South Korea’s No.1 mobile carrier SK Telecom’s operating profit tumbled around 10 percent last year due to soaring costs amid a sluggish growth in the telecommunication industry, according to its corporate earnings announcement on Friday.

SKT reached 17.09 trillion won ($14.9 billion) in revenue on a consolidated basis in 2016 and 1.54 trillion won in operating profit. While the revenue slipped 0.3 percent on-year, the profit slid 10.1 percent, reflecting a rise in depreciation expenses incurred by its purchase of new spectrum blocks in May. The overall costs spiked as its subsidiary SK Planet expanded its business. 

The total net income, however, stood at 1.66 trillion won, achieving a 0.5 percent on-year growth, largely due to the sale of SK Planet’s stake in Loen Entertainment in the first quarter.

Despite the downside factors, SKT’s mobile network operation business sustained its steady performance backed by the growth of its LTE subscribers and mobile data usage per user, the company said.

As of the end of 2016, the number of LTE subscribers marked 21.08 million, representing an 11.1 percent on-year growth and taking up over 70 percent of the company’s total mobile subscriber base. The company’s total number of mobile subscribers also grew 3.4 percent to 29.6 million.

As a result, the mobile business made a turnaround in the fourth quarter with a 0.4 percent rise in quarterly sales, for the first time since the same quarter of 2015.

SKT has also achieved some meaningful growth in its new business areas, the company said, citing its mobile navigation ‘T Map’ and dialer platform ‘T Phone,’ it said.

It also sold over 40,000 units of NUGU, the first-ever artificial intelligence-based assistance service device in the last five months.

The telecom unit alone posted an operating profit of 1.78 trillion won, a 7.4 percent growth compared to 2015.

This year, SKT plans to focus major efforts on expanding the new IoT and AI businesses, as its CEO Park Jung-ho has vowed.

The company plans to seek new growth by converging AI and commerce, expanding use of AI platforms across various industries.

“The year 2016 was a year when we continued to make progress in the mobile telecommunications business, while thoroughly preparing ourselves for the future,” said Ryu Young-sang, chief financial officer of SKT.

“In 2017, we will not only strengthen our competitiveness in the area of mobile telecommunications, but will also generate tangible results in the field of new ICT.”

By Song Su-hyun (song@heraldcorp.com)