SK Telecom Q1 2026 Earnings Call - Dividends Resume as AI Data Centers and Telecom Recovery Offset Cybersecurity Fallout
Summary
SK Telecom is stitching its balance sheet back together. The company resumed quarterly dividends at KRW 831 per share after a cybersecurity incident forced a pause, signaling that management believes the worst of the operational and reputational damage is behind them. Core telecom metrics are stabilizing. Handset subscriber net adds turned positive at 208,000, and fixed-line retention is holding as the company shifts from price wars to higher-value plans. Operating income hit KRW 537.6 billion, a clear rebound from the post-incident trough.
The real narrative, however, is the pivot toward AI infrastructure. AI data center revenue surged 89% year-over-year, driven by higher utilization at Gasan and the Pangyo facility. Management is treating the AI data center business as a standalone profit center comparable to legacy telecom operations, with new builds in Ulsan and Seoul on the horizon. The company is also dabbling in AI RAN, partnering with NVIDIA and Samsung to turn base stations into inference nodes. The market is getting a signal that SK Telecom is no longer just a telco selling bandwidth. It is becoming a utility for AI compute.
Key Takeaways
- SK Telecom resumed quarterly dividend payments at KRW 831 per share, marking a return to shareholder distributions after the cybersecurity incident.
- Consolidated revenue reached KRW 4.39 trillion, up 1.5% quarter-over-quarter, driven by mobile network operator growth and expanding data center demand.
- Operating income posted KRW 537.6 billion, exceeding the KRW 500 billion threshold and reflecting a recovery toward pre-incident profitability levels.
- Handset subscriber net adds turned positive at approximately 208,000, reversing a year-over-year decline of nearly 986,000 and signaling a restoration of customer trust.
- The company is shifting marketing strategy away from price competition, focusing instead on high lifetime value customers, foreign segments, and revamped membership programs.
- Fixed-line business showed stable performance with net subscriber additions, higher adoption of premium Giga plans, and improved retention rates.
- AI data center revenue grew 89% year-over-year, fueled by increased utilization at the Gasan facility and strong demand from global technology companies.
- Management stated that the AI data center business is now comparable in profitability to the legacy telecom business, with significant room for margin expansion.
- Construction is underway on the Ulsan AI data center, with plans for additional scale-up in Seoul to capture surging global demand for AI infrastructure.
- SK Telecom is exploring AI RAN technology in partnership with NVIDIA and Samsung, aiming to use base stations for both network optimization and AI inference services.
- The company is restructuring its B2B AI strategy to leverage full-stack capabilities, integrating proprietary foundation models with agent-based services to create telecom synergies.
- Management aims to improve full-year earnings beyond pre-incident levels by combining telecom recovery, AI infrastructure expansion, and enterprise-wide AI-driven cost efficiencies.
Full Transcript
Conference Moderator, SK Telecom: The conference call for the First Quarter of Fiscal Year 2026 Earnings Results by SK Telecom will commence in a few minutes. Please wait until the conference begins.
[Break]
[Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: Good morning and good evening. Thank you all for joining the conference call for the SK Telecom Earnings Results. This conference will start with a presentation followed by a Q&A session. If you have a question, please press star and one on your phone during the Q&A. Now we will begin the presentation on SK Telecom’s first quarter of fiscal year 2026 earnings results.
SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: Good afternoon. I am Kim Tae-hee, IRO of SK Telecom. I first like to ask for your kind understanding that the earnings call started later than scheduled. Let us now begin the earnings conference call for the first quarter of 2026. Today, we will first deliver a presentation on the financial and business highlights, followed by a Q&A session. Please note that all forward-looking statements are subject to change depending on various factors such as market and management situations. Let me now present our CFO.
Jong-seok Park, Chief Financial Officer, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: Good afternoon. This is Jong-seok Park, CFO of SK Telecom.
Jong-seok Park, Chief Financial Officer, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: At the beginning of this year, we said that we would focus on strengthening fundamental business competitiveness centered on customer value and restore profitability through sophisticated AI business in 2026. The first quarter was a significant period in which this direction began to translate into actual results.
Jong-seok Park, Chief Financial Officer, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: Thanks to ceaseless efforts to regain our customers trust, the company recorded a net subscriber add this quarter, and the fundamentals of our core telecom business are rapidly returning to normal.
Jong-seok Park, Chief Financial Officer, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: The performance of the AI business is gradually improving as a result of business restructuring based on a strategy of focus and prioritization. As these changes led to actual results, we were able to post earnings similar to the levels prior to the cybersecurity incident.
