Even as KT and LGU+ Stall, SKT Remains Strong... Upward Trend Driven by Non-Telecom Growth

Sharp Growth in Non-Communication Business Sector... Year-End Dividend Expectations Rise
KT 'Quiet', LGU+ 'Frowning'... Decline Since May Due to Huawei Risks and Others

The three major mobile carriers

[Asia Economy Reporter Minwoo Lee] The stock prices of the three major telecom companies are showing mixed trends. While KT and LG Uplus are struggling to gain upward momentum, SK Telecom is standing out by pushing ahead alone. Analysts attribute this to growing expectations for growth as SK Telecom is considered a high-dividend stock ahead of year-end and its non-telecom businesses are also performing well.

According to the Korea Exchange on the 15th, SK Telecom closed at 24,900 KRW, up 0.81% from the previous trading day. This marks a second consecutive day of gains following a 3.78% rise the day before. During the session, it even reached a new annual high of 251,500 KRW. Although it showed some hesitation after hitting 250,000 KRW early in the session, it has generally maintained a steady upward trend since early last month. On the same day, LG Uplus closed down 0.84% at 11,800 KRW. Since reaching 14,250 KRW in May, it has mostly been on a downward path, failing to break above or below around 12,000 KRW. Meanwhile, KT closed slightly down by 0.20% the previous day.

Although the core telecom business is seeing steady growth in 5G subscribers, growth expectations remain low due to various policy risks. Analysts say SK Telecom’s growth in non-telecom businesses has differentiated it from other telecom stocks. This was already proven in the third-quarter earnings. Wireless segment revenue remained flat year-on-year at 2.497 trillion KRW, while media business revenue increased by 20.3% to 966.8 billion KRW during the same period. Commerce and security businesses also saw revenue growth of 18.7% and 15.5% year-on-year, respectively. Jang Minjun, a researcher at Kiwoom Securities, explained, “Considering SK Telecom’s overall operating profit increased by 20% year-on-year to 361.5 billion KRW, the contribution of media, security, and e-commerce to operating profit is significant,” adding, “This should be interpreted as the emergence of another growth driver leading earnings growth.”

Year-end dividend expectations also influenced investor sentiment. The dividend per share is estimated to be between 10,000 and 11,000 KRW. According to FnGuide, a financial information provider, as of the 10th, SK Telecom ranked 25th among 232 KOSPI and KOSDAQ listed companies with dividend yield estimates from three or more securities firms, at 4.20%. Dividend yields above 3% are generally classified as “high-dividend stocks.”

Meanwhile, LG Uplus is showing particularly weak performance compared to SK Telecom and even KT. Despite consistently posting surprise earnings, its stock price has struggled to rise. Analysts suggest that investor interest has waned due to LG Uplus’s continued transactions with China’s Huawei, which is under sanctions by the U.S. government. However, some forecasts suggest the actual damage may be minimal. Kim Hongsik, a researcher at Hana Financial Investment, explained, “The likelihood of the U.S. or South Korean government ordering the removal of Huawei equipment is low, and even if that happens, government compensation is highly probable,” adding, “If Huawei enters a phase of depleted parts inventory, it is likely that U.S. parts supply approval will be granted, and considering maintenance costs, the cost increase from replacing Huawei equipment with Samsung and Nokia equipment is not significant.”

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