Hacking fallout wipes out 90% of SK telecom profit

(Yonhap)

SK telecom Co., South Korea’s top mobile carrier, reported a 90 percent drop in operating profit for the third quarter, hit hard by the lingering impact of a massive USIM hacking incident earlier this year that triggered record compensation and penalties.

The company said Thursday that its consolidated operating profit fell to 48.4 billion won ($33.8 million), while revenue dropped 12.2 percent year-on-year to 3.98 trillion won. Net losses totaled 166.7 billion won, compared with a profit a year earlier.

The results missed market expectations. According to FnGuide, analysts had forecast revenue of 3.94 trillion won, operating profit of 107 billion won, and net losses of 136.7 billion won — indicating the actual losses were deeper than projected.

The steep earnings decline stemmed from the April hacking crisis, when the company’s USIM system was compromised. The resulting free SIM replacements, penalty waivers, fee discounts, data compensation programs, and a 1.35 trillion won fine imposed by the Personal Information Protection Commission collectively weighed on profitability.

Despite the setback, SK telecom saw a modest rebound in its core telecom business. The number of 5G subscribers rose by 240,000 from the previous quarter to 17.26 million, while high-speed internet subscriptions also increased.

The company’s AI business continued to grow, earning 149.8 billion won from data center construction and GPU leasing, and 55.7 billion won from its AI infrastructure, model, and transformation (AIX) operations. Its A. AI assistant app reached 10.56 million cumulative users by the end of September.

To accelerate its AI-driven restructuring, SK telecom plans to integrate its AI units into a new company-in-company (CIC) structure and will invest 700 billion won over the next five years to strengthen cybersecurity and data protection. The company is also participating in the government’s national AI development project led by the Ministry of Science and ICT.

SK telecom said it decided to suspend its third-quarter cash dividend due to the financial losses, adding that dividends will resume once management conditions normalize.

SK telecom CFO Kim Yang-seob said the company had gone through one of the most challenging quarters since its founding. He added that the firm will prioritize restoring customer trust by year-end while improving operational efficiency and profitability next year. According to him, growth in AI data centers and AI solutions is expected to drive recovery, supported by a leaner cost structure and stronger financial discipline.