Seoul: SK Telecom Co., South Korea's leading wireless service provider, announced a significant decline in its second-quarter net profit, which plunged 76.2 percent compared to the same period the previous year. This downturn is attributed to the repercussions of a substantial data breach that compromised the information of its entire 25 million user base.
According to Yonhap News Agency, the net profit for the three-month period ending in June dropped to 83.2 billion won (US$60 million) from 350.2 billion won in the corresponding quarter last year. This figure fell short of market expectations, as analysts had predicted an average net profit of 187.3 billion won, based on a survey conducted by Yonhap Infomax, the financial data arm of Yonhap News Agency.
The company's operating income for the second quarter saw a 37.1 percent year-on-year decline, amounting to 338.3 billion won, while sales decreased by 1.9 percent to reach 4.33 trillion won. SK Telecom attributed this sharp decline in net profit to one-off costs, which included customer universal subscriber identity module (USIM) card replacements and compensation for losses incurred by retail stores.
In April, SK Telecom reported a large-scale cyberattack targeting its main servers, leading to the potential compromise of USIM data. As a response to the breach, the company replaced USIM chips for all 25 million users and temporarily halted new subscription services for two months. In June, SK Telecom unveiled a comprehensive compensation package and a cybersecurity investment plan, collectively valued at over 1 trillion won.
Despite the overall sluggish performance, SK Telecom's artificial intelligence (AI) business demonstrated robust growth. The sales of the AI data center segment experienced a 13.3 percent year-on-year increase, reaching 108.7 billion won, while the AI transformation (AIX) division posted a 15.3 percent rise, earning 46.8 billion won in sales. The company anticipates that its AI data center business will generate more than 1 trillion won in annual revenue by 2030, once the new facilities in Seoul and Ulsan become fully operational.
SK Telecom emphasized its commitment to regaining customer trust through enhanced data protection and security measures. "We are taking a hard look at the cybersecurity incident and are committed to rebuilding our business thoroughly and transparently," stated Kim Yang-seob, chief financial officer (CFO) of SK Telecom. "We ask for our customers' continued support and trust as we move forward with changes in rebuilding SK Telecom."