SKT Initiates 'Quarterly Dividends', Prepares for Transition to Intermediate Holding Company... Execution This Year

[Asia Economy reporters Seulgina Jo and Minyoung Cha] SK Telecom, the core of SK Group's governance restructuring, is going all out to enhance corporate value by introducing a 'quarterly dividend' system that pays dividends every three months. This is essentially part of the preparatory work for the transition to an intermediate holding company, which has a deadline this year. SK Telecom also officially confirmed its plan to implement the governance restructuring within the year.

◇ Establishment of Quarterly Dividends... Raising Corporate Value

On the morning of the 25th, at the regular shareholders' meeting held at T Tower in Euljiro, Jung-gu, Seoul, SK Telecom resolved to amend part of its articles of incorporation by deleting the 'interim dividend' and introducing quarterly dividends. Accordingly, SK Telecom will abandon the previous method of paying an additional interim dividend once a year around the end of June, which had been in place for the past 16 years, and will now pay dividends four times a year on a quarterly basis.

This move aims to enhance investment attractiveness and increase corporate value. It aligns with the actions that SK Telecom CEO Park Jung-ho has been pursuing, such as share buybacks and expanding stock options. Quarterly dividends, regarded as a shareholder-friendly policy, enable a steady cash flow, making them an attractive option for dividend investors. Unlike the existing system where stock prices sharply drop after the ex-dividend date, quarterly dividends reduce volatility.

CEO Park explained, "There has been an evaluation that quarterly dividends align with global standards," adding, "Predictability increases, and shareholder value is expected to be further enhanced." When asked about the total dividend amount, he responded, "There is no need to worry about dividends being lower than now."

In South Korea, only a few companies such as Samsung Electronics and POSCO have introduced quarterly dividends. Lee Seung-woong, a researcher at Ebest Investment & Securities, explained, "It signifies strengthening shareholder return policies," adding, "There are five companies in Korea that pay quarterly dividends, and the stock prices of these companies rose by an average of 31.3% in the year they started quarterly dividends."

◇ Transition to Intermediate Holding Company... Park Jung-ho: "Will Execute This Year"

The market views SK Telecom's introduction of quarterly dividends as a signal that the group's governance restructuring has begun in earnest. Previously, Samsung Electronics (2016) and Fila Korea (2019) also introduced quarterly dividends during the process of highlighting or pursuing holding company transitions.

In SK Telecom's case, it appears that they judged it necessary to enhance dividend attractiveness to appeal to shareholders regarding the corporate value of the business company when splitting into an intermediate holding company and a telecommunications-focused business company. This is why it is seen as preparatory work for the imminent transition to an intermediate holding company. Choi Nam-gon, a researcher at Yuanta Securities, analyzed, "By implementing quarterly dividends in the telecommunications business company after the split, they aim to stabilize the stock price."

The agenda related to SK Telecom's transition to an intermediate holding company was not included in this day's shareholders' meeting. SK Telecom faces the task of completing the transition to an intermediate holding company within the year due to the enforcement of the Fair Trade Act next year, but a concrete plan has not yet been revealed. CEO Park confirmed, "I will definitely execute the governance restructuring this year so that shareholders receive the greatest benefits." He added, "It is not in the first half of the year, but I will explain separately as soon as it is concretized."

The industry expects that if SK Telecom transitions to an intermediate holding company, it will likely split by spin-off into an investment company and a business company specializing in telecommunications. The investment company would have subsidiaries such as SK Hynix and 11st, accelerating growth in new businesses.

SK Telecom is also accelerating the initial public offerings (IPOs) of its new business subsidiaries. Following One Store this year, ADT Caps in 2023, SK Broadband, and Wavve are lined up for IPOs. Recently, SK Telecom's entry into the bidding for eBay Korea is also seen as a move to secure competitiveness for its commerce subsidiary 11st and to gain proper recognition of corporate value in the market. The securities industry expects the total corporate value of these new business subsidiaries to exceed 20 trillion won.

Meanwhile, at this shareholders' meeting, SK Telecom approved the reappointment of Yoo Sang-young as an inside director and head of the MNO business, the reappointment of Professor Yoon Young-min from Korea University's Department of Media as an outside director, and his appointment to the audit committee.

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