SK Telecom, Raising Objection from Equipment Makers
By Kim Seong-wook
Saturday, January 25, 2003
SK Telecom's change of its words regarding its policy on telecom equipment purchase is inviting criticism. SK Telecom raised confusion on the 21st by changing primary negotiators for WCDMA equipment purchase through announcement. In addition, the company was criticized on the 24th when it officially announced that it would take a whole review on its investment plan this year.
The announcement came after an urgent meeting which was held because its stock hit a record low in three years on the 23rd due to its massive investment plan this year.
SK Telecom announced on the 22nd in a conference call to analysts that it would invest as much as 2.5 trillion won, for example, by expanding investment in WCDMA this year. However, on the 23rd when the invest plan announcement made investors dump the stocks, driving down the stock price, it officially announced that the company would scale down the investment plan. That comes just three days after it changed its word regarding its equipment purchasing policy.
What's worse, since such change of SK’s policy has a lot to do with overseas major equipment makers as well as domestic equipment maker, trust in the domestic telecom market would be undermined, which would do considerable damage to national image.
Indeed, a source at a foreign equipment maker which participated in WCDMA purchase bidding of SK Telecom said that it was not understandable for SK Telecom to reverse its words several hours later after announcement of maker selection result. "It doesn’t maker sense that SK Telecom announced its review on its trillion won worth of annual investment plan three days later just because of stock price fall."
He added that such attitude of SK Telecom which is ambitious to become the world's leading telecom service provider would have negative impact on overseas entry of Korean telecom firms. "Furthermore, it poured cold water on domestic equipment makers which expect SK's expanded investment to spur the domestic telecom equipment market."
In this regard, a source at SK Telecom said that its position to take a whole review on investment plan on the 24th did not directly mean investment reduction. "Equipment makers do not need to be sensitive to the decision." He also explained that after announcement of this year's investment plan, there was bigger resistance from institutional investors and shareholders than expected, which made the company review the investment plan under its management policy to respect shareholders.
etienglish.com
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SKT Reexamine Capital Investment Plan
By Kim Gyu-tae
Saturday, January 25, 2003
SK Telecom which had planned to invest 2.49 trillion on this year into capital investment, changed its plan in two days and started to reexamine its investment plan. SK Telecom ( sktelecom.com) announced on January 24 that it decided to reexamine its investment plan to stabilize its stock prices, and that it plans to buy about 3% of the total issued stocks as company-owned stocks.
This company said that it will reexamine its investment plan with the consideration that its investment budget for this year, which stands at 2.49 trillion won, is too high. An official at this company said, Reexamination does not necessarily mean investment reduction."
In a investor phone IR on January 22, SK Telecom announced its plan to invest some 520 billion won for WCDMA equipment investment and 780 billion won for cdma2000 1x network, but people said that the budgets are higher than necessary by 1 trillion won.
The company also said, it will purchase 3% of the issued stocks as company-owned stocks in order to resolve market jittery over the possibility that the surplus cash to be given to stockholders will decrease due to the increase in investments."
The size of company-owned stocks will be some 2.54 million stocks, (total issued stocks: 84,695,035) and the purchase price will be some 500 billion won if the per stock price is 200 thousand won. The timing and measures of purchase will be determined by the boardroom meeting at an early time.
An official at SK Telecom said, "Our decision is to stabilize the market by resolving the shocks of recording the lowest price in 33 month on January 23."
In the meantime, SK Telecom decided in its board meeting on January 20 to implement cash dividend and company stock purchase at 30% of the FCF level. They also decided to raise the dividends for stockholders from 5% to 10%.
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