Telecom companies canceling and buying back shares

Logos of three telecom companies [SKT, KT, LG U+]

Telecom companies are rapidly buying back shares and canceling treasury stock.

LG U+ repurchased 100 billion-won ($90 million) of its own shares last week, a first for the company.

The carrier also introduced an interim dividend that will be paid out on top of the regular dividend.

LG U+ “will initiate an interim dividend program this year to divide the payout in two – one in the middle and end of the fiscal year,” the company said via an electronic disclosure last week.

SK Telecom permanently cancelled 8.69 million treasury shares worth 2.6 trillion won last month. Treasury stock is owned by the company itself.

The amount retired shares represents 10.8 percent of total company shares, marking the second largest treasury stock cancellation after a move in 2018 by Samsung Electronics.

The retirement permanently cancels shares and reduces the number of issued shares. Following the move, SK Telecom’s total shares were reduced to 72 million from 80.7 million.

KT bought back 12 million shares worth 300 billion won between last December and March. The repurchased assets account for 4.7 percent of all issued shares.

KT CEO Koo Hyeon-mo has been actively purchasing treasury stock since last year, buying 5,234 shares of KT for 100 million won last March.

Analysts think that the companies are trying to pump up the value of their shares, which have been performing poorly for years.

The efforts appear to be paying off, at least for now.
Shares of SK Telecom surged 40 percent since the beginning of the year, while KT rose 39 percent during the same period.

“The upward momentum will likely continue through the second half as the telecom units are finding opportunities in new business areas including media, e-commerce and fintech,” said Hwang Seong-jin, an analyst at Heungkuk Securities.

BY KIM KYUNG-JIN, PARK EUN-JEE [park.eunjee@joongang.co.kr]