The First Half of the Year Telecom Equipment Investment Report Card... SKT and KT Diverge

Comparing the Scale of CAPEX Investment in the First Half of the Year

The three major mobile carriers

[Asia Economy Reporter Cha Min-young] While KT significantly increased its capital expenditure (CAPEX) investment for 5G infrastructure advancement in the first half of this year, SK Telecom maintained its investment at the previous year's level.

According to the telecommunications industry on the 11th, SK Telecom, combined with SK Broadband, invested approximately 1.085 trillion KRW in wired and wireless infrastructure during the first half of this year, a 1.4% increase compared to the previous year. During the same period, KT invested 1.4022 trillion KRW, up 62.3% year-on-year, and LG Uplus invested 973 billion KRW, up 12.7%.

Although CAPEX spending typically concentrates at the end of the year, as this is the fourth year since the commercialization of 5G services, there is a strong call to proactively advance 5G infrastructure. The government has also urged proactive expansion of 5G rural network investments. On the 11th of last month, Minister Lee Jong-ho of the Ministry of Science and ICT met with the CEOs of the three major telecom companies to discuss expanding 5G coverage and improving quality, emphasizing the need for investment in 28GHz base stations.

From a corporate perspective, capital investment costs are a significant burden. There are forecasts that the burden of capital investment will increase from the second half of this year, potentially becoming an obstacle to performance. According to the Ministry of Science and ICT, as of the end of April, the compliance rate for the mandatory construction of 28GHz base stations by the three major telecom companies was only 11.2%. At the time of 5G frequency allocation, the three companies were each obligated to build 15,000 stations, totaling 45,000 stations, but they have barely exceeded the 10% threshold that would lead to frequency allocation cancellation.

An industry insider explained, "From a corporate standpoint, it is best to execute capital investments as efficiently as possible, and the CAPEX aspect is the biggest concern for investors," adding, "When wireless communication standards transition from 4G to 5G, and from 5G to 6G, there is a pattern where investments initially increase sharply but decrease over the mid-term."