SKT Spins Off Platform Unit

SK Telecom plans to restructure itself by
dividing business and platform divisions

SK Telecom announced a plan on May 31 to separate its platform division and make it an independent subsidiary under a two-tiered restructuring of its portfolio. The creation of a platform subsidiary calls for autonomous, responsible management according to the characteristics of each telecom and platform business arena. The mobile network (MNO) and platform business divisions are expected to adopt more aggressive management strategies in an era of mobile internet by strengthening its capabilities and corporate culture, SK Telecom officials said.
SK Telecom has made diverse efforts to optimize its decision-making process, create corporate culture and introduce a company-in-company (CIC) system, unlike the conventional telecom business arena.
But the introduction of the CIC system failed to meet its inherently nature and corporate culture of the platform business area and SK Telecom suffered difficulties in implementing the tasks of the platform business area - expanding its clientele to non-SK Telecom customers and its overseas business environs.
The platform subsidiary plans to initiate innovative services by moving one step ahead of others to meet customers demands and market trends through a swift decision-making process. It plans to build a corporate culture in which creative innovations can be made through changes and challenges by allowing a free operation system and trial and error rather short-term profit-taking.
SK Telecom denied reports that it would establish a telecom holding company and consolidate SK Broadband.
An action plan to flesh out the platform subsidiary proposal will be determined later, the company officials said.
SKT's T Store Makes Inroads into China and Japan
T Store content and applications to be sold via a shop-in-shop within Mobile Market, China Mobile's application marketplace
SK Telecom announced today that it will provide T Store's content and applications to be sold via a shop-in-shop within Mobile Market, which is the application store of China Mobile Communication Group, Guangdong Co. Ltd. (China Mobile), the world's largest mobile carrier. The company also unveiled plans to enter the Japanese market with T Store and to open a Global Distribution Center (GDC) to actively help developers enter overseas markets. GDC will provide assistance in localizing and optimizing T Store's high-quality mobile applications and content as well as handling registration and settlement for developers, thereby accelerating the pace of globalization of the T Store platform.
Aggressively entering the massive Greater China market, creating valuable opportunities for Korean developers?
SK Telecom has successfully entered the Greater China mobile content market by partnering with Lenovo, China's leading PC and handset manufacturer, and Tencent QQ, the largest portal in terms of revenues with 500 million users, in November 2010, and East Power, a Taiwanese leading mobile device supplier, in February 2011. Now, with the launch of a shop-in-shop in China Mobile's Mobile Market, SK Telecom will be able to provide well-made Korean content and applications to China Mobile's 600 million customers.
SK Telecom and China Mobile recently signed an MOU to cooperate in promoting mobile content exchanges and building an ecosystem. The signing ceremony was attended by senior executives of both companies including Lee Joo-sik, SK Telecom's executive vice president and head of the New Business Division, and Qiu Wen Hui, deputy general manager of China Mobile Guangdong. Under the MOU, SK Telecom will provide its high quality T Store content and applications to China Mobile customers from July 2011.
With smartphone sales expected to reach 100 million units in China this year, the partnership with China Mobile, the company that dominates 70 percent of the Chinese mobile telecommunications market, is expected to create valuable opportunities for application developers in Korea.
SK Telecom also said it will promote further discussions with China Mobile to provide mobile advertising services and enable the distribution of massive amount of applications by operating a separate server for T Store.
Advancing into the Japanese market by opening a localized version of T Store
SK Telecom also announced plans to establish its presence in the Japanese market by launching a localized version of T Store -- tentatively named J Store - in September. Content, applications and user interface (UI) will be localized and optimized to meet the needs and preferences of Japanese customers.
SK Telecom is actively developing J Store and plans to start selling applications to customers of many different mobile carriers in September. To this end, the company is in talks with Japanese handset and content distributors on issues regarding the application store's marketing and operation as well as the creation of an ecosystem.
