SK Telecom's SK Horizon Spinoff: A New AI Growth Engine for SKM?

To capitalize on the rapidly growing demand for AI infrastructure, SK Telecom Co. SKM plans to split its wholly owned subsidiary SK Broadband into two entities: the surviving SK Broadband and a newly established company, SK Horizon, dedicated primarily to AI data center (AIDC) infrastructure. The restructuring separates SKM's traditional connectivity and media businesses from a potentially much faster-growing AI infrastructure opportunity. Moreover, SKM is bringing in heavyweight financial partners KKR and the IMM Investment-Stonebridge consortium with a combined KRW 3.08 trillion equity investment.

Following completion of the investment, KKR will hold 29%, the IMM consortium will own 20% and SKM will retain a controlling 51% stake. The transaction is likely to provide SK Horizon with the capital, focus and governance needed to become a major player in South Korea's AI data center market. Under the planned structure, SK Broadband will continue operating its fixed-line, media, and enterprise businesses. SK Horizon will focus on expanding AI data center infrastructure. The new company will have a substantial operating base. SK Horizon is expected to oversee infrastructure with a total capacity of 318 MW, including eight existing data centers.

The creation of SK Horizon also fits into a broader restructuring of SKM's AI infrastructure strategy. SKM plans to oversee the group's overall AIDC business, including strategic direction and collaboration with global technology companies. SK Horizon will focus on infrastructure expansion and operations, leveraging SKM's existing data center expertise. Meanwhile, SK Hyper, established in July, will focus on business development for new AIDC projects. SK Hyper is targeting 5 GW of capacity by 2029, with ambitions to expand to 15 GW by 2035.

However, the AI infrastructure market is becoming increasingly competitive. Global cloud providers like CoreWeave, Inc. CRWV, hyperscalers like Microsoft MSFT, infrastructure funds, semiconductor companies and specialist data-center operators are all pursuing the same opportunity.

How Intense is Competition in AI Infrastructure for SKM?

CoreWeave has emerged as a prominent AI-focused cloud infrastructure provider. Its platform is designed specifically for accelerated computing and AI workloads, giving customers access to large amounts of GPU computing capacity without having to build their own infrastructure. Its relationships include AI labs, hyperscalers and enterprises, while recent customer wins and expansions include companies such as Hudson River Trading and Runway ML. Active power reached 1.5 GW, while contracted power rose to 3.7 GW by quarter-end and 4.2 GW afterward, keeping it on track for more than 8 GW of active power by 2030. CRWV also expects more than 1.85 GW of active power by year-end.

MSFT capitalizes on the momentum of the AI business and Copilot adoption, alongside the expansion of Azure cloud infrastructure. In July, Microsoft launched MAI-Cyber-1-Flash, its first cybersecurity-specialized AI model, alongside a new agentic security platform called Project Perception, with the company claiming the model — when combined with OpenAI's GPT-5.4 inside its MDASH vulnerability management harness — delivers 96% on the CyberGym benchmark at 50% of the cost of its current MDASH configuration. Multi-model flexibility, paired with continued access to OpenAI's frontier models under an IP arrangement extending to 2032, allows customers to optimize cost and performance while keeping Microsoft central to their AI infrastructure decisions.

SKM’s Price Performance, Valuation and Estimates

Shares of SKM have gained 33.1% in the past month against the Zacks Wireless Non-US industry’s fall of 1%.

Image Source: Zacks Investment Research

In terms of Price/Book, SKM’s shares are trading at 1.62X, lower than the industry’s 2.34X.

Image Source: Zacks Investment Research

The Zacks Consensus Estimate for SKM’s earnings for the current year has been revised downward over the past 60 days.

Image Source: Zacks Investment Research

SK Telecom currently carries a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Beyond Nvidia: AI's Second Wave Is Here

The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research