SK Telecom Co.,Ltd Q2 FY2025 earnings call

• Cybersecurity incident response: Announced Accountability and Commitment Program, including customer assurance package (free mobile device security solution, USIM replacements, etc.) and KRW 700 billion Information Protection Innovation Plan over 5 years. - Financial results: Consolidated revenue down 1.9% y-o-y; operating income KRW 338.3 billion, down 37.1% y-o-y; net income KRW 83.2 billion, down 76.2% y-o-y. Subscriber base declined due to security incident and new sign-up suspension. AI and AIDC businesses showed growth. - Data center plans: Plan to build hyperscale AI data center in Ulsan with AWS, aiming to start operation in 2027 and reach over 300 megawatts capacity by 2030, expecting ~KRW 1 trillion annual sales from data centers.

Consolidated revenue for the second quarter of 2025 was KRW 4,338.8 billion, down 1.9% year-on-year. MNO revenue decreased due to net subscriber losses from the cybersecurity incident and suspension of new sign-ups, plus sales of certain subsidiaries. AI business revenue grew 13.9% year-on-year. AIDC revenue was KRW 108.7 billion, up 13.3% year-on-year. AIX revenue grew 15.3% year-over-year to KRW 46.8 billion.

• Annual revenue guidance lowered from KRW 17.8 trillion to KRW 17 trillion due to cybersecurity incident impact. - Financial impact of incident reflected in Q2 and expected in H2, with Accountability and Commitment Program measures affecting earnings in Q3 and Q4.

• Temporary impact on 2025 earnings due to cybersecurity incident responses like USIM replacement, Accountability and Commitment Program, and M&O contract cancellation fee waivers. - Risk of further loss of customer trust if trust restoration efforts are not effective.

Q: Please provide more details on specific response measures to the cybersecurity incident and future prevention measures, and the financial impact on earnings.

A: Accepted government investigation results, implemented corrective measures, Accountability and Commitment Program including customer assurance package and KRW 700 billion Information Protection Innovation Plan. Financial impact in Q2 included MNO revenue decline, USIM replacement costs, and one-off costs; larger impact expected in H2 with Accountability and Commitment Program measures.

Q: Question on dividend payout plans and strategies to win back lost customers.

A: Board will discuss future dividends considering full-year earnings visibility; strategies include Customer Appreciation Package, restoring subscription years/membership grades for returning customers, and using additional subsidies now that handset subsidy law is abolished for more personalized marketing.

Q: Questions on AI data center in Ulsan and sovereign AI development.

A: SK Broadband and AWS to invest in Ulsan AI data center, with investments from 2025 H2 to 2028; cannot disclose specific investment/ revenue numbers but expect over 300 megawatts capacity by 2030 and ~KRW 1 trillion annual revenue. For sovereign AI, actively participating in government projects, selected as GPU lease supplier and consortium finalist, released Korean-specific LLM and tested AI chip for AI services.