SKT Surpasses Telecom Companies After 37 Years... Emphasizes "Enhancing Shareholder Value"

The Surviving Company is a Telecommunications and AI Business Company
The Newly Established Company is an ICT Investment Specialist
Denies Merger Rumors with SK Group's Intermediate Holding Company
CEO Park Jung-ho Explains the Meaning of the Split at Town Hall Meeting

On the 14th, SK Telecom announced that it will proceed with a spin-off into the surviving company, 'AI & Digital Infrastructure Company,' and the newly established company, 'ICT Investment Specialist Company.' The photo shows Park Jung-ho, CEO of SK Telecom, speaking at the regular shareholders' meeting in March. Photo by Park Jung-ho

[Asia Economy Reporter Cha Min-young] SK Telecom, which has solidified its position as the top telecommunications company, is redefining its business after 37 years since its establishment in 1984 and is moving forward with a corporate split. The company name will also be changed.

On the 14th, SK Telecom announced that it will proceed with a spin-off into the surviving company, 'AI & Digital Infrastructure Company,' and the newly established company, 'ICT Investment Specialist Company.' The company explained that a spin-off is considered a shareholder-friendly method in the industry.

The purpose of this spin-off is to have telecommunications, semiconductors, and New ICT assets fully evaluated by the market to accelerate future growth and enhance shareholder value. By separating telecommunications and new growth areas, each sector will have a management structure and investment foundation suited to its field. The company plans to expand semiconductor and New ICT businesses and provide shareholders with investment options in both telecommunications and new growth businesses.

For example, SK Hynix, a subsidiary of SK Telecom, has a market capitalization reaching 100 trillion won and ranks as the second-largest KOSPI-listed company in South Korea by market cap. As of February this year, SK Telecom’s 5G subscribers numbered approximately 6.35 million (about 46.5% market share), firmly maintaining its leadership position. The New ICT sector (media, security, commerce) subsidiaries have also grown rapidly, accounting for 24% of SK Telecom’s total operating profit in 2020. Initial public offerings (IPOs) of subsidiaries such as One Store and ADT Caps are also imminent.

The surviving company, AI & Digital Infrastructure Company, plans to expand AI and digital new businesses based on its 5G leadership, with subsidiaries including SK Broadband. Representative new businesses include cloud, data centers, and subscription services, with AI technology planned to be applied across all ICT areas. The surviving company will generate future profits in promising 5G industries based on stable cash flow and continue investing in innovative technologies such as AI and digital infrastructure.

The newly established ICT Investment Specialist Company plans to actively invest in semiconductor-related companies domestically and internationally. More active investments are expected compared to past investments such as SK Hynix’s investment in Kioxia (formerly Toshiba Memory) and the acquisition of Intel’s NAND business unit. Additionally, the company will promote the listing of New ICT subsidiaries to enhance their corporate value and create a virtuous cycle of ‘profit generation and reinvestment.’ Subsidiaries such as ADT Caps, 11st, and T map Mobility aim to become life platform companies providing convenience across daily life.

Regarding rumors about a merger between the newly established company and SK Inc., SK Telecom stated that “there are no plans for a merger.” Reflecting shareholders’ concerns about a merger between the intermediate holding company and SK Inc., the company intends not to merge for the time being. SK Telecom will continue to actively communicate with shareholders.

As expectations for the split rise, securities firms are raising SK Telecom’s target stock price one after another, and there are forecasts that the combined value of the surviving and newly established companies after the split will reach about 30 trillion won. This is approximately 8 trillion won higher than SK Telecom’s market capitalization of about 22 trillion won as of the end of March.

SK Telecom plans to complete the split within the year after going through all necessary procedures such as board approval and shareholder meetings. Along with this, a new company name reflecting future-oriented corporate value is also being prepared. SK Telecom CEO Park Jung-ho held an online town hall event immediately after the disclosure to actively communicate with employees and explain in detail the purpose of the split and the company’s vision.

At this event, CEO Park Jung-ho emphasized, “It is time to have the assets of SK Telecom, which have been well nurtured through the efforts of our members, fully evaluated and to move toward a better future,” and added, “Even after the split, let’s create companies that continue to grow according to each company’s goals.”

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