Asian telecom stocks face minimal 5G risks - JP Morgan

LG Uplus

30/04/2018 12:06

April 30 (Reuters) - Shares of Asian telecom players have
already priced in the impact of investments for setting up fifth
generation (5G) mobile networks and potential monetization
uncertainty, J.P. Morgan Securities analysts said on Monday.
    The Asian telecom sector has underperformed the broader
market by 18 percent in the past 12 months due to investor
concerns stemming from uncertainties related to 5G spending and
potential monetization, JP Morgan analysts said.
    They, however, believe it is now time to revisit the sector,
with spectrum auctions due in Korea and Australia in 2018 and
Japan and China in early 2019.
    JP Morgan recommended investors buy telecom stocks in Japan,
South Korea, China and Australia, saying these companies were
unlikely to build significant standalone 5G networks until a
business case emerges.
    However, their rivals in Hong Kong, Singapore and Taiwan
face more competitive spectrum auctions, which are not expected
until 2020, due to limited availability of 5G bandwidth, the
analysts said.    
    The incremental costs of investments in 5G networks could be
minimal as much of the improvements are currently being made
under non-standalone (NSA) 5G networks, which build on the
existing 4G infrastructure, JP Morgan wrote. 
    Standalone 5G network is likely to require substantially
more capex when compared to NSA 5G, it added.
    JP Morgan prefers South Korea's LG Uplus Corp  032640.KS 
and Japan's Softbank Group Corp  9984.T , both rated
"overweight."
    It remains cautious on China Mobile Ltd  0941.HK , as it
sees the company as most likely to build a wide coverage of
standalone 5G networks.

 (Reporting by Derek Francis in Bengaluru; Editing by Amrutha
Gayathri)
 ((derek.francis@thomsonreuters.com; within U.S. +1 646 223
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