Telecom stocks ride AI data center wave — SK Telecom leads the pack

As investment in AI data centers accelerates, the data center businesses of South Korea's major telecom carriers are emerging as a new growth engine. How many data centers each company secures — and how many customers it attracts — is expected to shape future earnings. SK Telecom has drawn the most attention from analysts as the top pick in the sector, given its aggressive push to expand large-scale AI data centers alongside related services.

SK Telecom is the most active of the three domestic carriers in expanding its AI data center business, according to industry sources Friday. The company is moving beyond simply building new data centers to lease space and power to AI firms and cloud providers — it is also expanding into GPU rental services for AI computing workloads. The core strategy is to grow revenue from facility leases and GPU usage fees by adding data center capacity and locking in customers. Mirae Asset Securities named SK Telecom the biggest beneficiary of the data center scale-up trend, citing this business expansion.

SK Telecom currently operates eight data centers with a combined capacity of 143 megawatts. It plans to add facilities in Ulsan and Guro, more than doubling total capacity to 318 MW by 2030. The Ulsan data center is set to begin operation at 41 MW in 2027 and expand to 103 MW by 2029, while the Guro facility will be built out to 75 MW by 2030.

Earnings are expected to track the data center rollout. Mirae Asset Securities projected SK Telecom's data center operations revenue would rise 63.1 percent, from 412 billion won ($298 million) this year to 672.1 billion won next year, while operating profit would surge 128.7 percent from 82.4 billion won to 188.5 billion won. The Ulsan data center, which has secured a long-term contract with a global cloud provider, is expected to generate revenue faster than other new facilities.

SK Telecom is also expanding its GPU-as-a-Service offering — renting GPUs to corporate clients — as well as its colocation business, which leases data center space, power and cooling infrastructure. Over the longer term, the company has set a target of reaching 15 gigawatts of installed data center capacity by 2035, combining data center operations with AI computing services to diversify its revenue base.

"The company can leverage its existing data center operating capabilities and customer base for large-scale new AI data center development," said Choi Yu-jin, an analyst at Mirae Asset Securities. "Since AI data centers require large-scale power supply before servers and GPUs can even be procured, development capabilities — including power infrastructure — will themselves become a core competitive advantage."

KT Corp takes a different approach, securing customers first before expanding capacity. The company plans to grow its current data center capacity of 152 MW more than sevenfold to approximately 1.1 GW by 2031, building new facilities sequentially in Bucheon, Gaebong, Gunsan, Yongin and Ansan. KT is understood to have already secured a customer pipeline — prospective demand from clients likely to use the new centers — equivalent to roughly 80 percent of the planned 1 GW addition.

Revenue from KT's new data centers is expected to begin flowing in earnest from 2028. Operating profit from the data center business is projected to grow from 129.3 billion won in 2029 to 190.7 billion won in 2030 and 436.8 billion won in 2031. As customers begin using the facilities and utilization rates climb, profitability is expected to improve accordingly.

"KT is expanding capacity based on actual demand, which limits the risk of overbuilding," Choi said. "We understand that pipeline equivalent to roughly 80 percent of the new 1 GW capacity has already been secured."

For LG Uplus, the key challenge is converting its Paju AI data center into tangible revenue and profit. The company plans to expand its current data center capacity of 165 MW to 400 MW by 2030 — roughly 2.4 times its current size — with the Paju AI Data Center, or AIDC, at the center of that expansion.

As the Paju AIDC's utilization rate rises, operating profit growth is expected to accelerate. Mirae Asset Securities forecast LG Uplus's data center revenue would grow 20.1 percent to 759.6 billion won in 2028, with operating profit rising 36.4 percent to 95 billion won. Because data centers carry heavy upfront construction and equipment costs, higher utilization rates translate into a larger share of incremental revenue flowing through to profit.

"The Paju AIDC will be a key driver of profitability improvement in the data center business," Choi said. "After 2028, when utilization at the new center stabilizes, we expect not only top-line growth but also meaningful margin improvement."