income from SK Hynix Operating Income EPS (KRW tn) 16.2% (KRW 000) 40.5% 55.7% 0.8% 0.1% -8.4% 8.4% 12.0% -24.6% -9.2% -6.4% -10.1% -27.7% -16.6% Consolidated Operating Income YoY% EPS YoY% 5

7 I. Financial Metrics SK Broadband Increase in both operating revenue and operating income due to the growth in IPTV business Operating Revenue (KRW tn) Operating Income (KRW bn) % 3.3% 2.9% 2.2% 2.3% 2.8% 4.2% % 13.6% 18.0% 23.2% 28.7% 33.5% Operating revenue Revenue % of IPTV revenue Operating income Income % to revenue 6

8 I. Financial Metrics SK Planet SK Planet s profitability is improving with efficiently managing expenses and adjusting business portfolio SK Planet s Operating Income* Adjustment in Business Portfolio (KRW bn) Time Business Action Mar 16 Mobile platform operation Spun off as SK techx Mar 16 App market Spun off as OneStore Apr 16 Jul 17 Location Based Service (T map) B2B internet shopping mall (Benepia) Merged to SKT after the spin off Disposed to SK m&service Improves by KRW 136.5bn excluding spin off business Oct 17 Advertisement agency Disposed to SM C&C Jan 18 Mobile payment system Disposed to Payletter * Excludes operating results from discontinued operations 7

9 I. Financial Metrics Shareholder Return Dividend to maintain stable trend while pursuing gradual increase Total Dividend Paid Dividend Per Share (KRW bn) (KRW) ,400 10,000 53% 73% 65% 64% 58% 53% 39% Cash dividend Dividend paid Paid Dividend payout Payout ratio Ratio 8

10 Ⅱ. Key Takeaways Subscribers Mobile and LTE subscribers maintain upward trend while increase in IPTV and broadband subscribers continues Mobile Fixed line (mn) (mn) Total mobile subscribers LTE subscribers Broadband subscribers IPTV subscribers 9

11 Ⅱ. Key Takeaways 5G To secure 5G initiative with strong partnerships and global 1 st commercialized service 5G Roadmap st RFP 1) sent to biz partners (Jul) Demonstrated 1 st global standard 5G data communication (Dec) 2 nd RFP 1) sent to biz partners (Jan) Spectrum Auction (Jun(E)) Build commercialized network in NSA 2) basis (Dec(E)) Launch the 1 st 5G device and commercialized network Expand 5G network in strategic points Secure network stabilization Technology partnership with Deutsche Telekom, Ericsson Feb.17 Network slicing technology Co-project with Nvidia May.17 Autonomous car Partnership with Here* Jan.18 Agreed to co-develop HD map solution, LBS based IoT *HD map/lbs service provider. Audi/BMW/Intel owns share of HERE Pursuing partnerships in all direction beyond industry category Expansion of SKT s 5G eco-system 1) RFP: Request for Proposal 2) NSA: Non-standalone, network technology that sends 5G wireless signal through LTE network 10

12 Ⅱ. Key Takeaways AI Sharp increase in usage as NUGU service expands Pursuing service enhancement by utilizing accumulated data Service Expansion of NUGU Increase in NUGU Usage (mn) H 17 2H 17 NUGU platform MAU* 2H 18F 11

13 Ⅲ. Appendix Consolidated Summary of Income Statement (Consolidated) (KRW bn) YoY Q Q QoQ Operating revenue 17, , % 4, , % Operating expenses 15, , % 4, , % Labor cost 1, , % % Commissions paid 5, , % 1, , % Depreciation 1) 3, , % % Network Interconnection % % Cost of goods sold 1, , % % Others 2, , % % Operating income 1, , % % Operating margin 8.8% 9.0% -0.2%p 6.9% 8.8% -1.9%p Net profit or loss from non-operating items 1) Includes R&D related depreciation 1, % % Income before taxes 3, , % , % Consolidated net income 2, , % % EBITDA 2) 4, , % 1, , % EBITDA margin 27.3% 26.9% 0.4%p 25.4% 27.2% -1.8%p Basic EPS (KRW) 36,582 23, % 8,236 11, % 2) EBITDA = Operating income + Depreciation (including R&D related depreciation) Operating revenues - Annual operating revenues increased by 2.5% YoY as a result of mobile service revenue turnaround and growth at subsidiaries. - Quarterly operating revenues rose by 1.2% QoQ as SK Broadband and other subsidiaries continued to grow. Operating income - Annual operating income posted 0.1% growth YoY as improved earnings from SK Broadband and SK Planet offset the rise in depreciation expense. - Quarterly operating income declined by 20.9% QoQ due to seasonality in operating expenses. EBITDA - Annual EBITDA increased by 3.9% YoY from revenue growth and earnings improvement at major subsidiaries. Net income - Net income rose by 60.1% YoY as equity gains from SK Hynix increased. SK Hynix equity method gains (KRW bn) 17 : 2,175.9, 16:

