SK Telecom is moving to attract external investment to accelerate its artificial intelligence (AI) business. The goal is to secure funding to push forward the "AI Infra Super Highway" project that President Ryu Young-sang of SK Telecom released last year. Inside and outside the telecom industry, people are saying, "You can't change the head of a running horse," noting that SK Telecom's move to bring in external investment will bolster Ryu.
◇ Attracting external investment to secure resources for the AI business
According to ChosunBiz reporting on the 24th, SK Telecom is set to seek external investment to push forward its AI project. A source familiar with SK Telecom said, "SK Telecom is preparing to send out a request for proposal (RFP) to attract external investment," adding, "The size of the investment and the RFP recipients are being kept confidential internally." In response, SK Telecom said it is "reviewing the attraction of external investment for the AI project."
The reason SK Telecom has moved to seek external investment is the growing need to secure firepower to advance its AI business. In the second quarter, SK Telecom's cash and cash equivalents (including short-term financial products, separate basis) stood at 875.4 billion won, down 38.2% from the first quarter's 1.4185 trillion won. The decline stemmed from the fallout of a hacking incident that surfaced in April. If SK Telecom mobilizes all its subsidiaries, the cash that can be immediately secured amounts to 2.5265 trillion won.
According to the industry, just the cost to build an AI data center planned for Ulsan in partnership with Amazon Web Services (AWS) is 3.4 trillion won, prompting talk that cost coverage is needed. However, SK Telecom drew a line, saying, "We are not seeking external investment because of the AI data center we are building with AWS in Ulsan."
◇ Role of "President Ryu Young-sang," the key figure in the SK hynix acquisition, comes to the fore
The industry also raises the possibility that SK Telecom could attract external financial investors (FI) and move into strategic mergers and acquisitions (M&A) of AI corporations. In 2020, when acquiring Tbroad, SK Telecom raised about 400 billion won from players including Mirae Asset Daewoo. An industry source said, "There is a high likelihood the company will broaden options with external investors with an eye to acquiring AI corporations or making strategic equity investments."
Inside and outside SK Group, there is talk that President Ryu Young-sang's role will grow if SK Telecom attracts external investment and pursues AI corporation acquisitions. Ryu was the key figure who oversaw the working-level side of the 2011 SK hynix acquisition project. Since joining SK Telecom in 2000, Ryu has led new businesses and M&A at SK C&C (now SK AX), among others, and has extensive experience raising large external funds. A person in the investment industry said, "There is a spreading view within SK Group that Ryu's track record is needed in a phase of AI corporation acquisitions and large-scale external fundraising."
This trend is also detectable at the "SK AI Summit" on the 3rd of next month. Ryu is scheduled to deliver a keynote speech on "Next in AI infrastructure strategy: AI Infra Super Highway 2.0." This is a follow-up roadmap to "AI Infra Super Highway 1.0," released in Nov. last year, and signals an SK Group-level drive in AI infrastructure. SK Group Chairman Chey Tae-won will also give a presentation the same day on future AI infrastructure. In the industry, some say, "The fact that Chairman Chey and Ryu both focus on 'AI infrastructure' is a kind of signal," adding, "The success or failure of attracting external investment is the last piece of the retention puzzle." A telecom industry source said, "The timing of disclosing specifics on external fundraising and the messages at the SK AI Summit are expected to be a turning point for the future AI business and governance."
Meanwhile, on the 1st of this month, Ryu met with OpenAI Chief Executive Officer Sam Altman, who visited Korea, and discussed cooperation between the two companies in the AI business. At the end of this month, he plans to carry out an organizational reshuffle to integrate in-house AI teams into an AI company-in-company (CIC) system. Ryu also led the "adot" project, SK Telecom's AI service that surpassed 10 million monthly active users (MAU) last month.