SK Tel CEO says low valuation tops list of his concerns

South Korea’s SK Telecom Co. is undervalued relative to its robust earnings and steady dividend payouts and needs to boost new AI-driven growth areas such as over-the-top platforms and other subscription-based services, its CEO Ryu Young-Sang said in a recent memo.

“Our underestimated value is my biggest concern,” he said in the memo posted on the company’s online newsroom.

The country’s top mobile carrier is now shifting its focus away from diversification it had pursued in the past five years. For the next 10 years, it will redefine its business model to make an AI-driven transformation.

“We will not only transform our core MNO (mobile network operation) and media services into AI-driven ones, but also may acquire solid companies,” Ryu noted.

Its share price has wiped out nearly 20% off its historic high of 63,100 won touched in late December of last year, broadly in line with the broader Kospi index.

To expand media services, it launched the OTT platform Wavve in 2019. It also operates the metaverse platform iFriends and music streaming services. Now it is preparing its entry into the urban air mobility (UAM) segment.

The mobile services provider is trying to provide AI as a service (AIaaS), utilizing search and recommendation algorithms to boost its commerce and subscription-based businesses such as 11Street Co. and T Universe.

The CEO said that the company has ample room for growth even after paying hefty dividends. To do so, it is aiming to double sales of new growth engines such as media services by 2025.

As part of efforts to lift its share price, SK Telecom retired 2.6 trillion won ($2.3 billion) worth of its treasury shares and carried out a five-for-one stock split last year. In the same year, it hived off its investing operations into a new entity named SK Square

In January, the company appointed its e-commerce arm's chief executive and artificial intelligence (AI) expert Lee Sang-ho as chief technology officer.

Write to Jung-Soo Hwang at hjs@hankyung.com
Yeonhee Kim edited this article