5G Subscribers to Drive Revenue Growth
The author is an analyst of KB Securities. He can be reached at joonsop.analyst@kbfg.com. -- Ed.
Maintain BUY and target price of KRW300,000; 3Q20E OP at KRW367.1bn
We maintain our BUY rating and TP of KRW300,000 for SK Telecom. Our TP, derived using the discounted cash flow model, holds 36.1% upside against the current price. The company is forecast to turn in 3Q20 OP of KRW367.1bn on the back of improving standalone and SK Broadband earnings.
2Q20 review: MNO and SK Broadband lead earnings beat
SKT reported 2Q20 revenue/OP of KRW4.6tn/KRW359.5bn, beating our estimate of KRW4.66tn/KRW348.0bn and the market consensus of KRW4.58tn/KRW328.3bn (FnGuide). SKT’s cornerstone division MNO and subsidiary SK Broadband posted stronger-than-expected results. MNO OP rose 4.8% QoQ on revenue growth backed by an increase in no. of 5G subscribers.
5G subscribers to drive revenue growth
Despite social-distancing practices, the no. of SKT 5G subscribers reached 700k (+136k QoQ), backed by the SKT-exclusive 5G smartphone Galaxy A Quantum. More subscribers are expected in 2H20 with the release of several other 5G products.
SK Broadband’s earnings run to continue into 3Q20
SK Broadband’s current earnings run will continue into 3Q20 on the back of IPTV subscribers. The no. of IPTV subscribers, which reached 5.4mn in 2Q20, will continue to rise at an accelerated pace, as the company has gained the opportunity to market IPTV services to the broadband internet subscribers of t-broad (recently merged).