SKT Q1 flat despite AI-inspired cloud and data center surge

SKT CFO acknowledges the Korean operator's difficulty in balancing AI investment and legacy telco business amid flat Q1 revenues.

Robert Clark, Contributing Editor, Special to Light Reading

May 8, 2024

2 Min Read
SKT stand at a trade show.
(Source: Matthias Oesterle/Alamy Live News)

SK Telecom (SKT) says it saw a surge of cloud and data center revenue in Q1 on the back of AI-driven demand. 

The Korean telco aims to turn itself into a global AI player through AI services and infrastructure, and with the help of its partners in the recently-formed Global Telecom AI Alliance (GTAA). But in an earnings call Wednesday the company also acknowledged the difficulty of trying to balance its ambitious AI goals with the requirements of its legacy telco business.

SKT is relatively small by global standards, with market cap of around $8 billion, while other GTAA members Singtel and SoftBank Corp, for example, are worth some $29 billion and $58 billion respectively.

CFO Kim Yang-seob said while SKT typically generated around 1 trillion Korean won (US$730 million) in free cash flow every year, around 70% of that was returned to shareholders in cash dividends.

"As a telecom stock, we fully understand that the dividend is what supports our valuation in the market," he pointed out. The company had to achieve a balance between investment for growth and shareholder returns, he said.

"We do not have much room to manoeuvre around investments for growth and management," he admitted.


That's tough for a company needing to tip cash into LLMs, AI services and infrastructure.

As it is, SKT's Q1 numbers were underwhelming. It boosted net income by 19.6% to KRW362 billion ($270 million), thanks to investment returns, but the underlying business is flat, even with the stellar AI-inspired growth.

Operating profit improved by just 0.8% and revenue rose 2.3%, with EBITDA unchanged and EBITDA margin down from a year ago.

Its core mobile business improved revenue by 1.6%, with the consumer 5G business also flat. 5G now accounts for 70% of mobile subs, yet ARPU is still falling, down 1% from Q4 and nearly 3% over Q1 last year. The major growth is now in the enterprise segment, which recorded 508.7 billion won in sales, up 9%, and now accounts for 11% of total sales.

The data center business grew 26%, with the telco vowing to double capacity to more than 200 megawatts by 2030 to become Korea's bigger data center provider. Cloud revenue gained 39%, mostly from multi-cloud and the expanding AI cloud market, SKT said.

When it comes to AI-based services, the company has introduced an AI-powered personal assistant that provides call summaries and translations, and next month plans to debut its own telco-specific LLM.

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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 ( 

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