14 Ⅲ. Appendix Consolidated Summary of Balance Sheet (Consolidated) (KRW bn) Q Q YoY Q QoQ Total assets 33, , % 31, % Current assets 6, , % 6, % Cash and marketable securities 2, , % 2, % Assets - Increased by 6.8% YoY due to growth in the book value of SK Hynix. Non-current assets 27, , % 25, % Investment assets 10, , % 9, % Property & Equipment 10, , % 9, % Intangible assets 5, , % 5, % Shareholders equity - Increased by 11.9% YoY due to growth in net income. Total liabilities 15, , % 14, % Current liabilities 7, , % 6, % Non-current liabilities 8, , % 8, % Total shareholders' equity 18, , % 17, % Interest-bearing financial debt 7, , % 7, % Net debt 5, , % 5, % 13

15 Ⅲ. Appendix Non-Consolidated Operating Revenues (Non-consolidated) (KRW bn) YoY Q Q QoQ Total operating revenue 12, , % 3, , % Mobile service revenue 10, , % 2, , % Interconnection revenue % % Others 1) % % 1) Includes revenues from leased line, fixed-line resale, solutions and other businesses Mobile service revenue - Despite tariff cut pressures, mobile service revenue increased by 0.5% YoY driven by handset subscriber expansion and data usage growth. - Declined by 0.9% QoQ from the effect of selective tariff discount rate hike. (KRW bn) Interconnection revenue - Decreased by 4.8% YoY due to lower interconnection 2, , , , , , , ,716.6 rates and decline of land-to-mobile call volume. - Rose by 4.3% QoQ from larger mobile-to-mobile call Mobile service revenue volume. Other revenue 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 - Increased by 10.8% YoY from rise in IoT solutions business revenue. - Dropped by 9.2% QoQ due to one-time solutions sales in the previous quarter. 14

16 Ⅲ. Appendix Non-Consolidated Marketing expense & CAPEX (KRW bn) YoY Q Q QoQ Marketing expense 1) 3, , % % % of operating revenue 25.0% 23.9% 1.1%p 25.5% 25.3% 0.2%p Capital expenditure 1, , % % % of operating revenue 15.9% 15.9% % 17.6% 13.8%p 1) Marketing expense = marketing related commission + advertising expenses Marketing expense - Increased by 5.6% YoY as a result of handset subscriber acquisition efforts. - Decreased by 0.4% QoQ due to lower marketing commissions. (KRW tn) Marketing expense % to Revenue 28.2% 27.5% 26.7% 25.8% % 23.9% 25.0% CAPEX - Increased by 1.0% YoY due to fulfilling network deployment obligations Network CAPEX Non-Network CAPEX

17 Ⅲ. Appendix Major Subsidiaries Operating Revenue (Non-consolidated) (KRW bn) YoY Q Q QoQ SK Broadband 3, , % % IPTV 1, % % Others 1) 2, , % % SK Planet 2) , % % 1) Others : High speed internet, residential, B2B, others, etc. 2) Excludes revenue from discontinued operations(advertising, etc.) (KRW bn) SK Broadband - Annual operating revenues increased by 3.6% YoY as a result of IPTV subscriber base expansion and higher demand of paid contents. - Quarterly operating revenues rose by 10.1% QoQ as IPTV business continued on its upward trend and other SK Broadband operating revenues IPTV revenue to total revenue(%) SK Planet operating revenues % 27.8% 29.0% 30.4% 32.6% 33.5% 33.6% 34.1% 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 revenues increased from year-end wireline constructions. SK Planet - Although e-commerce business improved throughout 2017, due to business restructuring in 2016*, annual revenues declined by 4.3% YoY. * Spin-off of SK TechX, OneStore, LBS business - Quarterly operating revenues increased by 6.0% QoQ from growth in 11st and OK Cashbag transactions. 16

