LG Uplus Corp. (032640) shares surged the most in 14 months, leading gains among South Korean mobile-phone carriers on speculation lower marketing costs will boost profit.
LG Uplus, the nation’s smallest mobile-phone operator, rallied 8.2 percent to 11,250 won as of 12:40 p.m. Seoul time, poised for its steepest advance since Feb. 22, 2012. The stock was the best performer in the MSCI Emerging Markets Index. SK Telecom Co. climbed 5.2 percent as it reported first-quarter net income that beat estimates.
Telecommunications companies’ second-quarter earnings will be “very solid” as the number of South Korean users who switched service providers fell 21 percent to 700,444 in April from a year earlier, KTB Investment & Securities Co. wrote in a report today. Lower switching rates may give companies scope to cut the amount spent on marketing.
“The subsidy war has eased and the cut in marketing expenses can also lead to profit increases,” Hwang Sung Jin, an analyst at HMC Investment Securities Co., said by phone today. “Expectations are rising that telecom companies’ earnings will improve further from the second quarter.”
The Kospi Communication Index surged 6.6 percent today, the most since February 2002. The gauge was the best performer among 19 industry groups in the Kospi index.
LG Uplus reported on April 30 first-quarter net profit of 74.3 billion won ($68 million), exceeding the 52.6 billion won median estimate of analysts compiled by Bloomberg. SK Telecom today posted first-quarter net income of 345.9 billion won, compared with the consensus estimate of 327.3 billion won.
SK Telecom, South Korea’s biggest wireless operator, jumped 5.2 percent to 203,500 won. KT Corp. (030200), the country’s second- largest mobile-phone carrier, surged 6.8 percent, the most since March 2010, to 38,500 won.
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