SK Telecom Co., Ltd.

Kim Yang-seop, CFO Kim Yang-seop, CFO

Good afternoon. I am Heejun Jung, IRO of SK Telecom. Let us begin the earnings conference call for the fourth quarter and the fiscal year 2024. Today, we will first deliver a presentation on the financial and business highlights followed by a Q&A session. Please note that all forward-looking statements are subject to change depending on various factors such as market and management situations. Let me now present our CFO.

Hello, I am SK Telecom CFO Kim Yang-seok. 2025년 처음 인사드립니다. 새해 복 많이 받으시고 건강하고 평안한 한 해 되시기를 기원합니다.

지난 한 해를 돌이켜보면 SK Telecom의 2024년은 OI와 AI로 요약될 것입니다.

For SK Telecom, 2024 was all about operational improvements and artificial intelligence.

While operational improvement efforts further strengthened our competitiveness in the telecom business, The AI pyramid strategy guided us in refining business models and establishing execution systems to lay the foundation to become an AI company.

The AI pyramid strategy guided us in refining business models and establishing execution systems to lay the foundation to become an AI company.

We focused on operational improvements not just to reduce costs, but also to enhance our overall portfolio, processes, and culture to strengthen the company's business fundamentals. Thanks to these efforts, the consolidated operating profit grew 4% year-over-year, and the OP margin exceeded 10%.

Let me now report on the consolidated financial results for 2024.

Consolidated revenue reported $17,940.6 billion, up 1.9% year-over-year.

As wireless, wired, enterprise, and AI all business areas grow evenly, sales continue to rise steadily after the 2021 company split. Wireless business growth has been slightly reduced, but roaming services, which are one step closer to customers, contributed to increased wireless sales, and cloud, AICC, and B2B businesses and data centers showed a large growth rate and encouraged connection sales growth.

With sustained growth in all business areas, including fixed and mobile, enterprise, and AI, our consolidated revenue has continued the upward trend since the spinoff in 2021. MNO business saw a slight slowdown in its top-line growth, but customer-friendly roaming services contributed to MNO revenue growth, while significant growth in data center and B2B business such as cloud and AICC

contributed to consolidated revenue growth.

Operating income posted $1,823.4 billion.

AI was introduced in the field of business and work to continue the trend Throughout the year, we successfully reduced major expenses such as marketing and DNA costs through cost-efficiency measures.

To continue the trend, we are utilizing AI to further drive cost efficiency in key business areas and processes. Last year, we also rebalanced our business portfolio by phasing out low-profit businesses and increasing the share of high-profit ones, thereby laying the foundation for sustainable growth in the future, not just short-term operating income growth.

OIA 일환으로 추진된 포트폴리오 재평과 자산 효율화 효과로 전년 대비 25.6% 증가했습니다.

다음으로 AI 성과에 대해 말씀드리겠습니다. Next, let me report on AI-related highlights.

AI data center 분야의 강점을 보유한 Lambda와 Penguin Solutions의 전략적 투자를 단행했고, ADAC과 Aster, 그리고 Telco LLM 분야에서 Perplexity, Entropic 등 유수의 글로벌 AI tech 컴퍼니들과 In 2024, SK Telecom strengthened its global AI partnerships through equity investments in diverse AI-related domains.

Specifically, we made strategic investments in Lambda and Penguin solutions to utilize their expertise in AI data center business. Furthermore, we're closely collaborating with global AI tech companies such as Perplexity and Anthropic for ADOT, Ester, and Telco LLM. Last month, we launched SKT GPU as a service that we have been preparing for a year with Lambda. This year, we will carry out AI business activities in earnest to achieve meaningful growth in AI-related revenue.

This year, we will carry out AI business activities in earnest to achieve meaningful growth in AI-related revenue. This year, we will carry out AI business activities in earnest to achieve meaningful growth in AI-related revenue. This year, we will carry out AI business activities in earnest to achieve meaningful growth in AI-related revenue. From this year onwards, in order to show more comprehensive AI business growth, we would like to present the sales of AIX and AIDC, which are B2B businesses related to AI, by quarter. The sales related to AI in 2024 grew by 19% compared to last year, and we will accelerate AI business growth through the construction and acquisition of AI infrastructure superhighway, which will continue this year.

