Core Viewpoint - South Korean mobile carrier SK Telecom has launched its in-car AI system, Auto, which is integrated into Renault Korea's new model, Filante, enhancing driver interaction and safety [1]. Group 1: Company Developments - SK Telecom's stock surged by 12.2% in pre-market trading following the announcement of the new AI system [1]. - The AI system, Auto, is designed to understand driver behavior and real-time driving conditions, allowing for hands-free operation [1]. Group 2: Market Performance - The pre-market price of SK Telecom reached 23.550, an increase of 2.560 from the previous close [2]. - The stock's trading volume was 584,000 shares, with a market capitalization of 80.55 billion [2].

Core Insights - The article emphasizes the importance of looking beyond U.S. large caps for investment opportunities, particularly in undervalued international stocks [1][3][9] - The Benzinga Value Ranking is introduced as a systematic, numbers-driven tool to identify the cheapest stocks globally based on multiple valuation metrics [2][5] Investment Strategy - Investors are encouraged to focus on the top decile of the Benzinga Value Ranking, specifically targeting non-U.S. stocks to access the cheapest part of the global market [7][9] - The current market environment is characterized by extreme valuation dispersion outside the U.S., with many profitable companies trading at low earnings multiples [4][6] Company Highlights - **POSCO Holdings (NYSE:PKX)**: A leading steel producer in South Korea, trading at discounted multiples despite controlling high-quality assets [11] - **Sasol Ltd. (NYSE:SSL)**: An integrated energy and chemicals company in South Africa, generating substantial cash flow but heavily discounted due to past operational issues [12] - **Korea Electric Power Corp. (NYSE:KEP)**: The backbone of South Korea's power system, facing extreme low valuation multiples due to government pricing controls [13] - **LuxExperience (NYSE:LUXE)**: A niche luxury travel company in the Netherlands, undervalued due to lack of investor attention rather than demand collapse [14] - **Gerdau (NYSE:GGB)**: Brazil's largest long steel producer, trading at low multiples despite consistent cash flow generation [15] - **Honda Motor (NYSE:HMC)**: A global manufacturing leader in Japan, undervalued due to lack of hype around its steady profits and cash flow [16] - **SK Telecom (NYSE:SKM)**: South Korea's largest wireless carrier, undervalued due to low growth expectations despite reliable cash generation [18] - **Jiayin Group (NASDAQ:JFIN)**: A Chinese fintech company facing regulatory uncertainty, leading to extreme valuation discounts [19] - **FinVolution Group (NYSE:FINV)**: Another Chinese fintech platform, similarly undervalued due to regulatory challenges and investor distrust [20] - **KT Corp. (NYSE:KT)**: A leading telecommunications provider in South Korea, generating stable cash flow but facing compressed valuation multiples [21]

Core Insights - The global AI race is increasingly characterized by scale, infrastructure, and national strategy, with SK Telecom's unveiling of the A.X K1 model indicating Korea's ambition to compete at the highest level in AI [1] - A.X K1, a 519-billion-parameter model, is positioned as a "Teacher Model" to transfer knowledge to smaller models, establishing a national AI infrastructure [2] - Accessibility is a key feature, with A.X K1 integrated into SK Telecom's A-DoT platform, allowing nationwide access and positioning AI as a public utility [3] AI Infrastructure Development - Running a 500B-scale model tests the limits of systems, providing a proving ground for Korea's AI chips and strengthening its position in a critical sector [4] - SK Telecom is transforming into a comprehensive artificial intelligence data center (AIDC) developer, aiming to make South Korea a leading AI hub in Asia [6] - The company plans to replicate its AIDC model domestically and internationally, attracting global capital and entering Southeast Asia with energy-optimized facilities [7] Commercialization and Innovation - SK Telecom is commercializing end-to-end AIDC solution packages, covering design, construction, operations, and energy efficiency, to enhance national AI infrastructure [8] - The company is collaborating with AWS and NVIDIA to accelerate innovations in Edge AI and other advanced use cases [7] Market Performance - SK Telecom currently holds a Zacks Rank 3 (Hold), with shares having fallen 3% in the past year compared to a 39.1% growth in the sub-industry [9]

