"SK Telecom, 5G Subscriber Growth and Subsidiary Enterprise Value Reassessment Expected"

Cape Investment & Securities Report

[Asia Economy Reporter Minji Lee] SK Telecom is expected to see its stock price follow an upward curve next year due to an increase in new 5G subscribers and a rise in the corporate value of its subsidiaries. Accordingly, on the 28th, Cape Investment & Securities issued a buy rating and a target price of 300,000 KRW for SK Telecom.

Kim Inpil, a researcher at Cape Investment & Securities, said, "With the expanded distribution of 5G, an increase in wireless ARPU and stabilization of marketing costs are expected to lead to profit recovery. The rising contribution of non-telecom subsidiaries' performance, the physical division of the mobility business unit, and the planned listing of One Store in the second half of next year are likely to lead to a revaluation of corporate value."

Despite a decrease in revenue due to the termination of 2G services from July, the Mobile Network Operator (MNO) segment showed slight growth compared to the previous year thanks to the expanded distribution of 5G services. The 5G new subscriber market share (48.8%) was higher than the third quarter market share (46.9%). Researcher Kim Inpil explained, "Marketing cost competition across the telecommunications industry is stabilizing. We expect structural profit growth to continue next year due to an increase in ARPU and limited growth in marketing costs."

In the commerce segment, 11st achieved both sales growth and operating profit profitability for the first time in the third quarter of this year. The profitability-focused strategy was effective, and next year there is potential for profit growth and an IPO momentum. On the 13th, a strategic partnership was signed with Amazon, and an investment of approximately 50 billion to 300 billion KRW is expected through convertible preferred shares (CPS). Researcher Kim said, "11st is expected to expand its influence in the e-commerce market in the future. One Store is aiming for an IPO in the second half of next year, and it is expected to receive a higher valuation at that time."

The media segment has achieved economies of scale through the merger of SKB and T-broad. Third-quarter sales and operating profit grew by approximately 20.3% and 78.8%, respectively, compared to the same period last year. The expansion of market share through mergers and acquisitions is expected to strengthen commission negotiation power and increase home shopping-related sales. In the security segment, a solid net increase in subscribers to dispatch security and home security services continues, and the trend toward unmanned parking lots and stores is expected to increase medium- to long-term demand for these services.

The mobility segment has announced a physical division, with the new company expected to be named T map Mobility (tentative). A car-sharing company has invested approximately 150 million USD. T map Mobility's revenue was 29.5 billion KRW last year and is estimated to have reached 40 billion KRW this year. Researcher Kim Inpil said, "Based on the users of T map, the number one navigation app, the company is expected to plan expansion into platform businesses such as taxi calling, parking, and insurance-linked products."