SK Telecom, South Korea's top mobile carrier, reported a sharper-than-expected 76% fall in quarterly net profit as marketing costs to attract users for new services wiped out revenue growth, a Reuters report said.
The Reuters report said losses at its affiliates such as US wireless joint venture Helio and mobile TV company TU Media also hit its results.
SK is battling with No. 2 operator KTF over more profitable 3G mobile services, such as video calls and wireless internet, the report said.
3G-linked investment and marketing costs may fall in the coming quarters, while SK could benefit from a broader range of services once it finalises a deal to take control of hanarotelecom, the country's No. 2 broadband company, analysts said.
The Reuters report further said SK, which controls 50.5% of the country's mobile market, posted 66.05 billion won ($65 million) in net profit in the quarter to December 31, well below an average forecast of a 259.6 billion won ($258 million) profit from Reuters Estimates.
The earnings shrank from a 279.3 billion won ($279 million) profit a year earlier and 776.8 billion won earned in July-September, when the company booked a one-off gain related to its acquisition of a stake in China Unicom, the Reuters report further said.
Revenue reached 2.92 trillion won ($2.7 billion), up 6% from a year earlier and above a consensus forecast of 2.89 trillion won ($2.8 billion).
SK had 21.97 million subscribers at the end of December, up 8.4% from a year earlier, a strong increase in a country where almost 90% of population has a mobile phone.
But the growth was weighed down by a 34% jump in marketing costs, which totalled 854 billion won ($853 million) in the fourth quarter. For all of 2007, marketing costs were equal to 25.3% of the company's revenue.