reports
- Chris Hoare
SK Telecom (Neutral, KRW 78,000, +43%) Overall impact of data breach ...
It is now clear that as we thought, the market’s initial response to SKT’s data breach was too sanguine, as earlier today, South Korea's regulator ordered SKT to waive the termination fees following April's cyberattack, and thereafter, SKT agreed to the waiver and announced a Customer Appreciation package and therefore cut 2025 revenue guidance, and said that it now expects EBIT to decline this year too. In this note, we summarise our thoughts and assess the potential financial impact.
- Chris Hoare
Global EM Telcos & Towers Another decent month: NSR GEM Top-10 July ‘...
Our picks largely had a slightly slower month in June, with VEON seeing sharp profit taking, but a recovery in some of the weaker stocks such as LILAK offset to continue to see overall valuations rise. We continue to see the EM Telco cycle in an upswing. This note also includes key news & other thoughts, to try to help investors generate alpha within the EM Telco space. In our view, our picks remain heavily undervalued, so we make no changes to the list.
- Chris Hoare
South Korean Telcos Q1 25 review: Peers expected to benefit near-term...
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.
- Chris Hoare
Global EM Telcos M&A Cycle in-bound; buy the targets
With sentiment, leverage and cash flow all improving for EM Telcos we think we are approaching the point of the cycle where M&A is going to become more prevalent, and shift from bearish (in-market consolidation), to bullish (out of footprint). Investors should consider building portfolios based on likely targets. Who are they?
- Chris Hoare
Japanese Telcos Q4 FY24 review: Inflationary telco market
Japan’s mobile sector accelerated again in Q4 and we think is heading to above inflation. With both KDDI and DCM recently announcing price increases the environment is increasingly benign and should be helped by NTT’s recent acquisition of SBI Sumishin Net Bank. Our recent trip to Japan highlighted how positive the environment is; NTT stays our preferred pick, with KDDI closely behind.
- Chris Hoare
Global EM Telcos & Towers Bull market continues – NSR GEM Top-10 June...
It was another very strong month for our picks as the EM Telco bull market continues. As we have been arguing for some time EM Telco is a much better space than it used to be, and the market has now started to understand this. This note also includes key news & other thoughts, to try to help investors generate alpha within the EM Telco space.
- Lindsay Whipp
- Chris Hoare
NTT (Buy, TP: ¥215, +38%) NTT to acquire SBI Sumishin Bank and a mino...
As has been widely rumoured, NTT has offered to acquire up to 66% of SBI Sumishin Bank (7163-JP), in a bid to strengthen its financial services offering. The offer price (¥3,615) represents a 10% premium to yesterday’s price, but actually around 10% below today’s closing price.
- Chris Hoare
GEM Telcos: Consolidation – THE theme driving improved trends for EM T...
Earlier this month we published on how Global EM Telco Capex is falling rapidly, in large part driven by consolidation. On average EM Telco markets have fallen from a peak of 7 players to under 3. We expect many to end up with 2, or even a single network. How much further far might this cut capex?
- Chris Hoare
Takeaways from Meetings with the Japanese Telcos + Rakuten in Tokyo. D...
We met with all 3 of the incumbent Japanese Telcos & Rakuten in Tokyo last week, as well as visiting Osaka to talk to NTT in more depth about IOWN. Overall, we remain bullish on Japanese telcos operationally and buyers of all three incumbents. NTT remains our top pick followed by KDDI.
- Chris Hoare
Takeaways from Meetings with the Korean Telcos in Seoul. KT to KRW 105...
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.
- Chris Hoare
KDDI (Buy, ¥3,150, +22%) Q4 24 Quick Take: Good revenue growth; big b...
KDDI reported a better top-line, and generous shareholder remuneration. However, guidance is largely in line and leaves us wondering what happens after the company hits it in March ’26. Within this space, NTT remains our preferred pick on potential upside catalysts (IOWN revenue optionality, NTT Data and Fixed line rebound) while KDDI remains a close second with a ¥3,150 price target.
- Chris Hoare
- Chris Hoare
SK Telecom (Buy, KRW 86,000, +65%) Q1 25 Quick Take: Good cost cuttin...
SKT printed decent 1Q25 results with marked improvement in profitability, supported by its ongoing portfolio restructuring. EBITDA and net profit were ahead by 3% and 2% respectively. Cost efficiency programme remains a theme for South Korean operators. For SKT however, this is likely to be overshadowed by last month’s data breach with shares down 11% since then.
- Chris Hoare
- Chris Hoare
KT Corp (Buy, KRW 85,000, +64%) Q1 25 Quick Take: Benefiting from cos...
KT reported strong profit growth as it benefits from the hefty headcount reduction programme undertaken in Q4, and despite a softer topline, a result of its conscious effort to shift away from lower-margin B2B businesses. Both EBITDA (+12%) and EBIT (+36%) were up sharply. None of this is reflected in the valuation of 8x FY25 P/E and 4.4% dividend yield, the stock remains one of our Top Picks with a KRW 85,000 price target.
- Chris Hoare
NTT (Buy, TP: ¥215, +44%) NTT offers to buy out NTT Data – Quick thou...
As rumoured, NTT has offered to buy out the minorities (~42.3%) of NTT Data via a tender offer, at a 34% premium, or ¥4,000 per share. This is a slightly lower premium than we would have expected and implies a transaction value for the minority stake of ¥2.4tn (USD 16.5bn). Quick thoughts below.
- Chris Hoare
LG Uplus (Buy, KRW 19,000, +53%) Q1 25 Quick Take: Decent bottom-line...
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.
- Chris Hoare
Global EM Telcos Capex in steep decline; underpins EFCF growth
We analyze the capex history & outlook for Global EM Telcos. For this group capex is falling rapidly (-12% in 2024 in US$) as competitive intensity improves and markets consolidate. Excluding China and India, EM Telco capex is already down 23% from peak.
- Chris Hoare
Global EM Telcos & Towers Still rising – NSR GEM Top-10 May ‘25 Updat...
Despite global volatility our EM Top Picks posted positive returns again in April and now up 34% YTD on average. As we have been arguing for some time EM Telco is a much better space than it used to be and this is now being reflected by the market it seems.
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