In this regard, we have changed the classification of AI-related revenue. The entire business of SK Telecom is largely divided into two categories, telecom business and AI business, which includes AIX, AIDC, ADOT, and GPAA. Previously, we showed figures on cloud and data center business, but starting from this year, we will announce quarterly sales of AIX and AIDC which are AI-related B2B business, to provide you with a more comprehensive view of AI business growth. In 2024, AI-related revenue grew 19% year over year. Going forward, we will continue to accelerate AI business growth through the construction of AI infrastructure superhighway and monetization efforts.

. . . . .

Another pillar of our AI business is PAA, which is now organized into two tracks, ADOT for the domestic market and Ester for global customers. After an overhaul in August last year, ADOT was able to achieve a 160% growth year-over-year in total users thanks to the application of AI to phone calls, and multi-LLM agent features. Having been unveiled in November last year, Esther presented a comprehensive daily management service model at CES 2025 and will launch a beta service in the first half of the year in the U.S. Finally, let me turn to shareholder return for 2024 and earnings guidance for 2025.

2024 배당금은 기지급된 분기배당금 2,490원을 포함하여 주당 3,540원으로 이사회에서 결정하였으며, 3월 정기주주총회 승인을 거쳐 최종 확정될 예정입니다.

The DPS for 2024 was determined by the Board at 3,541, including the quarterly dividend of 2,491 that was already paid out.

It is subject to the approval at the annual general meeting of shareholders in March.

Our annual consolidated revenue target for 2025 is $17.8 trillion. It represents approximately 1% growth year-over-year on a normalized basis after removing the impact of sales of certain subsidiaries late last year. We also aim to achieve a YOY growth in operating income through continuous operational improvements.

This year, we anticipate significant economic, industrial, and political changes both in Korea and globally.

We will strengthen our fundamental competitiveness to cope with high uncertainty and pioneer the AI era through challenges and innovations, thereby further enhancing our corporate value.

We look forward to your continued support and encouragement.

Thank you.

질문을 하실 분은 전화기 버튼의 별표와 1번을 누르시기 바랍니다. 질문을 취소하시려면 별표와 2번을 누르시면 됩니다. Now, Q&A session will begin. Please press star 1, that is star and number 1, if you have any questions. Questions will be taken according to the order you have pressed the number star 1. For cancellation, please press star 2, that is star and number 2 on your phone. The first question will be provided by Kim Hye-jae from DaeShin Securities.

Please go ahead with your question. And please give us some guidance on how much we should expect the overall sales to be. The second is about the demand. Including the 1050 won of the final payment, you decided to pay 3,540 won a year, the same payment as in 2023. In fact, I wonder what the background of your decision was compared to the fact that there was a concern that it might decrease a little. And in the 25th year, I would like to ask you to make a decision

I would like to ask two questions. First of all, in your opening speech, you already talked about your plans for AI-related businesses, but I'd like to understand what would be the key focus areas for SK Telecom in conducting AI business, and if you can provide us with some guidance on AI-related revenue outlook, we will appreciate that. My second question is concerned with shareholder return. There were some concerns that SK Telecom's dividend per share may decline. However, you've decided to go ahead with a DPS of 3,541, which is the same as the previous year. So I'd like to understand the background behind this decision and also the If you can add some color on what we can expect for 2025 for shareholder return, including any plans on share buyback, I would appreciate that. Thank you.

I'm CFO Kim Young-seop.

Thank you for your questions. I'd first like to talk about AI-related revenue.

At the end of last year, SK Telecom restructured the company into seven business units based on two pillars of telecom and AI.

And the AI business includes ADOT and GPAA for B2C business and AIX and AIDC for B2B business. You asked a question about AI-related revenue, and it has been materialized, first of all, in our B2B business, such as AIX and AIDC.

AIX is a product that includes various AI B2B products such as AI Vision, AI CC, and AI Cloud. Last year, the sales amounted to 1,930 billion won. We expect to grow by about 30% this year.

The AIX business unit includes not only the AI cloud business, but also other diverse AI B2B products such as AI Vision and AI CC. And in this category, we posted 193 billion won of revenue last year, and it is expected to grow about 30% this year.

The AI DC business unit's sales in 2024 grew 13% compared to the previous year at 3,974 billion won. Now, revenue from AIDC in 2024 was $397.4 billion, up 13% year-over-year.

It is mostly revenue coming from our conventional data center business operation, but we recently launched GPU as a service in partnership with Lambda, and so we will pursue this business in earnest this year.

