SK Telecom Co., Ltd. (SKM) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals several negative factors: a significant decline in revenue, operating income, and net income largely due to a cybersecurity incident, and the suspension of dividends for Q4 2025. Although there are positive developments in AI and data centers, the overall financial performance and unresolved issues around customer trust and AI execution risks weigh heavily. The Q&A section highlights ongoing challenges and uncertainties, further supporting a negative sentiment. Without market cap data, assuming moderate impact, the stock is likely to experience a negative reaction in the range of -2% to -8%.
Key Financial Performance
Consolidated Revenue KRW 17.099.2 trillion, down 4.7% year-on-year due to sales of subsidiaries, net decline in subscribers following the cybersecurity incident, and implementation of the Accountability and Commitment Program, including tariff discounts.
Operating Income KRW 1.073.2 trillion, down 41.1% year-over-year, on the back of the decline in revenue, costs related to the cybersecurity incident, including USIM replacements, and costs incurred during business restructuring at the end of 2025.
Net Income KRW 375.1 billion, down 73% year-over-year, mainly due to penalty payments arising from the cybersecurity incident.
AIDC Revenue Continued a 2-digit growth trend, thanks to the increase in utilization rates of Gasan and Yangju data centers and the acquisition of Pangyo data center.
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Operating Highlights
AI business: Focused on solidifying a foundation for new growth in 2025. Plans to concentrate on areas of expertise to achieve tangible results starting this year.
AIDC revenue: Continued a 2-digit growth trend in 2025 due to increased utilization rates of Gasan and Yangju data centers and acquisition of Pangyo data center. Construction of Ulsan AIDC underway since September 2024.
Business expansion in AIDC: Plans to accelerate growth by developing business expansion opportunities, including an additional data center in the Seoul metropolitan region.
Undersea cable business: Scaling up the undersea cable business initiated in 2025.
Operational optimization: Focused on customer lifetime value to regain business competitiveness and become the #1 service provider from the customer's perspective.
AI agent and B2B AI business: Aiming to enhance efficiency and productivity to produce meaningful outcomes.
Customer value innovation: Priority on adhering to fundamental principles and standards in quality, safety, and security to regain customer trust.
AI Foundation Model Project: Securing preferential opportunities to participate in various projects through the second phase of the project.
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Risk or Challenges
Cybersecurity Incident: The cybersecurity incident led to a net decline in subscribers, penalty payments, and substantial costs including USIM replacements and business restructuring. This incident also impacted customer trust and financial performance, resulting in a 4.7% revenue decline and a 73% drop in net income year-over-year.
Business Restructuring Costs: Costs incurred during business restructuring at the end of 2025 further impacted operating income, which fell by 41.1% year-over-year.
Dividend Reduction: Due to the financial impact of the cybersecurity incident and restructuring costs, the company decided not to pay out a quarterly dividend for Q4 2025, reducing the annual DPS to KRW 1,660.
Customer Trust and Retention: The cybersecurity incident and subsequent developments have highlighted challenges in maintaining customer trust and retention, which are critical for business recovery and competitiveness.
AI Business Execution Risks: While the AI business showed growth, there are risks associated with achieving tangible results and scaling up operations, including the undersea cable business and AI Foundation Model Project.
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Guidance & Outlook
Telecom Business Outlook for 2026: The company will prioritize customer value innovation, adhering to fundamental principles and standards in quality, safety, and security to regain customer trust. Plans include improving products and channels, achieving operational optimization centered on customer lifetime value, and regaining fundamental business competitiveness to become the #1 service provider from the customer's perspective. Financial performance is expected to recover to previous levels.
AI Business Growth Plans: The company plans to focus on areas of strength to achieve tangible results. Growth will be accelerated through business expansion opportunities, including scaling up with an additional data center in the Seoul metropolitan region. New possibilities will be created through in-house development and external partnerships for the AIDC solution business. The undersea cable business will also be scaled up. Efficiency and productivity of the AI agent business and B2B AI business will be enhanced to produce meaningful outcomes. The AI Foundation Model Project, now in its second phase, will secure preferential opportunities in various projects.
AIDC Business Expansion: The company aims to accelerate growth in the AIDC business by increasing utilization rates of existing data centers and constructing new ones, including the Ulsan AIDC and an additional data center in the Seoul metropolitan region. Synergies will be created through the AIDC solution business, and the undersea cable business will be scaled up.
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Shareholder Return Plan
Quarterly Dividend for Q4 2025: The company decided not to pay out quarterly dividend for the fourth quarter due to the financial impact of the cybersecurity incident and substantial costs incurred in business portfolio restructuring.
Dividend Per Share (DPS) for FY 2025: The Board of Directors resolved to set the DPS for fiscal year 2025 at KRW 1,660, including the quarterly dividends already paid. This decision will be finalized after approval at the Annual General Shareholders Meeting in March.
Future Dividend Plans: The company will strive to restore financial performance to return to previous dividend payout levels.
