Core Insights - SK Telecom has formed a strategic partnership with Schneider Electric to collaborate on mechanical, electrical, and plumbing (MEP) systems for artificial intelligence data centers (AIDCs) [1][2] - The partnership aims to enhance the stability and efficiency of AIDCs from construction to operational capability [2][3] - The collaboration will initially focus on the development of hyperscale AIDCs in key regions in Korea, with plans for global market expansion [3][4] Company Overview - SK Telecom has been a leader in the mobile industry since 1984 and is transitioning into an AI-focused company, emphasizing AI Infrastructure, AI Transformation, and AI Service [6] - Schneider Electric is recognized for its comprehensive integrated infrastructure solutions for AI data centers, covering all stages from design to operation [2][4] Strategic Goals - The partnership is expected to generate significant synergies by combining SK Telecom's AIDC expertise with Schneider Electric's MEP capabilities, ultimately enhancing efficiency and performance in AIDC infrastructure [4][5] - The collaboration will serve as a foundation for expanding AIDC projects into global markets, strengthening SK Telecom's competitiveness [4][5]

Corporate Governance - The board of directors has resolved to call the annual general meeting of shareholders on March 26, 2025, to approve the financial statements for the fiscal year 2024[4]. - The total amount of remuneration paid to directors for fiscal year 2024 was Won 5,781,914,670, with a maximum authorized amount for fiscal year 2025 set at Won 10,000,000,000[16]. - The company plans to amend its Articles of Incorporation to enhance dividend predictability by allowing the record date for quarterly dividends to be set after the Board's resolution[7]. - The company appointed Kang, Dong-soo as a non-executive director, who has extensive experience in business strategy and finance, expected to contribute to growth in telecommunications and AI sectors[11]. - Kim, Changbo has been nominated as an independent non-executive director and audit committee member, bringing expertise in risk management and compliance[12][14]. - The number of directors will decrease from nine to eight if the appointment agenda is approved at the annual general meeting[16]. - The company aims to strengthen the independence and expertise of the audit committee through the appointment of qualified candidates[17]. - The company emphasizes the importance of management transparency and shareholder rights protection through the appointment of independent directors[17]. Financial Performance - Operating revenue for 2024 reached W 17,940,609 million, an increase of 1.88% from W 17,608,511 million in 2023[22]. - Operating profit for 2024 was W 1,823,409 million, up 4.00% compared to W 1,753,204 million in 2023[22]. - Profit for the year increased to W 1,438,795 million in 2024, representing a growth of 25.59% from W 1,145,937 million in 2023[24]. - Basic earnings per share rose to W 6,023 in 2024, a 21.58% increase from W 4,954 in 2023[22]. - The company reported a total comprehensive income of W 1,599,571 million for 2024, up from W 1,121,970 million in 2023, indicating a growth of 42.66%[24]. - The company plans to continue expanding its market presence and investing in new technologies to drive future growth[22]. - Profit for the year increased to W 1,438,795 million in 2024, up from W 1,145,937 million in 2023, representing a growth of 25.5%[29]. Assets and Liabilities - Current assets increased to 5.3 million won as of December 31, 2024, compared to 4.3 million won in 2023, reflecting a growth of approximately 23.3%[19]. - Total assets as of December 31, 2024, were W 30,515,255 million, compared to W 30,119,227 million in 2023, reflecting a growth of 1.31%[20]. - Total liabilities increased to W 18,635,921 million in 2024, up from W 17,890,828 million in 2023, marking a rise of 4.15%[20]. - Shareholders' equity attributable to owners of the Parent Company was W 11,750,327 million in 2024, compared to W 11,389,046 million in 2023, an increase of 3.17%[20]. - Non-controlling interests decreased significantly from W 839,353 million in 2023 to W 129,007 million in 2024[20]. Cash Flow - Net cash provided by operating activities rose to W 5,087,285 million in 2024, compared to W 4,947,205 million in 2023, an increase of 2.8%[30]. - Net cash used in investing activities decreased to W (2,711,827) million in 2024 from W (3,352,905) million in 2023, reflecting a reduction of 19.1%[30]. - Cash inflows from financing activities totaled W 1,552,192 million in 2024, down from W 2,416,817 million in 2023, a decline of 35.8%[30]. - The company reported a net increase in cash and cash equivalents of W 565,605 million in 2024, compared to a decrease of W (426,690) million in 2023[30]. Investments and Subsidiaries - SK Telecom established a new subsidiary, Astra AI Infra LLC, in 2024, while several subsidiaries were excluded from consolidation due to liquidation or loss of control[39]. - The non-controlling interest in SK Broadband Co., Ltd. decreased in 2024, resulting in no material non-controlling interests for the Group as of December 31, 2024[40]. - Total assets of SK Broadband Co., Ltd. reached W 6,806,280 million in 2024, with total liabilities of W 3,760,426 million and total equity of W 3,045,854 million[37]. - Revenue for SK Broadband Co., Ltd. was W 4,415,270 million in 2024, an increase from W 4,281,932 million in 2023, showing a growth of 3.1%[37]. Tax and Compliance - The Group expects the exposure to Pillar Two income tax, effective January 1, 2024, to be immaterial based on recent assessments[57]. - The Group assesses uncertainty over income tax treatments and reflects the effect of uncertainty using the most likely amount or expected value methods[183]. - Deferred tax assets and liabilities are measured at expected tax rates applicable when the asset is realized or the liability is settled[181]. Accounting Policies - The Group applies hedge accounting for derivatives to manage interest rate and foreign exchange risks, with changes in fair value recognized in other comprehensive income for effective hedges[104]. - Property and equipment are initially measured at cost and depreciated over their estimated useful lives, which range from 3 to 40 years depending on the asset type[110]. - Intangible assets are measured at cost and amortized on a straight-line basis, except for those with indefinite useful lives such as club memberships and brands[113]. - The Group derecognizes financial assets when contractual rights to cash flows expire or when risks and rewards of ownership are transferred[88]. Research and Development - Expenditures on research activities are recognized in profit or loss as incurred, while development expenditures are capitalized only if they meet certain criteria[116].