We are planning to actively promote AIDC by establishing a global player and active cooperation system. AIDC business sales will be much larger than now based on AIDC market demand.

And so we plan to conduct AIDC business more actively by establishing a cooperation system with global players as well as SK Group affiliates. Well, we see a growing demand for AI data centers in the market, so we believe that the AIDC revenue can grow more significantly. We anticipate about a double-digit growth rate for AIDC business this year.

B2C 영역에서의 비행 마련도 올해 좀 더 구체화해 나갈 예정입니다. 국내 대표 PAA 서비스로 자리매김한 ADAS의 경우, 누적 가입자 827만 명을 And this year, we will also develop more concrete business models for our AI B2C business.

ADOT has established itself as a major personal development AI agent service in Korea, and with a total users of 8.27 million, we're currently working on expanding services to offer more diverse features, and we plan to introduce a subscription-based paid service within this year.

We will make sure that the sales of the AI business can grow to a significant level, and for this reason, we will continue to develop

To sum it up, we will strive to grow our AI business revenue in a meaningful manner, and for this, we will strengthen our execution capabilities in all AI-related business areas to produce meaningful results. Thank you. Let me now comment on our shareholder return policy.

So regarding our dividend, the board determined that the 2024 year-end DPS would be $1,051, which is, as you know, the same as

what we had in 2023, and the annual DPS is the same as the prior year, which is 3,541.

As a CFO, I had a lot of concerns when I was deciding on this dividend. There were many shareholders who expected a dividend increase, but considering the uncertain business environment, I decided on the minimum dividend level expected from the market.

As a CFO, I had to put a lot of thought before determining this year's dividend, and I understand that some shareholders expected an increase in dividend payout, but we decided to maintain the minimum dividend level expected by the market in consideration of the uncertain business environment.

In order not to lag behind in AI 패권 경쟁에서 Our earnings improved in 2024, but in the context of rapidly changing economic and political circumstances, both at home and abroad,

We need to secure resources for investment to stay in the competition for AI, and funds secured through operational improvements and business performance will be used to make investments for growth in AIDC and other businesses. And this year, we also need resources to acquire equity of SK Broadband.

The company has continued to have the best stock market in Korea. It is expected that the political and economic environment in Korea will not be as good as it used to be in 2025, and the Party is planning to continue to promote the transformation of AI companies, including the mobilization of core assets.

Going forward in 2025, what I can say is that our shareholder return is still the highest level in the industry, and we anticipate a lot of challenges in terms of both politics and economy. So we will continue to pursue operational improvements, including the liquidation of non-core assets, and pursue better improvements. And this is what we're going to reflect in our shareholder return.

To achieve these goals, in 2025,

To achieve these objectives, we will continue to make investments for growth in AI areas, and we will have to continue to make relevant investments. However, at the same time, we're committed to stable shareholder return.

I think it's still meaningful to invest in the stock market, but I think it's still meaningful to invest in the stock market, but I think it's still meaningful to invest in the stock market,

As for the methods of shareholder return, our priority is to maintain a stable trend of cash dividend payout, and treasury share purchase and cancellation can still be a meaningful option when the stock is undervalued. However, for share buyback, we believe it is effective to announce a medium-term plan rather than just carrying it out as a one-off event. We will consider a share buyback by considering various factors such as the stock price trend and market views in a more comprehensive manner.

The following question will be presented by Lee Sun-jung from Bank of America.

Please go ahead with your question. I think it will be helpful to understand. And regarding Esther, which came out as a global market target, you briefly mentioned it during the presentation, but I would appreciate it if you could tell us a little more specifically about the progress. And the second question seems to have been that the marketing cost of the fourth quarter has also continued to decrease. I'm Lee Sunjeong from Bank of America.

Thank you for this opportunity. My first question is related to your AI business. You mentioned about possibly introducing a subscription model for ADOT within this year. And if you can provide us with more details, we'll be able to better understand how you're going to monetize using your AI business. And also, you've recently launched Esther for the global audience, and you mentioned it in your opening speech. So if there's any more detail that you can provide us with, it would be great. My second question has to do with the marketing situation. In the fourth quarter, I can see that your marketing cost has gone down, and I'd like to understand any update on the market competition situation. And the handset subsidy ban was lifted in December last year, so I'd like to better understand how your marketing strategy will unfold in the near future.

Yes, thank you for the question. Thank you for your questions.

