Telecom Stocks That Beat the Market, Laughter Grows Louder

Telecommunication Sector Index Up 32.7% This Year... Outpacing KOSPI's 9.3% Rise
Improved Earnings and Dividend Expectations Grow

[Asia Economy Reporter Minwoo Lee] Telecommunications stocks outperformed the market returns for the first time in four weeks. This is interpreted as reflecting expectations that the three major telecom companies have entered a long-term earnings growth phase as 5G sales stabilize.

According to the Korea Exchange on the 12th, the KOSPI telecommunications industry index closed at 433.05 last week (7th to 9th), up 0.31%. Considering that the KOSPI fell 1.9% during the same period, this is a relatively strong performance. While the KOSPI was hitting record highs, the telecommunications industry index, which had been somewhat sluggish, outperformed the market returns for the first time in four weeks. The difference becomes even more pronounced when comparing year-to-date gains. The telecommunications industry index rose 32.7% as of the closing price on the 9th compared to the beginning of the year. In contrast, the KOSPI increased by only 9.3% during the same period.

It appears that expectations have grown that companies within the sector will generally improve their earnings and increase dividends. According to financial information provider FnGuide, SK Telecom's consolidated earnings consensus for the second quarter of this year are sales of 4.8471 trillion KRW and operating profit of 398.3 billion KRW. These are expected to increase by 5.31% and 10.80%, respectively, compared to the same period last year. KT is also expected to post sales of 6.1009 trillion KRW and operating profit of 400.8 billion KRW, with sales increasing by 3.82% and operating profit by 17.22%. LG Uplus is estimated to have sales of 3.4431 trillion KRW, up 5.21%, and operating profit of 268.1 billion KRW, up 11.86%, compared to the same period last year.

Stock prices are also expected to steadily trend upward going forward. This is based on the assessment that 5G services have been stably established and have entered a long-term growth phase. Kim Hoejae, a researcher at Daishin Securities, said, "The cumulative 5G penetration rate has reached 32%, steadily increasing, and the average monthly data usage per person is 27 gigabytes (GB), three times that of LTE, indicating stable demand for 5G and entry into a long-term growth phase for average revenue per user (ARPU). The marketing environment is stable, and investment expenditures have passed their peak, so profits are expected to grow steadily by more than 10% each quarter."

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