SKT "Enhancing Negotiation Power with Big Tech through Global Telco LLM" (Comprehensive Report 2)

SK Telecom Earnings Announcement on the 8th... Revenue 4.4746 Trillion KRW
Operating Profit Up 0.8% YoY, Net Profit Up 19%

SK Telecom announced that it will enhance its bargaining power against big tech companies through a telco large language model (LLM) developed in collaboration with the Global Telco AI Alliance (GTAA).

On the 9th, Choi Hwan-seok, Head of Management Strategy at SK Telecom, stated during an SKT conference call about AI business strategy, "We will provide a telco-specialized LLM based on multinational customers and data to participating member companies," adding, "Through this, we expect to increase our bargaining power with big tech companies." Choi also said, "Our goal is to expand the telco LLM globally and secure global telco LLM references."

SKT has formed the GTAA with telecommunications companies from Germany, the United Arab Emirates (UAE), Singapore, and Japan, collaborating to develop a global telco LLM based on data from 1.3 billion users across 50 countries held by the founding members.

In the first quarter of this year, SKT recorded consolidated sales of KRW 4.4746 trillion and operating profit of KRW 498.5 billion. Sales increased by 2.3% year-on-year, and operating profit rose by 0.8%. Net profit for the period was KRW 361.9 billion, up 19.6% due to increased non-operating income related to investment assets.

SKT is attempting to leap forward as a global artificial intelligence (AI) company. It announced its focus on generating results in three core areas: AI infrastructure, AI transformation, and AI services. In the AI infrastructure sector during the first quarter, the data center business achieved a 26% sales growth year-on-year, driven by a continuous increase in utilization rates. SKT plans to further develop its AI data center business, which is experiencing steady demand growth.

Regarding the development of the telco-specialized AI model, 'Telco LLM,' SKT plans to complete the Korean version next month and push for commercialization. The Telco LLM will be applied to customer-facing tasks such as customer centers, infrastructure operations, marketing, and distribution networks, as well as internal operations including legal affairs and human resources.

Meanwhile, in the telecommunications business, as of the end of the first quarter this year, SKT secured 15.93 million 5G subscribers, 9.59 million paid broadcasting subscribers, and 6.99 million high-speed internet subscribers, leading to net growth in both wired and wireless subscribers. Kim Ji-hyung, Head of Integrated Marketing Strategy, said, "The future focus for mobile network operators (MNOs) will be on pricing plans, service differentiation, and improving operational efficiency using AI technology." He added, "Along with product development based on customer demand such as OTT bundled plans and roaming services, we will enhance customer experience, productivity, and efficiency through customer consultations using AI contact centers (AICC)."

Enterprise business sales grew approximately 10% year-on-year. Bae Jae-jun, Head of Enterprise Planning, said, "Thanks to increased data center utilization and the cloud business, enterprise business sales in the first quarter reached KRW 415.4 billion, achieving 9% year-on-year growth." Bae added, "By 2024, we plan to secure a capacity of 200 MWh, double the current capacity, and are pushing to establish new centers mainly in the metropolitan area to become the number one data center operator in Korea."

Notably, cloud business sales increased by about 40% year-on-year, driving overall enterprise growth. In the enterprise AI sector, SKT plans to continuously discover innovative products such as the recently launched AI simultaneous interpretation solution 'Transtalker' and nurture them as the core of its B2B business. In addition to Transtalker, SKT has launched new products including the subscription-based AICC 'AI CCaaS' and 'AI Copywriter,' which automatically generates advertising copy.

The subscription service T Universe surpassed 2.6 million monthly active users as of the end of the first quarter. SKT plans to develop T Universe into a 'subscription market' and expand its partnership scope within the first half of the year.

Meanwhile, SKT recently announced a shareholder return policy for the three years from this year through 2026, stating it will return more than 50% of adjusted net profit on a consolidated basis to shareholders. The policy features the removal of the upper limit on the guideline defining the scope of shareholder return funds and an improvement to share subsidiary performance with shareholders based on consolidated results rather than separate results. The first-quarter dividend per share was confirmed at KRW 830, the same as in the first quarter of last year.

Kim Yang-seop, CFO, said, "Setting 50% of net profit as the baseline is the minimum threshold," adding, "We will do our best to improve profitability through structural improvements in all areas and raise the baseline for shareholder returns."

Kim also stated, "The company's intention to provide greater shareholder returns depending on performance improvement trends is reflected in the new shareholder return policy. We will further solidify our robust wired and wireless foundation and focus on improving corporate value by enhancing profitability, efficiency, and achieving concrete AI outcomes."

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