Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- SK Telecom Co Ltd (SKM, Financial) reported a 2.9% year-over-year increase in consolidated revenue for Q3 2024, driven by stable growth in roaming and B2B solution businesses.
- Operating income increased by 7.1% year over year, attributed to cost stabilization in marketing and depreciation.
- The company has established a strong AI Pyramid Strategy, focusing on AI data centers, AI B2B, and AI B2C to generate profit.
- Data center revenue grew by 14% year over year, indicating higher utilization and potential for short-term results in AI monetization.
- SK Telecom Co Ltd (SKM) has a robust 5G subscriber base, with 16.58 million subscribers, accounting for 73% of the total subscriber base.
Negative Points
- Consolidated net income fell by about 9% year over year due to recognition of valuation losses from investment assets as non-operating expenses.
- Despite the positive market response to AI initiatives, the company faces challenges in monetizing AI services effectively.
- SK Telecom Co Ltd (SKM) was not included in the core value index announced by the Korean Exchange, indicating potential concerns about market perception.
- The company faces competition in the AI B2C market, traditionally led by platform companies, which may impact its market share and profitability.
- There is uncertainty regarding the year-end dividend, as it depends on the closing of the fourth quarter earnings and board deliberation.
Q & A Highlights
Q: With the larger recognition of non-operating losses leading to a smaller net income, will this impact your year-end dividend? Also, can you explain the background of your Corporate Value-Up Plan disclosure?
A: Yang Seop Kim, CFO, explained that the valuation losses are one-off non-recurring items and will not affect the dividend payout. The company remains committed to maintaining a stable dividend trend. Regarding the Corporate Value-Up Plan, it was disclosed to enhance corporate value and includes key indicators like ROE and AI Vision 2030. SK Telecom aims to improve ROE and maintain a high shareholder return ratio.
Q: Can you elaborate on AI's contribution to your earnings and the direction for AI service development? Also, what benefits have you seen from the Perplexity Pro promotion?
A: Yang Seop Kim, CFO, stated that SK Telecom is focusing on AI Data Centers, AI B2B, and AI B2C for monetization. The Perplexity Pro promotion has been successful, increasing subscriber interest in AI. Jae-shin Lee, Head of AI Growth Strategy, added that the promotion helped forge a partnership with Perplexity, and they are developing AI products tailored to Korean users.
Q: What is the impact of the launch of flagship handset series on your 5G subscriber addition and marketing costs?
A: Ji-hyeong Kim, Head of Integrated Marketing Strategy, noted that the launch of new flagship handsets and popular 5G price plans contributed to a 20% QoQ increase in 5G subscribers. The company focuses on differentiated services and marketing strategies to improve revenue and profit in the mature 5G market.
Q: Can you provide updates on your cooperation with Penguin Solutions and Lambda for your AI Data Center business?
A: Jae-joon Bae, Head of the Enterprise Business Strategy Office, highlighted the partnership with Lambda to open an AI data center in December, providing GPU-as-a-service. Collaboration with Penguin Solutions strengthens their AI data center capabilities, aiming for leadership in the global market.
Q: Regarding your 2030 targets, what is the current portion of AI in your total revenue, and what are your expectations?
A: An unidentified company representative stated that SK Telecom aims to increase AI's revenue portion to 35% by 2030, focusing on AI Data Centers, AI B2B, and AI B2C. The company is working on the revenue breakdown and will communicate details when ready.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
