[Click eStock] "SK Telecom Hits New Low on Earnings Shock... 5G Marketing Costs Weigh Down"

[Asia Economy Reporter Park Jihwan] Ebest Investment & Securities stated on the 10th that SK Telecom recorded an earnings shock despite strong non-telecom performance due to a sharp increase in 5G marketing expenses. The investment opinion remains 'Buy,' but the target price has been lowered by 11% from 350,000 KRW to 310,000 KRW.

Hyunyong Kim, a researcher at Ebest Investment & Securities, explained, "The target price downgrade reflects the earnings shock and the downward revision of earnings forecasts." He evaluated, "It is expected to be difficult to escape the value discount status until each business is corporatized purely through governance changes, including the split."

Researcher Kim analyzed, "In the fourth quarter, operating revenue increased by 1.4% year-on-year to 4.4106 trillion KRW, while operating profit decreased by 27.9% to 162.5 billion KRW, recording an earnings shock that fell short of consensus by more than 30%." He added that although mobile phone sales increased by 3.2%, and in addition to external growth, the non-telecom subsidiaries recorded profit growth in the 30 billion KRW range, the earnings shock was caused by a sharp increase in marketing expenses to defend 5G market share.

The proactive response to the maturity of the paid television broadcasting industry through the internet-based TV service 'OTT' was viewed positively.

Researcher Kim emphasized, "Compared to competitors, the most aggressive commercialization of the alternative platform WAVVE OTT is positive," adding, "At the end of last year, WAVVE's paid subscribers were estimated at 1.7 million, forming a duopoly along with Netflix's 2.3 million subscribers."

This content was produced with the assistance of AI translation services.