Morningstar Rating

Stock Research and Analysis

by Ross MacMillan

Bulls Say

SK Telecom dominates the Korean wireless telecom market with more than 50% market share. Its market share has been relatively stable over the past 10 years.
The handset distribution reform bill, which passed the April 2014 National Assembly and will be implemented from 1 October, promises to reduce the overall marketing spend for the telecom companies by enforced reduction of handset subsidies, improving profitability and reducing volatility of earnings.
The firm invested in SK Hynix at a cyclical low point, and with the memory chip industry consolidating, the outlook for the business is positive for the medium term. Read more 

Bears Say

SK Telecom has spent significant money making investments outside of Korea and in businesses outside of its core competence. Despite SK Hynix's recent improvement, its USD 3.1 billion acquisition of this unrelated cyclical business may end poorly.
The government frequently intervenes in the Korean telecom market to lower operator tariffs and alter marketing & sales strategies. The Korean telecom market is also known for bouts of extreme competition.
The firm's quarterly financial releases don't provide detailed commentary, particularly on its fixed-line telecom business, which makes following its progress difficult. Read more 

Management

We rate SK Telecom's stewardship as Poor.

SK Group owns 29.2% of SK Telecom's stock, and has the right to name three directors to the board, including the CEO, giving it significant influence. SK Telecom's board also includes five independent directors.  Read more 

Profile

SK Telecom is Korea's largest wireless telecom operator, with 27.8 million customers. The firm also owns 51% of SK Broadband (formerly Hanaro Telecom), which has 4.7 million   Read more 

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