SK Telecom, Last Hurdle Was Q4 Last Year [Click e-Stock]

Impact of One-Off Expenses Reflected... Earnings Recovery Expected This Year
Anthropic Stake Value Rises as IPO Preparations Begin

SK Telecom's fourth-quarter earnings last year are expected to fall significantly short of market expectations (consensus), indicating weak performance. This is due to the costs of customer appreciation packages and one-off expenses related to voluntary retirement. However, earnings are expected to begin recovering starting this year.

On January 14, Yuanta Securities maintained its target price for SK Telecom at 71,000 won and its "Buy" investment rating, citing these factors. The previous day's closing price was 54,300 won.

The consolidated results for the fourth quarter of last year are estimated at 4.353 trillion won in revenue and 84.4 billion won in operating profit. Compared to the same period last year, revenue decreased by 3.5% and operating profit dropped by 66.8%. The company expects operating profit to fall far short of the consensus estimate of 184.1 billion won.

The underperformance in operating profit is attributed to the customer appreciation package costs incurred through the end of last year, as well as one-off personnel expenses related to voluntary retirement at both SK Telecom and SK Broadband. On a separate basis, operating profit is expected to be 88.9 billion won, down 50.4% year-on-year. This is because, in addition to revenue deduction items such as membership discounts, voluntary retirement expenses are expected to exceed 110 billion won, as they did in the same period last year. Considering annual controlling net income and the total dividend paid in the first half, it is expected that no dividend will be paid for the fourth quarter.

Performance is expected to recover starting this year. The dividend per share is also projected to recover to 3,540 won, the same level as in 2024. The expected consolidated results for this year are 17.791 trillion won in revenue and 1.971 trillion won in operating profit. The effects of a low base due to last year's hacking controversy and the improvement in personnel cost structure through workforce adjustments (a combined 5.6% reduction at SKT and SKB) are expected to become more pronounced. The recovery of wireless subscribers, aided by KT's waiver of cancellation fees, is also expected to contribute to improved results. Yuanta Securities estimates that SK Telecom will see a net inflow of about 160,000 subscribers in the first quarter of this year alone.

The value of SK Telecom's stake in Anthropic, an artificial intelligence (AI) startup it invested in during 2023, is estimated to have risen from $100 million (about 130 billion won) to $1.75 billion (about 2.5874 trillion won). Anthropic is currently seeking to raise $10 billion at a valuation of $350 billion. The company has also selected a legal advisor and begun preparations for an initial public offering (IPO). SK Telecom's stake is currently estimated to be around 0.5%. Lee Seungwoong, a researcher at Yuanta Securities, explained, "Given the revaluation of the Anthropic investment stake and the attractiveness of dividends due to normalized earnings this year, the current share price is undervalued and appealing."