Korean telecom stocks outlook upbeat on earnings and dividend gains

Kim Geum-yi and Susan Lee 2022. 1. 10. 14:57
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Korean telecom stocks KT, LGU+, and SKT are expected to outperform Kospi in the first half as they are likely to be lifted by strong earnings and dividend payouts.

The wireless carriers are expected to deliver robust fourth-quarter earnings and share the returns with shareholders with increased dividend payout for February, according to Kim Hong-sik, an analyst from Hana Financial Group.

The companies are expected to approve bigger dividend per share (DPS) programs at board meetings in February. Their stocks rose 20 to 40 percent, well above the Kospi, in the first half of last year on high expectations for increased dividend rates.

Operating profits of the three telecommunication giants are also expected to grow 14 percent year-on-year this year. Their aggressive foray into metaverse and artificial intelligence (AI) will bolster stock prices.

KT topped buy recommendation, followed by LGU+, and SKT.

KT¡¯s stock prices are expected to head north on sales growth and improvements in profitability. There are still concerns, however, over the issue of increasing capital expenditure from 5G facility investments and a possibility of a cut in telecommunication fees before the presidential election in March.

Heungkuk Securities was buoyant on teleco stocks as their 5G-based businesses have been flourishing amid faster digitalization.

Since 5G penetration rate has passed 40 percent threshold, marketing costs of telecommunication companies are expected to decrease. In the IPTV sector, partnership deals with Disney Plus will boost subscribers.

Telecom stocks also can expect revenue increase from data centers and smart factories.

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