Jong-seok Park, Chief Financial Officer, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: With business performance returning to normal, the company has decided to resume dividend payments starting this quarter.
Jong-seok Park, Chief Financial Officer, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: Dividend per share for the first quarter is KRW 831.
Jong-seok Park, Chief Financial Officer, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: We are pleased that we were able to deliver on the promises that we made during the last earnings call. We will make every effort to restore the dividend level by normalizing earnings on a full year basis through continuous improvement of the telecom business fundamentals and creation of additional results from the AI business.
Jong-seok Park, Chief Financial Officer, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: Let me now report on the financial results for Q1. Consolidated revenue posted KRW 4.39 trillion, up 1.5% Q-on-Q on the back of MNO revenue growth driven by subscriber growth and the growth trend of the data center business.
Jong-seok Park, Chief Financial Officer, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: We posted KRW 537.6 billion in consolidated operating income. Our quarterly operating income exceeded more than KRW 500 billion, which is attributable to extensive efforts to regain customers trust and company-wide initiatives to improve productivity.
Jong-seok Park, Chief Financial Officer, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: Let me now present business highlights by business line.
Jong-seok Park, Chief Financial Officer, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: MNO achieved a handset subscriber net add of approximately 210,000 in the first quarter, which is a substantive outcome of diverse measures taken to innovate customer value and restore customers trust.
Jong-seok Park, Chief Financial Officer, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: We are not complacent, but remain committed to further strengthening business fundamentals and competitiveness with customer friendly products and services. We have expanded customer benefits and usability by restructuring the membership program, and we’re currently overhauling price plans to offer more choices to customers.
Jong-seok Park, Chief Financial Officer, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: The fixed line business is also producing stable results thanks to continued subscriber net adds, an increase in the share of subscribers signing up for higher price plans, including Giga price plan, and a stronger subscriber retention trend.
Jong-seok Park, Chief Financial Officer, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: We will do our utmost to achieve the dual objectives of subscriber recovery and profitability enhancement through constant change and execution based on the philosophy that customers are the essence of our business.
Jong-seok Park, Chief Financial Officer, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: In the AI business, the effects of the strategy of focus and prioritization are gradually becoming visible.
Jong-seok Park, Chief Financial Officer, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: AI data center revenue is maintaining a growth trend year-over-year, driven by Pangyo Data Center and higher utilization of Gasan Data Center. The construction of Ulsan AI Data Center is underway, and we plan to pursue additional scale-up by building new data centers in areas including Seoul.
Jong-seok Park, Chief Financial Officer, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: New opportunities are emerging for our AI data center business due to the surge in demand for AI data centers from global tech companies. Based on business experience and differentiated competitiveness across the entire value chain of AI data centers, we will actively pursue partnerships with global players and keep expanding our AI infrastructure business.
Jong-seok Park, Chief Financial Officer, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: Within AI B2C business, the agent business is evolving in a direction that creates synergy with the telecom business and enhances fundamental competitiveness. We plan to improve AI’s performance by linking it with our proprietary AI foundation model to strengthen its own competitiveness.
Jong-seok Park, Chief Financial Officer, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: With the increase in AI adoption, the B2B market is undergoing structural change driven by AI transformation, and new AI based markets are taking shape. SK Telecom will secure leadership in the rapidly evolving market by utilizing full stack AI capabilities across infrastructure models and agents, and mobilizing the customer base and execution capabilities secured from our B2B business.
Jong-seok Park, Chief Financial Officer, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: We ask for the continued support and interest of our investors and analysts as we overcome the crisis and continue driving change and embracing challenges to achieve greater growth. Thank you.
Conference Moderator, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: We will now like to begin the Q&A session.
Conference Moderator, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: Q&A session will begin. Please press star one, that is star and one, if you have any questions. Questions will be taken according to the order you have pressed the number star one. For cancellation, please press star two, that is star and two on your phone.
Conference Moderator, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: The first question will be provided by Seung-Woong Lee from Yuanta Securities. Please go ahead with your question.
Seung-Woong Lee, Analyst, Yuanta Securities: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: I’m Seung-Woong from Yuanta Securities. Thank you for the opportunity to ask you questions. I have two questions. First of all, as you mentioned during your earnings presentation, the company started quarterly dividend payment starting from Q1, and I’d like to understand the overall shareholder return plan and the size of the shareholder return for the entire year of 2026. Secondly, I can see that the company was able to produce earnings results that are similar to the levels prior to the cybersecurity incident. Is it safe to understand that this type of trend will become a new normal? I’d like to get some guidance from the company on a full year basis earnings outlook. Thank you.
