SK Telecom Co., Ltd.

Good afternoon. I am Taehee Kim, IRO of SK Telecom. Let us begin the earnings conference call for fiscal year 2025. 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.

Good afternoon.

This is Jongseok Park, CFO of SK Telecom.

It is my first time to greet investors and shareholders at CFO.

I wish you a happy new year, and I also wish all of you good health and happiness in the new year. In 2025, SK Telecom put priority on expanding operational improvements across the company and monetizing AI business and made strenuous efforts to strengthen fundamental business competitiveness and secure a foundation for new growth drivers. However, the cybersecurity incident and its subsequent developments also led us to a period of careful reflection, realizing that understanding and innovating on customer value, which is the essence of our business, is a prerequisite for a sustainable future. We will do our utmost to build SK Telecom with strong fundamentals grounded in the trust of our customers. Let me now report on the financial results for fiscal year 2025.

매출은 전년 대비 4.7% 감소한 17조 992억 원을 기록했습니다. 자회사 매각과 사이버 침해 사고로 인한 가입자 감소 및 요금 감면 등을 포함한 책임과 약속 프로그램 실행이 영향을 주었습니다.

Consolidated revenue posted 17 trillion 99.2 billion won down 4.7% year on year due to sales of subsidiaries, net decline in subscribers following the cybersecurity incident, and implementation of the accountability and commitment program, including tariff discounts.

Operating income reported $1,073.2 billion, down 41.1% year-over-year,

On the back of the decline in revenue, costs related to the cybersecurity incident including UCM replacements, and costs incurred during business restructuring at the end of 2025.

The short-term profit is 3,751,000 won, which decreased by 73% compared to the previous year. This is due to the negative effects of the cybersecurity incident.

Net income came in at 375.1 billion won, down 73% year-over-year, mainly due to penalty payments arising from the cybersecurity incident.

다음으로 주주 환원에 대해 말씀드리겠습니다.

Let me report on shareholder return.

지난 4분기에도 사이버 침해 사고로 인한 재무적인 영향이 지속되었고 사업 포트폴리오를 정비하는 과정에서도 상당한 비용이 발생하면서

The financial impact of the cybersecurity incident persisted into the fourth quarter, and substantial costs were incurred in the process of business portfolio restructuring. As a result, the company decided not to pay out quarterly dividend for the fourth quarter.

Accordingly, the Board of Directors resolved to set the BPS for fiscal year 2025 at $1,661, including the quarterly dividends already paid.

which will be finalized after being approved at the annual general shareholders meeting in March. We will strive to restore our financial performance to return to previous dividend payout levels. Next, let me report on the current status and future directions of our telecom business and AI business.

25년 통신사업은 사이버 침해 사고로 변화된 경영 환경에 대응하는 데 집중하였습니다. 올해에는 고객 가치 혁신을 최우선으로 하여 품질, 안전, 보안 등 전 영역에서 기본과 원칙을 준수하고 고객의 신뢰를 완전히 회복하기 위한 노력을 기울이겠습니다.

In 2025, our MNO business focused on addressing changes to the business environment caused by the cybersecurity incident. In 2026, with our priority on customer value innovation, we will strive to adhere to fundamental principles and standards in all areas, including quality, safety, and security, and to fully regain our customers' trust.

We will do our best to improve our own economic performance by implementing products, channel management, and optimization of customer value-centered operations. Through this,

We aim to improve our products and channels and achieve operational optimization centered on customer lifetime value to regain fundamental business competitiveness and become the number one service provider from the customer's perspective. Through this, we will also ensure that our financial performance recovers to previous levels.

AI business, we focused on solidifying a foundation for new growth in 2025.

Starting this year, we plan to concentrate on areas where we excel to achieve tangible results.

In 2025, AIDC revenue continued a two-digit growth trend

thanks to the increase in utilization rates of Kasan and Yangju data centers and the acquisition of Pangyo data center. Also, construction of Ulsan AIDC has been underway since September last year. This year, we aim to accelerate growth by actively developing business expansion opportunities through business scale-up with an additional data center in the Seoul metropolitan region.

데이터센터 사업과의 시너지 차원에서 출발한 AI 데이터센터 솔루션 사업도 자체 개발과 외부 협력 등을 통해 새로운 가능성을 만들어 나갈 계획이며, 25년도에 시작한 해저 케이블 사업 또한 추가적인 확장을 통해 사업의 스케일을 지속 확대시켜 나갈 계획입니다.

We plan to create new possibilities through in-house development and external partnerships for the AIDC solution business, which was launched to create synergies with AIDC business.

Also, we will scale up the undersea cable business initiated in 2025.