Regarding your question on ADOT, the head of AI business strategy will address that. And for Esther, the head of AI growth strategy will address that question. And then the team head of marketing strategy will comment on your question regarding our marketing expenses.

So this is Kim Jihoon, head of AI business strategy.

So as you know, ADOT is Korea's number one personal AI agent service with the largest number of customers in our customer base. And for the past year, we focused on advancing ADOT as a primary agent, and we utilized divergence strategy for external expansion.

Before I talk about our financial planning, I would like to briefly explain about our previous initiatives. In particular, we are focusing on building up our current primary agent, GoDoA. We are focusing on building up our current primary agent, GoDoA. We are focusing on building up our current primary agent, GoDoA.

Before I comment on our plans for monetization, I'd like to elaborate more on this initiative and the kinds of approaches we're taking. We continue to advance ADOT as a primary agent so that we can offer ADOT phone service, which is an improved version of the existing phone call services, and we have been mobilizing our capabilities internally.

So for the evolution of this agent, we focus on making the agent not only engaging in some simple conversation or do search for users but also

be able to complete requested tasks. And we will continue to test these functions to improve the user experience, and this is our priority.

We are considering the form of subscription products first.

As ADOT has already established itself as a leading personal AI agent through service improvements last year, we believe that we have a strong foundation for the introduction of paid services. No specific decisions have been made yet on how we're going to go about it, but our first consideration will be utilizing the subscription model.

We are planning a subscription product by combining our daily experience, search, and capacity as a telecommunications company. We are also reviewing the bundling of external elements that can create synergy with other services of the company, including various joint products. We are still reviewing these parts, and we will be able to communicate with the market about more detailed situations in the future.

So we're working on offering services for daily task management as well as search and combining it with other telecom features. So we're working on plans for specific services and we're also considering various bundled offerings in order to generate synergies with other services that SK Telecom is offering. So we're working on all these plans and when we have more details to share, we will make sure to communicate them with the market.

Yes, I'm Lee Jae-shin, Director-General of the AI Growth Strategy. Last year, we released Esther, an agentic AI service, at the SK AI Summit to promote personal AI agents globally, and we are currently running a closed beta service. In particular, Esther's service demo was released at CES this January.

This is Lee Jae-sin, head of the AI growth strategy for global business of the personal AI agent. We unveiled Ester, an agentic AI service, at the SKAI Summit last year, and currently a closed beta testing is ongoing. And this year in January, we showcased the service demonstration at CES 2025.

Ester is a service that provides a simple answer to the user's question

Unlike other AI services that simply respond to user prompts, Aster aims to be an agentic AI that can not only respond to user prompts, but also execute necessary daily tasks through the communication with the users.

The company is planning an open beta service for American users in the first half of the year, and we are planning a meal prep that recommends recipes and ingredients that suit your taste, budget, and schedule, as well as a weekend prep that recommends recommendations for holiday schedules, reservations, and transportation. And we plan to start an open VEDA service in the U.S.

for U.S. customers in the first half of the year, which will include some of the key use cases, such as creating meal preps and also working on weekend preps, as well as managing all these schedules and executing necessary actions.

For this, we're accelerating collaboration with diverse tech partners such as Perplexity, and we're also at the same time actively pursuing partnerships with global

telecom companies who can benefit from agentic AI services.

아직 정식 서비스 런칭을 준비하는 단계이기 때문에 구체적인 BM 등을 말씀드리기에는 시기상조인 점을 이해해주시기 바라며 서비스 준비 과정에 많은 관심을 가지고 지켜봐 주시면 감사하겠습니다. 이상입니다.

As we're still preparing for an official launch, please understand that it is too early to discuss any specific business models, but I'd like to ask for your continued interest in this process of developing and launching the service. Thank you.

Yes, I'm Jeong Song-yong, the Marketing Strategy Team Leader. After the decision was made by the Board of Directors at the end of 2024, there was a press release about the deposit collection of a part of Seongji-jeong, This is Jang Sung-yong from the marketing strategy team.

After the abolishment of handset subsidy ban at the end of 2024, there were some news reports on how certain sales offices offered huge subsidies, but this was a limited phenomenon, mainly to get rid of handset inventory.

The current market situation is very different from when the subsidy ban was introduced.

As the unit shipment cost of handsets continues to increase, and the handset replacement cycle of customers continues to lengthen, we've seen more stability in the market, and the size of the market itself has been reduced.

