SK Telecom Co.,Ltd Q3 FY2025 earnings call

Fixed and Mobile Business

• 5G subscribers increased by ~240,000 Q-on-Q to 17.26 million. Broadband and IPTV subscribers had positive net additions. Launched Air, a digital communication service for unlocked devices, designed for customers in their 20s and 30s.

AI Business

• Reorganized AI capabilities into AI CIC. AI DC revenue up 53.8% y-o-y to KRW 149.8 billion. Ulsan AI data center groundbreaking in late August, under construction. Signed MOU with OpenAI for AI data center in Korea's Southwest region. AIX, an enterprise AI agent, rolled out to 10 SK Group affiliates and planned to expand to 25 by year-end. SK Telecom Consortium selected as core team for proprietary AI foundation model project.

Crisis Response

• Fully mobilized to respond to cybersecurity incident. Set goal of continuous innovation in information security, strengthening security investment, next-gen tech adoption, and external verification system.

Consolidated revenue for the third quarter of Fiscal Year 2025 was KRW 3,978.1 billion, a 12.2% decline year-on-year. M&A revenue fell by approximately KRW 547.7 billion year-on-year due to tariff discounts. Operating income was KRW 48.4 billion, a 90.9% year-on-year drop. The AI business achieved a 35.7% year-on-year increase in revenue. AI DC revenue was KRW 149.8 billion, up 53.8% year-on-year. The AI business contributed to revenue growth, with various segments showing positive momentum despite the overall revenue decline.

Q4 Outlook

• Some decline in mobile revenue expected to persist in Q4 but impact smaller than Q3. Cautious on operating profit due to concentrated spending in Q4. ### FY'26 Guidance
• Full-year guidance to be provided after finalizing management plans. Aiming to drive steady recovery in mobile revenue via restored customer trust and cost efficiency to return to pre-incident operating profit levels. Dividend for Q3 not declared, Q4 dividend to be reviewed by Board considering full-year performance and cash flow, aiming to restore to pre-incident level from 2026.

Risks

• Continued financial impact from cybersecurity incident. Potential for further customer loss if trust not restored effectively. Impact of ongoing tariff discounts and customer appreciation packages on revenue and margins.

Q: About dividends, why no third quarter dividend and outlook for Q4 and FY'26?

A: Due to financial impact of cybersecurity incident, cash flow condition, and financial stability, no third quarter dividend. Q4 dividend to be reviewed by Board considering full-year performance and cash flow. Aiming to restore dividend to pre-incident level from 2026.

Q: How many customers lost in previous quarter regained in this quarter and marketing plans?

A: After contract cancellation fee waiver period ended, customer churn contained in August and September, resulting in net neutral balance. Plans to pursue qualitative recovery centered on strengthening fundamental competitiveness and improving customer and revenue quality, using granular customer analytics to provide optimized products.

Q: Progress of Ulsan AI DC project and data center expansion plan?

A: Construction of Ulsan AI data center began September 1, progressing smoothly. Revenue to ramp up with utilization. Aim to achieve KRW 1 trillion revenue by 2030 with 300 MW+ data center capacity. Pursuing additional AI data center in Seoul, design work just begun.

Q: Plan to charge A. service?

A: Cumulative subscribers for A. surpassed 10.56 million. B2C paid model under review, target launching in first half of 2026. B2B profit model from T Map integration expected to generate revenue from Q4.

Q: Dividend visibility and policy?

A: Due to unforeseeable cybersecurity incident, no Q3 dividend. Committed to normalizing business environment. Shareholder return policy is returning 50% of adjusted consolidated net income, with nonoperating items like fines classified as nonrecurring.