Furthermore, we aim to enhance efficiency and productivity of AI agent business and B2B AI business to produce meaningful outcomes. We plan to secure preferential opportunities to participate in various projects through our own AI foundation model project, which is in its second phase.

In addition, we aim to improve the M&O system by strengthening the economic value of the AI data center를 중심으로 한 AI 사업 성과를 통해 수익성을 회복할 수 있도록 최선을 다하겠습니다.

SK Telecom is determined to improve MNO's business fundamentals by strengthening core competitiveness in all business areas centered on customer value and to restore profitability by producing AI business results driven by AI data centers.

위기를 기회로 삼아

We ask for the continued support and interest of our investors and analysts as we work to turn this crisis into an opportunity to restore our customers' trust. Thank you. Now we would like to begin the Q&A session.

Now, Q&A session will begin.

Please press star 1, that is star and 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 2 on your phone. The first question will be provided by Jaemin Ahn from NH Investment and Securities.

Please go ahead with your question. I think the market is looking forward to it. I would like to congratulate you again and ask you to do well. I'm going to ask you two questions. The first is, I'm most curious about the payment for 26 years. Last year, you couldn't give a lot of payment due to the loss of performance, but this year, I would appreciate it if you could tell us how much we can expect the recovery of the payment and the actual normal. I'm Ahn Jae-min from NH Investment and Securities.

Thank you for giving me this opportunity to ask you questions. I can see that we now have new CFO, COO, as well as IRO, so there are new members to the management team. and I believe that the market has high expectations upon this change. And so congratulations to all of you, and I hope that there will be good results coming from this management this year. I'd like to ask you two questions. The first question is that we'd like to get some color on our dividend policy for 2026. Last year, due to some sluggish business performance, the size of the dividend payout to shareholders was reduced. So what can we expect in terms of dividend payout for 2026, as well as the possibility of earnings normalization? And my second question has to do with the overall strategic directions and priorities for the new management this coming year. Thank you.

Thank you for your question. First, I would like to answer your question about the outlook and direction of this year's results.

Thank you for your questions. First, I'd like to answer your question on this year's earnings outlook as well as dividend payout direction.

First, I'd like to answer your question on this year's earnings outlook as well as dividend payout direction.

First of all, to comment on 2025 earnings performance, I understand that many people would like to know whether we can return to the pre-cyber security incident earnings levels. Due to sales of certain non-core subsidiaries and decline in MNO subscribers, revenue did not recover to the 2024 levels. However, in terms of operating income, we aim to return to the 2024 level as much as possible by improving profitability of the telecom business and improving the self-sustainability of the AI business.

Marketing network 등 통신사업 전반을 AI화함으로써 생산성을 향상시키고 수익성을 제고할 것이며 가입자 회복에 있어서도 비용과 효육의 균형에 집중할 계획입니다. We will utilize AI across the telecom business, including marketing and network, to boost productivity and improve profitability.

Also, we plan to focus on striking a balance between cost and benefits, when it comes to subscriber acquisition. For AI business, we plan to continue to focus on areas where we can make meaningful earnings contribution. In particular, we will pursue meaningful expansion of data center business to create new revenue streams and improve profitability through economies of scale.

실적과 연계하여 배당에 대해 말씀드리겠습니다.

Now let me comment on the dividend payout outlook in connection to earnings expectation.

Now let me comment on the dividend payout outlook in connection to earnings expectation.

First of all, we sincerely apologize to our shareholders for not being able to pay the year-end dividend in the fourth quarter following the third quarter. The cybersecurity incident has had direct financial impact, and one-off costs were incurred in the process of restructuring our business portfolio and organization in 2025. Please understand that we had to reduce the size of the annual dividend payout for these reasons.

Our number one priority in 2026 is to restore earnings through the measures that I mentioned earlier.

and we will do our best to return the previous dividend payout levels. We will also consider other measures to increase shareholder value, such as tax-free dividend, to restore the trust of our shareholders and investors, and to ensure that SK Telecom is a company that people want to invest in.

We will consider the balance of overall capital allocation, such as business performance and productivity, and discuss it at the board meeting.

More details will be discussed at the board in consideration of business performance, financial positions, and funds for growth investments to achieve a balance in overall capital allocation.

Now I'd like to comment on the key strategic priorities for the new management. This year, SK Telecom will focus on 실질적인 경쟁력을 단단하게 다져가는 것을 최우선 목표로 삼고, 이를 위해 크게 세 가지 전략 방향으로 추진하고자 합니다.

So our priority for this year is to strengthen practical and substantial competitiveness in both telecom and AI business. And for this, we plan to pursue three main strategic directions.

첫째, 고객가치 혁신을 통해 마켓 리더십을 회복하겠습니다. First of all, restore market leadership through customer value innovation.