T Store's entry into the Japanese market is attributable to the determination of SK Telecom to actively utilize its know-how accumulated through its establishment of an application ecosystem centered around the Android OS as well as the openness of the Android OS.
Android OS enables the establishment of an independent application store by simply downloading an application to smartphones without having to go through a local mobile carrier. SK Telecom plans to introduce J Store as an independent application store and attract Japanese customers with rich Korean content and applications.
Opening Global Distribution Center to help developers enter overseas markets
SK Telecom has been thoroughly preparing for overseas expansion of the T Store platform based on the localization strategy. In the same vein, the company unveiled plans to establish the GDC next month to help developers enter and succeed in overseas markets by resolving their main obstacles and difficulties including language differences, copyright infringement and an unclear settlement system.
Although SK Telecom has already been offering translation and settlement services for developers, the company decided to open GDC to meet growing needs for a more professional and comprehensive service, which was driven by the accelerated pace of export of the T Store platform.
GDC's broad range of services include localizing and changing developers'content and applications to suit the handset environment; providing analysis of the target market; and designing marketing tools tailored to each market or customer segment. Furthermore, it will provide support in operation - e.g.; registration and management of applications in the application market, customer complaints, etc., - thereby providing one-stop service in technology, marketing and operation.
Making all-out efforts to build a total mobile ecosystem in Asia
SK Telecom will focus on expanding the market for high-quality content/application development and distribution by maximizing the synergies of the T Store platform that has been exported to China, Japan and Taiwan and create a total, seamless ecosystem. Under this total ecosystem, developers can distribute their applications in all four countries, thereby allowing customers to enjoy greater choice. In addition, SK Telecom's future plans include operating support programs for developers in these countries like the T Academy.
Executive Vice President Lee said, SK Telecom's partnership with China Mobile will serve as an opportunity to accelerate the global expansion of the T Store platform. SK Telecom will continue to make multifaceted efforts to enlarge the T Store's mobile ecosystem so that Korean developers can successfully make inroads into the global market. SK Telecom's 2011 1Q Earnings Results
SK Telecom announced its earnings for the first quarter of 2011: Revenue of 3.132 trillion won, operating income of 598 billion won and net income of 560.7 billion won.
Revenue grew 2.7 percent year-on-year (YoY) backed by growth in smartphone subscribers, but dropped 2.5 percent quarter-on-quarter (QoQ) due to fewer business days in the current quarter.
Operating income climbed 16.0 percent YoY and 8.6 percent QoQ, helped by increased revenues and decreased marketing expenses as the company made aggressive efforts to stabilize the market. Net income jumped 35.7 percent YoY and 0.5 percent QoQ due to a one-time profit of 152.5 billion won on the sale of its stake in SK C&C.
Marketing expenses went down 7.0 percent YoY, but up 5.7 percent QoQ to stand at 785.4 billion won, accounting for 25.1 percent of Q1 revenues. However, based on the government' marketing cost calculation method, marketing expenses took up 23.8 percent of Q1 revenue.?
SK Telecom secured 6 million smartphone subscribers as of May 4 and expects to exceed its 10 million smartphone subscriber target by yearend by releasing both high-end and affordable smartphones.
The company raised 2011 CAPEX guidance from 2 trillion won to 2.3 trillion won to invest in the 3G network and LTE so as to further strengthen its network competitiveness and expand its network capacity.
According to the consolidated financial statement that factor the company's subsidiaries into its aggregated accounting figure, SK Telecom recorded 3.909 trillion won in revenue, 614.3 billion won in operating profit and 537.3 billion won in net income.
SK Telecom's CFO Ahn Seung-Yun said, SK Telecom continues to maintain its leadership position in the mobile internet market by launching Korea's first LTE network trial in April and further strengthens its competitive edge in quality and service. SK Telecom will constantly identify and promote high-potential business opportunities while focusing on its existing growth engines like commerce and T Store. nw

SK Telecom's headquarters in Euljiro, downtown Seoul.

Lee Ju-sik, chief of SK Telecom's service platform division, shakes hands with his Quangdong China Mobile Oiu Wen Hui after signing an MOU on mobile content.

Photos on Courtesy of SKT

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