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SK Broadband Issuer Flash — Q2 2026 Results

Issuer: Sk Broadband | Document: Issuer Flash | Date: 2026-08-28 | Event: Q2 2026 Results

Report date: 2026-08-28 Event date: 2026-08-05 Event title: Q2 2026 Results

Flash Conclusion

SK Broadband's Q2 2026 disclosure is supportive of the existing credit view. Revenue increased 3.6% year on year to KRW1,160.3bn and operating income increased 44.3% to KRW132.5bn. EBITDA rose to KRW374.7bn, lifting the reported EBITDA margin to 32.3% from 29.9% a year earlier. The results show that the issuer's fixed-line platform continues to generate resilient earnings despite a mature pay-TV market, and that the Q1 2026 profit recovery was not confined to a single quarter.

The disclosure also provides more direct issuer-level liquidity information than the Q1 release. On an SK Broadband consolidated basis at 30 June 2026, cash and cash equivalents were KRW275.8bn and short-term financial instruments were KRW693.4bn, against KRW319.8bn of short-term borrowings and notes payable and KRW2,139.3bn of long-term borrowings and notes payable. The presentation does not provide a reported net-debt figure, debt-maturity profile, undrawn facilities, interest expense, dividends, capex, FX hedging or bond covenants. Accordingly, on this limited reported-balance comparison, the figures do not show an immediate short-term funding gap, but they do not establish maturity coverage, leverage headroom or issue-specific protection for HATELE bondholders.

The existing conclusion is maintained: SK Broadband remains a relatively defensive domestic telecom credit with improving operating momentum, while pay-TV maturity, capital needs for data-centre growth, financial-policy choices and the absence of verified contractual parent support remain the main constraints. SK Telecom's ownership is strategically supportive but is not evidence of a guarantee of SK Broadband debt.

Q2 Earnings and Operating Drivers

SK Telecom's 5 August investor briefing reports SK Broadband's consolidated results on a management-prepared, unaudited K-IFRS basis. Q2 operating revenue was KRW1,160.3bn, up KRW40.6bn from Q2 2025 and KRW10.5bn from Q1 2026. Operating income rose from KRW91.8bn in Q2 2025 and KRW116.6bn in Q1 2026 to KRW132.5bn. Net income was KRW87.0bn, compared with KRW57.5bn a year earlier and KRW70.5bn in Q1 2026. The corresponding EBITDA improvement to KRW374.7bn is important because it is a clearer indicator of recurring debt-service capacity than net income alone.

The operating mix remains mixed rather than uniformly improving. At the SK Telecom group fixed-business level, fixed-line revenue grew 3.8% year on year, supported by broadband subscriber net additions and a higher share of Giga subscribers. SK Broadband broadband subscribers increased 2.4% year on year to 7.348m. By contrast, pay-TV revenue fell 0.8%, while pay-TV subscribers declined 0.7% to 9.431m; the IPTV subscriber count was broadly stable at 6.754m but cable-TV subscribers fell 3.4% to 2.677m. Enterprise revenue declined 3.6% year on year.

The presentation attributes 3.6% SK Broadband revenue growth to continued data-centre-business growth. Group AI data-centre revenue rose 92.5% year on year, driven by greater utilisation and submarine-cable contribution. This is a positive indication of demand in adjacent infrastructure activities, but the issuer's disclosure does not allocate the group AI data-centre revenue, capex, contracted capacity, power costs or project funding specifically to SK Broadband. It should therefore not be treated as proof that future SK Broadband data-centre investment will be self-funding.

Balance-Sheet and Credit Read-Through

The new end-June figures improve visibility compared with the Q1 flash. Cash and cash equivalents plus short-term financial instruments totalled KRW969.2bn at 30 June 2026, exceeding the reported KRW319.8bn of short-term borrowings and notes payable. Total liabilities were KRW4,468.8bn and shareholders' equity was KRW2,971.5bn. Long-term borrowings and notes payable increased from KRW1,971.0bn at 31 March 2026 to KRW2,139.3bn at 30 June, while short-term borrowings were essentially stable. These movements warrant continued monitoring rather than a conclusion that leverage has fallen: other liabilities, intra-quarter working-capital movements and the relationship of reported liquidity to scheduled maturities are not provided.

The earnings improvement is constructive for the rating-agency monitoring framework cited in the May issuer summary. Korea Investors Service had identified EBITDA margin and net debt to EBITDA as relevant downside indicators, while the last directly cited net-debt measure was 1.6x at end-September 2025. Q2 EBITDA margin of 32.3% is above that historical margin context, but current net debt to EBITDA cannot be calculated reliably from this presentation because its definition of cash available for net debt and any additional debt items are not established here. Bondholders should therefore view the Q2 results as supporting operating resilience, not as confirmation that leverage has improved.

Nor does the Q2 disclosure change the structural treatment of the USD 4.875% 2028 notes and other HATELE obligations. The issuer remains strategically embedded in SK Telecom's fixed-line, pay-TV and infrastructure platform, which supports the incentive for parent support. However, the presentation does not provide the offering circular or confirm a parent guarantee, keepwell, negative pledge, cross-default, change-of-control protection, security, ranking, tax or redemption terms. These must be verified from bond-specific documentation before an issue-level investment conclusion.

Key metric Q2 2026 Q2 2025 YoY Q1 2026 Credit interpretation
Operating revenue KRW1,160.3bn KRW1,119.7bn +3.6% KRW1,149.8bn Earnings base expanded modestly despite mature services.
Operating income KRW132.5bn KRW91.8bn +44.3% KRW116.6bn Profitability improved in both comparisons.
EBITDA / margin KRW374.7bn / 32.3% KRW334.2bn / 29.9% +12.1% / +2.4pp KRW359.8bn / 31.3% Supports operating cash-generation capacity, but not a full leverage conclusion.
Cash plus short-term financial instruments KRW969.2bn Not comparable from this release — KRW705.5bn Provides additional liquidity visibility, subject to cash availability and maturity analysis.
Short- and long-term borrowings and notes payable KRW319.8bn / KRW2,139.3bn Not comparable from this release — KRW319.7bn / KRW1,971.0bn Long-term borrowings increased quarter on quarter; net debt and maturity profile remain unverified.

Points to Look at Next

The next review should confirm whether the stronger operating profit converts into stable free cash flow after capex and any dividends. The relevant evidence is SK Broadband's own regulatory filing or detailed financial statements, including a debt-maturity schedule, interest expense, cash restrictions, committed facilities, FX debt and hedging. It is also important to separate the contribution and investment burden of SK Broadband data centres from the wider SK Telecom group AI data-centre strategy.

Operationally, broadband subscriber growth and the stabilisation of IPTV provide the strongest support in this release. The continued cable-TV decline, pay-TV revenue pressure and lower group fixed-business enterprise revenue remain offsets. Future results should establish whether data-centre growth can compensate for these pressures without increasing leverage or reducing financial flexibility.

Finally, an issue-specific review remains incomplete until the USD 2028 offering circular and any parent-support documents are obtained. In the absence of those documents, strategic ownership and domestic rating support should remain analytical factors, not assumptions about contractual recourse.

Unverified / Pending

Sources