SK Telecom spins off AI data center unit with $2.2B investment

The spin-off of SK Horizon allows SK Telecom to isolate capital-intensive infrastructure costs while attracting specialized private equity funding for rapid scaling. For the streaming ecosystem, this expansion addresses the critical bottleneck of compute power and low-latency connectivity required for AI-driven personalization and high-resolution delivery across Asia. By integrating submarine cables with massive data center capacity, the entity controls both the processing and the transit of regional data traffic. Watch for the finalization of the spin-off in Q1 2027 and subsequent updates on the 5 GW interim capacity milestone set for 2029.

SK Telecom's decision to spin off its data center and submarine cable assets into SK Horizon places the company within a broader wave of telecom operators restructuring to capture AI infrastructure demand. In South Korea, KT Corp announced in March 2025 that it would invest 7 trillion won in AI and cloud infrastructure through 2028, including new hyperscale data centers in the Seoul metropolitan area. Meanwhile, SK Broadband, the fixed-line subsidiary of SK Telecom, reported in its Q2 2025 earnings that enterprise data center revenue grew 18% year over year, underscoring the domestic demand signal that motivated the spin-off. The KKR-led consortium, which includes IMM Investment and Stonebridge, reflects a pattern of global private equity firms targeting Asian digital infrastructure as a distinct asset class.

The regulatory and financing environment in South Korea has shifted to accommodate large-scale data center buildouts. South Korea's Ministry of Science and ICT designated AI infrastructure as a national strategic investment category in January 2025, enabling tax incentives and streamlined permitting for facilities exceeding 100 MW. KKR itself has been active in the region's data center market: the firm committed $1.5 billion to a Singapore-based data center platform in November 2024, signaling its thesis that Asia-Pacific compute demand will outstrip supply through the end of the decade. For SK Horizon, the $2.2 billion injection provides a runway toward its 5 GW interim milestone by 2029, though analysts note that securing power supply agreements in South Korea's constrained grid remains the primary execution risk.

On the technical side, SK Horizon's combined data center and submarine cable portfolio positions it to serve both hyperscaler and streaming workloads across Northeast Asia. The company's existing submarine cable assets include stakes in the Asia Pacific Gateway and the Korea-Japan Cable Network, which together carry an estimated 40% of trans-Pacific data traffic originating from Korean networks. Independent benchmarking from Uptime Institute's 2025 Global Data Center Survey found that facilities in South Korea achieved an average PUE of 1.38, below the global average of 1.55, partly due to the country's temperate climate and mature district cooling infrastructure. For streaming platforms expanding AI-driven encoding and personalization workloads in the region, SK Horizon's scale target of 15 GW by 2035 would represent one of the largest single-operator capacity expansions outside the United States and China, a trend currently facing .