[Click eStock] SKT Accelerates 탈통신 with Share Buyback Amid 'Wave' Smooth Sailing

OTT Platform Wavve Smooth Sailing... 500 Billion KRW Buyback of Treasury Shares in 5 Years
"Smooth Progress in Diversifying Revenue Sources Beyond Telecom and Pay TV"

[Asia Economy Reporter Minwoo Lee] An analysis suggests that SK Telecom is experiencing positive factors such as share buybacks and the smooth operation of its content platform 'Wavve.'

On the 31st, Ebest Investment & Securities maintained a 'Buy' rating and a target price of 310,000 KRW for SK Telecom. The previous trading day's closing price was 242,500 KRW.

The share buyback, conducted for the first time in five years, is expected to be a positive factor. On the 28th, SK Telecom announced the signing of a trust contract for a share buyback worth 500 billion KRW to enhance shareholder value. Although the exact number of shares to be purchased is undecided, applying the recent average closing price suggests about 2 million shares (2.48%). After acquisition, SK Telecom's treasury stock holding ratio is projected to be 11.90%. This is the first share acquisition since September 2015, interpreted as a strong commitment to boosting the stock price at the current market capitalization level of approximately 20 trillion KRW.

Furthermore, it is analyzed that SK Telecom will accelerate its 탈 (?) telecommunications strategy. There is an interpretation that this share buyback could be used to strengthen stakes in existing related businesses or for new business partnerships. Hyunyong Kim, a researcher at Ebest Investment & Securities, explained, "Looking at SK Telecom's share acquisition and disposal history over the past five years, treasury stocks were used not merely as a means to boost stock prices but strategically for equity swaps for alliances or changes in the governance structure, including making affiliates wholly owned subsidiaries."

Over the past five years, SK Telecom has bought back shares once and disposed of shares three times. Of the disposals, two were used for governance restructuring, and the remaining one was conducted as a strategic equity alliance with Kakao. Through this, SK Broadband and SK Infosec were incorporated as wholly owned subsidiaries, strengthening their business structures in the paid broadcasting and security solution sectors, respectively. SK Broadband, leveraging its wholly owned subsidiary status, maintains an absolute stake of 74% even after the cable merger. Regarding future considerations for an initial public offering (IPO), there is inevitably no issue with the stake ratio. In Kakao's case, the purchase amount for Kakao shares swapped with treasury stocks in November last year was 300 billion KRW (138,000 KRW per share). Kakao's previous trading day's closing price was 405,500 KRW, increasing the value of SK Telecom's shares to 882.9 billion KRW, a 194% increase.

Content Wave, where SK Telecom is the largest shareholder, is also progressing smoothly. The online video service (OTT) 'Wavve,' operated by Content Wave, attracted 2 million paid subscribers as of the end of the first half of the year. It plans to invest up to 8 original productions and more than 60 billion KRW in original content this year. The recently premiered 'Alice' started with an average viewership rating of 8%. Around the time paid subscribers reach 2.5 million, the company's stake in Content Wave is expected to increase by 5 percentage points through the exercise of call options. The first call option exercise is expected within this year.

Researcher Kim explained, "While the cash cows of mobile phones and paid broadcasting are functioning properly, under a favorable environment of high growth in media and content centered on Wavve (video) and Flo (music), the company's stake expansion has come into sight. Commerce and security sectors are also judged to have entered a stable profit contribution phase."

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