2023 Performance Announcement... Operating Profit Up 8.8%
Sales Target for This Year: 17.9 Trillion KRW
Global Market Expansion through DC and Semiconductor Advancement
SK Telecom once again declared its determination to transform into an artificial intelligence (AI) company as it announced its 2023 performance results. In response to the slowing growth of wireless communication revenue, the company plans to diversify its AI business this year to achieve substantial revenue growth.
SKT announced on the 5th that its consolidated revenue for last year reached KRW 17.6085 trillion, and operating profit was KRW 1.7532 trillion, representing increases of 1.8% and 8.8% respectively compared to the previous year. Net profit rose by 20.9% to KRW 1.1459 trillion. SKT explained that "the increase in net profit was due to the reflection of gains related to equity investments such as dividend income."
Revenue for the fourth quarter of last year increased by 3.0% year-on-year to KRW 4.5273 trillion, and operating profit grew by 16.7% to KRW 297.1 billion.
Looking at SKT’s standalone performance excluding affiliates, revenue was KRW 12.5892 trillion and operating profit was KRW 1.4559 trillion, marking growth of 1.4% and 10.2% respectively compared to the previous year.
SKT stated that based on the 'AI Pyramid Strategy' personally devised by CEO Yoo Young-sang last year, as well as its AI infrastructure and technological capabilities, it aims to achieve visible revenue growth this year. The target revenue for this year is set at approximately KRW 17.9 trillion.
SKT expects that "AI data centers, AI enterprise, and AI semiconductors will rapidly expand revenue this year alongside steep market demand growth, driving the growth of the AI business."
In the AI infrastructure sector, data center business revenue grew by 30% compared to the previous year. The company introduced an immersion cooling system that reduces maximum power consumption by nearly 40%, plans to build new AI data centers this year, and is also concretizing its entry into the global market.
SKT affiliate and AI semiconductor specialist company 'Sapeon' successfully commercialized the data center AI semiconductor 'X330' last November, which offers more than four times the computing power and twice the power efficiency compared to its predecessor. It is accelerating its global market entry by discussing cooperation plans with global server manufacturer 'Supermicro.'
SKT is also pursuing a two-track multi-large language model (LLM) strategy. Alongside its proprietary LLM 'A.Dot.X,' it is preparing an AI platform that encompasses a diverse lineup of LLMs from leading domestic and international AI companies such as Entropic, OpenAI, Allganize, and Conan Technology.
The 'Enterprise AI Market' launched last month allows customers to select their preferred LLM from various options and easily apply AI to company tasks without coding knowledge. In the enterprise business, SKT continues to expand orders for Internet of Things (IoT) lines while discovering various AI items to foster growth. Relatedly, the cloud business saw revenue increase by more than 30% last year compared to the previous year.
In the Urban Air Mobility (UAM) business, SKT showcased the actual UAM aircraft from U.S. company Joby Aviation for the first time in Korea during this year's 'K-UAM Grand Challenge' demonstration project. The company plans to secure leadership in the domestic market and jointly enter the global market.
During the conference call held on the day, SKT revealed that as of the end of last year, its 5G mobile subscribers numbered 15.67 million, accounting for 68% of the total. This indicates that the wireless communication market has essentially reached saturation. Since the number of IoT lines, which have a low average revenue per user (ARPU), continues to steadily increase, the ARPU including IoT is expected to slightly decline. Accordingly, the strategy going forward is to drive wireless revenue through various methods such as killer services and subscriptions, in addition to growth focused on net subscriber additions.
In particular, SKT stated that it will lead the AI agent market by continuously adding services to the AI personal assistant 'A.Dot,' which added an iPhone call recording feature last year. Currently, A.Dot has about 3.4 million subscribers, showing explosive growth with a 300% increase in cumulative subscribers over the past year.
The subscription service 'T Wooju' achieved more than 2.35 million monthly users as of the end of last year through partnerships with highly demanded services such as YouTube Premium. This year, SKT plans to add partnership products like Netflix and evolve it into an AI-based subscription commerce platform.
SK Broadband has 9.55 million paid broadcasting subscribers and 6.93 million internet subscribers. SKT announced plans to launch a 'personalized AI TV service' that will provide new experiences in the future.
Kim Yang-seop, SKT’s Chief Financial Officer (CFO), said, "Last year, we laid the foundation for growth as an 'AI company' by strengthening our own AI capabilities and establishing global partnerships with leading AI companies worldwide. We will create visible results as a global AI company to maximize corporate and shareholder value."
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