Since the start of the year, SK Telecom shares have surged, bringing its market capitalization close to 20 trillion won. While telecom stocks overall have been strong since early in the year, SK Telecom has effectively been on a near solo run, fueling expectations for "100,000 Telecom." Analysts say normalization of dividends, a rebound in earnings, and optimism over its artificial intelligence (AI) business are being priced in at once, leading to a reassessment beyond its past image as a dividends stock.
On Apr. 13, ChosunBiz compared the share price gains of the three telecom companies based on the closing prices on Jan. 2 and Apr. 10 this year and found that SK Telecom rose 74.5%, from 53,300 won to 93,000 won. During the same period, KT climbed 21.1%, from 51,300 won to 62,100 won, and LG Uplus gained 22.5%, from 14,210 won to 17,410 won.
Although telecom stocks as a whole rose, SK Telecom was overwhelming in terms of upward momentum. On the 9th, SK Telecom hit an intraday high of 99,700 won to set a new record, and its market capitalization closed at 9:3 p.m. at 20.1473 trillion won based on the closing price of 93,000 won. This is the first time its market cap has exceeded 20 trillion won since it was partitioned with SK Square in 2021.
The market now sees SK Telecom not simply as a stock to buy for dividends, but as one that reflects a rebound in earnings, shareholder returns, and AI growth potential together. Brokerages are also raising their expectations. NH Investment & Securities raised its target price to 100,000 won, citing a simultaneous recovery in earnings and dividends, IBK Securities set 107,000 won, and SK Securities suggested 110,000 won. Hana Securities also mentioned the possibility of breaking through 100,000 won in the first half. It means a growth premium has begun to attach to telecom stocks that had long been assessed conservatively.
The first pillar supporting the share price is expectations for dividend normalization. As the appeal of dividends, the key investment point for telecoms, comes back into focus, it is underpinning the stock.
Hana Securities sees a high likelihood that SK Telecom's first-quarter dividend per share this year will recover to the 800–900 won range. Last year, due to the aftermath of a hacking incident, SK Telecom did not pay dividends in the third and fourth quarters, leaving the annual dividend per share at 1,660 won. Simply comparing dividend per share, it was larger than LG Uplus (660 won) but smaller than KT (2,400 won). However, if dividends return to normal levels on the back of an earnings recovery this year, the dividend per share is expected to recover to around 3,600 won.
At this year's regular shareholders meeting, a proposal to convert 1.7 trillion won in capital surplus into retained earnings also passed. As a result, expectations are growing for the possibility of tax-free dividends. Normally, dividends are subject to dividend income tax, but when capital surplus is reduced and used as a source for dividends, it is not regarded as dividend income and is not taxed.
The second pillar is expectations for an earnings recovery. NH Investment & Securities forecasts SK Telecom's operating profit this year at 1.98 trillion won, up 84.5% from last year's 1.0732 trillion won. Costs have eased after the peak of 5G (fifth-generation mobile network) investment, subscriber churn and marketing competition have calmed, and savings from SK Broadband's voluntary retirement implemented late last year will add to the effect, analysts said. Expectations that the core telecom business is entering a recovery phase are being reflected in the share price.
Optimism over the AI business is also essential. The corporate value of Anthropic, a U.S. AI company SK Telecom invested in in 2023, has surged, bringing its investment performance back into focus. On top of that, it passed the government's first evaluation for the independent AI foundation model project, and it is presenting a strategy to expand infrastructure centered on the Ulsan AI data center. Having successfully layered an AI narrative onto its core telecom business, the valuation the market assigns appears to be stepping up.
Still, some say 100,000 won is a price where expectations are ahead of earnings. IBK Securities projects SK Telecom's first-quarter operating profit at 534 billion won, down 5.9% from a year earlier. Since the share price has risen quickly on dividend expectations and an AI premium alone, if actual earnings fail to follow, the momentum for further gains could weaken.
In the end, for SK Telecom to go beyond "100,000 Telecom" and settle at that level, it must prove earnings improvement with numbers. While it is clear dividends are reviving and AI expectations are growing, what the market truly wants to see is ultimately a recovery in profit. Whether the price of expectations turns into the price of earnings is expected to be the watershed for the share price going forward.
Kim Kyung-won, a distinguished professor in business administration at Sejong University, said, "SK Telecom's share price reflects both expectations for dividend normalization and the AI growth narrative," but added, "For the share price to settle in the 100,000 won range, SK Telecom ultimately must show in numbers that AI expectations translate into improvements in actual profits and cash flow."