SK Telecom Co., Ltd.

Hello, I'm Kim Tae-hee of SK Telecom IRO. I'm sorry that I started earlier than expected. From now on, I will start the conference call for the 1st quarter performance announcement of SK Telecom in 2026. Today's conference call will be in the order of Q&A after I tell you about your financial performance and business situation. I will also tell you in advance that the content related to the future can vary depending on the market and business environment. Then, Park Jong-seok CFO will tell you.

Good afternoon. I am Taehee Kim, IRO of SK Telecom. I'd first like to ask for your kind understanding that the earnings call started later than scheduled. Let us now begin the earnings conference call for the first quarter of 2026. 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.

Good afternoon. This is Jongseok Park, CFO of SK Telecom.

At the beginning of this year, we said that we would focus on strengthening fundamental business competitiveness centered on customer value and restore profitability through sophisticated AI business in 2026. The first quarter was a significant period in which this direction began to translate into actual results.

The continued efforts to recover customers' trust have led to

Thanks to ceaseless efforts to regain our customers' trust, the company recorded a net subscriber ad this quarter, and the fundamentals of our core telecom business are rapidly returning to normal. The performance of the AI business is gradually improving as a result of business restructuring based on a strategy of focus and prioritization. As these changes led to actual results, we were able to post earnings similar to the levels prior to the cybersecurity incident. With business performance returning to normal, the company has decided to resume dividend payments starting this quarter. Dividend per share for the first quarter is $831.

We are pleased that we were able to deliver on the promises that we made during the last earnings call.

We will make every effort to restore the dividend level by normalizing earnings on a full year basis

through continuous improvement of the telecom business fundamentals and creation of additional results from the AI business.

Let me now report on the financial results for Q1. Consolidated revenue posted 4.39 trillion won up 1.5% Q on Q on the back of MNO revenue growth driven by subscriber growth and the growth trend of the data center business. We posted 537.6 billion won in consolidated operating income. Our quarterly operating income exceeded more than 500 billion won, which is attributable to extensive efforts to regain customers' trust and company-wide initiatives to improve productivity. Let me now present business highlights by business line. MNO achieved a handset subscriber net ad of approximately 210,000 in the first quarter, which is a substantive outcome of diverse measures taken to innovate customer value and restore customers' trust.

Yet, we are not complacent but remain committed to further strengthening business fundamentals and competitiveness with customer-friendly products and services.

We have expanded customer benefits and usability by restructuring the membership program, and we're currently overhauling price plans to offer more choices to customers. The fixed-line business is also producing stable results thanks to continued subscriber net ads, an increase in the share of subscribers signing up for higher price plans, including Giga price plan, and a stronger subscriber retention trend. We will do our utmost to achieve the dual objectives of subscriber recovery and profitability enhancement through constant change and execution based on the philosophy that customers are the essence of our business. In the AI business, the effects of the strategy of focus and prioritization are gradually becoming visible.

AI data center revenue is maintaining a growth trend year-over-year, driven by Pangyo Data Center and higher utilization of Kasan Data Center.

The construction of Ulsan AI Data Center is underway, and we plan to pursue additional scale-up by building new data centers in areas including Seoul.

Global Big Tech's AI Data Center demand is increasing, and there are new opportunities for the AI Data Center business. Based on the business experience and discriminatory competitiveness of the AI Data Center value chain,

New opportunities are emerging for our AI data center business due to the surge in demand for AI data centers from global tech companies. Based on business experience and differentiated competitiveness across the entire value chain of AI data centers, we will actively pursue partnerships with global players and keep expanding our AI infrastructure business.

Within AI B2C business, the agent business is evolving in a direction that creates synergy with the telecom business and enhances fundamental competitiveness.

We plan to improve ADOT's performance by linking it with our preparatory AI foundation model to strengthen its own competitiveness.

The B2B market is experiencing structural changes through AI transformation, and a new AI-based market is being formed in earnest. The company has a full-stack capacity of AI infrastructure, models, and agents,

With the increase in AI adoption, the B2B market is undergoing structural change driven by AI transformation, and new AI-based markets are taking shape. SK Telecom will secure leadership in the rapidly evolving market by utilizing full-stack AI capabilities across infrastructure, models, and agents and mobilizing the customer base and execution capabilities secured from our B2B business. We ask for the continued support and interest of our investors and analysts as we overcome the crisis and continue driving change and embracing challenges to achieve greater growth. Thank you.

We would now 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 Seungwon Lee from Uanta Securities.

Please go ahead with your question.

Hello, I'm Lee Seung-woon from Uanta. Thank you for the opportunity to ask me a question. I have two questions. You just told me that you have been re-opening the air-conditioning system since the first quarter. So, when you look at this year as a whole, I would appreciate it if you could tell me in detail how the supply and demand will flow. I'm Lee Seung-woong from Uanta Securities.

