SK Telecom's AI business makes progress but earnings flat

　　SK Telecom's ambitious AI strategy made further gains in Q2 but not enough to lift its bottom line. The Korean operator announced quarterly earnings of 350.2 billion Korean won (US$254 million), up just 0.7%, although slightly ahead of analysts' expectations of KRW346.2 billion ($251 million).

　　Revenue improved 2.7%, and while operating income enjoyed a 16% pop, this was primarily thanks to a one-off recognition of patent pool payments.

　　executives on an earnings call Tuesday pointed to the healthy topline growth in its nascent AI-related businesses, with data center revenue up 21%, cloud sales 28% higher and enterprise rising 11%. Its legacy mobile and broadband businesses both posted growth of 2.3% on the back of higher subscriber take-up, with 5G now accounting for 70% of all mobile subs.

　　CFO Kim Yang-seob said the company aimed to raise more than KRW60 billion (US$44 million) in revenue this year from Gen AI, data center and AI solutions targeting key verticals. He said the AI data centers would offer GPU as a service and energy solutions and would drive the company away from its traditional data center business.

　　Astronomical investment

　　Kim said the speed and scale of AI development meant "an astronomical amount of investment" was required. SKT's strategy is to partner with local and foreign AI companies and to make small-scale investments to secure core capabilities.

　　In its latest deal last month it agreed to invest $200 million into Nasdaq-listed AI computing and solutions provider SGH, which it hopes will help drive its global AI data center business.

　　Other investments include a $100 million stake in Silicon Valley LLM firm Anthropic, a $20 million piece of GPU cloud startup Lambda and a $10 million deal with AI search engine Perplexity.

　　SKT's AI personal assistant named A. (pronounced 'A dot'), which debuted earlier this year, now has 4.6 million users. The company hopes to take it global in partnership with Perplexity later this year.

　　The company also said it expected network efficiency gains from the development of AI-powered edge basestations. It is working with global vendors and other telcos to build an AI RAN that can support both AI and telecom services.

　　But Kim expressed unease that SKT's combined efforts in its AI and legacy businesses "have not been properly reflected in the corporate valuation in the stock market, and honestly this is something that concerns me as the CFO."

　　"In the medium to long-term we will consider increasing shareholder returns in proportion to significant earnings improvements," he added.

　　SKT's stock on the Seoul exchange fell 0.19% on Tuesday.