SK Telecom to Decide on 'Mobility Spin-off' This Afternoon... To Compete with 'AI Alliance' Kakao

[Asia Economy Reporter Seulgina Jo] SK Telecom is planning to spin off its mobility business. The goal is to grow into the largest comprehensive mobility company in Korea, covering everything from platform taxis based on the navigation app T map to artificial intelligence (AI) and autonomous driving, making it a cash cow for SK Telecom and the group.

According to industry sources on the 15th, SK Telecom will hold a board meeting this afternoon to discuss the establishment of a mobility subsidiary. SK Telecom launched a mobility business unit with about 250 employees through an organizational restructuring last year and has been exploring commercialization plans. This spin-off will be carried out as a physical division in which SK Telecom owns all the issued shares of the newly established mobility corporation. SK Telecom will hold 100% of the shares of the new company.

◆T map as a Comprehensive Mobility Platform

The move is seen as a predictable step in the industry. SK Telecom CEO Jung-ho Park expressed his commitment to the mobility business at the Consumer Electronics Show (CES) held in the U.S. last year, stating, "Mobility will undergo innovative changes in the 5G era." In the same year, SK Telecom opened the door to overseas expansion by establishing a joint venture with Grab, a mobility sharing service company. Mobility was chosen as the core new business to nurture at a time when the mobile communication market has practically reached saturation.

At the center of this decision is the powerful content of T map, which holds a 70% market share in the domestic market. T map is the largest mobile navigation service in Korea, with 18.5 million subscribers and nearly 12.5 million monthly users. However, despite its high market share, it has consistently been evaluated that the navigation app service alone does not generate significant profits.

SK Telecom is interpreted to have judged that it can not only foster new businesses based on the vast data accumulated in T map and AI technology but also increase profits. T map has evolved into a comprehensive mobility platform by integrating the AI voice assistant NUGU into navigation and adding functions such as taxi calls, parking, restaurant searches, and tourist information. This spin-off is expected to be a new turning point that accelerates this evolution.

In the future, SK Telecom plans to introduce various linked services to create synergy with existing businesses such as shopping (11st), OTT (Wavve), and music (Flo). When autonomous vehicles become common, the importance of such services and platforms will inevitably increase. The 'integrated in-vehicle infotainment' system developed in-house is also interpreted as part of this roadmap. Recently, as BMW, Jaguar Land Rover, and others have decided to equip SK Telecom's integrated infotainment in new cars launched in Korea, B2B transactions centered on T map are expected to accelerate.

Currently, SK Telecom is reportedly negotiating with Uber, the world's largest ride-sharing company, for an investment of about 100 billion KRW in the new corporation, making Uber the second-largest shareholder. The industry expects that by combining SK Telecom's T map big data and technology with Uber's ride-hailing service know-how, SK Telecom can gain an advantage in the domestic taxi business, where it has lagged behind Kakao.

◆Can SK Telecom Surpass Kakao, the 'AI Alliance'? Mobility Competition Inevitable

As SK Telecom officially enters the mobility market, significant changes are expected in the domestic mobility industry, which has been dominated by Kakao Mobility. Kakao spun off its mobility business early as Kakao Mobility, securing the related market and successfully monetizing services centered on taxis. Aside from Kakao, most domestic mobility companies are startups.

The industry is also highly interested in what kind of relationship SK Telecom will have with Kakao, its key partner in ultra-collaboration and AI alliance, in the mobility sector. Although SK Telecom and Kakao established a strategic partnership last year by exchanging shares worth 300 billion KRW, they have maintained a subtle competitive relationship in the mobility field for a long time.

Kakao Mobility, spun off from Kakao, is a strong competitor overlapping with most services provided by T map, including Kakao Navi, Kakao Taxi, and parking services. The two sides have competed since 2011 in navigation with T map and Kakao Navi, and later in taxi services with T map Taxi and Kakao Taxi. In navigation, T map has outpaced Kakao Navi with a strong monthly user base, but in the taxi sector, except for a brief increase in market share during conflicts between Kakao Mobility and the taxi industry, it has effectively lagged behind.

Moreover, attention is drawn to future moves as Uber, which was blocked by government regulations after entering Korea, has joined hands with SK Telecom.

However, the industry expects that SK Telecom and Kakao will initially cooperate to expand the ecosystem rather than engage in a zero-sum leadership competition in the mobility market. The earlier establishment of the AI alliance is also analyzed as part of this effort.

This content was produced with the assistance of AI translation services.