SK Telecom aims to put artificial intelligence at the center of its business.

Robert Clark, Contributing Editor, Special to Light Reading

November 11, 2022

3 Min Read
SKT's bold plan to transform into AI company

SK Telecom has set its sights on becoming an AI company, vowing to deploy the technology to energize its legacy businesses and to pursue new growth areas.

"SK Telecom's growth story for the next decade can be summed up as AI transformation," CFO Jinwon Kim told a quarterly earnings call Thursday.

"We will transform our core businesses into AI-based businesses to secure new growth drivers, offer AI services to deepen customer relations and employ AIX strategy to spread SK Telecom's AI and digital transformation capabilities to other industries," he said.

Figure 1: (Source: Ryan Pikkel on Flickr CC2.0) (Source: Ryan Pikkel on Flickr CC2.0)

The Korean operator doesn't lack for ambition. It believes growth from the new AI businesses will increase its market cap to 40 trillion Korean won (US$30.3 billion) by 2026 – more than 3.5 times its current KRW11.05 trillion ($8.4 billion) capitalization.

Its AI strategy has three parts: to drive innovative new business models in existing businesses such as broadband and mobile; to grow out its own AI-based services such as A. (pronounced A-dot) and T Universe; and to sell AI-based services and transformation to enterprises.

But Kim admitted it was not easy to acquire AI talent, which was one of the drivers behind its investment last month in a listed local AI company, Konan Technologies.

Subscription platform the star performer

It took a 21% stake in Konan, which specializes in text and video AI technologies and has a strong R&D arm, for KRW22.4 billion ($16.9 million).

Kim said the investment would strengthen SKT's AI capabilities. The company would collaborate with Konan on some AI projects as well as pursuing its own AI solutions.

Among SKT's emerging AI-based services, subscription platform T Universe is the star performer.

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T Universe is growing faster than any of its non-telecom services has grown, with 1.4 million users and KRW400 billion ($303.4 million) in transactions in Q3, which the company expects will grow to nearly KRW560 billion ($424.8 million) by year-end.

By contrast, SKT's core mobile and broadband units reported modest numbers in Q3.

The mobile business grew operating income by 22% thanks to higher handset sales and cuts in marketing expense.

But MNO revenue was just 2% higher, despite the addition of another 786,000 5G subscribers, and EBITDA was up just 3.8%. ARPU contracted slightly from KRW30,656 to KRW30,633. It finished the quarter with 12.5 million 5G subscribers, 53% of the total.

The broadband and pay TV business improved operating income by 1.4% and revenue just 1.9%.

Total revenue was up 3% but net earnings of KRW246 billion ($186.6 million) fell well short of analysts' expectations of around KRW303 billion ($229.8 million), according to Yonhap News Agency.

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— Robert Clark, contributing editor, special to Light Reading

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About the Author(s)

Robert Clark

Contributing Editor, Special to Light Reading

Robert Clark is an independent technology editor and researcher based in Hong Kong. In addition to contributing to Light Reading, he also has his own blog,  Electric Speech (http://www.electricspeech.com). 

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