Hana forecasts 3% rise in Korean carriers' combined operating profit in 2027 if 5G tariffs change

A possible 5G tariff overhaul separates modest earnings growth from a flat year in Hana Securities’ Nov. 4 outlook for Korea’s three mobile carriers. The brokerage forecasts combined consolidated operating profit of 5.29 trillion won in 2027 for SK Telecom, KT and LG Uplus, up 3% from its 2026 estimate, if the overhaul occurs. Without it, profit would stay near the 2026 level.

What would lift revenue?

New spectrum investment would support higher-priced 5G plans, with mobile service revenue growth accelerating in the second half of 2027, according to the outlook. Hana presents this as a forecast for 2027. Higher depreciation would absorb much of the additional revenue.

The analysts expect limited pressure from subscriber-acquisition costs, which they model as being amortised over eight quarters. The report distinguishes those costs from advertising and certain agency fees recognised immediately; the eight-quarter treatment does not cover all marketing expenses.

How did results compare with expectations?

SK Telecom and LG Uplus have reported third-quarter results since Yuanta Securities published its Nov. 4 weekly. SK Telecom reported third-quarter consolidated revenue of 4.4973 trillion won and operating profit of 552.3 billion won on Nov. 4. Operating profit was about 3.4% above Yuanta’s pre-release estimate of 534.0 billion won.

For LG Uplus, reported revenue was 3.9813 trillion won and operating profit was 297.6 billion won. Operating profit rose 84.1% year on year, helped by a low comparison base from one-off personnel costs and improved operating efficiency, according to the company. It was about 2.8% below the 306.2 billion-won consensus figure cited in the weekly. The company’s newsroom post is dated Nov. 6 and identifies Nov. 4 as the announcement date.

For KT, the weekly listed a Nov. 10 earnings release and estimated revenue of 7.1 trillion won and operating profit of 535.0 billion won, both slightly lower than a year earlier. These remain pre-release estimates. Yuanta expects the effects of customer departures during a cancellation-fee waiver to ease.

What supports the carrier preference?

The Nov. 4 outlook retained SK Telecom ahead of LG Uplus and KT. The brokerage’s Oct. 30 valuation used an estimated 750 billion won in SK Telecom’s 2026 dividends and an assumed dividend yield of 5% to imply an equity value of 15 trillion won.

On that basis, Hana argued that the roughly 16 trillion-won market capitalisation cited in its Oct. 30 report left little value assigned to the Anthropic stake and other businesses. Its scenario for the shares reaching 140,000 won or more also depended on a 2027 tariff overhaul.

How does US policy affect equipment suppliers?

In its Nov. 6 policy assessment following the US midterms, Hana expected restrictions on Chinese equipment to keep tightening and saw little prospect of Congress reversing the extension of spectrum-auction authority. Separately, the FCC’s public notice confirms that its general authority runs through Sept. 30, 2034, subject to statutory exceptions.

For KMW, the Oct. 30 investment case rested on expected US 5G spending in 2027. Hana anticipated supplies of filters, antennas and system equipment through Samsung Electronics and possible new shipments to Ericsson. These are the brokerage’s supply forecasts, not confirmed contracts.

Risks to the forecasts

The main earnings risk is that the tariff overhaul does not materialise. For US data-centre development, Hana separately flagged permitting obstacles in densely populated areas, regardless of party control.

Yuanta cited KTOA data showing 598,032 mobile number-portability switches in October, up 0.2% from September and down 0.3% from a year earlier. These measure switching between providers, not total subscriber growth. Within those flows, LG Uplus recorded the largest net gain among the three carriers, while budget mobile operators recorded net outflows to the big three for a second consecutive month.