SK Telecom Posts Solid Core Business Results; Annualized Q1 Dividend Implies Over 6% Dividend Yield

Narrow-moat SK Telecom reported a strong first-quarter result with revenue growth of 4% year on year and operating profit growth of 15.5% year on year. Revenue growth was driven mainly by an increasing 5G customer base in its mobile business as well as growth from internet protocol TV, or IPTV, and fixed line enterprise business customers. The telecom business model operating leverage on the revenue growth, as well as reduced mobile marketing spend, drove the operating income growth. The result puts the business on track to hit its 2022 revenue guidance of KRW 17.4 trillion implying a little over 4% year-on-year growth driven by stable growth of mobile and fixed line communications and high growth from IPTV, enterprise and AIVERSE businesses. We retain our forecasts and our USD 30.70 per ADR fair value estimate.