Thank you for the opportunity to ask you questions. I have two questions. First of all, as you mentioned during your earnings presentation, the company started quarterly dividend payment starting from Q1. And I'd like to understand the overall shareholder return plan and the size of the shareholder return for the entire year of 2026. Secondly, I can see that the company was able to produce earnings results that are similar to the levels prior to the cybersecurity incident. Is it safe to understand that this type of trend will become a new normal? And I'd like to get some guidance from the company on a full-year basis earnings outlook. Thank you.

Yes, thank you for the question. First, I would like to talk about the annual performance outlook and then I would like to talk about the 20-year stock market.

First of all, thank you for your questions. I'd like to comment on the question on our annual earnings outlook, and then I'll move on to addressing your second question on shareholder returns.

First of all, I'd like to comment on the question on our annual earnings outlook, and then I'll move on to addressing your second question on shareholder returns.

First, on our annual earnings outlook. In the first quarter, our operating profit posted 537.6 billion won, and the trend has reversed from the downward trend after the cybersecurity incident and showed an upward trend to be approaching the pre-incident levels. Our goal is to improve the full-year earnings further from the current levels.

First, we would like to thank all of you for your support

For our telecom business, thanks to our efforts to restore customers' trust, which is our number one priority in 2026, we achieved a net addition to handset subscribers in Q1, contributing to the recovery of the bottom line as well as the top line.

AI is a technology that can be used to improve customer trust, For our AI business, we are reviewing and implementing various measures to improve the structural profitability by pursuing pivoting and discontinuation of low-margin businesses through the strategy of focus and prioritization.

In addition, data center business is seeing a meaningful growth trend, and the B2B business has revised its strategy to focus on AI full-stack capabilities. And we believe that these businesses will drive revenue and contribute to bottom-line improvements for the remainder of the year.

Lastly, with the introduction of AI tools and the transition of call centers to AX, we will continue to work to improve productivity 비용 효율화에도 긍정적인 영향을 미치고 있습니다.

And finally, we are working to improve productivity in terms of business operations and processes through enterprise-wide AI tool adoption and AEX transformation of call centers. And these measures are having a positive impact on cost efficiency improvement.

통신사업의 수익성 회복과 함께 AI 데이터센터 중심의 성장사업 확대 및 지속적인 생산성 향상을 통해 연간 실적을 사고 전 수준 이상으로 회복할 수 있도록 최선을 다하겠습니다.

In short, we will do our utmost to recover the annual earnings to be higher than the pre-incident levels through profitability recovery of the telecom business, expansion of growth businesses centered on AI data centers, and continuous productivity enhancement.

다음으로 26년 주주 환원에 대해 말씀드리겠습니다.

Now I'd like to speak about shareholder returns for 2026.

As was announced earlier, we resumed quarterly dividend payments with the DPS for the first quarter of 831.

I'd like to thank our shareholders very much for their kind understanding and patience.

As earnings continue to recover this year, we plan to conduct dividend payments as stably as possible.

As for the size of the dividends for the whole year, when concrete full-year earnings become more materialized, the Board of Directors will have discussions and make decisions in consideration of business performance and financial structure. I won't be able to share with you any specific number at this point, but I promise that we will do our utmost to restore the dividend levels to the previous levels.

Also, the Board of Directors will make sure that the dividend levels At the annual general meeting of shareholders in March, the company transferred capital reserves of 1.7 trillion won to retained earnings to allow tax-exempt dividends.

which is expected to deliver substantive benefits to shareholders. And for your reference, according to relevant law, tax-exempt dividends are possible from the 2026 year-end dividends.

The following question will be presented by John Sopkin from KB Securities.

Please go ahead with your question.

Thank you for your question. My name is Jun Seo Kim from KB Securities. I would like to ask about the MNO marketing strategy and the AIDC business. Recently, it seems that the recovery tax has been introduced when looking at the increase in the number of subscribers and the decrease in the share price. I think it would be helpful if you could share the goal of the subscriber share price and the direction of the marketing strategy to achieve this, which SK Telecom thinks. Also, I would like you to explain how you are balancing the profit and loss in the share price recovery process. I'm Kim Junseo from KB Securities.

Thank you for the opportunity. I have two questions, one on M&O marketing, the other on AIDC. you have produced a recovery trend in terms of the net subscriber ads as well as a market share. So I'd like to understand the overall subscriber market share target for SK Telecom and the marketing direction and how you're planning to strike a balance between profitability and marketing. Secondly, when you reported that the AIDC revenue in the first quarter has increased by 89% year-over-year, And I'd like to understand how this AIDC business is making meaningful contribution to your profitability. If you can give us some color, I would appreciate it.

Thank you for your question. First, I will answer the question about the AIDC business, and then Ms. Bae will answer the question about the goal of a non-profit investor.

Thank you for your questions. I'd like to address your question on our AIDC business and I will hand over to Mr. Bae Byung Chan in charge of MNO support who will answer your question on our MNO subscriber targets. First, let me comment on a timeline as to when AIDC business will be able to make meaningful earnings contribution.