In the fourth quarter, there were no signs of over-competition in the market,

and the market is likely to wait for a new enforcement decree of the Korea Communications Commission to come up with response strategies. We will continue to monitor the market situation closely. Going forward, we will continue to create a momentum in the market to offer more personalized and differentiated value to our customers.

The next question is from Jung Jisoo from Merit Securities. The next question is from Jung Jisoo from Merit Securities. The next question is from Jung Jisoo from Merit Securities.

The next question is from Jung Jisoo from Merit Securities. The next question is from Jung Jisoo from Merit Securities. The next question is from Jung Jisoo from Merit Securities. The next question is from Jung Jisoo from Merit Securities. The next question is from Jung Jisoo from Merit Securities.

Can you repeat the question? Can you hear me well now? I think the sound is too loud.

I'm sorry. If I ask you again, I think the effect of OI has been reflected a lot. This is Jung Jisoo from Merit Securities.

I would like to ask a question on the impact of operation improvements on your earnings. So how much was the impact coming from the OA in 2024? And what is your outlook on the impact of your operation improvement initiative in 2025? And if possible, please provide us with the guidance on 2025 CAPEX plan.

Thank you for the question. AI라는 성장 투자의 기반을 마련하기 위함입니다.

We have been implementing operational improvements across the company to ultimately strengthen our fundamental competitiveness of the telecom business and also secure a basis for AI-related growth investments.

구체적인 OI의 방식으로는 OPEX 절감, CAPEX 효율화, BXC 자산 매각을 생각해 볼 수 있는데 The company's main cash outflow, CapEx, has been trying to change the paradigm of investment based on the quality of the network that customers feel, and has also been trying to reform the business portfolio based on AI.

Operational improvement can be achieved mainly through OPEX savings, CapEx efficiency, and also disposal of non-core assets. And in addition to company-wide cost-saving efforts, we also shifted our CapEx paradigm to focus on network quality improvement, which our customers can enjoy, as CapEx is our major cash outflow category, while at the same time restructuring the business portfolio centered on AI.

As a result, sales profits increased by 4% last year, and while maintaining a firm foundation of 5G subscribers, we were able to lead to a reduction in capex, and we were able to strengthen our basic physical strength for the change of AI companies by reducing the rate of income in turn by improving the free cash flow.

As a result, we were able to increase our operating income by 4% and reduced capex while maintaining a strong 5G subscriber base. Net borrowings were also reduced through free cash flow improvement, and these efforts helped strengthen our fundamentals to transform into an AI company.

This year, we will continue to promote OI so that its effect will not stop and will continue to be managed. In the field of communication and AI, And we will continue with operational improvements this year as well so that this initiative is not short-lived but is maintained sustainably.

And we will develop growth plans optimized for each business model in our telco and AI businesses. and allocate resources in a balanced manner so that we can achieve a bottom-line growth and cash flow improvement much more so than what we achieved in 2024.

In the case of CapEx in 2025, it is difficult to tell you the exact number, but we are planning to maximize the quality of the customer experience with efficient network operation and strategic AI growth investment. 중장기적인 안정화 기조가 여전히 유효하다고 말씀드리겠습니다. 이상입니다.

As for our CAPEX plan, we cannot disclose any specific number, but we're planning to optimize CAPEX for efficient network operation for the benefit of customers and strategic AI growth investments. And the medium to long-term stabilization trend for CAPEX is going to continue.

그만. 지금 질문...

The following question will be presented by Kim Hong-sik from Hana Securities. Please go ahead with your question.

Yes, hello. My first question is about the stock market recently. As the KT and SKT market trends reversed, a lot of news was reported. The biggest reason is the uncertainty of the long-term dividend of SKT. If you look at the recent stock market volume, there is enough of a sense of decline. If you look at SKT's stance today, it doesn't look so optimistic, but the worried part is still the stock market. What do you think about the future of the stock market? Secondly, if you look at the SKT IR news, you often mention a company called AI. If you look at the East, you can't see any companies that make money with AI. If I go to a retail store, I don't feel like SKT is a company that sells AI. I think it's been a while since you said you make money through AI, but I'm curious if we can actually expect the release of AI funds or funds from B2C.

