SK Telecom's Q2 net income plunges after massive data breach

Seoul, Aug 6 (IANS) SK Telecom, South Korea's leading wireless service provider, said on Wednesday its second-quarter net profit plunged 76.2 per cent from a year earlier due to the fallout from a massive data breach that affected its entire 25 million user base.

Net profit for the three months ended in June fell to 83.2 billion won ($60 million) from 350.2 billion won in the same period last year, the company said in a regulatory filing.

The earnings fell short of market expectations. The average estimate of net profit by analysts stood at 187.3 billion won, according to a survey by Yonhap Infomax, the financial data firm of Yonhap News Agency.

Its operating income for the same period fell 37.1 percent on-year to 338.3 billion won, and sales decreased 1.9 percent to 4.33 trillion won.

SK Telecom attributed the sharp decline in net profit to one-off costs, including customer universal subscriber identity module (USIM) card replacements and retail stores' loss compensation.

In April, the company reported a large-scale cyberattack on its main servers, during which universal subscriber identity module (USIM) data was potentially compromised.

In response, it replaced the USIM chips for all 25 million users and suspended new subscription services for two months.

In June, it unveiled a comprehensive compensation package and cybersecurity investment plan worth more than 1 trillion won in total.

Despite the sluggish overall performance, the company said its artificial intelligence (AI) business delivered strong growth.

Sales of the AI data center segment rose 13.3 percent on-year to 108.7 billion won, while the AI transformation (AIX) division posted a 15.3 percent increase to earn 46.8 billion won in sales.

The company expects its AI data center business to generate over 1 trillion won in annual revenue by 2030, when new facilities in Seoul and Ulsan become fully operational.

SK Telecom emphasised its commitment to restoring customer trust through stronger 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," said Kim Yang-seob, chief financial officer (CFO) at SK Telecom. "We ask for our customers' continued support and trust as we move forward with changes in rebuilding SK Telecom."

—IANS

na/