SKT says it's primed for AI growth

SK Telecom, almost certainly the world's most AI-forward telco, says it's expecting "high growth" from a swathe of AI-related services, led by data centers and chips.

Handing down its Q3 results last week, the company said 9% of revenue came from AI-related services and it aims to lift that to 36% by 2028.

It expects its spending on AI will triple from around 12% of total investment in 2019-2023 to 33% over the next five years.

CFO Kim Jin-won told an earnings briefing last week that SKT's energy-efficient AI data center business and AI semiconductor subsidiary Sapeon would likely be the first AI businesses to produce "tangible results."

Silicon Valley-based Sapeon's first chip outperformed Nvidia and the company says the new X330 product, to be launched by year-end, will likely start generating significant revenue in 2025.

The telco has just released its first major consumer AI service, called A., which can provide call recording and real-time translation and which it hopes to evolve into a personal AI assistant (PAA).

In enterprise, it will bundle its AI contact center solutions and customized generative AI solutions targeting the public sector, finance and manufacturing.

The company unveiled its 'AI pyramid' strategy in September, dividing the business into infrastructure, transformation (AIX) and service.

Telco-specific LLMs

Besides its own services, SKT has backed several AI startups, including most notably a $100 million investment in Anthropic, a competitor to Open AI. It has also formed multiple partnerships, including one with DT to develop telco-specific LLMs.

Aside from AI it is also pushing into the metaverse with its Ifland platform – which has 4.2 million users – and has teamed up with US firm Joby to become a frontrunner in Korea's urban air mobility race.

Choi Hwan-seok, head of SKT's corporate strategy office, said the company expects "high growth" from data centers, semiconductors, enterprise solutions and AI-driven subscription commerce.

"We believe that PAAs and Metaverse services will be integrated in the future and that commerce services including subscription will ultimately be part of the AI service domain," he said.

These big bets on emerging technologies might appear to be stretching the company thin, with its stock down 6% so far this year.

But it is a member company of the SK conglomerate, Korea's second largest chaebol, with 201 affiliated companies and assets of more than $200 billion, and has a different risk appetite than your average telco.

SK Telecom reported net income of 308 billion Korean won ($230 million), up 26%, on 1.4% higher revenue for the third quarter. It added 473,000 5G subs to take the total to 15.1 million.