I'm Kim Ong Sik from Hana Securities. My first question is related to the stock price trend. And recently there was a reversal of stock prices between KT and SK Telecom. And I believe it is mainly because of uncertainty surrounding long-term dividend payout from SK Telecom. And so based on what you discussed today, it seems that it's not very optimistic for SK Telecom, for shareholders and investors to expect. And so there are still concerns over the future stock price trend of SK Telecom. So what is your outlook or view on your stock price going forward? And secondly, SK Telecom's IR releases and other press releases often mention becoming an AI company. But in reality, there aren't many companies who are able to generate profit using AI. And when I actually visit an SK Telecom's sales offices, I don't get the impression that they are focusing on AI. And you've been talking about using AI for profit generation for some time. So I'd like to understand if you have any plans for B2C price plan or pricing for B2C as well as a bundling of AI with your MNO plans. Thank you.

Thank you for your valuable questions.

I'd like to comment on your first question.

Thank you. I think we have done our best to remove the value of memory by focusing on AI and communications.

You mentioned about market cap, and back in 2021, there was a spinoff from SK Telecom so that we split it off SK Hynix and T-Mobility and other non-Telecom businesses as SK Square. And so the combined market cap of SK Square and SK Telecom is currently more than $24 trillion.

And after the spin-off, we continue to focus on AI business and telecom business in order to improve our corporate value.

As you point out, shareholder return is an important factor that determines stock price in the market. But however, as you may know very well, market valuation does not just reflect shareholder return, but also reflects other factors, including future growth potentials.

As you point out, shareholder return is an important factor We know that 2025 will be a very important year where we need to demonstrate the effect of AI business to the market.

And we are going to produce tangible results through AI investment and business partnerships and corporations so that we can show to the market that our AI business is competitive. And as part of that plan, starting from this earnings conference call, we will continue to announce specific AI-related revenue and other figures.

As I mentioned earlier, the resources obtained through OI and other business achievements And as I mentioned earlier, the additional financial resources that we secure from business operation and operation improvements

will be used in diverse areas to boost our corporate value, including growth investments, financial structure improvement, and acquisition of equity of SK Broadband. So we will use these resources in a balanced manner.

Thank you.

I would like to reiterate that SK Telecom will continue to maintain the best or the highest level of shareholder return in the industry in a stable manner, and we are committed to sharing additional fruits of growth investments with shareholders. And about your second question, the head of the marketing strategy team will address.

I am Jung Sung Yong from Marketing Strategy Team.

To give you the answer right away, we do not have any specific plans yet when it comes to including AIB2C services such as ADOT to our M&O price plans.

Yes, but a little while ago, the AI Business Strategy Director explained the AIDA performance in detail, and he also talked about the future plans for the year, but I think that these users' preference for high-end services can definitely be an asset that can further strengthen our M&O productivity, so if the future plans for AIDA are specified, we will of course think about how to translate them and how to translate them.

But as Mr. Kim, the head of AI business strategy, elaborated, there will be continuous results coming from ADOT operation, and there's a plan to introduce a paid service within this year. And I believe that these types of AI B2C services that are popular among users can strengthen the competitiveness of our MNO products. So when we have more details coming out from the monetization of ADOT,

We will, of course, consider the option of bundling ADOT with our mobile price plans.

I believe the investors well understand the product and service competitiveness of SK Telecom with our attractive price plans. We will continue to make sure that our competitiveness is further strengthened by developing diverse price plans to satisfy the needs of users and launching them in the right time.

Next question is from The following question will be presented by Kim Joon-seop from KB Securities.

Please go ahead with your question. I'm curious about how it affects the AI infrastructure that SK Telecom is running. I think it will be of great help to understand if you tell us about the AIDC planning department, which is preparing in the SK group. And next, I'd like to ask you more about AIX. I think today's conference call is probably about the future growth power of the key issue, AI-related visual performance. Please explain more in detail about the business model of the AIX business that are included in the AIX business. If you can tell us which AIX business you expect to have a 30% increase in revenue in 2025, it will be of great help. Thank you.

I'm Kim Junseop from KB Securities. Thank you for this opportunity. I'd like to ask questions on your AI infrastructure and AIX business. Recently, a very affordable and cheaper AI model, such as DeepSeq, has been introduced in the market, and I'm sure it has had some impact on your AI infrastructure business. So if you can elaborate more on that, we'll appreciate that. And you can also comment on that in connection with your AIDC business that you're pursuing at the SK Group level. My second question is related to your AIX business. And I'm sure that it is critical for SK Telecom to show how much visible or tangible results you can produce from your AI business. I would appreciate it if you can provide us with more details on specific business models that you are considering or pursuing as part of your AIX business. And you mentioned that you're expecting about 30% growth in revenue in 2025. And which business models within AIX are expected to contribute to this revenue growth?

