[Click eStock] "SKT, Increased Investment Appeal Through AI Expansion and Core Business Improvement"

Q3 Earnings Meet Expectations... AI Pyramid Strategy and Data Center Growth
AI Infrastructure Strategy Confirms High Data Center Utilization
5G Customer Reach at 73%... Q4 Operating Profit Expected to Exceed Market Forecast

On the 7th, KB Securities analyzed that SK Telecom is becoming more attractive due to the expansion of artificial intelligence (AI) and improvements in its core business. They maintained a 'Buy' investment rating and a target price of 70,000 KRW. SK Telecom's closing price on the previous trading day was 57,500 KRW.

According to KB Securities, SK Telecom recorded Q3 sales of 4.53 trillion KRW and an operating profit of 533.3 billion KRW, meeting market expectations of 521 billion KRW. Notably, despite the launch of the Galaxy Z Fold4 and iPhone, marketing expenses were reduced by 3% year-on-year to a stable level of approximately 726 billion KRW, and CAPEX was also maintained at a low level. SK Telecom cited the company-wide efficiency gains from the adoption of AI technology as the background for these results.

In this earnings announcement, SK Telecom emphasized its AI business model called the ‘AI Pyramid Strategy.’ A key part of this strategy is the unveiling of the ‘AI Infrastructure Super Highway,’ composed of AI data centers, GPU as a Service (GPUaaS), and edge AI, highlighting that AI data centers are a segment that can drive short-term performance. Data center revenue for Q3 reached 60.9 billion KRW, with high utilization rates and increased demand confirmed in the results.

SK Telecom’s Q4 operating profit is expected to exceed market forecasts of 338.6 billion KRW, reaching 366 billion KRW. This is because the effect of flagship device launches was already reflected in Q3, and marketing cost burdens are expected to ease in Q4. Additionally, with the 5G customer ratio reaching 73%, revenue from the wireless communication core business is also expected to continue stable growth.

KB Securities researchers Junseop Kim and Seongwon Cha stated, "SK Telecom’s expansion of AI-based business and improvement in its telecommunications core business, along with structural improvements from AI technology adoption and the expansion of the 5G customer base, are key drivers of earnings growth, making the investment appeal even stronger."