SK Telecom Plans No Change for 2003 Spending Plan
Wednesday February 5, 9:29 pm ET
SEOUL -- There will be no change in SK Telecom Co.'s capital spending plan for this year and the total amount will remain at about 2.5 trillion won ($ 2.1 billion), President and Chief Executive Pyo Moon Soo said Thursday.
"Let me reassure that there has been no change in our investment strategy," Mr. Pyo told analysts during a conference call. "The most critical principle that determines capex amount is return on investment. There won't be investment unless a certain amount of return is expected," said Mr. Pyo.
The conference comes after SK Telecom reported a surprising 24% drop in fourth quarter earnings last month, resulting in a number of downgrades by analysts and a plunge in the company's stock price.
Mr. Pyo said capital spending this year will total about 2 trillion won, excluding wide-band code division multiple access investment of about 520 billion won.
"Our WCDMA investment strategy is based on economics," said Mr. Pyo, noting that the company's spending will be determined by the adoption of handsets as well as progress in mobile technology.
In an attempt to assuage concerns and support the stock, SK Telecom last month said it would buy back 3% of its shares.
Mr. Pyo said Thursday the company will consider various options and will " review" canceling the shares. He gave no further details.
SK Telecom is still maintaining its aim of returning 30% of its free cash flow to shareholders this year. With the current capex budget of 2.5 trillion won, the company estimates it will have about 1.3 trillion won of free cash this year.
Mr. Pyo also said the dividend payout for 2003 will "not be an abrupt change from 2002."
SK Telecom boosted its dividend payout to 1,800 won from 690 won last month.
With regard to the 'number portability' plan, it will have "minimal" impact on the company, though Mr. Pyo noted that the company's market share could decrease slightly in 2004.
"However in 2005, the decline will be recovered based on some of the factors that we think are in line with our competitive advantage," Mr. Pyo said.
Last month, the Ministry of Information and Communication approved a plan to adopt "number portability" option in stages, beginning with SK Telecom. Under the option, subscribers will be able to choose a calling plan from another carrier, while maintaining their mobile phone number.
Responding to questions as to whether SK Telecom has any plans to acquire a credit card company, Mr. Pyo said "no decision has been made."
Shares of SK Telecom fell 1%, or 2,000 won, to 179,500 won, following the conference call.
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