South Korean Telcos Q1 25 review: Peers expected to benefit near-term from SKT’s data breach

Margins are improving as operators execute on cost discipline and shift away from less profitable operations. As capex intensity falls, cash flow is rising and so therefore are dividends or buybacks; LG is expected to announce a buyback in 2H. Thus we are confident of further re-rating and our recent trip reinforced this view. Following the data breach at SKT, near term results are likely to favour KT and LG Uplus. KT remains our preferred pick and is one of our top picks in GEM Telcos.

Takeaways from Meetings with the Korean Telcos in Seoul. KT to KRW 105,000 SKT to Neutral.

We met with all 3 of the Korean Telcos in Seoul over the last couple of days. All 3 remain committed to “Value-up”. However, far the biggest impact is on KT who’s cash flow is dramatically improving. LG is also likely to have a strong year, and we think profitability has turned a corner.

LG Uplus (Buy, KRW 19,000, +53%) Q1 25 Quick Take: Decent bottom-line beat

LG Uplus printed a solid profit beat, ahead of expectations by 7% on better service revenue and EBITDA inflecting back to growth, as margins were better managed this quarter. We continue to believe its shareholder remuneration is attractive (5.6% dividend yield + potential buyback announcement in 2Q25). We stay Buyers with a KRW 19k price target.

Eutelsat (Sell, €1.2, -60%) 4Q25: Good results, but LEO backlog stationary

Eutelsat has reported a good set of Q4 results, with revenue boosted by one-off equipment sales and EBITDA better than feared. All FY26 guidance has been confirmed, although the 2.5x leverage target looks increasingly pessimistic given the additional €150m equity raise (0.2x turns). The LEO backlog is still at c.€1.0bn, fueling concerns about the long-term commercial outlook for the service

AMD pre-2Q25 Model Update

Softbank Corp (Buy, TP: ¥270, +19%) Q1 FY25 Quick Take: Another decent quarter

Softbank Corp reported a relatively in-line topline and EBITDA whilst headline EBIT was 4% ahead of expectations. Trends in mobile service revenue slowed with continued momentum in net additions (in particular Y!Mobile) offsetting the marginal decline in mobile ARPU.