First of all, I'd like to remind you that we only announced AIDC revenue numbers, and we do not disclose any other indicators, including profitability-related indicators.

We're aware that the market is interested in knowing this, but please understand that we are doing so in consideration of various factors, including the domestic data center market situations.

However, compared to the existing U-MOOSEN communication business, we can tell you that there is no room for improvement in terms of usability and there is room for improvement in the future.

Nevertheless, what I can say is that the AIDC business is comparable to the existing telecom business in terms of profitability, and there's much room for the AIDC business to become even more profitable going forward.

As the AIDC business is pushing for key growth, we will consider and review the indicators that investors can understand more clearly about the business performance.

Since AIDC is our key growth business, we will think of what we can share to help investors better understand our AIDC business performance. Now, I'd like to turn to Mr. Bae in charge of MNO support to answer your question on our MNO subscriber targets.

I'd like to comment on our MNO subscriber target.

The new year, 2026, started with the number of handset subscribers reduced by around 986,000 year-over-year.

Reflecting on our performance in the first quarter, we were able to achieve a net ad in subscribers on the back of changes in the competitive landscape, back-to-school marketing to attract new subscribers

and S26 flagship handset marketing. As a result, we were able to achieve a net addition to our handset subscribers of 208,000.

앞으로도 외국인 등 신규 SEG 공약 강화와 상품 서비스 및 판매 채널 경쟁력 강화를 통해 가입자 회복을 위한 다양한 노력을 연중 지속해 나갈 것입니다.

Throughout the year, we will continue to make efforts to recover subscribers by targeting new segments including foreigners and strengthening competitiveness in terms of products, services, and sales channels. When we continue to strengthen fundamental competitiveness through business operations focused on profitability, we believe that the subscriber base and the market share will naturally grow.

This will lead to a competitive competition that simply increases the number of subscribers, and will continue to promote market operations that aim to secure high LTV subscribers.

And based on this approach, we will avoid engaging in excessive spending competition aimed solely at increasing subscriber numbers, but rather focus on market operation on securing high LTV subscribers.

The following question will be presented by Aram Kim from Shinhan Securities.

Please go ahead with your question. I'm curious about what SK Telecom is thinking about AI LAN. There is also a short second question. AI traffic is increasing rapidly. In terms of our communication business, what kind of business opportunities will this AI traffic increase bring? I'm Kim Aram from Sinan Securities.

I'd like to ask you two questions. First of all, telecoms equipment providers, both in Korea as well as abroad, are focusing on developing AI RAN, which is about using telecommunications network infrastructure for AI functions such as inference. So I'd like to get SK Telecom's view on AI RAN. And secondly, there is an increasing demand and growth for AI traffic. And I'd like to understand what this increase in AI traffic, what kind of business opportunities will this bring to SK Telecom as a telco? Thank you.

Thank you for your question. I'd like to answer the questions about AI RAN and AI traffic.

Thank you for your questions. On your questions on AI RAN as well as business opportunities brought by AI traffic, Mr. Jonghoon Lee in charge of network strategy will address them.

I am Lee Jonghoon in charge of network strategy.

I'd like to first talk about expected benefits and commercialization plans of AI RAN.

AI RAN is evolving in two domains.

One is to improve telecommunications network infrastructure using AI, and the other is to use wireless network infrastructure as a platform to provide AI services.

Electronics is expected to be able to improve customer experience by automating and increasing efficiency through AI-based prediction, optimization of traffic resources, and power efficiency. The latter is expected to be able to create new business opportunities and profits by using the AI computing resources of the organization and providing AI services such as media processing.

So in the first domain, we expect to be able to automate base station operations through AI-based failure prediction, optimization of traffic and resources, and power efficiency improvement. This will lead to higher efficiency and improved customer experience. As for the second domain, we may be able to create new business opportunities and generate profit from the provision of AI services such as inference and media processing, by utilizing AI computing resources at the base stations. We are actively participating in technology research and standardization together with global players and manufacturers such as Samsung, Docomo, and NVIDIA for the evolution of AI RAN. However, AI RAN is still in an early stage, so we will consider the adoption of AI RAN by comprehensively considering various aspects, such as technology maturity, standardization, validation on commercial networks, and other aspects. We will continue to maintain technology leadership in the next generation network technology areas including AI RAN and use the technology leadership to proactively secure new business opportunities. Next, I'd like to make some comments on AI traffic.

While there is a significant increase in AI traffic, the share of AI traffic in the entire traffic is still not very high.

However, we're considering ways to make AI traffic increase with a connection with AI RAN and how to distribute traffic across the networks. So we will continue to look into technology to be able to do so.

There are no questions in the queue right now. This concludes the earnings conference call for 2026 first quarter of SK Telecom.

If you need further explanations or have additional questions, please contact IR at any time. Thank you.