As 5G Subscribers Increase, Telecom Stocks Show 'V' Shaped Rebound

SKT, KT, LGU+ Stock Prices Rise... 5G Subscriber Growth Driven by Samsung Electronics New Product Launch Effects

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[Asia Economy Reporter Geum Bo-ryeong] Telecom stocks are showing a 'V'-shaped rebound, driven by the increase in 5th generation (5G) mobile communication service subscribers.

According to the Korea Exchange on the 7th, the leading telecom stock SK Telecom recorded a closing price of 206,500 KRW the previous day. Compared to 228,500 KRW on February 13 and 165,500 KRW on March 23, this represents a V-shaped rebound. During the same period, KT showed a similar pattern, moving from 25,200 KRW to 17,650 KRW, then to 23,500 KRW, and LG Uplus from 14,400 KRW to 9,470 KRW, then to 12,700 KRW. Notably, while the KOSPI index rose only 11% compared to March, the combined market capitalization of the three telecom companies increased by 20.4%, outperforming the market return.

The biggest factor influencing the stock prices was the net increase in 5G subscribers. According to SK Securities, the net increase in 5G subscribers in February was 402,000, marking a rebound after six months. In March, the subscriber increase trend continued with 520,000 new subscribers. This is attributed to the combined effects of the Samsung Electronics Galaxy S20 launch and the price reduction of the Galaxy S10.

Although the first-quarter earnings of telecom stocks inevitably declined compared to the previous year, it is analyzed that this will not significantly affect stock prices. SK Telecom announced on the same day that its consolidated operating profit for the first quarter of this year was 302 billion KRW, down 6.37% year-on-year. Choi Gwan-soon, a researcher at SK Securities, said, "Despite the decrease in telecom stocks' operating profit compared to the same period last year, the impact on stock prices is expected to be limited," adding, "Unlike other industries where earnings revisions are inevitable due to the global spread of COVID-19 becoming full-scale in the second quarter, telecom stocks are expected to maintain stable earnings, and their relative investment attractiveness is likely to continue beyond this month."

There is still momentum remaining in telecom stocks. In the case of SK Telecom, on the 30th of last month, SK Broadband and T-Broad completed their merger, securing 8.21 million paid broadcasting subscribers and 6.48 million high-speed internet subscribers. This is expected to generate synergies through economies of scale, the launch of bundled products in partnership with SK Telecom's over-the-top (OTT) service Wave, and strengthening of bundled offerings. LG Uplus also shows a high possibility of a turnaround in average revenue per user (ARPU) for mobile subscribers in the first quarter compared to the same period last year, with the full effect of 5G expected to appear in the second half of the year.

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