Core Insights - SK Telecom has launched A.X K1, Korea's first hyperscale AI model with 519 billion parameters, aiming to position Korea among the top three global AI players alongside the U.S. and China [1][2][8] AI Model Characteristics - A.X K1 functions as a 'Teacher Model', enabling knowledge transfer to smaller models, particularly those below 70 billion parameters, and serves as foundational digital social overhead capital for the AI ecosystem [3][9] - AI models with over 500 billion parameters exhibit stable performance in complex reasoning and multilingual understanding, facilitating advanced tasks such as high-complexity coding [4] Accessibility and Public Good - The SKT consortium plans to enhance nationwide AI accessibility by offering A.X K1 through A. (A-DoT), which has over 10 million subscribers, promoting an 'AI for Everyone' framework [5][9] - Liner, a consortium member, aims to provide accurate multilingual search services using A.X K1, which is expected to enhance industrial competitiveness through various applications [6] Semiconductor Industry Validation - A.X K1 will serve as a testbed for validating Korea's semiconductor industry, crucial for addressing performance bottlenecks in high-performance AI semiconductors [7] Strategic Alignment - The SKT consortium's strategy aligns with Korea's national goal of becoming a top-three AI nation, emphasizing the importance of scaling and operating AI at a national level [8][9] Consortium Composition - The SKT consortium includes eight organizations, such as SK Telecom, Krafton, and Seoul National University, collaborating to build a full-stack sovereign AI ecosystem [9][11] Open Source and Development Support - The consortium plans to release A.X K1 as open-source to foster AI development across Korea's ecosystem, providing access to APIs and training data [13][14] Future Vision - The launch of A.X K1 marks a significant milestone in Korea's ambition to enhance its global AI competitiveness amid increasing international competition [15]

Core Point - South Korea's consumer agency will order SK Telecom to compensate 58 users due to a class action related to a recent hacking incident [1] Group 1 - The consumer agency's decision highlights the regulatory scrutiny faced by telecommunications companies in South Korea [1] - The class action reflects growing consumer concerns over data security and privacy in the telecom sector [1] - SK Telecom is expected to address the implications of this incident on its reputation and customer trust [1]

Core Insights - The telecom sector is experiencing a significant transformation driven by AI, with companies like IQSTEL Inc. leading the charge in providing advanced solutions across various domains [5][3]. Market Overview - The global AI in telecommunication market is projected to grow from USD 1.89 billion in 2024 to approximately USD 50.21 billion by 2034, reflecting a compound annual growth rate (CAGR) of 38.81% from 2025 to 2034 [4]. Company Highlights - IQSTEL Inc. forecasts organic revenue of $430 million for 2026, indicating a 26% increase from its $340 million revenue forecast for 2025 [6][7]. - The company reported $283 million in revenue for fiscal year 2024 and is on track to meet its 2025 forecast, driven by growth in Telecom, Fintech, AI, and Cybersecurity services [8]. - IQSTEL aims to achieve $15 million in EBITDA by 2026 through strategic acquisitions and organic growth [9][10]. - The company is targeting a revenue milestone of $1 billion by 2027 [11]. Strategic Partnerships - NVIDIA and Nokia have formed a strategic partnership to integrate NVIDIA-powered AI-RAN products into Nokia's portfolio, facilitating the launch of AI-native 5G-Advanced and 6G networks [12][13]. - T-Mobile U.S. will collaborate with Nokia and NVIDIA to test AI-RAN technologies, with trials expected to begin in 2026 [15]. - Verizon Business has announced a deal with AWS to enhance network infrastructure for AI applications, marking a significant commitment to support the AI ecosystem [19][20]. Technological Advancements - NVIDIA is collaborating with SK Group to build an AI factory featuring over 50,000 GPUs, expected to be one of Korea's largest AI factories upon completion [22][24]. - The partnership aims to accelerate digital transformation and innovation across various industries in Korea [22][24].

