KB Securities: SK Telecom's AI data center must quadruple revenue by 2031 to justify its KRW 3 trillion valuation

[Financial News] Jun-sub Kim, an analyst at KB Securities, said on the 27th that SK Telecom's plan to establish a dedicated AI data center company, SK Horizon, and sell a 49% stake for KRW 308.11 billion will ultimately hinge on whether future earnings from the AI data center can support a revaluation of the company's worth.
SK Telecom will spin off the data center and submarine cable businesses of its subsidiary SK Broadband to create SK Horizon. It will attract a total of KRW 308.11 billion in external capital, including KRW 188.11 billion from the sale of existing shares and KRW 120 billion from new share issuance. After the investment is completed, SK Telecom will hold 51%, Kohlberg Kravis Roberts & Co. Inc. (KKR) will hold 29%, and the IMM Investment-Stonebridge consortium will hold 20%. SK Horizon will take over a total of 318 MW of existing and under-construction data center infrastructure.
Kim focused less on the size of the capital raise and more on whether the value recognized by the financial investor can be backed by future performance.
Assuming a typical target return of 10% to 13% for infrastructure funds, he estimated the required net operating income, or NOI, at KRW 790 billion to KRW 1.02 trillion. Applying an NOI margin of 60%, the revenue needed in 2031 would be KRW 1.3 trillion to KRW 1.7 trillion.
Converted into rent based on 265 MW of IT load, that works out to KRW 410,000 to KRW 540,000 per kW per month. Compared with the KRW 200,000 to KRW 300,000 charged by ordinary domestic data centers, that implies a premium of roughly 40% to 80%. The analysis suggests that expectations that AI data centers can command higher rents than conventional facilities were already reflected in the transaction price.
The point at which performance can be verified is expected in 2028. Of the total 318 MW, the first 41 MW phase of the Ulsan AI data center is scheduled to begin operations in November 2027. Including organic growth in the existing business, SK Horizon's revenue is projected to rise to KRW 570 billion to KRW 630 billion in 2028.
Kim said, "Because of the nature of hyperscale colocation contracts, tenant disclosure is likely to be limited under NDAs," adding, "Rather than customer disclosure, the business value is more likely to be confirmed through utilization rates, rental fees and revenue." He also noted, "The point at which SK Horizon's value will be fully reflected in SK Telecom's share price will likely be around 2028, when full-year results from the Ulsan AI data center are confirmed."
[email protected] Kim Kyung-a Reporter