[Click e-Stock] "SK Telecom's Excessive Market Share Decline Will Be Limited"

On June 12, Korea Investment & Securities analyzed that SK Telecom is unlikely to experience an excessive decline in market share due to the recent information leak.

According to the Ministry of Science and ICT, SK Telecom recorded a net outflow of 520,000 subscribers in April and May (110,000 in April and 410,000 in May). During the same period, KT saw a net inflow of 230,000 subscribers, LG Uplus 180,000, and MVNOs 100,000.

As a result, SK Telecom's market share appears certain to fall into the 39% range. As of March, the handset market shares of the three major telecom operators were: SK Telecom 40.4%, KT 23.4%, LG Uplus 19.2%, and MVNOs 17.1%.

Kim Jungchan, a researcher at Korea Investment & Securities, stated, "Reflecting the subscriber outflow to date, we estimate the decrease in wireless service revenue from May to December will be 146 billion won (1.4% of 2024 wireless service revenue), assuming an average revenue per user (ARPU) of 35,000 won." He added, "Although profit visibility is low due to cost uncertainties, the situation should remain manageable."

Kim also believes that SK Telecom's market share decline will be limited. He explained, "This is because the smooth supply and replacement of USIM cards will justify the resumption of new subscriptions, and checks and balances among operators are necessary to ensure a soft landing for the abolition of the Device Distribution Act (to prevent excessive competition in subsidies)."

He further stated, "Once new subscriptions resume, the market's focus will shift to subsidy competition following the abolition of the Device Distribution Act on July 22. Going forward, subsidy policies will play a bigger role than the information leak in influencing subscribers' decisions to switch carriers."

The 'Buy' investment rating and the target price of 70,000 won for SK Telecom were maintained.

Kim commented, "After declining since April 22, the share price rebounded from a low of 50,700 won (dividend yield 7%). If there are no additional negative factors, the stock price is expected to recover over time."