Daishin Securities has lowered its investment rating for SK Telecom from “Buy” to “Market Perform” (neutral) and adjusted the target stock price from 67,000 KRW to 56,000 KRW. This adjustment comes in response to stronger-than-expected government measures regarding a hacking incident involving SK Telecom. It is projected that SK Telecom’s annual operating profit will decrease this year compared to last year.
Researcher Kim Hoe-jae from this securities firm explained that the Ministry of Science and ICT suggested that the company should waive penalty fees for contract breaches related to the provision of secure communication services. In response to this unexpectedly strong government measure, SK Telecom proposed a customer appreciation package worth 500 billion KRW.
The researcher further noted that measures related to the hacking incident in the second to fourth quarters this year would impact the financial results, but normalization is expected by 2026. The sales forecast for this year was lowered by 3.6% from 17.856 trillion KRW to 17.216 trillion KRW, and operating profit estimates were adjusted downward by 29.6% from 1.901 trillion KRW to 1.338 trillion KRW.
On July 4th, SK Telecom announced it would invest a total of 700 billion KRW in information security over the next five years. The company also promised to waive penalty fees for users terminating their contracts following security breaches and to offer a 50% discount on communication charges next month. Daishin Securities estimated the penalty fee reimbursements (based on previously paid amounts) to be approximately 32 billion KRW, and the scale of the communication fee discount was estimated to be around 420 billion KRW.
Regarding SK Telecom, Researcher Kim stated that the company’s market share in the mobile phone market was expected to fall below 40% in May. He anticipated that SK Telecom would focus on preventing further customer departures and would avoid excessively competitive marketing campaigns.
The stock’s lower limit was viewed as 50,600 KRW, given the low likelihood of dividend cuts. Kim added that if the previous year’s dividend per share (DPS) of 3,540 KRW is maintained, the payout ratio could rise to 100%. However, since 2006, there has been no instance of DPS reduction despite various crises, and at the DPS of 3,540 KRW, a 7% dividend yield would place the stock’s lower boundary at approximately 50,600 KRW.