Mirae Asset Securities logo

Synergies between SK Horizon and SK Hyper to materialize

Raise TP by 25% to W150,000; our top pick in the sector

We raise our target price for SK Telecom (SKT) by 25% to W150,000 (from W120,000) and maintain the stock as our sector top pick. Our target price is based on the sum of SKT’s operating value (W22.9tr), the value of its stake in Anthropic (W4.3tr), and SK Horizon’s operating value (W5.1tr).

We believe SKT is better positioned than its competitors to expand data center capacity aggressively in response to growing demand, supported by: 1) its differentiated full-stack AI capabilities; 2) support from the broader group; and 3) a stable funding base.

Reinforcing its position as Asia’s leading data center operator

With SK Hyper now established, we expect the planned launch of SK Horizon to further accelerate SKT’s data center expansion, which is already aggressive relative to peers. On Aug. 27, SKT announced plans to establish SK Horizon as a new entity through the spin-off of SK Broadband’s data center and submarine cable businesses. SK Broadband will continue to operate its existing fixed-line, media, and enterprise businesses, while SK Horizon is expected to focus on expanding AI data center infrastructure.

SK Horizon will be responsible for eight data centers already in operation―Seocho, two in Ilsan, Bundang, Gasan, Centum, Yangju, and Pangyo―as well as the new data centers scheduled to come online in Ulsan and Guro, representing total capacity of 318MW. We also expect the company to gradually expand its submarine cable infrastructure.

Further submarine cable investments are planned to meet growing traffic demand. SJC2―connecting Japan, Korea, Hong Kong, and Singapore―entered commercial operation in Jul. 2025, while E2A, which will connect the US, Korea, Japan, and Taiwan, should begin commercial operation in 2029. We expect further submarine cable network expansion across Asia going forward.

Unique mix of full-stack AI capabilities, group support, and stable funding

At the same time that profitability in the telecom services business is improving through enhanced cost efficiency, earnings growth from data centers is poised to accelerate. We believe SKT is uniquely positioned to meet steadily rising demand, supported by: 1) its differentiated full-stack AI capabilities; 2) support from the broader group; and 3) a stable funding base. We maintain SKT as our top pick in the sector.