Can AI Growth Offset Core Weakness at SK Telecom?

While SK Telecom’s core telecommunications operations face pressure from a significant cyberattack and disappointing quarterly performance, the company’s artificial intelligence division has emerged as a surprising source of strength. This divergence presents investors with a critical question: is the expansion within the AI unit sufficient to counterbalance the challenges in the traditional business and reverse the stock’s downward trajectory?

Cybersecurity Incident and Earnings Disappointment

A severe cybersecurity breach was a primary factor behind the company’s struggles, triggering notable subscriber losses and incurring substantial costs for damage control. The operational impact was severe, forcing a complete halt to new customer acquisition for over a month—a development that significantly disrupted revenue streams. In response, management has implemented enhanced protective measures, including dual fraud detection systems.

The fallout contributed to deeply disappointing second-quarter 2025 results that fell short of market expectations. The company reported earnings of just $0.16 per share, missing the projected $0.36. Revenue also underwhelmed, reaching $3.12 billion against forecasts. This performance prompted a sharp downward revision to the full-year outlook; management now anticipates annual revenue of 17 trillion won, reduced from a previous expectation of 17.8 trillion won.

Artificial Intelligence Division Shows Promise

In stark contrast to the broader operational difficulties, the artificial intelligence segment delivered impressive growth. The unit’s revenue for Q2 2025 surged by 13.9% compared to the same period last year. Its various components all showed robust performance. The AI Data Center (AIDC) division benefited from improved utilization rates, boosting its revenue by 13.3%. Meanwhile, the AIX business unit, which focuses on B2B solutions, experienced an even stronger 15.3% increase.

Should investors sell immediately? Or is it worth buying SK TelecomADR?

The company is aggressively advancing its strategic position in this high-growth field. A key ambition is to achieve 30% growth in AI-related B2B revenue by 2025. A flagship project in this offensive involves plans to construct South Korea’s largest AI data center through a partnership with AWS. This facility is projected to generate significant annual revenue by 2030.

Shareholder Returns and Future Outlook

Despite these operational headwinds, SK Telecom has maintained stability in its shareholder returns. The board approved a second-quarter dividend of 831 won per share, maintaining the same level as the previous quarter. However, company leadership has indicated that future distributions will be contingent on the overall business performance.

For investors, the central dilemma remains unresolved. The impressive momentum within the AI business is clear, but its capacity to fully compensate for the persistent weaknesses in the core telecom division—and thereby provide a foundation for a sustained stock recovery—is yet to be proven.