On Oct 7, we upgraded the stock of SK Telecom Co. Ltd. to Outperform. In the recently concluded second quarter, both its top and bottom lines outpaced the Zacks Consensus Estimate.
Apart from strong financial results, solid subscriber growth and aggressive deployment of LTE and the new LTE-Advanced services have resulted in such upgrades.
Why the Upgrade?
SK Telecom continues to maintain its leading position in the Korean wireless market. We believe that strong smartphone offerings, 3G network, 4G LTE network expansions and the cloud computing business will fuel the company’s future growth. The demand for smartphones and high-speed data services is growing rapidly, leading to a growing requirement for wireless data services.
Additionally, SK Telecom’s Apple iPhone 4 and iPad offerings are gaining traction in the Korean market, driving revenues. Such robust LTE customer growth will will facilitate the achievement of the company’s LTE subscriber target of 15 million by 2013.
SK Telecom unveiled the world’s first LTE-Advanced (LTE-A) network that renders speeds of up to 150 Mbps, which is twice as fast as LTE and 10 times swifter than 3G network. Management has already commercialized the newly launched network across the Seoul region and the central cities of Gyeonggi-do and Chungcheong-do, with plans to extend the coverage to 84 cities across the nation.
Along with network expansion, the company is also offering LTE-A friendly handset – Samsung Galaxy S4 LTE-A – and aims to bring in seven more smartphones in the later half of 2013.
The company is also investing heavily in high-speed Wi-Fi and data femtocell to boost network capacity in small areas. Additionally, SK Telecom is concentrating on deploying 5G Wi-Fi hotspot routers in Korea. The company collaborated with the leading semi-conductor solutions provider – Broadcom Corp. – to launch the first 5G Wi-Fi hotspot router to ensure reliable and faster connectivity.
Currently, SK Telecom carries a Zacks Rank #1 (Strong Buy).
Other Stocks Outlook in Related Industries
Related stocks belonging to the same industry are Cellcom Israel Ltd. (CEL - Snapshot Report) , KT Corp. and NTT DOCOMO, Inc. (DCM - Snapshot Report) . Both, KT Corp. and NTT DOCOMO carry a Zacks Rank #2 (Buy) while Cellcom Israel carries a Zacks Rank #1 (Strong Buy).