[Concall] SKT "Governance Restructuring Not Yet Decided... Taxi Service with Uber in April" (Update)

[Asia Economy Reporter Seulgina Jo] "We are keeping all possibilities open." SK Telecom confirmed that no decisions have been made yet regarding the transition to an intermediate holding company and related governance restructuring. They also indicated that if pursued, the goal would be to increase corporate value.

Yoon Poong-young, SK Telecom's Chief Financial Officer (CFO), stated during the 2020 Q4 earnings conference call on the afternoon of the 3rd, "No decisions have been made yet regarding governance restructuring, including the split," and added, "We will promptly communicate with the market once a decision is made."

CFO Yoon explained, "We have kept all possibilities open under the premise of enhancing shareholder value by recognizing the value of not only the MNO business but also new businesses, and have exchanged various opinions with stakeholders. If restructuring is pursued, it will be aimed at increasing corporate value with measures that satisfy shareholders."

Currently, SK Group's governance structure flows from the owner family → SK Inc. → SK Telecom → SK Hynix. SK Hynix is effectively a grandchild company of SK Inc. However, if SK Telecom becomes an intermediate holding company, SK Hynix's status will change to a subsidiary, and the shackles that have hindered aggressive group-level investments and mergers & acquisitions (M&A) will be lifted.

The transition to an intermediate holding company is likely to involve a spin-off of SK Telecom into a mobile telecommunications business and an investment company. Although the SK Telecom board approved a plan for a spin-off to become an intermediate holding company and aimed to pass it at the March regular shareholders' meeting, it is reported that the plan was scrapped. There is also mention of a governance structure where SK Telecom is physically split into an investment company and a business company, with the intermediate holding company (investment company) overseeing the business company, SK Hynix, SK Broadband, and others.

SK Telecom officially announced this intermediate holding company transition plan in 2018. However, there has been little progress over the past two years. The conditions surrounding group governance restructuring are also challenging. The amended Fair Trade Act passed by the National Assembly at the end of last year includes a provision raising the required ownership stake from 20% to 30% when a newly established holding company owns a subsidiary (listed company). In this case, SK Telecom would have to increase its stake in Hynix from the current 20.1% to 30%, which would inevitably require nearly 9 trillion KRW based on current stock prices. This is why this year is considered the deadline for SK Telecom's transition to an intermediate holding company.

During the conference call, CFO Yoon said regarding SK Telecom's dividend policy, "Last year, we announced a dividend policy that would be flexibly operated based on MNO performance and linked with subsidiaries such as Hynix," adding, "This basic stance will be maintained." He also noted, "I understand there is market expectation for interim dividends as Hynix's dividends increase."

The taxi service between T map Mobility, launched at the end of last year, and the global company Uber will officially start in April. Ha Hyung-il, head of SK Telecom's Corporate 2 Center, explained, "The taxi service with Uber will be launched in April," and added, "Services such as designated driver will be introduced gradually afterward." He mentioned, "Based on T map, we will grow focusing on five core areas and achieve a corporate value of 4.5 trillion KRW by 2025." He also hinted at expanding ultra-collaboration with Amazon, another key partner, beyond its subsidiary 11st, into various ICT fields.

Meanwhile, SK Telecom announced that it recorded consolidated sales of 18.6247 trillion KRW and operating profit of 1.3493 trillion KRW last year. Sales increased by 5% and operating profit by 21.8% compared to the previous year. Net profit during the same period rose 74.3% to 1.5005 trillion KRW, influenced by equity method gains from SK Hynix shares.

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