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This article is part of: Transformation
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What can others learn from SK Telecom’s advanced efforts to grow in the face of declining core telecoms revenues? 5G is a part of the story, but not all of it.
SK Telecom’s strategy
SK Telecom is the largest mobile operator in South Korea with a 42% share of the mobile market and is also a major fixed broadband operator. It’s growth strategy is focused on 5G, AI and a small number of related business areas where it sees the potential for revenue to replace that lost from its core mobile business.
By developing applications based on 5G and AI it hopes to create additional revenue streams both for its mobile business and for new areas, as it has done in smart home and is starting to do for a variety of smart business applications. In 5G it is placing an emphasis on indoor coverage and edge computing as basis for vertical industry applications. Its AI business is centred around NUGU, a smart speaker and a platform for business applications.
Its other main areas of business focus are media, security, ecommerce and mobility, but it is also active in other fields including healthcare and gaming.
The company takes an active role internationally in standards organisations and commercially, both in its own right and through many partnerships with other industry players.
It is a subsidiary of SK Group, one of the largest chaebols in Korea, which has interests in energy and oil. Chaebols are large family-controlled conglomerates which display a high level and concentration of management power and control. The ownership structures of chaebols are often complex owing to the many crossholdings between companies owned by chaebols and by family members. SK Telecom uses its connections within SK Group to set up ‘friendly user’ trials of new services, such as edge and AI
While the largest part of the business remains in mobile telecoms, SK Telecom also owns a number of subsidiaries, mostly active in its main business areas, for example:
- SK Broadband which provides fixed broadband (ADSL and wireless), IPTV and mobile OTT services
- ADT Caps, a securitybusiness
- IDQ, which specialises in quantum cryptography (security)
- 11st, an open market platform for ecommerce
- SK Hynixwhich manufactures memory semiconductors
Few of the subsidiaries are owned outright by SKT; it believes the presence of other shareholders can provide a useful source of further investment and, in some cases, expertise.
SKT was originally the mobile arm of KT, the national operator. It was privatised soon after establishing a cellular mobile network and subsequently acquired by SK Group, a major chaebol with interests in energy and oil, which now has a 27% shareholding. The government pension service owns a 11% share in SKT, Citibank 10%, and 9% is held by SKT itself. The chairman of SK Group has a personal holding in SK Telecom.
Following this introduction, the report comprises three main sections:
- SK Telecom’s business strategy: range of activities, services, promotions, alliances, joint ventures, investments, which covers:
- Mobile 5G, Edge and vertical industry applications, 6G
- AIand applications, including NUGU and Smart Homes
- New strategic business areas, comprising Media, Security, eCommerce, and other areas such as mobility
- Business performance
- Industrial and national context.