SK Telecom Co.,Ltd Q4 FY2025 earnings call

• 2025: SK Telecom prioritized expanding operational improvements across the company and monetizing AI business, but was affected by the cybersecurity incident. The MNO business focused on addressing changes in the business environment caused by the cybersecurity incident. The AI business focused on solidifying a foundation for new growth.
• 2026: Priority on customer value innovation, aiming to restore customers' trust by adhering to fundamental principles in all areas, improving products and channels, and optimizing operations centered on customer lifetime value to regain fundamental business competitiveness. For AI business, concentrate on areas of strength to achieve tangible results, accelerate growth of AIDC business through business scale - up, develop AIDC solution business, scale up undersea cable business, enhance efficiency and productivity of AI agent and B2B AI business, and secure preferential opportunities through the second - phase own AI Foundation Model Project.

Consolidated revenue for SK Telecom in fiscal year 2025 was KRW 17.099.2 trillion, a 4.7% year - on - year decline due to sales of subsidiaries, net decline in subscribers after the cybersecurity incident, and implementation of the Accountability and Commitment Program including tariff discounts. Operating income was KRW 1.073.2 trillion, down 41.1% year - on - year, mainly due to revenue decline, costs related to the cybersecurity incident (such as USIM replacements), and business restructuring costs. Net income was KRW 375.1 billion, down 73% year - on - year, mainly because of penalty payments from the cybersecurity incident. For the AI business, in 2025, AIDC revenue continued a 2 - digit growth trend due to the increase in utilization rates of Gasan and Yangju data centers and the acquisition of Pangyo data center. Construction of Ulsan AIDC has been underway since September 2024. The AIDC revenue contribution to the overall business is not explicitly stated in absolute percentage but shows growth momentum.

• For telecom business: Aim to return operating income to the 2024 level by improving profitability of the telecom business and using AI across the telecom business (including marketing and network) to boost productivity and improve profitability, and balance cost and benefit in subscriber acquisition.
• For AI business: Continue to focus on areas that can make meaningful earnings contribution, and pursue meaningful expansion of the data center business to create new revenue streams and improve profitability through economies of scale.
• Dividend: Priority in 2026 is to restore earnings to return to previous dividend payout levels, and will consider other measures to increase shareholder value such as tax - free dividend after considering business performance, financial positions, and funds for growth investments.

• Network security incident led to net decline in subscribers following the incident and implementation of the Accountability and Commitment Program including tariff discounts, causing revenue to decline.
• Costs related to the cybersecurity incident such as USIM replacements and business restructuring costs at the end of 2025 had a negative impact on operating income and net income.

Q: Please get some color on our dividend policy for 2026 as well as the possibility of earnings normalization and the overall strategic directions and priorities for the new management.

A: Regarding earnings outlook, due to sales of certain noncore subsidiaries and decline in MNO subscribers, revenue didn't recover to 2024 levels, but aim to return operating income to 2024 level by improving telecom business profitability and AI business sustainability. Utilize AI across telecom business to boost productivity and profitability, and balance cost and benefit in subscriber acquisition. For AI business, focus on areas that can make meaningful earnings contribution and pursue meaningful expansion of data center business. For dividend, sincerely apologize for not paying quarterly dividend in the fourth quarter due to cybersecurity incident and business portfolio restructuring, and 2026 priority is to restore earnings to return to previous dividend payout levels and consider other measures to increase shareholder value such as tax - free dividend.

Q: What is the status of our equity stake in Anthropic and the strength and potential business opportunities of our proprietary foundational model project?

A: On equity stake in Anthropic, cannot disclose accurate details on shareholding ratio and value at the time of change due to confidentiality clauses, invested assets are regularly revalued, and no decisions made on equity disposal or its use for dividend. On the foundational model project, A.X K1 is Korea's first hyperscale AI model with over 500 billion parameters, developed using the largest Korean data set, having differentiated competitiveness in considering cultural context. For B2C, plan to add the model to A. with over 10 million users and Liner. For B2B, add to A. Biz for work productivity enhancement and provide to manufacturing affiliates, and expand use in vertical services within the consortium, and continue to develop in a cost - effective manner with government support.

Q: To what extent did we benefit from the trend of our competitor's waivering of cancellation fee on our MNO business and our subscriber target for 2026 as well as the key areas to focus on in our MNO business in 2026?

A: With competitor's cancellation fee waivers, the carrier switching market expanded temporarily at the beginning of the year, but then market stabilized, and a large share of customers who joined SK Telecom were voluntary win - back customers after the cybersecurity incident. 2026 MNO business priority is to strengthen core business competitiveness through customer value innovation, restore profitability, reorganize products and channels, use AI to optimize operations including products, marketing, and network operation, and create a productivity - based business structure to enhance customer value and maximize performance relative to input