SK Telecom Raises Dividend Expectations... What Is the Stock Price Outlook?

[Asia Economy Reporter Minji Lee] SK Telecom's stock price is on the rise as the company initiates quarterly dividends to enhance shareholder value. According to the Korea Exchange on the 28th, SK Telecom's stock price increased by 8% in a single day on the 26th. The annual growth rate reached 15%, surpassing the KOSPI's 5.8% increase during the same period. The notable stock price surge is attributed to SK Telecom's decision to adopt a 'quarterly dividend' policy, paying dividends four times a year. SK Telecom plans to pay the unpaid dividends from the first quarter combined with those of the third and fourth quarters.

Quarterly dividends are an attractive feature for dividend investors. Analyzing five domestic listed companies that implemented quarterly dividends shows that their stock prices rose by an average of about 31.3% in the year they started quarterly dividends. Heejae Kim, a researcher at Daishin Securities, explained, "One of the most important investment points for telecom stocks is dividends; stable dividends are as important as high dividends," adding, "Since 2015, SK Telecom has maintained a dividend policy of 1,000 KRW interim and 9,000 KRW final dividends, totaling 10,000 KRW, and dividends have never decreased even once."

Kim further stated, "Introducing quarterly dividends signifies that earnings have become more solid and provides shareholders with a sense of stability, which is highly meaningful," adding, "With the improvement of the core telecom business and the emphasis on the value of subsidiaries, this will lead to an increase in corporate value."

SK Telecom is expected to undergo a governance restructuring soon through a spin-off. A detailed announcement is anticipated in May, with the split and re-listing expected to be completed within the year. Following the governance restructuring, SK Telecom's market capitalization is projected to increase. According to NH Investment & Securities, the combined value of SK Telecom is estimated at 27.3 trillion KRW, higher than its current market capitalization. SK Telecom's telecommunications business (wireless business + SK Broadband + treasury shares) is valued at 13.7 trillion KRW, and SK Telecom Holdings at 13.6 trillion KRW, both exceeding the current market capitalization of SK Telecom (20.5 trillion KRW).

Jaemin Ahn, a researcher at NH Investment & Securities, said, "The value of subsidiaries such as SK Broadband, ADT Caps, 11st, WAVVE, T map Mobility, and One Store, which were not properly recognized due to the telecom industry's PER being capped at 10 times, will be properly reflected."

For example, DL's stock price rose significantly as the value of its chemical business, which was undervalued before the split, was properly recognized. Hyundai Development Company increased from 3.5 trillion KRW to 4.4 trillion KRW, and Hyundai Heavy Industries rose from 12.5 trillion KRW to 16.8 trillion KRW. Researcher Ahn said, "SK Telecom Holdings will have the value of its subsidiaries properly recognized after the split," adding, "A spin-off is a positive event for the stock price compared to a physical split, and considering ESG and the rights of minority shareholders, the spin-off SK Telecom is pursuing is positive for the stock price."

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