Friday, November 1, 2013

SKM's LTE- A A Gets a Boosts - Analyst Blog

SK Telecom Co. Ltd. (SKM), one of the leading telecom carriers in South Korea, has already enrolled more than 150,000 subscribers for its newly launched LTE – Advanced network plan.

A couple of weeks back, SK Telecom introduced the new service with a conversion rate nearly 10,714 customers adopting the new service per day. The company has already covered 44 important cities (inclusive of Seoul) in South Korea.

Higher adoption of smartphones and tablets has induced most people to watch online HD videos. Such increased usage of smart devices has resulted in network congestion. In order to counter the problem, most telecom operators are continuously upgrading their networks from 3G to 4GLTE and now LTE-A, which offers lightning speed and better frequency usage.

The newly launched LTE – Advanced network plan offers downlink speed of up to 150 Mbps. To popularize its new service, SK Telecom has also introduced Samsung's Galaxy S4 LTE-A, the world's first LTE – Advanced smartphone allowing better usage of bandwidth and supporting faster network speed. Moreover, the new device powered with Qualcomm Inc.'s (QCOM) processor can download multiple LTE radio channels simultaneously, unlike other existing 4GLTE handsets that can download.

Meanwhile, rival network operators, KT and LGU+, are also set to launch the LTE – Advanced network service. LGU+ will initially begin the new service in Seoul by the end of July and gradually cover other major cities by the year-end.

However, we remain apprehensive about the success of the new service plan as these carriers lack 4GLTE-Advanced smartphones. After Samsung, LG Electronics and local manufacturer – Pantech – will launch new handsets compatible with LTE – Advanced network. However, the technology is new and will require time to gain popularity.

Currently, SK Telecom carries a Zacks Rank #3 (Hold).

Other Stocks to Consider

Related stocks belonging to the same industry are China Unicom Limit! ed (CHU) and NTT DOCOMO, Inc. (DCM). Both, China Unicom and NTT DOCOMO carry a Zacks Rank #1 (Strong Buy).

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