April 18, 2024

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SK Broadband and t-broad’s merger will boost SK Telecom’s earnings, said Daishin Investment and Securities on Feb. 22 maintaining a “buy” recommendation and 360,000 won (US$319.80) target price. 

The merger decision will not dent SK Telecom’s cash reserves, as it utilizes its wholly owned subsidiary SK Broadband. It is a winning scheme that seeks growth in promising paid network sector while not chipping away at its capital earmarked for investment in 5G technology, said analyst Kim Hoi-jae.

SK Broadband posted record earnings last year on the back of increase in number of IPTV subscribers and average revenue per user. Merging with t-broad, the second-largest cable television network by number of subscribers, which generates stable profits with a 17 percent average operating profit margin, will advance its growth in media sector, forecast the analyst. After the merger, SK Broadband’s paid TV market share will expand to 23.8 percent closing in on 24.5 percent of LG Uplus and CJ Hello, the second largest in the market. 

Although the telecom company’s main wireless department still is degrowing, commercialization of 5G beginning in the second half will improve its earnings, he added.

By Hwang You-mee (glamazon@heraldcorp.com)