Yes, thank you for the question. First of all, I would like to thank the AIDC Director-General for answering the questions Thank you for the question.

Your first question will be addressed by the head of AIDC Development, and the second question on AIX Business will be addressed by the head of AIX Business Development.

I am Lee Hyun Woo, head of the AIDC development.

I'd like to comment on specific plans that we're pursuing for AIDC business and as well as the impact of AI models like DeepSeq on expected growth in demand for AI DC infrastructure.

As the full-fledged AI era arrives, we're witnessing an evolution from a real estate-based co-location data center business

to AI data center business with IT capabilities.

The core of these AI data centers is to continuously provide AI computing power that can handle a vast AI workload. To do this, high-performance computing power represented by GPUs must be procured in large quantities. Secondly, high-efficiency power of this computing power must be continuously provided. Thirdly, high-end infrastructure

The core of AI data centers is to be able to provide continuous AI computing power that can process massive AI workloads, which requires high technological capabilities in the areas of high-performance computing power represented by GPUs. high-efficiency power supply to provide maximum computing power, and the operational solutions, or DCIM, that can organically link these within a limited physical space.

These capabilities are very difficult to acquire in individual companies, and the SK Group is pushing for a strategy to build the cheapest and most efficient data center by accumulating and utilizing the capabilities of major companies.

And the kinds of required technological capabilities that I just mentioned cannot be secured by any individual companies on their own. So what we're doing is to implement plans to build the most affordable and most efficient data centers by pulling together and utilizing the kinds of capabilities possessed by major affiliates of SK Group at the group level.

So, the data center that SK will build is expected to be a collection of the latest technologies that SK Group and its partners have in their full potential. For example, in the field of computing power, there is SK Hynix's semiconductor, which is the world's largest HBM, and then there is the low-carbon LNG development that SK Energy and its partners have, and we are aiming to provide the best data center by collecting all of the eco-friendly energy solutions such as SMR nuclear power generation and fuel batteries.

So the kinds of data centers that SK will offer will utilize high-tech capabilities that exist within the SK group and our partner companies. To give you some examples, SK Hynix has world's best HBM and other advanced chip solutions in the computing power area. And SK Energy affiliates and partner companies have low-carbon LNG power generation, small modular reactors, fuel cells, and other eco-friendly energy solutions. We're going to pull together all these capabilities to offer the best data centers possible.

In the case of SK Telecom, we are focusing on developing a solution called DCIM, which is an AI data center optimization solution. Through this, we can orchestrate the entire infrastructure and develop the data center ecosystem.

And within this framework, SK Telecom is focusing on developing and operating a data center management solution, or DCIM, that is used for optimal operation of AI data centers. And in doing so, SK Telecom will orchestrate the AI data center ecosystem and continue to further develop this ecosystem.

In the process of creating and developing the AI data center ecosystem, there are multiple bottlenecks that we expect in the value chains, and SK will continue to develop

and utilize these bottlenecks as an opportunity for new business models and new business opportunities.

As a result, we are reviewing a plan to build a hyperscale AI data center in a local area, not in Seoul. In the long term, we have a strategy to scale up this infrastructure and reach the AI data center hub in the Asia-Pacific region.

Based on these synergies that we can create, we are considering a plan to build a hyperscale AI data center in a location not within Seoul. And in the medium to long term, we are planning to scale it up so that it can become an AI data center hub in the Asia-Pacific region.

Next, we are planning to build a deep-seq data center

I would like to talk about the implications of DeepSeq and other similar, more affordable and less infrastructure-intensive models.

DeepSeq has not been confirmed yet, but the presence of a cost-effective AI model AI data center와 같은 AI 인프라 시장의 성장을 촉진하는 기회로 작용한다고 보고 있습니다.

Even though the scale of resources invested in the development of DeepSeq has not been confirmed, the emergence of cost-effective AI models could actually serve as an opportunity to promote the growth of the AI infrastructure market such as AI data centers.

즉, 서비스 개발 비용이 낮아져서 더 많은 기업들의 AI 도입이 가속화될 것이고

As development costs for services will continue to go down, more companies will accelerate the adoption of AI, and as various application services continue to emerge based on these inexpensive AI models, we believe that the demand for AI infrastructure to support them will also increase.

