On Jul 3, we maintained our Neutral recommendation on
). The company displays strength in its ancillary units, focuses
on the expansion of new businesses and has a growing Long Term
Evolution (LTE) subscriber base. Nevertheless, the company faces
several headwinds that may impede its operating performance going
forward. This South Korean leading telecom company holds a Zacks
Rank #3 (Hold).
CHINA MOBLE-ADR (CHL): Free Stock Analysis
CHINA UNICOM (CHU): Free Stock Analysis
NTT DOCOMO -ADR (DCM): Get Free Report
SK TELECOM CO (SKM): Free Stock Analysis
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We believe that SK Telecom's strong smartphone offerings, 4G LTE
network expansions and investments in high-speed Wi-Fi business
provide it immense potential for future growth. There is a
growing demand for smartphones and high-speed data services that
the company can cater to, fueling its business activities.
Further, the launch of the T&T Sharing price plan is
attracting a vast number of customers.
SK Telecom remains focused on expanding the world's first
LTE-Advanced (LTE-A) network. The company already commercialized
the newly launched network across the Seoul region and the
central cities of Gyeonggi-do and Chungcheong-do, with plans to
broaden the coverage to 84 cities across the nation in the coming
months. We believe that this advanced network will enhance the
popularity of high quality broadcasting and video content as well
as boost the customer service level.
The company has high prospects in the media segment. The IPTV
business is booming and expected to reap in immense benefits,
supported by a leading number of 600,000 mobile pay-TV
subscribers and the broadcast of major U.S. league games as well
as the launch of the high-definition mobile TV. We also
appreciate the company's entry into the cloud computing market
and association with other organizations for the development of
business to business (B2B) mobile health care service.
Despite these positive aspects, we prefer to stay on the
sidelines taking into account certain risk factors. The company
continues to incur heavy spending for promotional efforts to
contain customer churn amid stiff competition. Additionally,
regulatory issues, tough economic conditions and drop in monthly
rates will continue to pressure the growth momentum of the
Companies operating within the telecommunication sector that are
worth taking note of include
China Unicom (Hong Kong) Limited
NTT DOCOMO Inc.
China Mobile Limited
). While the China Unicom and NTT DOCOMO hold Zacks Rank #1
(Strong Buy), China Mobile carries a Zacks Rank #2 (Buy).