SKT, 1 Year of Yoo Sang-young's Leadership... Accelerating AI Company Transformation, Enhancing Corporate Value Remains a Challenge

Restructuring into 5 Business Divisions... Driving Future Growth with I-Bus and Connected Intelligence
Concerns Over Undervalued Corporate Value... "New Business Results Will Emerge Sequentially in 2023"

Yu Young-sang, CEO of SKT. Photo by SKT

[Asia Economy Reporter Oh Soo-yeon] Yoo Sang-young, CEO of SK Telecom, has completed his first year in office and entered his second year. Since the split, CEO Yoo has presented the vision of SKT as an artificial intelligence (AI) service company, leading the growth of SKT 2.0. Over the past year, CEO Yoo has made investments for future growth, and SKT is recognized for making significant efforts to enter new businesses centered on AI from its telecommunications business. Enhancing corporate value remains a challenge to be addressed. Due to global financial market instability, SKT's market capitalization has decreased by nearly 2 trillion KRW.

On November 1 last year, SKT was split into a telecommunications company and an investment company through a spin-off with SK Square, marking the first time in 37 years that the company was divided. After the split, newly appointed CEO Yoo views SKT's competitiveness as AI services based on wired and wireless communications.

CEO Yoo reorganized SKT's business sectors into five main areas: wired and wireless communications, media business, enterprise business, iBuss, and connected intelligence. While securing stable revenue from wired and wireless communications, the strategy is to nurture four new businesses and achieve sales of 23 trillion KRW by 2025.

Last year, SKT's wired and wireless communications business generated approximately 13.2 trillion KRW in revenue, accounting for 82% of total sales. Media, enterprise, and iBuss sales totaled 2.9 trillion KRW, representing only 18% of the total. However, these sectors have been growing rapidly with an average annual growth rate of 15% over the past three years.

Driving Future Growth with iBuss and Connected Intelligence

In particular, the iBuss and connected intelligence business areas have been identified as core growth engines that will determine SKT's future. These areas can create synergy with the network strengths and vast data accumulated through the telecommunications business.

The iBuss business group is leading SKT's full-scale leap into an AI company by launching the growth-oriented AI service A. (A-dot) earlier this year. A-dot is based on the large language model (GPT-3) and enables natural conversations with customers, as well as information search and content recommendations.

On the 28th of last month, SKT also acquired a 20.77% stake in domestic AI solution company Konan Technology, which possesses outstanding technology in text AI and video AI fields. The plan is to create synergy with existing businesses such as A-dot and Sapeon and accelerate the transition to an AI company.

The subscription service "T Universe," launched in August last year as the first in the telecommunications industry, is also progressing smoothly. As of the end of August, marking its first anniversary, the monthly active users reached 1.3 million, with 68% of them being the highly purchasing 20-40 age group. The number of partner companies expanded 2.7 times from 18 at launch to 48 within a year.

"Ifland," launched in July last year, is a latecomer in the metaverse platform market but has quickly grown and established itself. As of the end of September, it surpassed approximately 12 million downloads, with an average of 2,000 newly created lands daily and 2,000 corporate and organizational partnership requests. SKT plans to introduce an economic system to Ifland and promote Ifland 2.0 by partnering with major overseas telecommunications operators to expand globally.

The connected intelligence sector is expected to lead SKT's future in 10 years. Although not yet concretized, the strategy is to add intelligence to future devices and introduce innovative services such as urban air mobility (UAM), robots, and autonomous driving.

Especially as the government pushes for UAM commercialization by 2025, SKT is taking a leading role by signing cooperation agreements with major domestic and international operators and local governments. CEO Yoo established a UAM task force (TF) directly under the CEO and assigned key executives to lead the new UAM business.

SKT partnered with global UAM aircraft manufacturer Joby Aviation and launched the "K-UAM Dream Team" consortium with Korea Airports Corporation, Hanwha Systems, Korea Transport Institute, Korea Meteorological Industry Technology Institute, and others. They are building a 5G aerial network in Goheung, Jeollanam-do, and signing business agreements with Daegu Metropolitan City and Jeju Special Self-Governing Province, accelerating efforts to provide UAM commercial services by 2025.

Additionally, in July, SKT exchanged shares worth about 400 billion KRW with Hana Financial Group to promote synergy between information and communication technology (ICT) and finance. The media business centered on SK Broadband, as well as enterprise businesses such as internet data centers (IDC) and cloud, are also progressing smoothly. The core telecommunications business is solidly supported as 5G subscribers exceed half of the total.

Concerns Over Undervalued Corporate Value... Market Cap from 12 Trillion KRW to 10 Trillion KRW

Not everything is smooth. Despite recording strong quarterly performances and continuing dividends, there is regret that the corporate value is undervalued. To enhance shareholder value, SKT has undertaken share buybacks and stock splits, but the stock price has not kept pace with expectations. In a CEO column last September, CEO Yoo stated, "Corporate value is a major concern and mission," and added, "At Analyst Day, I expressed my regret that despite our company's high-level performance and dividends, corporate value has not been adequately recognized."

As of the first day marking CEO Yoo's first year in office, SKT's closing price was 50,200 KRW. On the first trading day after the split and re-listing with SK Square on November 29 last year, the closing price was 57,900 KRW. Market capitalization also fell from 12.6704 trillion KRW to 10.9854 trillion KRW.

However, as CEO Yoo begins his second year, there is anticipation for a full-scale leap forward.

Minha Choi, a researcher at Samsung Securities, said, "2022 was essentially the first year of launch, laying the foundation for transformation. While new growth businesses showed clear results in expanding subscribers and sales, profit improvement was still driven by wired and wireless businesses. The changes in the business portfolio and new business discoveries will gradually appear from 2023, and IDC, cloud, and subscription services will contribute more to performance thanks to structural growth."

This content was produced with the assistance of AI translation services.