These AI models need to continue to improve through learning

and training, and this will lead to more demand for computing power. So I believe that the recent trend has positive impact on our AI infrastructure business.

As I said before, SK Group's goal is not simply to provide high-capacity computing power. Our goal is to provide the cheapest and most efficient data center in terms of computing power, power supply, and operation, so we will actively respond to market changes and create an optimized infrastructure ecosystem.

We're not just aiming at providing high-capacity computing power, but we aim to build the most affordable and efficient data centers in terms of computing power, power supply, and operation, and to supply an AI infrastructure solution package based on this. And we will respond flexibly to market changes and create an AI infrastructure ecosystem optimized for them.

I'm Kim Sang-mok, Director of AIX Business Development. AIX 사업의 BM 개요와 25년의 매출 성장 전망에 대해 답변 드리겠습니다.

I am Kim Sang-mo, head of the AIX business development. Let me comment on your question on our current status and expected revenue for 2025 from AIX.

우리 회사의 AIX 사업은 AI 비전, AI CC와 같은 레거시 AI 테크 기반의 B2B 사업인 AI B2B 사업, 그 다음에 AI B2B 사업,

Our AIX business consists of, number one, existing AI-related B2B business such as AI Vision and AICC, and number two, AI Cloud business that provides cloud computing power, And number three, AT use case business that supports corporate clients' AI transformation using SK Telecom's AI technology such as GenAI.

AI cloud is a cloud MSP that provides AI computing resources such as GPU and CPU for companies to create AI services. Currently, it accounts for a third of all AIX sales.

To give you more details by these business types, first of all, AI cloud refers to cloud MSP business that provides GPU and CPU computing power, and it is a very solid business model that accounts for about two-thirds of the total AIX revenue, and its revenue growth in 2024 was already more than 20%.

Moving on to the AI B2B business, such as AI Vision and AI CC, revenue grew more than 30% year-over-year in 2024 to $60.1 billion.

and we aim to accelerate growth this year with a target revenue growth rate of more than 30%.

Lastly, the AT use case business is a business area that is newly promoted by SK Broadband, SK CNC, and SK One Team, as well as SK Telecom. The business area that companies need to work in has been transformed into an agent, and we have innovated the way of working in SK Groups based on AI rather than other companies,

Finally, the AT use case business is a new business area where SK Telecom, SK Broadband, and SK CNC are working as one team. We aim to innovate the way SK Group conducts business by applying AI agents to diverse work domains, And based on these results, we're planning to turn it into an actual business model for external customers to produce meaningful revenue.

AT use case 사업을 좀 더 하이라이트 해드리면 크게는 3개의 영역에서 사업화를 추진할 예정입니다. 첫 번째는 회의록 작성과 같이 공통 업무, 법무세무와 같은 특허 업무를 에이전트화하는 A.Biz 상품. 두 번째는 LNG 가스 등과 같은 커머디티 거리를 예측해서 의사결정을 지원하는 Market Intelligence 상품. To give you more details, the AT use case business has basically three main products.

First, ADOTBiz, which automates not only common tasks, such as meeting minutes generation, but also specialized tasks, such as legal and tax affairs. The second product is Market Intelligence, which supports decision-making through predictions on commodity trades such as LNG, and finally, the manufacturing AI product that improves R&D efficiency using AI in the manufacturing sector.

올해의 계획은 이 세 가지 AT use case를 그룹 멤버사로 확대 적용해서 베스트 프랙티스를 확보하는 데 주력할 예정이고요. 이후 대외 고객으로 본격 확장해서 규모 있는 성과를 만들어낼 예정입니다.

This year, we will focus on expanding and working on these three major AT use cases to our SK Group affiliates to secure best practices and references. And later, we plan to expand the business to external clients to produce sizable results.

Overall, AIX's sales in 2024 was at the level of 1,930 billion. In 2025, it aims to grow by more than 30%.

And the AIX business revenue in 2024 was 193 billion won, and our growth target for 2025 is 30%. It still takes up a small portion in the total revenue of SK Telecom, but we will demonstrate the potential of using AI for profit generation by driving meaningful revenue growth from our AIX business.

Thank you.

Thank you. With this, we would like to end this earnings conference. If you have any further inquiries, please contact the IR team. Thank you.