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Key Q&A
Q:What is the dividend policy for 2026 and the possibility of earnings normalization?
A:The company aims to restore earnings to pre-cybersecurity incident levels by improving telecom business profitability and AI business self-sustainability. They plan to utilize AI for productivity and profitability improvements and expand the data center business. The dividend payout will be prioritized based on earnings restoration, with considerations for shareholder value, tax-free dividends, and balanced capital allocation.
Q:What are the strategic directions and priorities for the new management in 2026?
A:The new management will focus on strengthening competitiveness in telecom and AI businesses through three strategies: customer value innovation, AI-driven productivity improvements, and enhancing AI business sustainability. They plan to redesign telecom offerings, apply AI across operations, and expand AI data centers to scale up business and create new models.
Q:What is the value of the equity stake in Anthropic, and are there plans to liquidate it?
A:The company cannot disclose specific details about the equity stake in Anthropic due to confidentiality clauses. The 2025 business report will provide updates. No decisions have been made regarding equity disposal or its use for dividends.
Q:What is the strength of SK Telecom's proprietary foundational model project, and what are the potential business opportunities?
A:The A.X K1 model, developed with over 500 billion parameters, is Korea's first hyperscale AI model with cultural context consideration. It will be integrated into B2C and B2B services, including enhancing productivity for SK affiliates and vertical services. The company aims to develop the model cost-effectively with government support and participate in national AI projects.
Q:What is the impact of KT's cancellation fee waivers on SK Telecom's MNO business, and what are the subscriber and revenue targets for 2026?
A:The cancellation fee waivers temporarily expanded the carrier switching market, benefiting SK Telecom with returning customers. The company aims to restore profitability and subscriber base through customer value innovation, AI-driven operations, and restructuring product offerings. However, revenue recovery to pre-cybersecurity levels remains challenging.
Q:What are the key focus areas for the MNO business in 2026 under the new management?
A:The focus will be on profitability and customer value innovation. Strategies include restructuring products and channels, optimizing operations with AI, and creating a productivity-based business structure to enhance customer value and performance.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details about the equity stake in Anthropic, citing confidentiality clauses, and did not clarify plans for its liquidation or use for dividends.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI Foundation
AI MNO
AI effort
AI outcome
AIDC expansion
Annual General
BB AI
CFO health
Foundation Model
Gasan Yangju
General Meeting
KRW penalty
Kim SK
MNO change
MNO fundamental
Meeting dividend
Model Project
Park CFO
Program tariff
Project phase
Seoul region
Tae hee
Telecom MNO
Telecom fundamental
Telecom investor
Telecom priority
afternoon Tae
afternoon seok
agent BB
analyst crisis
area customer
area quality
area result
cable
competitiveness
customer value
development
restructuring
SKM Transcript
SK Telecom Co., Ltd. (SKM) Q4 2025 Earnings Call Transcript
Unknown2-5
The earnings call reveals several negative factors: a significant decline in revenue, operating income, and net income largely due to a cybersecurity incident, and the suspension of dividends for Q4 2025. Although there are positive developments in AI and data centers, the overall financial performance and unresolved issues around customer trust and AI execution risks weigh heavily. The Q&A section highlights ongoing challenges and uncertainties, further supporting a negative sentiment. Without market cap data, assuming moderate impact, the stock is likely to experience a negative reaction in the range of -2% to -8%.
SK Telecom Co., Ltd. (SKM) Q3 2025 Earnings Call Transcript
Unknown10-30
The earnings call reveals significant financial challenges, including a 12.2% revenue decline and a 90.9% drop in operating income due to cybersecurity penalties. While AI business growth is positive, the lack of dividend declaration and unclear guidance on future dividends signal financial instability. The Q&A highlights ongoing concerns over financial recovery and customer retention. Despite AI and data center progress, the overall sentiment is negative due to the substantial financial setbacks and uncertainty in restoring dividends, likely leading to a negative stock price reaction.
SK Telecom Co., Ltd. (SKM) Q2 2025 Earnings Call Transcript
Unknown8-6
The earnings call reveals significant challenges, including a cybersecurity incident causing substantial financial losses and subscriber churn. Operating income and net income have declined sharply, and revenue guidance has been lowered. The company's attempts to regain customer trust and enhance security measures are positive, but the financial impact remains a concern. The Q&A section highlights uncertainties and unclear management responses regarding future investments and dividends. Overall, the negative financial performance and uncertainties overshadow the positive aspects of AI business growth, leading to a negative sentiment.
SK Telecom Co.,Ltd (NYSE:SKM) Q1 2025 Earnings Call Transcript
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Despite strong operating income and AI business growth, the cybersecurity incident poses significant risks. The suspension of new subscriber sign-ups and potential regulatory scrutiny could negatively impact future revenue. Management's inability to provide clear guidance on the incident's financial impact adds uncertainty. While the dividend remains stable, the overall sentiment is negative due to these risks and uncertainties.
SKM Report
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