Number of 5G Subscribers Grows to 6.74mn

The author is an analyst of KB Securities. He can be reached at   joonsop.analyst@kbfg.com. -- Ed.

 

1Q21 earnings beat consensus 

— SKT reported 1Q21 preliminary revenue of KRW4.78tn (+7.4% YoY, -1.2% QoQ), OP of KRW388.8bn (+29% YoY, +17.4% QoQ) and NP (attributable to controlling interests) of KRW558.3bn (+80.9% YoY, +44.6% QoQ).

— OP and NP (attributable to controlling interests) exceeded our estimates of KRW360.0bn and KRW422.0bn, respectively, and the market consensuses of KRW345.8bn and KRW386.4bn (FnGuide 3m basis).

— Standalone OP reached KRW307.3bn, the highest level since 3Q18, which was before the rollout of 5G services.

— We partly attribute the estimate-beating results to solid Media and S&C earnings on increased revenue and cost savings.   

MNO earnings improve on 5G subscriber growth and more efficient expenses (incl. marketing)

— SKT’s no. of 5G subscribers grew by 1.25mn in 1Q21, lifting total 5G users to 6.74mn (28.0% of mobile subscribers). This catalyzed ARPU growth (KRW28,066 in 4Q20→KRW28,124 in 1Q21; includes MVNO subscribers).

— 1Q21 marketing expenses increased 3.2% YoY to KRW781.1bn because of the solid uptick in 5G subscribers but still decreased 1.9% QoQ. Cost reductions in other areas, such as SG&A (incl. promotional expenses), also contributed to the improvement in earnings. 

SK broadband earnings grow on more paid broadcasting subscribers and improved operations

— SK broadband continues to secure about 100,000 paid broadcasting subscribers every quarter, and total paid subscriber base expanded to 8.7mn in 1Q21 (IPTV at 5.8mn; cable TV at 2.9mn). In particular, IPTV net subscriber growth reached 125,000 in 1Q21. 

— SK broadband’s OPM climbed 1.2pp QoQ on improved operations following the T-broad merger.   

New business to fuel revenue growth after S&C merged SK infosec and ADT Caps

— Following the merger with ADT Caps, 1Q21 S&C revenue jumped 20.3% YoY to KRW350.5bn.

— The division’s OP gained 9.4% YoY, rising to KRW27.8bn on better profitability from new businesses bolstered by SK infosec and ADT Caps (e.g., cloud security, home security). 

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