【出版时间及名称】：2010年4月韩国电信行业研究报告
        【作者】：Korea Investment
        【文件格式】：pdf
        【页数】：32
        【目录或简介】：
Maintain Overweight on greater investment appeal
We reiterate Overweight on the telecom services sector based on: 1) the
government’s marketing cost controls policy, 2) growth potential of
smartphones, 3) attractive valuations, and 4) appealing dividends. The
government’s guidelines to trim marketing costs appear positive for stock
prices considering better profitability and waning competitive pressure.
Meanwhile, a possible rate cut is a risk factor.
We present KT and SK Telecom (SKT) as top picks. KT has emerged as the
victor in the smartphone market and its profitability will improve on payroll
cuts. SKT will likely become a primary beneficiary of easing competition and
the smartphone market’s growth as it is a pure mobile carrier. Data sales
growth and cost reductions from leased lines will contribute to profitability.
Marketing cost savings of W1.2trn in 2010F, W2.5trn in 2011F
The Korea Communications Commission (KCC) set guidelines to encourage
telecom operators to save on marketing costs and expand capex and R&D
for more competitive mobile Internet. The marketing costs guideline was set
at the 22% level of respective sales in mobile and fixed-line for 2010F and
20% for 2011F. If the four telcos – SKT, KT, LG Telecom (LGT) and SK
Broadband (SKB) – comply with the guideline from May, the 2010F marketing
costs would shrink by W1.2trn from our previous estimate of W9.2trn to
W8trn, compared to W8.5trn in 2009. The marketing costs-to-sales ratio rose
to 23.4% in 2009 from 19.2% in 2005 but should drop to 21.4% in 2010F
(pre-guideline estimate 24.4%). If the guideline is retroactively applied to Jan
1, the 2010F marketing cost savings would swell to W2trn. With a tougher
guideline of 20% in 2011F, the cost savings would amount to W2.5trn in the
year. Our estimates for cost savings are the maximum amount of marketing
spending cuts as operators will secure more available marketing spending.
Less marketing and greater investment good for profitability
Even if marketing cost savings are channeled to capex and R&D, it will be
positive for profitability. Cost cuts and the recognition for marketing
activities can be done in the corresponding year but investment and cost
recognition for capex and R&D are spread across a longer period. Mobile
Internet investment will also help domestic telcos compete with global
players such as Apple and Google.
Benefits all and more favorable for SKT and KT
The guideline will have a positive effect on the four telcos’ profitability.
Considering marketing cost savings and subsequent market share
changes, dominant players such as SKT and KT will benefit more. In a
saturated market like telecom services, the leaders are in a more
advantageous position to retain subscribers while laggards find it difficult to
steal market share from their competitors.