SK Telecom Co Ltd - ADR

Strong telecom recovery + improving profitability (core fundamentals): - 3Q26 consolidated revenue: KRW 4,497.3bn (+3.2% QoQ, +13.1% YoY) driven by mobile service revenue growth. - 3Q26 operating income: KRW 552.3bn (operating income > KRW 500bn for 3 straight quarters). - 1–3Q cumulative operating income: KRW 1,655.9bn, continuing the earnings recovery trend promised earlier in the year. - Mobile driver: handset launches (Galaxy Fold, iPhone) improving high-quality subscriber acquisition and boosting ARPU / mobile service revenue despite some subscriber decline. - Customer satisfaction upside: SKT again topped all 3 major Korea customer satisfaction surveys (National CSI, Korean Standard Service Quality Index, and Korean Customer Satisfaction Index) — supports retention/LTV and reduced churn risk.

AI/data center “build + finance” momentum, but still execution-dependent (opportunity): - Governance reshaped via new AIDC entities: SK Hyper (July) and SK Horizon (planned/established early next year; announcement in Aug) to separate execution stages and optimize decision-making. - SK Hyper (Ulsan/Seoul focus; sites secured): - secured sites, obtained construction permits for certain capacity in Ulsan - discussing concrete terms with 3–4 global companies (no disclosed volumes/timelines) - target to secure enough customer demand for initial operation by 1H next year; then open data centers in phases from 2H 2029 - SK Horizon (capital area + Ulsan + cables): plans new data centers in Ulsan and Seoul targeting ~180MW and phased submarine cable expansion; E2A cable targets commercial service in 2029. - Key investor takeaway: AI infrastructure is positioned as the major growth engine, but the plan hinges on securing long-term contracts to be “bankable” for external funding.

Growth monetization thesis (“growth gear”): telecom + AI usage monetization first via token gateway; infrastructure may monetize faster than services: - SKT frames a “single growth framework” linking AI infrastructure, telecom customer base, and AI services into an AI token economy concept. - Token Gateway concept: manages customers’ AI usage and connects models + infrastructure. - What monetizes first (management view): - Telecom + AI infrastructure already have workable business models; AI infrastructure utilization expected to grow faster. - Enterprise AI services may take longer for tangible results. - Early monetization focus: public sector + national defense, monetization through AI usage/operation via Token Gateway.