18 Ⅲ. Appendix Subscribers & ARPU Subscribers 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 YoY QoQ Subscribers ('000) 1) 28,921 29,150 29,451 29,595 29,833 29,993 30,156 30, % 0.1% Net adds % -76.4% Activations 1,552 1,536 1,503 1,504 1,583 1,385 1,462 1, % -4.9% Deactivations 1,257 1,307 1,203 1,360 1,345 1,225 1,299 1, % 4.1% Monthly churn rate 1.5% 1.5% 1.4% 1.5% 1.5% 1.4% 1.4% 1.5% 0.0%p 0.1%p Smartphone Subscribers ('000) 20,985 21,308 21,662 21,877 22,181 22,424 22,735 22, % 1.1% LTE Subscribers ('000) 19,526 20,028 20,545 21,078 21,650 22,071 22,569 22, % 1.3% LTE Penetration 67.5% 68.7% 69.8% 71.2% 72.6% 73.6% 74.8% 75.7% 4.5%p 0.9%p High speed internet ('000) 5,092 5,145 5,181 5,207 5,310 5,344 5,403 5, % 0.7% IPTV ('000) 2) 3,631 3,766 3,878 3,968 4,073 4,170 4,287 4, % 1.9% 1) Includes MVNO connections, excludes other connections such as facility-monitoring lines 2) Revised subscriber count including VoD users effective as of 2Q17 (historical data retroactively changed) ARPU (KRW) 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 YoY QoQ Billing ARPU 1) 35,959 35,764 35,471 35,355 34,927 35,241 35,488 35, % -0.8% ARPU including MVNO 32,611 32,324 32,010 31,788 31,316 31,532 31,649 31, % -1.1% 1) Calculated from SK Telecom mobile service revenue (2G/3G/LTE and IoT) : Includes voice, data, and other revenue (Excludes activation fee and interconnection revenue). Reflects sales discount from contract and bundling, etc. Excludes MVNO related revenue. Calculated from SK Telecom mobile service subscribers (2G/3G/LTE and IoT) : From MSIP subscriber statistics (avg. number of billed connections for the quarter) 17

19 Ⅲ. Appendix Income Statement (Consolidated) (in KRW bn) Q16 2Q16 3Q16 4Q Q17 2Q17 3Q17 4Q Operating revenue 17, , , , , , , , , , ,520.0 Operating expenses 15, , , , , , , , , , ,983.4 Labor cost 1, , ,966.2 Commissions paid 5, , , , , , , , , , ,486.3 Advertising Depreciation 1) 2, , ,247.0 Network interconnection Leased line Frequency usage fees Cost of goods sold 1, , ,886.5 Others 1, , ,657.4 Operating income 1, , ,536.6 EBITDA 4, , , , , , , , , , ,783.6 EBITDA margin 27.4% 27.2% 27.2% 28.0% 25.4% 26.9% 28.4% 28.3% 27.2% 25.4% 27.3% Net profit or loss from non-operating items (42.6) ,866.6 Interest income Interest expenses Profit or loss in other non-operating items ,089.7 Income before tax 2, , , ,403.2 Consolidated net income 1, , ,657.6 Majority interests 1, , ,599.8 Minority interests (2.7) (3.0) (14.2) (15.9) (5.7) (4.4) (2.9) Basic EPS (KRW) 20,988 8,099 3,990 4,604 6,905 23,497 8,344 8,731 11,271 8,236 36,582 1) Includes R&D related deprecation 18

