[Comprehensive] SKT Park Jung-ho "Governance Restructuring Must Be Implemented This Year... Subsidiary IPO to Be Detailed in April"

Park Jung-ho, CEO of SK Telecom, is answering shareholders' questions at the regular general meeting of shareholders held at the Euljiro headquarters in Seoul on the morning of the 25th. Screenshot of the online general meeting of shareholders.

[Asia Economy Reporters Seulgina Jo and Minyoung Cha] "This year, we will definitely implement the governance restructuring."

Park Jung-ho, CEO of SK Telecom, officially confirmed that this year is effectively the 'deadline' for concretizing and executing the transition to an intermediate holding company. Following the successful ultra-cooperation with Amazon, Park CEO also entered the bidding for the acquisition of eBay Korea and declared a 'commerce revolution' centered on subsidiaries such as 11st in the second half of this year.

◆Transition to Intermediate Holding Company to be Concretized Soon... Park Jung-ho: "Will Definitely Execute This Year"

At the SK Telecom regular shareholders' meeting held on the morning of the 25th at T Tower in Euljiro, Seoul, Park CEO stated, "We will definitely implement governance restructuring this year to ensure that shareholders receive the greatest benefits."

He said, "I have thought that restructuring is necessary because the current portfolio, including subsidiaries, is not sufficiently covered," adding, "I have been contemplating this for a long time and believe it is feasible to execute this year." He further added, "Not in the first half, but I will explain separately as soon as it is concretized."

SK Telecom's deletion of the interim dividend and introduction of quarterly dividends on the same day is also interpreted as part of the preparatory work for the transition to an intermediate holding company. Quarterly dividends, regarded as a shareholder-friendly policy, enable a steady cash flow and are considered an attractive card for dividend investors. Park CEO explained, "There was an evaluation that quarterly dividends align with global standards," adding, "Predictability increases and shareholder value is expected to be further enhanced."

The market also 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. The industry views that if SK Telecom transitions to an intermediate holding company, a spin-off separating the investment company and the business company specializing in telecommunications is likely. The investment company would hold subsidiaries such as SK Hynix and 11st, accelerating new business growth.

SK Telecom faces the task of completing the transition to an intermediate holding company within this year due to the enforcement of the Fair Trade Act next year. Enhancing corporate value is essential for this. Park CEO emphasized, "I do not think the market value is sufficiently reflected in the stock price compared to the portfolio," adding, "We will definitely implement measures this year to fully capture the portfolio value."

◆"Heard a lot about selling 11st after Coupang's IPO..." Commerce Revolution Announced

The commerce revolution based on ultra-cooperation between Amazon and 11st is expected to begin in earnest in the second half of this year. Commerce is considered a core part of SK Telecom's non-telecom strategy along with media, security, and mobility.

Park CEO said, "The most frequent question after Coupang's IPO was to sell 11st," emphasizing the importance of countermeasures for mergers and alliances. He evaluated, "Coupang's 100 trillion won IPO on the US stock market is a positive signal for the commerce business and signifies the emergence of a strong competitor domestically." He continued, "SK Telecom has been steadily preparing cooperation with Amazon since last year," adding, "In the second half of this year, we will present a new experience of global products that Korean citizens have not had and bring about a commerce revolution."

11st, which holds about a 6% share of the domestic e-commerce market, has long been considered a sore spot for SK Telecom and has been continuously surrounded by sale rumors. However, Park CEO, who has advocated non-telecom strategies, has consistently drawn a line against selling 11st, focusing on the growth of the commerce sector and the potential for platform expansion linked to AI and other ICT competitiveness.

Park CEO expressed concern, saying, "Coupang is a competitor not only in commerce but also in media," and added, "(For SK Telecom) a convergent strategy is necessary." The market is also keenly watching whether SK Telecom will acquire eBay Korea. If SK Telecom acquires eBay Korea following ultra-cooperation with Amazon, 11st will instantly rise to the big three. When asked about the intention to acquire eBay Korea, he replied, "We need to participate in a portfolio with influence and a structure that is not binding to flexibly execute strategies," adding, "Since it is a matter of strategy, it is difficult to speak specifically."

◆"Will Transform into a New ICT, AI Company... Subsidiary IPO to be Concretized as Early as April"

On the same day, Park CEO repeatedly emphasized the clear growth of new business sectors such as commerce, media, and security since his inauguration, evaluating, "We are growing healthily as a new ICT portfolio company, not just a simple mobile communication infrastructure company."

He added, "The new business sector turned profitable in 2019 and recorded an operating profit of 320 billion won in 2020, accounting for 24% of the total consolidated operating profit, which is a significant change during my tenure." The core mobile network operator (MNO) also succeeded in a turnaround last year by securing 5.48 million 5G subscribers. The mobility sector, which was spun off as T map Mobility at the end of last year and promoted to the fifth business division, is preparing for Uber and taxi services next month.

Subsidiary IPOs will also accelerate. The listing roadmap is being concretized in line with the governance restructuring plan. Following One Store this year, ADT Caps is scheduled for next year, and SK Broadband and Wavve are lined up for 2023. The securities industry expects the total corporate value of these new business subsidiaries to exceed 20 trillion won.

Park CEO explained, "I think we should hurry IPOs when capital market liquidity is good," adding, "We will proceed with subsidiary IPOs as planned this year." He said, "One Store will be listed first, and Wavve will be the next to prepare," explaining, "(The plan) is expected to be concretized around April to May, coinciding with our governance announcement."

However, he added a caveat regarding 11st, saying, "More important than IPO is the merger and alliance part." Given the importance of convergence strategies such as ultra-cooperation with Amazon, he judged that strengthening competitiveness in the market is more important than preparing for listing.

SK Telecom also reaffirmed its policy to grow into an artificial intelligence (AI) platform company based on its powerful mobile communication infrastructure. Park CEO predicted, "SK Telecom will transform from the current MNO to an AI company," adding, "Following the mobile era, the AI era will open for 10 to 20 years." He mentioned, "AI must be at the forefront of all services," and said, "Watching Amazon's evolution gives us confidence. SK Telecom has more in its portfolio composition than Amazon and has the powerful strength of an MNO, so AI evolution will be better."

The shareholders' meeting was held simultaneously online and offline. Park CEO said, "We did not know last year that the pandemic would be so serious. It has already been a year since the spread of COVID-19," adding, "I am proud to have set a good precedent by holding the first online shareholders' meeting among domestic conglomerates last year." This year, about ten companies including Samsung Electronics and POSCO also held online shareholders' meetings. He added, "As promised in 2017, I promise a shareholders' meeting that lasts all day and feels like a party between shareholders and SK Telecom."

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