[Click eStock] "SKT Approaching Split Re-listing, High Dividend Expectations Rise"

Re-listing on the 29th Following the Split into SK Telecom and SK Square

[Asia Economy Reporter Minwoo Lee] SK Telecom is expected to continue solid performance even after its spin-off listing. Additionally, its appeal as a high-dividend stock is anticipated to be highlighted.

On the 26th, Daishin Securities maintained a 'Buy' rating on SK Telecom with this background and raised the target price by about 9% to 89,000 KRW. Converted to the pre-5-for-1 stock split price, this corresponds to 445,000 KRW. The closing price on the previous day was 309,000 KRW.

SK Square, newly established as an information and communication technology (ICT) specialized investment company spun off from SK Telecom, will be re-listed on the stock market on the 29th. Accordingly, existing shareholders will receive SK Telecom shares split 5-for-1 divided into shares of the surviving company SK Telecom and the newly established SK Square at a ratio of 0.61 to 0.39. For example, if a shareholder held 20 shares of SK Telecom, they will receive 60 shares of SK Telecom and 39 shares of SK Square. Fractional shares will be converted to cash based on the closing price on the 29th.

The newly established SK Square consists of 11st, SK Shielders (ADT Caps), T map Mobility, One Store, SK Hynix, among others, while SK Telecom will retain subsidiaries related to SK Broadband and wired and wireless communications. As the number one wireless business operator, it is expected to maintain stable performance. It has already achieved a net increase in 5G customers with a market share of 50% and a 5G market share of 47.1%. Since the fourth quarter of 2018, wireless service revenue has started to rebound and is expanding its growth. SK Broadband is also expected to reach an operating profit of about 310 billion KRW this year, supported by an increase in IPTV subscribers and average revenue per user (ARPU). This is about four times the size compared to before listing.

Expectations for high dividends are also growing. The company implements a policy linked to performance based on quarterly dividends and minimum dividends. SK Telecom's dividend policy determines the total dividend amount within 30-40% of EBITDA (earnings before interest, taxes, depreciation, and amortization) minus capital expenditures (CAPEX) on a separate basis, while maintaining a minimum dividend of 720 billion KRW, the same level as last year.

Kim Hoejae, a researcher at Daishin Securities, said, "5G CAPEX is expected to decline from its peak in 2019 through 2023, while EBITDA is expected to increase by an average of 6% annually due to growth in 5G subscribers and ARPU." He added, "If the total dividend this year is between 730 billion and 810 billion KRW, the dividend yield is expected to reach 5.5-6.1%, and in 2023, the dividend yield is expected to reach 7.4-8.4%."

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