What Caused SK Telecom's Q2 Net Income to Plummet?
Click to start listening
Synopsis
In a significant downturn, SK Telecom's net profit dropped by 76.2% in Q2, following a massive data breach affecting 25 million users. The company is focusing on transparency and security while boosting its AI sector's growth.
Key Takeaways
- Net profit plunged 76.2% in Q2 2023.
- Data breach affected 25 million users.
- Operating income declined 37.1% year-on-year.
- AI business showed strong growth despite overall performance.
- Company plans a significant investment in cybersecurity.
Seoul, Aug 6 (NationPress) SK Telecom, the foremost wireless service provider in South Korea, announced on Wednesday that its net profit for the second quarter has nosedived by 76.2% compared to the previous year, largely due to the repercussions of a significant data breach impacting its entire base of 25 million users.
The company's net profit for the three months concluding in June has dropped to 83.2 billion won ($60 million), down from 350.2 billion won during the same quarter last year, as reported in a regulatory filing.
This decline fell short of market projections, with analysts estimating an average net profit of 187.3 billion won, as per a survey conducted by Yonhap Infomax, the financial data arm of Yonhap News Agency.
Operating income for the period also experienced a substantial fall of 37.1% year-on-year, totaling 338.3 billion won, while sales decreased by 1.9% to reach 4.33 trillion won.
SK Telecom has attributed this steep drop in net profit to one-off expenses, which include the replacement of customer universal subscriber identity module (USIM) cards and compensation for losses incurred by retail stores.
In April, the company revealed a large-scale cyberattack on its primary servers, during which USIM data was potentially compromised.
In reaction to this breach, SK Telecom replaced the USIM chips for all 25 million users and halted new subscription services for two months.
In June, the company announced a comprehensive compensation strategy and cybersecurity investment plan amounting to over 1 trillion won.
Despite the overall disappointing performance, the firm noted that its artificial intelligence (AI) sector showed remarkable growth.
Sales within the AI data center segment surged by 13.3% year-on-year to 108.7 billion won, while the AI transformation (AIX) division recorded a 15.3% increase, generating 46.8 billion won in sales.
The company anticipates that its AI data center operations will yield over 1 trillion won in annual revenue by 2030, as new facilities in Seoul and Ulsan become fully functional.
SK Telecom has reiterated its dedication to restoring customer trust through enhanced data protection and security initiatives.
"We are thoroughly examining the cybersecurity incident and are committed to rebuilding our business in a transparent manner," said Kim Yang-seob, CFO of SK Telecom. "We seek our customers' ongoing support and trust as we embark on the journey of revitalizing SK Telecom."
Point of View
The massive decline in SK Telecom's profits underscores the importance of cybersecurity in today's digital age. As South Korea's leading telecom provider, the company must prioritize customer trust and security to navigate this challenging landscape.
NationPress
30/08/2025
Frequently Asked Questions
What led to SK Telecom's profit decline?
The decline was primarily due to a significant data breach that affected 25 million users, leading to substantial one-off costs.
How much did the net profit decrease?
SK Telecom's net profit fell by 76.2%, dropping to 83.2 billion won ($60 million) from 350.2 billion won.
What measures is SK Telecom taking to address the situation?
The company is implementing a comprehensive compensation strategy and cybersecurity investment plan worth over 1 trillion won.
How is SK Telecom's AI business performing?
Despite the overall downturn, the AI sector showed strong growth, with sales increasing significantly in both the AI data center and AIX divisions.
What future projections does SK Telecom have for its AI business?
The company expects its AI data center operations to generate over 1 trillion won in annual revenue by 2030.