20 Ⅲ. Appendix Income Statement (Non-Consolidated) (in KRW bn) Q16 2Q16 3Q16 4Q Q17 2Q17 3Q17 4Q Operating revenue 12, , , , , , , , , , ,468.0 Operating expenses 10, , , , , , , , , , ,770.3 Labor cost Commissions paid 5, , , , , , , , , , ,864.5 Marketing commissions 2, , ,968.6 Other commissions 2, , ,895.8 Advertising Depreciation 1) 2, , ,503.5 Network interconnection Leased line Frequency usage fees Others 1, , ,708.1 Operating income 1, , ,697.7 EBITDA 3, , , , , , , , , , ,201.2 EBITDA margin 31.4% 32.3% 34.1% 34.2% 33.3% 33.5% 34.1% 34.8% 33.2% 32.6% 33.7% Net profit or loss from non-operating items (189.3) 35.8 (97.8) (71.1) (86.4) (219.4) 50.2 (89.0) (198.6) (93.9) Interest income Interest expenses Profit or loss from other non-operating items (46.4) (18.7) (35.2) (11.3) 91.6 (36.2) (146.2) 98.7 Income before tax 1, , ,603.8 Net income 1, , , ) Includes R&D related deprecation 19

21 Ⅲ. Appendix Balance Sheet (Consolidated) (in KRW bn) 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 Total assets 28, , , , , , , , ,428.7 Current assets 5, , , , , , , , ,201.8 Cash and marketable securities 1) 1, , , , , , , , ,171.5 Accounts receivable 3, , , , , , , , ,386.8 Short-term loans Inventories Other current assets Non-current assets 23, , , , , , , , ,226.9 Property & equipment 10, , , , , , , , ,144.9 Intangible assets 4, , , , , , , , ,502.0 Investment assets 8, , , , , , , , ,426.7 Other non-current assets ,153.3 Total liabilities 13, , , , , , , , ,399.5 Current liabilities 5, , , , , , , , ,109.1 Short-term borrowings Accounts payable 1, , , , , , , , ,438.3 Current portion of long-term debt , , , , , ,833.7 Other current liabilities 2, , , , , , , , ,707.2 Non-current liabilities 7, , , , , , , , ,290.4 Bonds payable & long-term borrowings 6, , , , , , , , ,808.1 Long-term payables - other , , , , , ,346.8 Post-employment benefit obligation Other non-current liabilities ,073.6 Total shareholders' equity 15, , , , , , , , ,029.2 Capital stock Capital surplus 3, , , , , , , , ,306.0 Retained earnings 15, , , , , , , , ,835.9 Capital adjustments (3,130.0) (3,118.3) (3,133.0) (3,122.3) (3,114.6) (3,122.6) (3,122.5) (3,117.9) (3,109.7) Other comprehensive income/loss 2) 9.3 (180.5) (232.4) (328.7) (226.2) (324.4) (176.6) (144.0) (234.7) Minority interests ) Cash & marketable securities includes cash & cash equivalent, marketable securities & short-term financial instruments 2) Other comprehensive income/loss include gains or losses on valuation of investment securities and derivatives 20

22 Ⅲ. Appendix Balance Sheet (Non-Consolidated) (in KRW bn) 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 Total assets 23, , , , , , , , ,557.5 Current assets 2, , , , , , , , ,768.1 Cash and marketable securities 1) , , , Accounts receivable 1, , , , , , , , ,523.7 Short-term loans Inventories Other current assets Non-current assets 20, , , , , , , , ,789.4 Property & equipment 7, , , , , , , , ,923.1 Intangible assets 3, , , , , , , , ,395.8 Investment assets 9, , , , , , , , ,877.3 Other non-current assets Total liabilities 9, , , , , , , , ,550.1 Current liabilities 3, , , , , , , , ,767.4 Short-term borrowings Accounts payable 1, , , , , , , , ,867.0 Current portion of long-term debt , , , ,432.8 Other current liabilities 1, , , , , , , , ,467.6 Non-current liabilities 5, , , , , , , , ,782.7 Bonds payable & long-term borrowings 5, , , , , , , , ,377.3 Long-term payables , , , , , ,328.6 Post-employment benefit obligation Other non-current liabilities Total shareholders' equity 13, , , , , , , , ,007.4 Capital stock Capital surplus 3, , , , , , , , ,357.8 Retained earnings 13, , , , , , , , , ) Cash Capital & marketable adjustments securities includes cash & cash equivalent, (2,988.4) marketable (2,988.4) securities & short-term (2,986.3) financial (2,986.3) instruments (2,986.3) (2,986.3) (2,986.2) (2,986.1) (2,985.9) 2) Other comprehensive income/loss include gains or losses (53.2) on valuation of (17.7) investment securities (45.3) and derivatives(4.0) (61.8) (26.2)