Telecom firms likely to see lackluster first quarter earnings
By Yang Sung-jin Staff reporter
(insight@koreaherald.co.kr)
2003.04.08
koreaherald.co.kr
Major telecom operators in Korea are likely to see lackluster earnings in the first three months of this year, analysts said yesterday.
LG Telecom, a major mobile carrier, is set to unveil its first-quarter earnings later this month, while KTF and SK Telecom will follow suit around the end of the month. Fixed-line telecom giant KT Corp. plans to reveal its first-quarter earnings in late April or early May through a conference call.
Analysts at major brokerage houses in Seoul said that the combined operating profit of those telecom firms might shoot up compared with the fourth quarter of last year, when listed firms reflected various costs for 2002.
But the overall earnings performances might be disappointing, they warned, noting that a strict accounting rule will be applied to the earnings report of those telecom firms after the alleged accounting fraud at SK Global shook up the corporate world.
Three mobile carriers led by SK Telecom, the country's largest mobile carrier, will likely see their operating profit go up a bit, while KT will sustain a lower profit, placing pressure on the fixed-line telecom industry at large.
Dongwon Securities said in a report that SK Telecom's first-quarter revenue will be down 4.5 percent compared with the previous period, while operating profit will shoot up 20.7 percent, helped by lower marketing costs.
KTF, a unit of KT Corp., completed the take-over of its sister unit KT ICOM last month, increasing the number of total outstanding shares by 3.8 percent. Despite the greater number of shares that could dilute the value of share prices, KTF is likely to benefit from the fresh injection of 1 trillion won in cash thanks to the merger.
KT ICOM was in charge of introducing W-CDMA third-generation (3G) mobile service, while KTF would continue to offer cdma2000 1x EV 3G service to forge a dual-standard scheme. But its parent unit KT decided to streamline the mobile operations, arranging the merger, partly affected by the negative outlook for W-CDMA services in Korea.
Korea has more than 32 million mobile phone users, all of whom rely on cdma2000 1x or its upgrade version EV-DO (evolution data-optimized services).
LG Telecom, meanwhile, is expected to see its service revenue go up 7.8 percent from the year-earlier period. The company's plan to increase its market share hit a snag, however, as the Ministry of Information and Communication suddenly balked at loosening up the handset subsidy ban at the requestion of President Roh Moo-hyun.
Hanaro Telecom Inc., the country's second-largest broadband carrier, is forecast to witness a dramatic year-on-year revenue increase - up to 33.1 percent - in the first quarter, supported by the steady rise in the number of high-speed Internet users. But the company's share price might come under downward pressure as its debt amounts to 1.8 trillion won and its cash reserve is 427.9 billion won. The company has to pay back 662.2 billion won in the first half of this year. |
