SK telecom’s 2023 OP up 8.8% thanks to focus on AI

Ryu Young-sang, CEO of SKT [Courtesy of SK telecom]

South Korea’s top mobile carrier SK telecom Co. saw its operating profit soar nearly 9 percent in 2023 from a year ago thanks to its focus on artificial intelligence (AI) services.

SK telecom said in a regulatory filing on Monday that its operating profit came to 1.75 trillion won ($1.3 billion) in 2023, up 8.8 percent from the previous year.

Revenue was up 1.8% to 17.6 trillion won and net profit gained 20.9 percent to 1.15 trillion won.

In the fourth quarter, SK telecom posted an operating profit of 297.1 billion won, up 16.7 percent from the same period a year ago. The figure was in line with the market consensus of 298 billion won.

Revenue increased by 3 percent to 4.5 trillion won in the fourth quarter but net profit fell 16.2 percent to 187.4 billion won.

The number of subscribers for its mobile network operator (MNO) service stood at 31.28 million as of the fourth quarter of 2023, while that of its mobile virtual network operator (MVNO) service reached 2.39 million.

Smartphone subscribers numbered 22.98 million, with about 68.1 percent of them being 5G subscribers, totaling 15.67 million. The average revenue per user (ARPU) for mobile network subscribers was 29,562 won. When including ARPU based on MVNO subscribers, the figure was 27,761 won.

Its subsidiary SK broadband Co. posted an operating profit of 309.2 billion won in 2023, up 1.1 percent from the previous year. Sales also increased by 3 percent to 4.28 trillion won.

SK broadband secured 9.52 million paid broadcasting subscribers and 6.93 million high-speed internet subscribers.

The combined capital expenditure (CAPEX) of SK telecom and SK broadband amounted to 1.26 trillion won, down 15.8 percent from the fourth quarter of 2022.

SK telecom unveiled its AI pyramid strategy in September last year, redefining its existing business into three major business areas – AI infrastructure, AI transformation (AIX), and AI services.

The revenue from the data center business, the foundation of AI infrastructure, grew by 30 percent to 202.4 billion won last year compared to the previous year.

In the AIX sector, the cloud business saw a revenue growth of 36.6 percent to 146 billion won last year, driven by subscription and revenue growth in managed service provider (MSP) business.

During its board meeting on Friday, SK telecom decided to pay a fourth-quarter dividend of 1,050 won per share and an annual dividend of 3,540 won per share, which will be paid after final confirmation at the regular shareholders’ meeting in March.

The company also completed the buyback of its shares worth 300 billion won, of which 200 billion won worth of shares were sold on the same day.