SKT Continues Growth in Q4... Full-Scale 'AI Transformation' Begins

Q3 Sales of 4.3434 Trillion KRW, Operating Profit of 465.6 Billion KRW Recorded
ifland to Expand into 48 Countries This Month... T-wooju to Generate Revenue Starting Next Year

Table=SK Telecom Newsroom

[Asia Economy Reporter Oh Soo-yeon] SK Telecom posted strong third-quarter earnings and also projected positive results for the fourth quarter. As it accelerates growth through the AI transformation, the metaverse platform 'Ifland' has expanded to 48 countries globally, and the subscription service 'T Woju' is expected to start generating significant revenue from next year, showcasing the achievements of new business ventures.

On the 10th, Kim Jin-won, SK Telecom's Chief Financial Officer (CFO), stated during the third-quarter earnings conference call, "There is no disagreement that the sales trend from the first to third quarters will continue into the fourth quarter."

Kim added, "However, expenses tend to be concentrated in the fourth quarter, and some costs are affected by inflationary pressures, but we do not expect any issues with profitability improvement compared to the same period last year." He also mentioned that operating profit is progressing according to internal targets.

"The Growth Strategy for the Next 10 Years is 'AI Transformation'"

CFO Kim emphasized artificial intelligence (AI) as SK Telecom's growth engine. "Despite challenging internal and external environments, we are achieving results in new businesses based on stable wired and wireless performance," he said. "While SK Telecom's past strategy focused on actively entering new businesses, the growth strategy for the next 10 years is AI transformation."

SK Telecom recently presented three key strategies to leap forward as an AI company: redefining core business with AI, innovating customer relationships through AI services, and initiatives like AIX.

Last month, SK Telecom acquired a 20.77% stake in Conan Technology, a specialized AI solutions company. As competition intensifies in the AI sector and securing talent and technology becomes challenging, the company aims to secure new growth engines through strategic equity acquisitions. This will enable the advancement of the AI service A.(A-dot) and innovation of AI-based business models.

3Q Operating Profit Up 18.5% YoY... T Woju and Ifland Show Results

On a consolidated basis, SK Telecom recorded third-quarter sales of KRW 4.3434 trillion, operating profit of KRW 465.6 billion, and net profit of KRW 245.6 billion. Compared to the same period last year, consolidated sales and operating profit increased by 3% and 18.5%, respectively. On a separate financial statement basis, SKT posted third-quarter 2022 sales of KRW 3.1226 trillion and operating profit of KRW 388.7 billion, growing 3.1% and 21.6% year-over-year, respectively.

Stable wired and wireless performance underpins growth, with new growth businesses such as media, enterprise, and AIVERSE continuing their upward trajectory.

As of the end of the third quarter, 5G subscribers numbered 12.47 million, accounting for 53% of all handset subscribers in wired and wireless communications.

With the transition to a COVID-19 endemic phase, roaming revenue surged significantly in the third quarter. CFO Kim said, "Last year’s roaming revenue was only 15% compared to pre-COVID-19 levels in 2019. This year, as travel restrictions have gradually eased, third-quarter roaming revenue increased about threefold year-over-year."

Core new businesses within the AIVERSE segment are expected to start delivering results.

Yoon Jae-woong, SK Telecom’s Head of Subscription Marketing, said, "From next year, T Woju will begin generating substantial revenue. Unit margins are designed to be positive. However, currently, these margins are being reinvested in subscriber marketing and service competitiveness to acquire customers."

He added, "In the mid to long term, the goal is to continuously generate revenue while achieving a total gross merchandise volume (GMV) in the trillion-won range. Next year, we plan to double the number of T Woju products and evolve into an open subscription product platform."

In the third quarter, T Woju’s monthly active users surpassed 1.4 million, and GMV reached KRW 150 billion, marking three consecutive quarters of growth. It is considered the fastest-growing non-telecom service launched by SK Telecom to date. The annual GMV target of KRW 550 billion set at the beginning of the year is within reach.

Yang Maeng-seok, SK Telecom’s Head of Metaverse CO, stated, "Ifland is scheduled to launch in 48 countries worldwide this month. We will closely collaborate with leading local telecom operators to rapidly expand Ifland’s customer base in each region."

In line with the global launch, the service will undergo a major update supporting multiple languages and offering diverse avatar and space creation options, including various skin tones, hairstyles, and fashion styles. Marketing will also leverage globally popular intellectual properties (IP) such as K-pop. The plan is to enable global users to communicate freely across borders.

Earlier in September, SK Telecom signed a memorandum of understanding with e& Group, the largest telecom operator in the United Arab Emirates (UAE), to jointly promote metaverse business in the Middle East region.

Additionally, media business revenue increased 20.6% year-over-year to KRW 395.6 billion. The enterprise business, centered on data centers and cloud services, grew 8.9% year-over-year to KRW 378.5 billion, maintaining its growth momentum. Cumulative enterprise business revenue through the third quarter of this year exceeds KRW 1 trillion.

Urban Air Mobility (UAM) business is also progressing smoothly. SK Telecom has formed consortia with major companies and partnered with global aircraft manufacturer Joby Aviation. In August, a 5G aerial network was established in Goheung for the Grand Challenge demonstration. In September and October, memorandums of understanding were signed with Jeju Special Self-Governing Province and Daegu Metropolitan City, respectively, fostering cooperation. Based on this, phase 1 open area demonstration is planned for 2023, phase 2 urban demonstration for 2024, and pilot services will commence in 2025 for commercialization.

Meanwhile, SK Telecom confirmed the third-quarter dividend at KRW 830 per share, the same as in the first and second quarters.

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