Sk Telecom ((SKM)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The recent earnings call for SK Telecom was a mixed bag, reflecting both optimism and challenges. While the company showcased significant advancements in its AI business and strategic initiatives for future growth, these positives were overshadowed by the negative repercussions of a cybersecurity incident. This incident not only led to substantial financial losses but also affected subscriber numbers and resulted in lowered revenue guidance.
AI Business Growth
SK Telecom reported impressive growth in its AI business, with revenue increasing by 13.9% year-on-year. This growth was a bright spot in the earnings call, partially offsetting the decline in telecom revenue. The AI Data Center (AIDC) revenue rose to KRW 108.7 billion, marking a 13.3% increase, while AI Experience (AIX) revenue grew by 15.3% to KRW 46.8 billion.
Hyperscale AI Data Center Plans
In a strategic move, SK Telecom announced plans to establish a hyperscale AI data center in partnership with AWS and SK Group affiliates. This facility, set to be operational by 2027 in Ulsan, aims to secure a combined capacity of over 300 megawatts by 2030, underscoring the company’s commitment to innovation and future growth.
Commitment to Customer Assurance and Security
In response to the cybersecurity incident, SK Telecom has pledged to invest KRW 700 billion over the next five years in an Information Protection Innovation Plan. This initiative aims to build a world-class information protection system, offering free mobile device security solutions to all subscribers, highlighting the company’s dedication to customer assurance and security.
Cybersecurity Incident Impact
The cybersecurity breach had a significant impact on SK Telecom, leading to a net loss of subscribers and a suspension of new sign-ups. This resulted in a decline in Mobile Network Operator (MNO) revenue and operating income, casting a shadow over the company’s financial performance.
Significant Financial Impact
The financial repercussions of the cybersecurity incident were severe, with consolidated revenue declining by 1.9% year-on-year. Operating income plummeted by 37.1%, and net income fell by a staggering 76.2%, primarily due to incident-related costs.
Reduction in Subscriber Base
The company’s subscriber base took a hit, with the number of 5G subscribers decreasing by approximately 220,000 to 17.02 million. This decline was accompanied by losses in broadband and IPTV subscribers, further impacting the company’s revenue streams.
Lowered Annual Revenue Guidance
SK Telecom has revised its annual revenue guidance downward from KRW 17.8 trillion to KRW 17 trillion. The company anticipates that operating profit will underperform compared to the previous year, reflecting the ongoing financial impact of the cybersecurity incident.
Forward-Looking Guidance
Looking ahead, SK Telecom aims to bolster its corporate value through enhanced cybersecurity measures and continued expansion of its AI business. Despite the anticipated financial impact of the cybersecurity incident on 2025 earnings, the company remains focused on innovation and growth, with revised annual revenue guidance set at KRW 17 trillion.
In conclusion, SK Telecom’s earnings call painted a picture of a company navigating through challenges while remaining committed to innovation and growth. The positive strides in the AI sector and strategic plans for a new data center highlight the company’s forward-thinking approach. However, the significant financial impact of the cybersecurity incident and the resultant lowered revenue guidance serve as a reminder of the hurdles that lie ahead.