Financial Data and Key Metrics Changes - Consolidated revenue reported KRW 17,940.6 billion, up 1.9% year-over-year, with sustained growth in all business areas including fixed and mobile, enterprise, and AI [10][27] - Consolidated operating profit grew 4% year-over-year, with an operating profit margin exceeding 10% [4][9] - Net income posted KRW 1,438.8 billion, up 25.6% year-over-year, attributed to business portfolio restructuring and asset efficiency enhancements [12][29] Business Line Data and Key Metrics Changes - The MNO business experienced a slight slowdown in top line growth, but customer-friendly roaming services contributed to revenue growth [10][27] - Significant growth in data center and B2B businesses such as cloud and AICC contributed to consolidated revenue growth [10][27] - AI-related revenue grew 19% year-over-year, with AIX and AIDC being key contributors [16][29] Market Data and Key Metrics Changes - The AI business is divided into two categories: telecom business and AI business, which includes AIX, AIDC, and other AI-related services [15][32] - A. achieved a 160% growth year-over-year in total users, indicating strong market demand for personal AI services [34][46] Company Strategy and Development Direction - The company focused on operational improvements and the AI Pyramid Strategy to refine business models and establish execution systems for becoming an AI company [4][7] - Plans to strengthen global AI partnerships through equity investments and collaborations with tech companies [13][30] - The company aims to build an AI Infrastructure Superhighway and monetize AI-related revenue [16][19] Management's Comments on Operating Environment and Future Outlook - Management anticipates significant economic, industrial, and political changes both in Korea and globally, emphasizing the need to strengthen fundamental competitiveness [20][36] - The company aims for a consolidated revenue target of KRW 17.8 trillion for 2025, representing approximately 1% growth year-over-year [19][36] Other Important Information - The DPS for 2024 was determined at KRW 3,540, maintaining the same level as the previous year, reflecting a cautious approach to shareholder returns amid uncertain market conditions [18][47] - The company plans to introduce a subscription-based paid service for A. within the year [59][91] Q&A Session All Questions and Answers Question: Key focus areas for AI business and revenue outlook - The company restructured into 7 business units focusing on telecom and AI, with expectations for AIX revenue to grow about 30% this year [42][44] Question: Background on maintaining DPS and future shareholder returns - The decision to maintain DPS was made considering the uncertain business environment, with plans for continued investment in growth areas [48][50] Question: Details on A. subscription model and Aster launch - A. is being developed to offer more diverse features, with plans for a subscription model and an open beta service for Aster in the U.S. [60][62] Question: Impact of operational improvements on earnings and 2025 CapEx guidance - Operational improvements led to a 4% increase in operating income, with a focus on optimizing CapEx for efficient network operation [77][79] Question: Outlook on stock price and AI profit generation - The company aims to demonstrate the effectiveness of its AI business in 2025, with a commitment to maintaining high shareholder returns [88][90] Question: AI infrastructure and AIX business models - The company is focusing on building affordable and efficient AI data centers, with AIX revenue expected to grow by 30% in 2025 [106][114]

