[Click eStock] 5G Deployment 6 Months Slower Than Expected... SKT Target Price Cut by 26%

5G Subscribers Increased by Only 290,000 in January... Lowest Since May Last Year
Galaxy S20 Sales Also 20-30% Lower Than Previous Model

On the 26th, an employee working at SK Telecom T Tower in Euljiro, Seoul tested positive in the first COVID-19 screening. SK Telecom plans to restrict access to the building and conduct disinfection until the 28th. The photo shows T Tower on that day. Photo by Moon Honam munonam@

[Asia Economy Reporter Minwoo Lee] As the expansion speed of the 5G market slows down by more than six months compared to expectations, SK Telecom's concerns are growing. The securities industry has lowered SK Telecom's target stock price by 26%.

On the 24th, Hyundai Motor Securities lowered SK Telecom's target stock price from 310,000 KRW to 230,000 KRW, a 26.3% decrease. This is based on the expectation that 5G adoption will be delayed by more than six months, causing setbacks in performance. The closing price the previous day was 165,500 KRW.

Hyundai Motor Securities analyst Hyunyong Kim explained, "As of the end of January, when the impact of the novel coronavirus disease (COVID-19) was virtually nonexistent, the number of 5G market subscribers was below 5 million," adding, "The net increase in January was 290,000, marking the lowest since May last year, and the net increase in February, which was directly hit by COVID-19, is expected to be even lower." This is why the previous forecast, which anticipated reaching a 10% market penetration rate in the first quarter and a clear improvement in average revenue per user (ARPU) from the second quarter, has been revised.

Within the industry, it is understood that Samsung Electronics' Galaxy S20, the first ambitious product in the 5G device market this year, has seen sales decrease by about 20-30% compared to its predecessor. Accordingly, the performance improvement pattern, which was expected to be low in the first half and high in the second half, is analyzed to be delayed by at least one quarter. Hyundai Motor Securities expects SK Telecom to record sales of 4.595 trillion KRW and an operating profit of 287 billion KRW in the first quarter of this year. Compared to the same period last year, sales are expected to decrease by 13% and operating profit by 5%.

Analyst Kim said, "The effect of increased 5G penetration due to restrained marketing costs and supply expansion will be completely offset, and the contraction in the top line will directly cause the decline in performance," adding, "However, since the current dividend yield is up to 6.0%, there will be some downside rigidity, but the timing of a stock price rebound will be linked to the effective end of COVID-19."

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