Lee Gyu-lee is a business writer at The Korea Times, focusing primarily on IT & telecommunications, the Ministry of Trade, Industry and Energy and KOTRA. Prior to this, she has covered a wide range of cultural news, from film, television and K-pop to lifestyle and fashion.
SK Telecom Q2 earnings plunge after hacking incident
SK Telecom is paying an enormous price for the hacking incident that resulted in a massive data leak of its users’ information, with its second-quarter earnings taking a significant hit.
SK Telecom headquarters in central Seoul / Courtesy of SK Telecom
By Lee Gyu-lee
The company reported Wednesday an operating profit of 338.3 billion won ($243 million) for the April-to-June period, marking a 37.1 percent decline from the previous year. Sales decreased 1.9 percent to 4.33 trillion won.
“The financial impact in the second quarter includes revenue decline due to subscriber turnout, an increase in costs due to the free USIM (universal subscriber identity module) replacement and compensation for sellers,” SK Telecom Chief Financial Officer Kim Yang-seob said during a conference call.
“After the incident, SK Telecom suspended new sign-ups in order to secure sufficient USIM cards for existing customers. As a result, the number of subscribers dropped by about 750,000 at the end of June compared to March, leading to a 28.7 billion won decrease in mobile service revenue compared to the previous quarter.”
To recover from this setback, the company pledged to bolster its IT and information security.
“Going forward, we will continue to strengthen information security levels with 700 billion won of investment for the next five years and put priority on IT security in management,” Kim said.
“To this end, we are working on the implementation of the information protection innovation plan, which includes the restructuring of the security governance framework, implementing multilayered next-generation information systems based on the zero trust principle.”
SK Telecom's new graphic processing unit cluster, Haein, at the Gasan AI Data Center / Courtesy of SK Telecom
Aside from mobile business, the company’s artificial intelligence (AI) business grew by 13.9 percent compared to the same period last year, driving the second quarter’s performance. The AI data center business recorded 108.7 billion won in revenue, up 13.3 percent year-on-year, while the AI transformation (AIX) business grew 15.3 percent with 46.8 billion won in revenue from expanding business-to-business solution sales.
In June, the company announced plans to build Korea’s largest hyperscale AI data center with Amazon Web Services and SK Group affiliates. The company noted that it plans to have its Ulsan AI Data Center begin operations in 2027.
“Including other locations such as data centers in Seoul, the company expects to secure more than 300 megawatts of data center capacity by 2030, and, as utilization rates increase, we anticipate being able to generate around 1 trillion won in annual revenue from data centers alone after that point,” Kim said.
To restore trust from its users following the cybersecurity breach, SK Telecom has been focusing on customer protection and information security innovation. It is also providing world-class mobile security, Zimperium, to all customers at no cost for a year and has established a compensation system for victims of USIM data leaks. Additionally, the company unveiled that it will offer substantial discounts and free additional data and will restore membership status for customers rejoining within six months.
“The accountability and commitment program will be implemented in full swing in the second half of the year. In particular, 50 percent tariff discounts are scheduled for the third quarter, which bears the biggest financial impact, so we anticipate a decline in revenue and operating profit compared to Q2,” the CFO noted.