Core Insights - SK Telecom has joined the MIT GenAI Impact Consortium as a founding member to explore the commercialization and industry implications of generative AI technologies [1][3] - The consortium aims to bridge academia and industry, focusing on the societal and industrial impacts of generative AI [2][6] Company Involvement - SK Telecom plans to share its competitiveness and development strategy with other founding members and explore collaboration opportunities [5] - The company aims to deliver tangible results from its collaboration with MIT to its SK AI R&D Center, focusing on areas such as ICT, semiconductors, and energy [5][6] - SK Telecom is transforming into an AI company, emphasizing AI Infrastructure, AI Transformation (AIX), and AI Service to enhance value for industry and society [7] Consortium Structure and Goals - The MIT GenAI Impact Consortium is led by Anantha Chandrakasan, with a focus on selecting optimized projects and managing research efforts [3][4] - The consortium includes six founding members: SK Telecom, OpenAI, The Coca-Cola Company, Tata Group, Analog Devices, and TWG Global [3] - The consortium plans to commence full-scale research on key projects within the year [4]

Core Insights - SK Telecom Co. has launched its SKT GPU-as-a-Service (GPUaaS) at its AI Data Center in Seoul, providing scalable and customizable GPU resources for businesses' AI needs [1][2] - The GPUaaS allows companies to select GPU count and duration, enabling tailored packages that include standalone servers and dedicated network lines [2] - SK Telecom has partnered with Lambda to ensure a stable supply of GPUs and leverage technical expertise, enhancing its capacity to meet AI computational demands [3] Product Innovations - The AI Cloud Manager, introduced in October 2024, streamlines GPU resource management, reducing AI model training time and facilitating faster development cycles [4] - The latest GPUaaS utilizes NVIDIA H100 Tensor Core GPUs, with plans to integrate the H200 Tensor Core by Q1 2025 to accelerate AI technology development in South Korea [5] Strategic Collaborations - SK Telecom is strengthening its position in the AI infrastructure sector through partnerships with SK hynix and Penguin Solutions for AIDC solutions research and development [6] - An investment of $3 million in Twelve Labs aims to enhance multimodal AI applications across various industries [6] Financial Performance - In the last reported quarter, SK Telecom achieved consolidated revenues of KRW 4.5321 trillion, a 2.9% year-over-year increase, driven by growth in roaming services and the enterprise sector [8] - Operating income rose by 7.1% to KRW 533.3 billion, supported by improved efficiency from AI integration [8] Market Position - SK Telecom holds a Zacks Rank of 3 (Hold), with its shares increasing by 0.2% over the past year, contrasting with a 14.6% decline in the sub-industry [9]

Group 1: Partnership and Investment - SK Telecom has entered into a partnership with SK hynix and Penguin Solutions to advance artificial intelligence data center (AIDC) solutions, announced during CES 2025 [1] - The collaboration is based on a $200 million investment agreement from July 2024, aimed at exploring synergies and leveraging complementary strengths in AIDC solutions [2] - The companies plan to target business opportunities in the Asia-Pacific and Middle East markets, including Japan, by combining their expertise in semiconductors, energy, memory technology, and AI [2] Group 2: Technological Development - A significant focus of the partnership is the development of a comprehensive full-stack software solution for efficient AIDC operations [3] - SK hynix and Penguin Solutions are expected to collaborate on next-generation data center memory technology to improve power efficiency and heat dissipation [3] Group 3: Company Performance and Initiatives - SK Telecom reported consolidated revenues of KRW 4.5321 trillion, reflecting a 2.9% year-over-year increase, driven by growth in roaming services and the enterprise sector [6] - The company’s operating income increased by 7.1% to KRW 533.3 billion, supported by improved efficiency through AI integration [6] - In December 2024, SK Telecom invested $3 million in Twelve Labs to enhance multimodal AI applications across various industries [4] - The company launched an AI Customer Service Support System in mid-October 2024, showcasing strong performance after restructuring its knowledge base and improving models [5] Group 4: Market Position - SK Telecom holds a Zacks Rank 3 (Hold) and its shares have gained 2.8% over the past year, contrasting with a 12.1% decline in the sub-industry [7]

Group 1 - The article emphasizes that South Korea is a market with many undervalued stocks, making it an attractive investment opportunity [1] - It highlights the presence of globally recognized companies in South Korea, such as Samsung Electronics, which adds to the market's appeal [1] Group 2 - The article does not provide specific financial data or performance metrics related to the companies mentioned [2][3]

