SK Telecom's Profits Plunge 41% After Hacking Crisis; Bets on AI for Comeback

[Korea Financial Times, Jeong Chaeyun] SK Telecom suffered a performance shock last year due to a hacking incident and surging one-time costs. This year, the company plans to concentrate its management firepower on strengthening its artificial intelligence (AI)-based security system and regaining customer trust, while using the Anthropic investment effect and AI alliance as a springboard to make a full-fledged leap as an "AI platform company."

'Year of Defense'... Profitability plummets due to one-time costs and subscriber exodus

According to SKT on the 5th, the company's fourth-quarter operating profit last year was KRW 119.1 billion, a decrease approaching 53% compared to the same period the previous year. Revenue was KRW 4.3287 trillion, which did not decrease significantly from KRW 4.5115 trillion in the same period the previous year, but follow-up measures for the security incident and labor costs weighed down performance.

Profitability fell sharply as severance pay burdens from organizational restructuring including SK Broadband in the second half of last year, hacking damage compensation costs in the second quarter, and related fines continued until year-end.

Looking at the entire year of 2025, SK Telecom spent "a year focused on defense." Last year's annual revenue was KRW 17.0992 trillion, down 4.69% from the previous year, and operating profit plunged 41.14% year-on-year to KRW 1.0732 trillion. The accounting shock was significant as the company chose to settle unavoidable cost burdens in the short term rather than dispersing them over the long term.

The aftermath of the security incident also dealt a clear blow to the core telecommunications business. In 2025, SK Telecom's handset subscribers decreased from 22.729 million in the first quarter to 21.75 million in the fourth quarter, a decline of nearly 1 million.

Consequently, last year's operating profit plunge is evaluated as a result showing not only the short-term hacking shock but also the simultaneous deterioration of the core business's health.

'Legal risk quagmire' follows rejection of compensation plan

Consumer compensation conflicts compounded this, making the management burden even heavier. The Consumer Dispute Settlement Committee (Consumer Committee) of the Korea Consumer Agency recommended a compensation plan of approximately KRW 100,000 per victim to SK Telecom, but the company ultimately rejected it on the 30th of last month.

Regarding the reason for not accepting the mediation plan, SK Telecom stated, "After in-depth review of the Dispute Settlement Committee's decision, we considered that we had preemptively implemented voluntary compensation efforts and security strengthening measures, and that the ripple effects of accepting the mediation plan would be very significant."

The stated reason is that voluntary compensation already in progress and security enhancements should be taken into account, but realistic financial burdens appear to have played a role behind the scenes.

In fact, if the mediation plan were accepted as is, considering that the total number of hacking incident victims is approximately 23 million, the compensation would amount to a total of KRW 2.3 trillion. This exceeds SK Telecom's annual operating profit of KRW 1.8324 trillion in 2024.

As a result, the dispute requires applicants to file separate civil lawsuits in court to continue legal procedures. At the same time, SK Telecom is also handling a lawsuit to cancel approximately KRW 134.8 billion in fines from the Personal Information Protection Commission already in progress, resulting in a situation where the company must deal with two major legal risks concurrently.

Cost elimination and trust recovery... Back to basics

This year, expectations for recovery are growing with last year's shock as the bottom. The securities industry is placing weight on the possibility that profitability will gradually recover as most one-time costs related to the hacking incident and workforce restructuring have been eliminated.

Signals of structural improvement have also been fired in the telecommunications market. As of the fourth quarter last year, the number of 5G subscribers reached 17.49 million, and the 5G penetration rate among total handset subscribers surpassed the 80% mark.

The rebound in the wireline sector is also clear. Both high-speed internet and IPTV subscribers, which experienced temporary stagnation in the second half, succeeded in turning to net additions from the fourth quarter, securing 7.238 million and 6.721 million subscribers, respectively.

Building on this recovery momentum, SK Telecom plans to further strengthen its fundamental business competitiveness this year through comprehensive reorganization of products and channels, along with customer lifetime value-centered operations.

Industry observers also note that reputation risk management, rather than cost management, will be key this year. Internally, the company is prioritizing trust recovery over performance. To regain customer trust that crumbled in the second half of last year, the company is pursuing a strategy that combines AI-based security system enhancement, customer compensation completion, and service quality improvement. This is interpreted as a strategic choice for long-term reputation recovery over short-term profits.

Gradual normalization can also be seen in shareholder return policy. SK Telecom decided not to implement a fourth-quarter dividend last year, resulting in total annual dividends of approximately KRW 353.6 billion, about half the previous year's level (KRW 753.6 billion). Dividend per share also decreased from KRW 3,540 in 2024 to KRW 1,660 in 2025, and dividend yield fell from 6.4% to 3.1%.

While the company maintains a conservative stance, if performance improvement is confirmed, it is highly likely to pursue normalization of shareholder returns such as resuming interim dividends or share buybacks and cancellations. In particular, given its clear policy of returning "more than 50% of consolidated adjusted net profit" for 2024-2026, the company is expected to accelerate shareholder value enhancement after trust recovery.

AI-native leap... Beyond telecommunications to platform

AI business sector reorganization is also proceeding in parallel. SK Telecom is expanding the application of differentiated services in security monitoring (A. phone AI message), customer service automation (A. Note), and vehicle network optimization (A. Auto) by combining its own large language model (LLM) "A." with network data.

AI business revenue is actually growing rapidly. Last year, AI data center (AIDC) revenue was KRW 519.9 billion, up 34.9% from the previous year, and the B2B AI solution (AIX) sector also grew 6.4% to KRW 198.6 billion. The number of A. subscribers exceeded 11.2 million as of the fourth quarter last year, up more than 35% from the previous year (8.3 million).

In particular, this year SK Telecom is making the group-level "SK AI Alliance" a core growth axis. The AI infrastructure and data sharing system built with group companies including SK Hynix, SK AX, and SK Broadband will be fully operational this year, aiming for both model training efficiency and cost reduction.

In addition, the rapid growth of Anthropic, a U.S. generative AI startup strategically invested in 2023, is also acting as a positive factor. Anthropic, which owns the "Claude" series, was recently valued at USD 350 billion in its pre-IPO stage.

SK Telecom strategically invested approximately USD 100 million (approximately KRW 130 billion) in Anthropic in August 2023 and has been cooperating through the AI alliance since then. The securities industry predicts that although SKT's stake is less than 1%, its holding value will reach KRW 2-3 trillion. Some assess that the symbolic significance of AI competitiveness status is greater than direct profits.

At the earnings conference call held on this day, SK Telecom said, "We are aware of the market's great interest in whether to liquidate the Anthropic stake, but nothing has been decided," adding, "Changes in shareholding will be updated in the 2025 business report."

In addition, expectations are growing that the national "independent AI foundation model" development project, in which the SK Telecom consortium is participating, will be a turning point in securing K-LLM competitiveness as it gets on track.

An industry official said, "If hacking risks led to financial shocks last year, this year is the time to reverse those aftereffects with trust and performance," adding, "AI-based structural improvement, not simple recovery, will be the turning point that determines success or failure."

Jeong Chaeyun (chaeyun@fntimes.com)