We will place priority on customer value, which is the essence of our business. based on which we are currently redesigning all elements of our telecom business, including products, memberships, and channels, to offer real value that customers want. We will share more details in the future.

Second, we will accelerate the productivity of the communication business through AI. We will develop AI in all areas, such as marketing, network, customer contact, to increase customer experience and productivity at the same time. Second, we will innovate business productivity through AX acceleration.

We will apply AI in all areas including marketing, network, and customer touchpoints to improve customer experience and boost productivity. We will advance AI-based lifetime value modeling technology to provide personalized offerings, and to use AI to automate network operations, including design, construction, and operation.

Third, AI business will ensure sustainability through choice and focus. Through pivoting according to the changing environment, we will focus on business that the company can do well, and we will also improve profitability through cost structure efficiency.

Third, we will enhance sustainability of our AI business by focusing on our core strengths. We will pivot according to changing business environment to focus on areas where we excel and improve profitability through cost structure improvement.

이미 확고한 성장 동력으로 자리 잡은 AI 데이터 센터의 경우 울산 AIDC를 빠르게 구축할 것이며 서울 지역 추가 데이터 센터 등을 통해 AI data centers are already a strong growth driver for SK Telecom.

We will quickly build the Ulsan AIDC and plan to add another data center in the Seoul region to scale up the AIDC business and create new business models to offer diverse solutions related to AIDCs. So to sum up, we will focus on strengthening core business competitiveness in all business areas centered on customer value and demonstrate how SK Telecom will make another leap forward.

Next question, please.

The following question will be presented by Taehyun Kim from IBK Investment and Securities.

Please go ahead with your question. And secondly, what is our competitiveness in terms of independent AI foundation model projects? And what business opportunities do we have in the future? Thank you.

I am Kim Tae-young from IBK Investment and Securities. Thank you for this opportunity to ask you questions. I would like to ask two questions. First of all, there is a lot of interest in the market about the value of the equity stake that you have in Anthropic. and I'd also like to understand whether you are planning to liquidate your equity stake going forward. The second question has to do with your proprietary foundational model project. What is the strength that SK Telecom has in this regard, and what are some of the potential business opportunities we can expect going forward? Thank you for your questions. I'd like to answer the first question on our equity stake in Anthropic, and then the head of AI strategy planning will address your second question on our own foundation model project. First, let me comment on the current status and future plans regarding our equity stake in Anthropic.

I would like to ask for your understanding that it is difficult to reveal the exact share value and value at the time of the change due to the confidentiality of the contract. However, the investment assets owned by the company will be sent to the business report for regular re-evaluation, and the share value of the 25-year business report will be updated soon.

First of all, please understand that we cannot disclose accurate details on shareholding ratio and value at the time of change due to confidentiality clauses in the contract. However, our invested assets are regularly revalued and reflected in the business report. So, the 2025 business report to be disclosed very soon will have updates on our equity stake.

I admit that I am interested in the market for the value of shares, but regarding this,

We understand that the market is quite interested in a possible equity disposal or equity valuation, but please understand that no decisions have been made in this regard, and there's nothing that we can share at this point in time about the possibility of using it as part of funds for dividend.

다음으로 독자 파운데이션 모델에 대해 AI 전략기획실장이 답변드리도록 하겠습니다.

AI 전략기획실장 최동희입니다. 독자 AI 파운데이션 모델 관련 경쟁력 및 사업 기회에 대해서 말씀드리도록 하겠습니다.

SK Telecom이 컨소시엄과 함께 개발 중에 있는 ADAT-X K1은 국내 최초로 5천억 개의

Let me answer your question on our competitiveness in a foundation model and business opportunities. The A.XK1 that SK Telecom is developing together with the consortium members is Korea's first hyperscale AI model with more than 500 billion parameters. This model is recognized as possessing differentiated competitiveness as it can provide high quality responses in consideration of cultural context because it is developed using the largest Korean data set.

향후 A.XK1은 B2C와 B2B 모두에서 사업 계획이 있을 것으로 기대되고 있습니다. B2C의 경우에는 내부적으로는 천만 명 이상의 가입자를 확보하고 있는 A.XK1에 탑재하여 많은 고객들이 사용할 수 있도록 하고, 컨소시움 내 라이너 서비스에도 탑재하여 레퍼런스를 확대할 예정입니다.

We expect that A.XK1 will create a lot of business opportunities for both B2C and B2B business. For B2C, we plan to add the model to ADOT, which has more than 10 million users, to ensure that a large number of customers can access the model.

We also plan to add references through Liner, a member of the consortium.

For B2B, we plan to add this model to A.biz for work productivity enhancement and provide a model to our manufacturing affiliates such as SK Hynix and SK Innovation to strengthen their competitiveness. Within the consortium, we plan to expand the use of the model to vertical services such as Krafton.

