The South Korean telecom giant SK Telecom Corp Ltd (SKM) has joined hands with telecom carriers for the commercial deployment of Long Term Evolution (LTE) services, also known as 4G networks. Given the surge in data traffic demand, the company will launch its LTE services in Seoul.
SK Telecom has selected Samsung Electronics, LG-Ericsson and Nokia Siemens Networks as the key equipment suppliers for its 4G LTE network. The LTE network allows up to 75 Mbps downlink and 37.5 Mbps uplink speed, which are five and seven times faster than those of WCDMA networks, respectively.
The demand for high-speed data services is growing rapidly, leading to a growing requirement for wireless data services. Following the LTE launch in the South Korean capital, SK Telecom expects to add 0.3 million LTE subscribers from its domestic market in 2011. This number is expected to reach 6 million and 10 million by 2013 and 2015, respectively.
Additionally, SK Telecom plans to invest approximately KRW 2 trillion ($1.87 billion) by 2014 for development and enhancement of 4G LTE networks. The company will launch nine LTE devices over the year, including data modem in July, smartphone in September, and tablet PC in October.
The company will expand its 4G LTE networks to 23 cities and 6 metros by the early next year, with nationwide coverage in 82 cities by year-end 2013. Further, SK Telecom anticipates handling 65% of total data traffic in 2014. These efforts made by the company will likely boost future wireless revenue.
Even global telecom companies are capitalizing on the uptrend in wireless demand. The largest U.S. mobile service provider Verizon Communications Inc. (VZ) plans to expand its LTE networks to more than 75 markets by the end of 2011 and cover virtually its entire nationwide 3G footprint by the end of 2013.
The second-largest U.S. mobile service provider, AT&T Inc. (T), plans its LTE launch in summer covering 15 markets in the second half of the year and reaching approximately 70 million Americans by this year-end. By 2013, AT&T intends to extend its 4G network to the entire American populace.
The third-largest U.S. wireless operator Sprint Nextel Corp. (S) provides 4G networks in 71 U.S. markets and covered approximately 120 million people at year-end 2010. Sprint expects to cover 130 million people by the end of this year.
We are currently maintaining our long-term Neutral recommendation on SK Telecom. The stock retains a Zacks #2 (Buy) Rank for the short term.
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