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SK Telecom Reports Higher Q2 Profit as AI Business Gains Traction

Cost-cutting measures and AI growth drive SK Telecom's profit up 16% despite pressure to reduce telco bills
South Korea
s 017670.KO Mid and Small Cap 2000
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SK Telecom Co., South Korea’s leading mobile carrier, posted a 16% increase in operating profit for the second quarter, reaching 537.5 billion won (approximately $390.5 million). This growth comes as the company effectively manages costs and capitalizes on its burgeoning artificial intelligence (AI) business, counteracting pressures such as the government’s push to lower telecommunication bills.

Sales for the quarter increased by 2.7% year-on-year to 4.4 trillion won, while the operating profit margin rose from 10.8% to 12.2%. The company successfully reduced marketing expenses by 5.1% to 716 billion won compared to the same period last year. However, the average revenue per user (ARPU) fell by 2.1% to 29,298 won due to the maturing 5G market and regulatory pressures to decrease consumer costs.

Despite these challenges, SK Telecom’s robust non-telecommunication sectors, particularly AI, played a crucial role in enhancing its financial performance. The company secured AI cloud business orders from domestic internet service providers, boosting overall sales and supporting its strategic shift towards AI.

Chief Financial Officer Kim Yang Seob highlighted the company’s focus on expanding its AI initiatives. SK Telecom plans to test a global personalized AI assistant (PAA) in international markets later this year, underscoring its commitment to evolving into a prominent AI company.

By leveraging its expertise in AI and maintaining stringent cost controls, SK Telecom aims to sustain its growth trajectory amid a rapidly evolving telecommunications landscape.

 

 

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