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Additional costs and subscriber churn to slow from 4Q25

3Q25 review: 5G subscriber growth resumes, but hacking incident takes a toll

For 3Q25, SK Telecom (SKT) reported consolidated revenue of around W4tr (-12.2% YoY; 1% above the consensus) and operating profit of W48.4bn (-91% YoY; 357% above the consensus).

Mobile services revenue contracted roughly W547.7bn YoY, as the company offered a 50% discount on August mobile bills and other membership benefits following the hacking incident. On a positive note, wireless/fixed-line subscriber growth remained solid. Total 5G subscribers reached 17.26mn, up approximately 240,000 QoQ, bringing the 5G penetration rate to around 79%. The broadband subscriber base also increased to 7.2mn (+1.2% YoY).

SK Broadband recorded revenue of W1.1tr (+3.4% YoY) and operating profit of W89bn (+1.5% YoY), driven by the acquisition of the Pangyo data center and higher utilization at the Yangju data center. AI data center revenue jumped 53.8% YoY to W149.8bn.

AI transformation-related businesses also reported sold results, with revenue rising 3.1% YoY to W55.7bn on B2B order wins (cloud services and AI contact centers). Meanwhile, the cumulative number of AI assistant (A.) subscribers reached 10mn.

Quarterly earnings have likely bottomed; costs/churn to slow from 4Q25

From 4Q25, we anticipate only limited additional costs/subscriber churn related to the hacking incident. Starting next year, we forecast profits to begin to improve markedly. In 2026, we look for consolidated revenue of W18tr (+4.6% YoY), operating profit of W1.9tr (+53.5% YoY), and an OP margin of 10.3%. We forecast standalone revenue at W12.6tr (+5.5% YoY) and SK Broadband’s revenue at W4.7tr (+2.9% YoY).

Maintain Buy and TP of W73,000; 2026 earnings growth warrants attention

We maintain our Buy rating and target price of W73,000 on SKT. We see three key drivers for next year: 1) the start of AI business monetization; 2) profitability improvement through enhanced cost efficiency; and 3) business portfolio optimization through the accelerated sale of non-core assets.