Financial Data and Key Metrics Changes - Consolidated revenue for Q3 2025 was 3,978.1 billion, representing a 12.2% decline year-on-year, primarily due to a 50% tariff discount in August and various membership discounts [8][10] - Operating income dropped significantly by 90.9% year-on-year to 48.4 billion, reflecting the adverse financial impact of the cybersecurity incident [10] - Net income turned negative due to penalties associated with the cybersecurity incident [11] Business Line Data and Key Metrics Changes - The number of 5G subscribers increased by approximately 240,000 in Q2 to 17.26 million, indicating a gradual recovery in the fixed and mobile business [18] - Revenue from the AI business grew by 35.7% year-on-year, contributing positively to the company's overall performance [24] - AI Data Center revenue rose by 53.8% year-on-year to 149.8 billion, driven by the acquisition of the Pan-gil Data Center [27] Market Data and Key Metrics Changes - The company is focusing on expanding its customer base through the launch of AIR, a digital communication service aimed at users of unlocked devices [20][62] - The AI business is being reorganized into a more cohesive structure, enhancing efficiency and competitiveness in the market [22] Company Strategy and Development Direction - The company aims to restore stability and resume dividend payments while focusing on continuous innovation in information security and customer trust restoration [15][40] - Plans include expanding data center operations and enhancing AI capabilities, with a goal of achieving trillion won level revenue by operating over 300MW of data center capacity by 2030 [76] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging period due to the cybersecurity incident but expressed commitment to turning the crisis into an opportunity for renewed growth [37][42] - The company anticipates a gradual recovery in mobile revenue and aims to return to pre-incident operating profit levels by maximizing cost efficiency [52] Other Important Information - The company decided not to declare dividends for Q3 2025 due to the financial impact of the cybersecurity incident, with future dividends to be reviewed based on performance and cash flow [15][54] - The Ulsan AI Data Center is under construction, with expected profit generation starting in 2027 [74] Q&A Session Summary Question: Dividend focus for Q4 and outlook for 2026 - Management indicated that while Q4 may see continued revenue decline due to ongoing discounts, the impact should be smaller than in Q3, and they aim to restore dividends in line with improved performance [51][55] Question: Customer recovery post-cybersecurity incident - Management reported that customer churn was contained, resulting in a net neutral balance between additions and losses, with a focus on qualitative recovery rather than just numerical [59][60] Question: Progress on Ulsan AI Data Center and future plans - Construction of the Ulsan AI Data Center is progressing smoothly, with expected revenue generation starting in 2027, and plans for additional data center facilities are being explored [73][76] Question: Charging for ADAS service - The company plans to review a B2C paid model for ADAS, targeting a launch in the first half of 2026, while focusing on improving usability and expanding the customer base [83]

Financial Performance - Consolidated revenue decreased by 12.2% YoY to KRW 3.98 trillion [7, 12] - SKT revenue declined by 16.8% YoY to KRW 2.67 trillion, driven by subscriber attrition and the Customer Appreciation Package [7, 12, 15] - Consolidated operating income decreased significantly by 90.9% YoY to KRW 48.4 billion [7, 12] - Consolidated net loss was KRW 166.7 billion, including a KRW 134.8 billion penalty from the Personal Information Protection Commission [12] - Non-consolidated operating loss was KRW 52.2 billion [19] - Non-consolidated net loss was KRW 206.6 billion, also including the KRW 134.8 billion penalty [19] - EBITDA decreased by 34.9% YoY to KRW 946 billion [7] SK Broadband (SKB) Performance - SKB revenue increased by 3.4% YoY to KRW 1.14 trillion [7, 20, 24] - SKB operating income increased slightly by 1.5% YoY to KRW 89 billion [7, 20, 24] Business Highlights - 5G subscribers recovered to pre-cybersecurity incident levels, reaching 17.3 million [27] - AI DC revenue increased by 53.8% YoY [28] - Telecom-related B2B revenue showed a stable trend, increasing by 0.8% YoY [27]

Core Insights - The article expresses a positive outlook on SKM shares, indicating a beneficial long position held by the analyst [1]. Group 1 - The analyst emphasizes the importance of conducting personal research before making investment decisions, highlighting the inherent risks involved in investing [2]. - It is noted that past performance does not guarantee future results, and no specific investment recommendations are provided [3].

Group 1 - SK Telecom Co. Ltd. is considered one of the most undervalued telecom stocks, with a new partnership with Aduna aimed at expanding developer access to standardized telecom APIs [1] - The collaboration will integrate Korea into the global network API ecosystem, utilizing the CAMARA open-source project to simplify developer interactions with network functions [2] - The initial focus of the partnership will be on high-value security and identity services, which are essential for fraud prevention and enhancing digital trust in sectors like banking and fintech [3] Group 2 - SK Telecom provides wireless telecommunication services in South Korea, operating through three segments: Cellular Services, Fixed-Line Telecommunications Services, and Other Businesses [4]