SK Telecom enjoys 14% jump in Q1 OP led by data centers, cloud services

SK Telecom Co. building [Photo by Lee Seung-hwan]

South Korea’s SK Telecom Co. posted a 14.4 percent on-year increase in its first-quarter operating profit driven by its new business areas like media and enterprise.

According to the telecommunications giant on Wednesday, it posted 494.8 billion won ($373.7 million) in operating profit for the first quarter on sales of 4.37 trillion won, up 2.2 percent from a year ago. Net income stood at 302.5 billion won, up 37.3 percent.

First-quarter operating profit was 1.4 percent above the market consensus of 487.9 billion won compiled by Yonhap Infomax.

On a standalone basis, SK Telecom’s operating profit was 415.7 billion and sales 3.17 trillion won, up 16.5 percent and 1.3 percent, respectively.

The carrier’s subsidiary SK Broadband Co. posted 76.1 billion won in operating profit, up 0.1 percent, on sales of 1.06 trillion won, up 3.5 percent.

New business areas, such as media and enterprise based on its data centers and cloud services, led the strong first-quarter performance, the company explained.

By segment, sales of media rose more than 10 percent on year to 393.2 billion won and those of enterprise business by 5.8 percent to 386.2 billion won.

Both the company’s data centers and cloud services are growing rapidly, posting more than 20 percent revenue growth. Its AI contact center (AICC) business, in particular, earned the largest ever amount of orders in the first quarter since its launch last year.

Subscription service T-Universe had more than 1.8 million active monthly users in the first quarter, and its own metaverse platform, ifland, attracted more than 10 percent of its monthly active users from overseas in the first quarter since its launch in 49 countries last year.

In the second half this year, SK Telecom plans to accelerate growth by strengthening its financial system through the content market based on its in-app payment service.

As for the wireless telecommunications business, the company had 14.15 million 5G subscribers as of end-first quarter, accounting for 60 percent of its entire customer base.

SK Telecom plans to launch a new mobile phone plan with benefits targeting younger consumers. Its wired services recorded 9.4 million paid broadcast subscribers and 6.76 million high-speed internet subscribers as of the end of the first quarter.

The strong first-quarter performance will encourage the company’s transition to becoming an AI-driven company this year, the company said.

Utilizing its AI services and technology capabilities accumulated over the years, SK Telecom will apply AI “everywhere” to lead innovation, it said, pivoting to five key areas including customers & technology, space & time, and AI transformation for industries (AIX).

As part of its grand scheme, the company bought a 15 billion won stake in Scatter Lab, a local startup and developer of the AI chatbot Luda, and signed a strategic partnership with that company back in April.

SK also highlighted that it will continue to strengthen cooperation with global AI companies in areas like large language models (LLM) and AI technologies and services.

“We will make our best effort to ensure that our transition to an AI-driven company will lead to maximized corporate and shareholder values based on even growth in our key business areas,” said Chief Financial Officer Kim Jin-won.