SK telecom posts strong Q3 earnings on AI business growth

SK telecom CI

South Korean mobile carrier SK telecom Co. achieved impressive third-quarter results for 2024 that exceeded market expectations, driven by balanced growth across both its telecom and non-telecom divisions. Particularly notable were gains in cloud and data center services, signaling a significant shift towards transforming SK telecom into an artificial intelligence (AI) company.

The company announced on Wednesday that its consolidated operating profit for the third quarter totaled 533.3 billion won ($380.6 million), up 7.1 percent from the same period the year before. Revenue rose by 2.9 percent to 4.5 trillion won during the same period, which topped the market forecasts compiled by financial information provider FnGuide Inc.

FnGuide projected revenue at 4.49 trillion won and operating profit at 521.3 billion won.

SK telecom attributed the gains to revenue growth in sectors like roaming and enterprise, as well as operational efficiency and restructuring driven by company-wide AI adoption.

On a separate basis, SK telecom’s revenue stood at 3.2 trillion won, up 1.7 percent from 2023, and operating profit came to 457 billion won, up 12.3 percent.

AI business growth stood out, with revenue from data centers totaling 60.9 billion won, up 14 percent from the same period during the previous year, while cloud services grew by 30 percent to 47 billion won.

Market analysts suggest that SK telecom’s efforts to accelerate its AI revenue model since its corporate split in November 2021 have been effective. The company’s strategy involves expediting its transformation into an AI-focused enterprise by expanding AI data centers and AI-driven B2B and B2C services.

SK telecom plans to establish a nationwide AI infrastructure anchored by regional AI data centers and GPU-as-a-Service (GPUaaS) subscription AI cloud services. SK telecom Chief Executive Officer Ryu Young-sang outlined the vision for positioning as an AI data center hub for the Asia Pacific region at the recent SK AI Summit 2024.

The company will launch an AI data center testbed in Pangyo, Gyeonggi Province, in December 2024. The facility will feature advanced AI semiconductors and liquid cooling solutions from SK Group and its partners, including Nvidia Corp. and SK hynix Inc.’s high-bandwidth memory.

For individual consumers, SK telecom is co-developing a telecom-specific large language model (LLM) in collaboration with global Telco AI Alliance members. Set for commercialization in 2025, the service will initially be rolled out within the company’s customer service operations.

“A Dot, the AI personal assistant, provides natural conversation experiences and professional services, with a major upgrade in August,” SK telecom Chief Financial Officer Kim Yang-seob said. “SK telecom is rapidly expanding the AI personal services portfolio with offerings such as A Dot Call, an AI-enabled T-phone feature, and Multi-LLM Agent, a PC version of A Dot.”

For their part, KT Corp. and LG Uplus Corp. are expected to release their third-quarter results on Friday. According to FnGuide, KT’s operating profit forecast stands at 456.4 billion won, up 41.8 percent on year, largely due to base effects from one-time costs associated with last year’s early wage negotiations. LG Uplus’s operating profit is anticipated to decline 0.34 percent to 253.4 billion won.