SK Telecom’s Q3 profit up on brisk data center, cloud sales

SK Telecom Co.'s third-quarter operating profit increased 7% on-year, becoming the only South Korean mobile carrier posting an on-year gain in profit in the quarter largely thanks to the robust performance of its data center and cloud businesses.

The top Korean telecom company reported in a regulatory filing on Wednesday that its consolidated operating profit for the third quarter ended in September added 7% from the same quarter of last year to 498 billion won ($381.7 million).

It is the only major Korean mobile carrier reporting an on-year gain in operating income in the quarter, as its crosstown rivals KT Corp. and LG Uplus Corp. saw a double-digit drop over the same period.

The result also beat Yonhap Infomax’s consensus of 472 billion won.

Its revenue for the quarter added 1.4% on-year to 4.4 trillion won, while net profit jumped 25.5% to 308.2 billion won largely due to its equity sale in Hana Bank and investment gain from Joby Aviation Inc.

The Korean company in June announced its $100 million investment in the California-based electronic vertical take-off and landing (eVTOL) aircraft maker. 

Its earnings growth in the third quarter was mainly driven by the strong performance of its data center and cloud businesses, the company said.

SK Telecom raked in 401 billion won in revenue from its Enterprise division, which oversees the data center and cloud businesses.

Data center revenue jumped 32.5% on-year to 53.4 billion won in the quarter, while cloud revenue climbed 38.7% to 36.2 billion won.

AI TRANSITION 

The strong performance of its data center business bodes well for the company’s transformation into an artificial intelligence company, given that data centers play a key role in building an AI infrastructure.

SK Telecom in September introduced its AI Pyramid strategy as part of its efforts to become a global AI company.

The strategy focuses on three core businesses – AI Infrastructure, AIX (AI transformation) and AI Service.

To build a strong AI infrastructure, the Korean telecom company plans to add more AI-powered data centers.

Its AI semiconductor-developing subsidiary Sapeon this month unveiled its next-generation X330 AI chip that boasts double the processing speed of its peers.

It also plans to release an AI platform for telecom-specific large language models (LLM) next year.

Cloud business is a pillar business of its AIX division, which will focus on innovating its internal businesses’ customer experience and boosting their productivity. It will also use AI technology to foray into the mobility and healthcare sectors.

As part of AI Service, SK Telecom in September officially launched A Dot, an AI private secretary service that enables iPhone users to record and summarize their phone conversations. It also plans to add a real-time interpreter service for phone conversations.

The company in June upgraded the A Dot service with OpenAI’s GPT-4.0.  

SK Telecom’s Chief Executive Ryu Young-sand announced in March that the company will strive to transform into a global AI company.

STILL KOREA’S NO. 1 MOBILE CARRIER

SK Telecom remained the top mobile and internet TV company in Korea in the third quarter.

Subscribers to its mobile services reached 31.2 million in the cited quarter, including 15.1 million 5G service subscribers.  

Subscribers to its internet protocol TV (IPTV) service also inched up to the local industry’s highest 9.52 million from 9.46 million in the previous quarter.

It was also the country’s No. 2 broadband business with 6.87 million subscribers.

SHARE BUYBACK AND CANCELLATION

SK Telecom disclosed on the same day that it has repurchased 146.8 billion won worth of treasury shares to date as part of its share buyback program announced in July.

The company plans to buy back its treasury shares worth 300 billion won in total until the end of January next year and retire 200 billion won worth of those shares on Feb. 5.  

SK Telecom shares lost 1.7% to end at 48,400 won on Wednesday.

Write to Seung-Woo Lee at leeswoo@hankyung.com

Sookyung Seo edited this article.