Jong-seok Park, Chief Financial Officer, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: First of all, thank you for your questions. I’d like to comment on the question on our annual earnings outlook, and then I will move on to addressing your second question on shareholder returns.
Jong-seok Park, Chief Financial Officer, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: First, on our annual earnings outlook. In the first quarter, our operating profit posted KRW 537.6 billion, and the trend has reversed from the downward trend after the cybersecurity incident and shown an upward trend to be approaching the pre-incident levels. Our goal is to improve the full year earnings further from the current levels.
Jong-seok Park, Chief Financial Officer, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: For our telecom business, thanks to our efforts to restore customers’ trust, which is our number one priority in 2026, we achieved a net addition to handset subscribers in Q1, contributing to the recovery of the bottom line as well as the top line.
Jong-seok Park, Chief Financial Officer, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: For our AI business, we are reviewing and implementing various measures to improve the structural profitability by pursuing pivoting and discontinuation of low margin businesses through the strategy of focus and prioritization. In addition, data center business is seeing a meaningful growth trend, and the B2B business has revised its strategy to focus on AI full stack capabilities. We believe that these businesses will drive revenue and contribute to bottom line improvements for the remainder of the year.
Jong-seok Park, Chief Financial Officer, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: Finally, we are working to improve productivity in terms of business operations and processes through enterprise-wide AI tool adoption and AX transformation of call centers, and these measures are having a positive impact on cost efficiency improvement.
Jong-seok Park, Chief Financial Officer, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: In short, we will do our utmost to recover the annual to be higher than the pre-incident levels through profitability recovery of the telecom business, expansion of growth businesses centered on AI data centers, and continuous productivity enhancement.
Jong-seok Park, Chief Financial Officer, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: Now I’d like to speak about shareholder returns for 2026.
Jong-seok Park, Chief Financial Officer, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: As was announced earlier, we resumed quarterly dividend payments with the DPS for the first quarter of KRW 831. I’d like to thank our shareholders very much for their kind understanding and patience. As earnings continue to recover this year, we plan to conduct dividend payments as stably as possible.
Jong-seok Park, Chief Financial Officer, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: As for the size of the dividends for the whole year, when concrete full year earnings become more materialized, the board of directors will have discussions and make decisions in consideration of business performance and financial structure. I won’t be able to share with you any specific number at this point, but I promise that we will do our utmost to restore the dividend levels to the previous levels.
Jong-seok Park, Chief Financial Officer, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: At the annual general meeting of shareholders in March, the company transferred capital reserves of KRW 1.7 trillion to retained earnings to allow tax-exempt dividends, which is expected to deliver substantive benefits to shareholders. For your reference, according to relevant law, tax-exempt dividends are possible from the 2026 year-end dividends.
Conference Moderator, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: The following question will be presented by Joonsop Kim from KB Securities. Please go ahead with your question.
Kim Joonsop, Analyst, KB Securities: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: I’m Kim Joonsop from KB Securities. Thank you for the opportunity. I have two questions. One on MNO marketing, the other on AIDC. You have produced a recovery trend in terms of the net subscriber adds as well as a market share. I’d like to understand the overall subscriber market share target for SK Telecom and the marketing direction, and how you’re planning to strike a balance between profitability and marketing. Secondly, when you reported that the AIDC revenue in the first quarter has increased by 89% year-over-year, and I’d like to understand how this AIDC business is making meaningful contribution to your profitability. If you can give us some color, I would appreciate it.
Jong-seok Park, Chief Financial Officer, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: Thank you for your questions. I’d like to address your question on our AIDC business, I will hand over to Mr. Bai Byeongchan in charge of MNO support, who will answer your question on our MNO subscriber targets.
Jong-seok Park, Chief Financial Officer, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: First, let me comment on the timeline as to when AIDC business will be able to make meaningful earnings contribution.
Jong-seok Park, Chief Financial Officer, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: First of all, I’d like to remind you that we only announced AIDC revenue numbers, and we do not disclose any other indicators, including profitability related indicators. We’re aware that the market is interested in knowing this, but please understand that we are doing so in consideration of various factors, including the domestic data center market situations.
Jong-seok Park, Chief Financial Officer, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: Nevertheless, what I can say is that the AIDC business is comparable to the existing telecom business in terms of profitability, and there’s much room for the AIDC business to become even more profitable going forward.
