Mirae Asset Securities logo

Data center business emerging as the group’s next growth engine

2Q26 review: AI data center revenue up 92.5% YoY

For 2Q26, SK Telecom (SKT) reported consolidated revenue of approximately W4.4tr (+0.5% YoY) and operating profit of W566.0bn (+67.3% YoY; OP margin of 13.0%). Operating profit came in roughly 3.7% above the consensus.

SK Broadband posted revenue of W1.2tr (+3.6% YoY) and operating profit of W132.5bn (+44.3% YoY). We believe the strong performance was driven by rising utilization at the Gasan and Pangyo data centers, new leased-line customer wins, and higher traffic.

AI data center revenue increased approximately 92.5% YoY to W136.2bn, driven mainly by higher utilization and the expansion of submarine cable infrastructure. AI B2B and B2C revenue reached W61.3bn (+24.5% YoY), supported by new cloud contracts.

Data center business emerging as the group’s next growth engine

We believe SKT is entering a phase in which solid telecom services earnings will be complemented by growth in AI data centers, which are emerging as the next group-wide growth engine. SKT’s track record in operating AI data centers, competitive infrastructure, and support from the broader group should allow it to maintain a competitive edge. We expect the business to serve as a meaningful medium/long-term driver, with its contribution to consolidated revenue beginning to ramp up in 2028.

We expect W330bn of the W750bn commitment to newly established subsidiary SK Hyper to be deployed this year. Given SKT’s free cash flow, we do not view this as an undue financial burden. Following the initial investment, we expect additional funding requirements to be met through financial investors and other sources.

Maintain TP of W120,000; still our top pick in the sector

We maintain our target price of W120,000 for SKT and continue to recommend the stock as our top pick in the sector. Our target price is based on the sum of SKT’s operating value (W22.5tr) and the value of its stake in Anthropic (W3.4tr).

We expect profitability in the telecom services business to continue improving through enhanced cost efficiency. At the same time, rising utilization at existing data centers should provide an increasingly meaningful boost to earnings. We also expect the trend toward enhanced shareholder returns to continue. Expectations for a special dividend in 4Q26 remain intact.