We will continue to develop this hyperscale model in a cost-effective manner with government support.

If we are selected as one of the top two at the end of 2026, we expect that we can secure preferential opportunities to participate in various projects, such as national B2C projects to maximize benefits of AI, AX projects to enhance industrial competitiveness and productivity, and projects to upgrade systems and services in the public sector.

Thank you. Next question please.

The following question will be presented by Hoji Kim from Daishin Securities.

Please go ahead with your question. I wonder how the impact is. For example, in the case of NCU Plus, the increase in the number of wireless instructors in 25 years has increased and the sales have increased significantly. I wonder if this situation can be adapted to SK Telecom as well. Also, I wonder how much the goal of the instructor this year is and how much the sales threshold depends on it. The second is that both the top management and M&A management are new people. The M&A business after 26 years

I'd like to ask you two questions regarding your M&O business. Due to the wavering of cancellation fee recently by your competitor, I can see that there was some impact on your business result. For instance, LGU Plus has demonstrated that they have seen an increase in their M&O subscriber base as well as M&O revenue in 2025 thanks to this development. So I'd like to understand to what extent you benefited from this trend for SK Telecom as well. And I'd also like to understand your subscriber target for 2026 as well as MNO revenue outlook. My second question is that you have now new members in the MNO management as well as the company management. So what will be the key areas that you will focus on in your MNO business in 2026?

Thank you for your questions.

Regarding your two questions on MNO business, I'd like to turn over to our head of MNO support. As a result of the competition's tax exemption measures, the number of market movements has been temporarily expanded in the early years. However, after that, the overall market stabilization is taking place. A significant number of customers who have been imported to the company during this period have been judged to be our customers' voluntary re-entry, or what we call win-back, who have left after the cyber-crime accident last year. This has played a major role in restoring customer satisfaction packages and various security strengthening measures that include practical benefits such as remittance and membership. I am Bae Byung Chan, head of MNO support.

Let me address your questions on the impact of KT's cancellation fee waivers as well as our win-back target for 2026. With the cancellation fee waivers by our competitor, the carrier switching market expanded temporarily in the beginning of the year, However, since then, we are seeing an overall market stabilization trend. A large share of customers who joined SK Telecom during that period were voluntary win-back customers who returned after having switched to another carrier last year following the cybersecurity incident. We believe that the customer appreciation package that includes substantial benefits such as subscription, tenure, restoration, and membership benefits as well as diverse measures to strengthen our security, have been effective in restoring the trust of our customers.

Going forward, we will not only...

We will not rely on destructive marketing competition for short-term gains, but rather focus on strengthening core business competitiveness through customer value innovation to continue to expand our customer base.

We are currently making structural changes to the product and market management front, and we will share specific directions and results with the market and customers as soon as possible.

So to this end, we are currently working on restructuring our product offerings and market operation, and as soon as they are ready and become available, we will share more concrete directions and results with the market and our subscribers.

다음은 26년 무선 매출 전망 및 회복 전략에 대해 말씀드리도록 하겠습니다. 26년은 전년 대비 감소한 행셋 가입자로 다소 챌린징한 조건에서 시작하게 되었습니다. Now, let me comment on our MNO revenue outlook for 2026 and strategies to recover our subscriber base.

We have started the new year under rather challenging circumstances due to the year-over-year decline in handset subscribers. And throughout 2026, we will strive to minimize revenue impact by winning back subscribers and implement various measures to create growth by developing new customer segments.

We are planning to promote various measures to improve our customer base, but it is not a stable environment for us to expect a return on sales by expanding our customer base every year.

However, despite these measures that we have in plan, with the prolonged impact of customer attrition, it is challenging to bring revenue back to the pre-cyber security incident level.

So for M&O business this year, we plan to focus on boosting profitability. LTV 중심의 오퍼레이션 최적화를 통해 비용 효율화를 추진해 나갈 예정입니다.

We will reorganize our products and channels to cater to customer preferences and improve cost efficiency through optimized operation based on customer lifetime value.

또한 AI를 기반으로 상품, 마케팅, 네트워크, 운영 전반을 고도화함으로써 고객 가치 재고 및 투입 대비 성과를 높이는 생산성 중심의 사업 구조를 만들어 나가고자 합니다.

In addition, we will use AI to further improve our operation, including products, marketing, and network operation, and create a productivity-based business structure to enhance customer value and maximize performance relative to input. So through these efforts in 2026, we aim to restore the profitability of the M&O business and build a structural foundation for medium and long-term growth.

There are no questions in the queue right now.

We know further questions.

We would like to conclude the earnings conference call for 2025 for SK Telecom. If there are additional inquiries or questions, please feel free to contact IR. Thank you.