Jong-seok Park, Chief Financial Officer, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: Since AIDC is our key growth business, we will think of what we can share, to help investors better understand our AIDC business performance.
Jong-seok Park, Chief Financial Officer, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: Now I’d like to turn to Mr. Bai in charge of MNO support to answer your question on our MNO subscriber targets.
Bai Byeongchan, Executive in charge of MNO support, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: I’d like to comment on our MNO subscriber target. The new year 2026 started with the number of handset subscribers reduced by around 986,000 year-over-year.
Bai Byeongchan, Executive in charge of MNO support, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: Reflecting on our performance in the first quarter, we were able to achieve a net add in subscribers on the back of changes in the competitive landscape back to school marketing to attract new subscribers and S26 flagship handset marketing. We were able to achieve net addition to our handset subscribers of 208,000.
Bai Byeongchan, Executive in charge of MNO support, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: Throughout the year, we will continue to make efforts to recover subscribers by targeting new segments, including foreigners, and strengthening competitiveness in terms of products, services, and sales channels.
Bai Byeongchan, Executive in charge of MNO support, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: We continue to strengthen fundamental competitiveness through business operation focused on profitability, we believe that the subscriber base and the market share will naturally grow.
Bai Byeongchan, Executive in charge of MNO support, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: Based on this approach, we will avoid engaging in excessive spending competition aimed solely at increasing subscriber numbers, but rather focus on market operation on securing high LTV subscribers.
Conference Moderator, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: The following question will be presented by Aram Kim from Shinhan Securities. Please go ahead with your question.
Kim Aram, Analyst, Shinhan Securities: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: I’m Kim Aram from Shinhan Securities. I’d like to ask you two questions. First of all, telecoms equipment providers, both in Korea as well as abroad are focusing on developing AI RAN, which is about using telecommunications network infrastructure for AI functions such as inference. I’d like to get SK Telecom’s view on AI RAN. Secondly, there is an increasing demand and growth for AI traffic, and I’d like to understand what this increase in AI traffic, what kind of business opportunities will this bring to SK Telecom as a telco? Thank you.
Jong-seok Park, Chief Financial Officer, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: Thank you for your question. On your questions on AI RAN as well as business opportunities brought by AI traffic, Mr. Jong-hoon Lee, in charge of network strategy, will address them.
Lee Jong-hoon, Executive in charge of network strategy, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: I am Lee Jong-hoon, in charge of network strategy. I’d like to first talk about expected benefits and commercialization plans of AI RAN.
Lee Jong-hoon, Executive in charge of network strategy, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: AI RAN is evolving in two domains. One is to improve telecommunications network infrastructure using AI, and the other is to use wireless network infrastructure as a platform to provide AI services.
Lee Jong-hoon, Executive in charge of network strategy, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: In the first domain, we expect to be able to automate base station operations through AI-based failure prediction, optimization of traffic and resources, and power efficiency improvement. This will lead to higher efficiency and improved customer experience. As for the second domain, we may be able to create new business opportunities and generate profit from the provision of AI services, such as inference and media processing by utilizing AI computing resources at the base stations.
Lee Jong-hoon, Executive in charge of network strategy, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: We are actively participating in technology research and standardization together with global players and manufacturers such as Samsung, DOCOMO and NVIDIA for the evolution of AI RAN.
Lee Jong-hoon, Executive in charge of network strategy, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: AI RAN is still in an early stage, so we will consider the adoption of AI RAN by comprehensively considering various aspects, such as technology maturity, standardization, validation on commercial networks, and other aspects.
Lee Jong-hoon, Executive in charge of network strategy, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: We will continue to maintain technology leadership in the next generation network technology areas, including AI RAN, and use the technology leadership to proactively secure new business opportunities.
Lee Jong-hoon, Executive in charge of network strategy, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: Next, I like to make some comments on AI traffic.
Lee Jong-hoon, Executive in charge of network strategy, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: While there is significant increase in AI traffic, the share of AI traffic in the entire traffic is still not very high.
Lee Jong-hoon, Executive in charge of network strategy, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: However, we’re considering ways to make AI traffic increase with a connection with AI RAN and how to distribute traffic across the networks. We will continue to look into technology to be able to do so.
Conference Moderator, SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: There are no questions in the queue right now.
SK Telecom: [Non-English content]
Kim Tae-hee, Investor Relations Officer, SK Telecom: This concludes the earnings conference call for 2026 first quarter of SK Telecom. If you need further explanations or have additional questions, please contact IR anytime. Thank you.