'August Goals' Frequency Supply Plan... SKT Focuses on AI Instead of Additional 5G Allocation

Digital Spectrum Plan Targeted for Release in August
'SKT Demand' 5G Additional Allocation Unlikely
SKT "Focusing on AI"... Science Ministry "Will Decide Considering Situation"

The possibility of additional allocation of the 5G frequency band 3.70~3.72 GHz (20 MHz), which SK Telecom had been requesting, has decreased. The government plans to announce a plan this month that includes frequency supply and utilization measures, as SKT's stance on additional frequency allocation has changed while strengthening its artificial intelligence (AI) business.

The above photo is not related to the article (Photo by Asia Economy DB)

According to the industry and the Ministry of Science and ICT on the 14th, the Ministry will unveil the Digital Spectrum Plan this month. The Digital Spectrum Plan is a strategy concerning frequency supply and utilization across all sectors including mobile communications, digital new industries, and public sectors to accelerate innovation in economic and social fields in response to the entry into the digital deepening era. A Ministry of Science and ICT official said, "Although it has not been finalized, the goal is to release the plan this month."

The additional allocation of the 3.70~3.72 GHz (20 MHz) 5G frequency band became an issue at the public hearing in January. SKT has been demanding additional allocation, raising fairness issues after LG Uplus received the 3.4~3.42 GHz (20 MHz) band in July 2022. Later, as the government's decision was delayed, SKT expressed concerns that if the supply was delayed, the positive effects of additional frequency supply such as industrial revitalization and public convenience would disappear.

Yu Young-sang, CEO of SK Telecom, is speaking at a CEO press briefing held on the 26th (local time) at the Fira Gran Via exhibition center in Barcelona, Spain, where Mobile World Congress (MWC) 2024 is taking place. Photo by Joint Press Corps

However, SKT has recently changed its position on receiving additional frequencies. This is closely related to its move to focus on the artificial intelligence (AI) business. Kim Yang-seop, Chief Financial Officer (CFO), said at the recent Q2 earnings conference call, "Under the AI pyramid framework, we plan to invest intensively in areas where we can make money." Kim explained that the areas where AI monetization is possible include large language models (LLM), AI data centers (DC), and AI personal assistants (PAA). He added, "Because the pace of AI progress is fast, astronomical investment costs are required." On that day, SKT announced that it aims for annual sales of over 60 billion KRW this year by providing AI in the form of solutions in the public, financial, and manufacturing sectors.

SKT plans to invest 300 billion KRW in AI this year, so it cannot ignore the cost burden. To receive additional 5G frequency allocation, large-scale investments are required, including carrier aggregation (CA) technology, construction of large-capacity base station equipment, additional construction of intermediate equipment connecting base stations and core networks, and software upgrades due to increased processing capacity. An SKT official said, "It seems to be a time to focus more on the AI business currently underway." A Ministry of Science and ICT official said, "Since SKT's situation appears to have changed, we plan to consider this in our judgment."