Financial Data and Key Metrics Changes - Consolidated revenue for fiscal year 2025 was KRW 17,099.2 billion, a decrease of 4.7% year-on-year due to subsidiary sales and a net decline in subscribers following a cybersecurity incident [4] - Operating income fell to KRW 1,073.2 billion, down 41.1% year-over-year, attributed to revenue decline and costs related to the cybersecurity incident [5] - Net income decreased to KRW 375.1 billion, a 73% drop year-over-year, primarily due to penalty payments from the cybersecurity incident [5] - The company decided not to pay out a quarterly dividend for the fourth quarter due to the financial impact of the cybersecurity incident [5] Business Line Data and Key Metrics Changes - The MNO business focused on addressing changes caused by the cybersecurity incident, with plans to restore customer trust and improve operational fundamentals [6][7] - AI business revenue continued a two-digit growth trend, driven by increased utilization rates of data centers and the acquisition of a new data center [7] - The company aims to enhance efficiency and productivity in AI-related businesses to produce meaningful outcomes [8] Market Data and Key Metrics Changes - The overall market for MNO services saw temporary expansion due to competitors waiving cancellation fees, but SK Telecom experienced stabilization with a focus on restoring customer trust [47] - The company plans to minimize revenue impact by winning back subscribers and developing new customer segments in 2026 [51] Company Strategy and Development Direction - The company prioritizes restoring market leadership through customer value innovation and redesigning telecom business elements to offer real value [23] - Plans to innovate business productivity through AI acceleration, applying AI across various areas to improve customer experience and operational efficiency [24] - The company aims to enhance the sustainability of its AI business by focusing on core strengths and improving profitability through cost structure improvements [25] Management Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by the cybersecurity incident and emphasized the need to restore earnings and shareholder trust [18] - The focus for 2026 includes improving profitability in the telecom business and enhancing the self-sustainability of the AI business [13][15] - The company plans to utilize AI to boost productivity and improve profitability across its operations [15] Other Important Information - The board of directors set the DPS for fiscal year 2025 at KRW 1,661, pending approval at the annual general shareholders meeting [6] - The company is committed to turning the current crisis into an opportunity to restore customer trust and improve financial performance [8] Q&A Session Questions and Answers Question: Dividend policy for 2026 and earnings normalization - Management aims to restore earnings and return to previous dividend payout levels, considering measures to increase shareholder value [18][19] Question: Strategic directions for new management - The new management will focus on strengthening competitiveness in telecom and AI businesses, with priorities on customer value innovation and AI acceleration [22][23] Question: Equity stake in Anthropic and potential liquidation - Management cannot disclose specific details about the equity stake but will provide updates in the upcoming business report [33][34] Question: Strengths in proprietary foundational model project - The A.X K1 model is recognized for its high-quality responses and is expected to create business opportunities in both B2C and B2B sectors [38][39] Question: Impact of competitors' cancellation fee waivers on MNO business - The company experienced a temporary expansion in the carrier switching market but is focusing on restoring customer trust and improving core business competitiveness [47][48]

Financial Data and Key Metrics Changes - Consolidated revenue for fiscal year 2025 was KRW 17,099.2 billion, a decrease of 4.7% year-on-year, attributed to subsidiary sales, a net decline in subscribers due to a cybersecurity incident, and tariff discounts [3][4] - Operating income fell to KRW 1,073.2 billion, down 41.1% year-over-year, primarily due to revenue decline and costs related to the cybersecurity incident [4] - Net income decreased to KRW 375.1 billion, a 73% drop year-over-year, mainly due to penalty payments from the cybersecurity incident [4] Business Line Data and Key Metrics Changes - The MNO (Mobile Network Operator) business faced challenges due to the cybersecurity incident, leading to a decline in subscribers and revenue [5][6] - AI business revenue continued a two-digit growth trend, supported by increased utilization rates of data centers and the acquisition of a new data center [6] Market Data and Key Metrics Changes - The overall market for MNO services saw temporary expansion due to competitors waiving cancellation fees, but SK Telecom experienced stabilization with a focus on restoring customer trust [78][84] - The company plans to minimize revenue impact in 2026 by winning back subscribers and developing new customer segments [84] Company Strategy and Development Direction - The company aims to restore market leadership through customer value innovation, redesigning telecom business elements to offer real value [35][36] - AI will be integrated across all business areas to enhance productivity and customer experience, with a focus on improving profitability through economies of scale [37][38] - The company plans to enhance the sustainability of its AI business by focusing on core strengths and improving cost structures [39] Management Comments on Operating Environment and Future Outlook - Management acknowledged the ongoing impact of the cybersecurity incident on financial performance and emphasized efforts to restore customer trust and improve business fundamentals [3][8] - The priority for 2026 is to restore earnings and return to previous dividend payout levels, with considerations for shareholder value enhancement [25][26] Other Important Information - The company decided not to pay out a quarterly dividend for Q4 2025 due to financial impacts from the cybersecurity incident [4][5] - The board set the DPS for fiscal year 2025 at KRW 1,661, pending approval at the annual general shareholders meeting [5] Q&A Session Summary Question: Dividend policy for 2026 and earnings normalization - Management expressed a commitment to restore earnings and return to previous dividend levels, while acknowledging the challenges posed by the cybersecurity incident [18][25] Question: Strategic directions for new management - The focus will be on strengthening competitiveness in telecom and AI, with priorities on customer value innovation, AI productivity enhancement, and sustainability of the AI business [33][39] Question: Equity stake in Anthropic and future plans - Management stated that no decisions have been made regarding the liquidation of the equity stake in Anthropic, and updates will be provided in the upcoming business report [53][55] Question: MNO business impact from competitors - Management noted that while there was a temporary expansion in the carrier switching market, they are focusing on restoring customer trust and improving core business competitiveness [78][84]

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]