[Click eStock] SKT Reports Strong 4Q Performance in Both Core Business and Subsidiaries

Not Only Mobile Carriers but Also Media and Commerce Are Growing Smoothly

[Asia Economy Reporter Minwoo Lee] SK Telecom is estimated to have maintained steady growth in the fourth quarter of last year. Both its core business and subsidiaries performed well, resulting in favorable earnings.

On the 15th, DB Financial Investment forecasted that SK Telecom would record consolidated sales of 4.7747 trillion KRW and operating profit of 249.8 billion KRW in the fourth quarter of last year. This represents an increase of approximately 8.3% and 7% respectively compared to the same period last year. These figures align with market consensus estimates of 4.7671 trillion KRW in sales and 260 billion KRW in operating profit.

Both the core business and subsidiaries were evaluated as strong. It is estimated that about 1.2 million 5G subscribers were added in the fourth quarter alone, driven by year-end demand and the iPhone 12 effect. Accordingly, mobile phone sales are expected to grow 4.8% year-on-year to 2.524 trillion KRW.

The subsidiaries’ performance is also expected to be solid. Media sales are projected to reach 970 billion KRW, an 18.2% increase year-on-year, due to the merger effect with TBroad and continuous growth in IPTV. Commerce is estimated to have grown about 10% year-on-year in annual transaction volume, supported by the '11th November' event and the recent favorable e-commerce market conditions.

However, due to anticipated large impairment losses on 28 gigahertz (GHz) frequency assets reflected in non-operating expenses across all three telecom companies, SK Telecom’s net income attributable to controlling interests is expected to be 48.9 billion KRW. This marks a return to profitability compared to the same period last year and an 87.4% increase from the previous quarter. Stable growth in the mobile network business and improved subsidiary performance are expected this year as well, with estimated sales of 19.638 trillion KRW and operating profit of 1.477 trillion KRW. These figures represent increases of 5.8% in sales and 16.1% in operating profit compared to last year’s estimates.

Against this backdrop, DB Financial Investment maintained a 'Buy' investment rating on SK Telecom and raised the target price by 16.7% from 300,000 KRW to 350,000 KRW. The closing price on the previous day was 255,500 KRW. Shin Eun-jung, a researcher at DB Financial Investment, explained, "Starting with the One Store IPO this year, the value of subsidiaries will be reflected in the stock price, and if SK Hynix dividends are included in dividend calculations, there is a high possibility of increased dividends starting from the interim dividend this year. The recently highlighted issue of transitioning to a holding company is also likely to materialize this year."