The new-look SK Telecom is confident its new growth business such as cloud, media and e-commerce can now power its growth, forecasting a 45% spike in revenue over the next four years.
The company, which restructured around the new businesses just three months ago, is targeting top-line revenue of around 25 trillion won (US$20.9 billion) in 2025, up from 16.7 trillion in 2021.
CEO Ryu Young-sang told a results briefing Wednesday that the growth businesses accounted for 18% of revenue last year but were expected to double that to 36% by 2025.
SKT's mobile and fixed-line services accounted for 82% of revenue and were growing at just 3%, while the growth businesses were expanding at 15% annually, he said.
He flagged a more aggressive approach to M&A to acquire key technologies and talent for emerging areas such as AI and metaverse.
He also said "SKT 2.0" would also seek more partnerships in telecom and data center services abroad.
Ryu said the recent reorganization into five business groups – mobile and fixed, enterprise, media, AI and connected intelligence – was aimed at maximizing the value of the emerging segments.
"The growth potential of both [legacy and growth] businesses is not reflected in the valuations," he said. "A different multiple applies to the media, enterprise and AI businesses."
Change it up
The telco recorded an 11% rise in full-year operating income to 1.39 trillion won ($1.2 billion), with total sales up 4% to 16.7 trillion won.
Net profit jumped 61% to 2.42 trillion won ($2.03 billion), boosted by the disposal of baseball team SK Wyverns and a change in accounting.
While mobile service revenue improved just 2.7%, fixed-line business grew 9%, helped by an 11% spurt in pay TV revenue.
Ryu singled out cloud and data centers as a prime growth segment, expanding at 30% to 50% CAGR.
The data center business, driven by huge domestic demand and a shortage in supply, doubled capacity last year.
SKT also saw opportunity in businesses where it could add intelligence to its networks and connectivity, Ryu said.
Earlier this week the company announced it has a partnership with west coast firm Joby Aviation, to build an urban air mobility (UAM) service, with the aim of winning the first commercial license in South Korea in 2025.
"SK Telecom is now moving on from connecting people," Ryu said. It aimed to become a company that "expands time and space for customers" with technologies such as AI and metaverse.
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— Robert Clark, contributing editor, special to Light Reading