Core Insights - SK Telecom Co. (SKM) has invested $3 million in Twelve Labs to enhance multimodal AI applications, particularly in security, public safety, and customer interaction [1][3] - Twelve Labs specializes in multimodal video foundation models, enabling enterprises to utilize video archives for tasks like semantic search and content summarization [3] - The collaboration aims to leverage SK Telecom's telecommunications expertise and Twelve Labs' video understanding capabilities to advance multimodal AI technology [3] Investment and Growth Strategy - SK Telecom is focusing on becoming a global AI company by developing AI data centers, enterprise AI, and AI consumer services [8] - The company has seen a 2.9% year-over-year increase in consolidated revenues, reaching KRW 4.5321 trillion, driven by growth in roaming and the enterprise sector [7] - Operating income increased by 7.1% to KRW 533.3 billion, attributed to enhanced efficiency from AI integration and operational improvements [7] AI Initiatives - SK Telecom's AI Customer Service Support System beta service was successfully concluded in November 2024, marking a significant advancement in customer service technology [5] - The company collaborated with global LLM leaders to develop an advanced AI system tailored for telecom, refining their Telco LLM and large multimodal model (LMM) [6] - The AI system has shown strong performance since its launch in mid-October, indicating successful implementation of AI-driven innovations [6] Market Performance - SK Telecom currently holds a Zacks Rank of 4 (Sell), with its shares gaining 2.6% over the past year, contrasting with a 17.1% decline in the sub-industry [9]

Financial Data and Key Metrics Changes - Consolidated revenue for Q3 2024 was KRW 4,532.1 billion, an increase of 2.9% year-over-year, driven by stable growth in roaming and B2B solution businesses [8] - Operating income rose to KRW 533.3 billion, up 7.1% year-over-year, attributed to cost stabilization in marketing and depreciation [8] - Net income decreased to KRW 280.2 billion, reflecting a 9% year-over-year decline due to nonoperating losses [21][9] Business Line Data and Key Metrics Changes - Data center revenue grew by 14% year-over-year, benefiting from higher utilization [10] - The enterprise business maintained an 8% year-over-year growth, while the cloud business saw a 30% increase in revenue [15] - 5G subscribers reached 16.58 million, accounting for 73% of the total subscriber base, with a net addition of 350,000 in Q3 [14][43] Market Data and Key Metrics Changes - The demand for AI data centers is exceeding supply, indicating a strong market opportunity [10] - The enterprise AI business is expected to grow significantly, with meaningful orders being secured [15] - The B2C service market is shifting towards subscription models, creating new opportunities for telecommunications companies [7] Company Strategy and Development Direction - SK Telecom is focusing on an AI Pyramid Strategy, aiming to become a global leader in AI data centers, B2B, and B2C services [4][5] - The company plans to establish an AI infrastructure super highway to enhance Korea's AI ecosystem [11] - The 2030 target includes total revenue of KRW 30 trillion, with AI contributing 35% [24][55] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of nonrecurring valuation losses on net income but emphasized that these will not affect dividend calculations [21] - The company remains committed to maintaining a stable dividend trend, which is crucial for corporate valuation [20] - Management expressed confidence in the growth potential of AI markets and the company's ability to capitalize on these opportunities [54] Other Important Information - The company has established a partnership with Lambda for AI data centers, with plans to deploy thousands of GPUs [47] - SK Telecom is actively developing a telco-specific LLM in collaboration with the Global Telco AI Alliance [12] - The company is enhancing its AI services, with significant upgrades to its A. platform and a successful promotion of the Perplexity Pro model [13][35] Q&A Session Summary Question: Impact of nonoperating losses on year-end dividend - Management clarified that nonrecurring valuation losses will not affect the calculation of funds for dividend payout, maintaining a commitment to stable dividends [21][20] Question: Corporate value-up plan and index inclusion - Management explained the rationale behind the corporate value-up plan and expressed intentions to enhance corporate value to be included in the Korea Value-up Index in the future [26][24] Question: AI's contribution to earnings and service development - Management detailed the AI Pyramid Strategy focusing on AI DC, AI B2B, and AI B2C as key areas for monetization, with expectations for significant growth [28][31] Question: Promotion of Perplexity Pro and its market response - The promotion was successful, leading to a large number of new customers and strengthening the partnership with Perplexity for future AI product development [37][39] Question: Impact of flagship handset series on 5G subscribers - The launch of new flagship handsets contributed to a net addition of 350,000 5G subscribers, with effective marketing strategies playing a crucial role [43][44] Question: Updates on cooperation with Penguin Solutions for AI DC - Management confirmed plans to open the first AI data center in the Asia Pacific region in December, with a focus on GPU as a Service [47][48]

LeoPatrizi I continue to rate SK Telecom Co., Ltd.'s (NYSE:SKM) [017670:KS] shares as a Buy. I have observed positive signs relating to SKM's core mobile telecommunications business and the company's AI-related growth initiatives. SK Telecom's current valuation metrics indicate that the company's shares have meaningful upside potential. With my prior July 4, 2024, update, I highlighted that SKM is a leading telecommunications company in terms of "mobile segment market share" and "AI competitiveness." Core M ...