SK Telecom Pursues Corporate Split, Anticipates Strong Q1 Performance Amid 5G Subscriber Growth

[Asia Economy Reporter Eunmo Koo] SK Telecom is expected to achieve solid first-quarter results, driven by an increase in 5G subscribers, as it embarks on a corporate split for the first time in 37 years.

Continued Growth in 5G Subscribers... Strong First-Quarter Performance Expected

According to financial information firm FnGuide on the 17th, SK Telecom's operating profit for the first quarter of this year is estimated to be 345.7 billion KRW, a 14.46% increase compared to the same period last year. Revenue for the same period is also expected to rise by 7.36% to 4.7778 trillion KRW.

Shin Eun-jung, a researcher at DB Financial Investment, analyzed, “Mobile phone revenue is expected to grow compared to the same period last year due to the steady increase in 5G subscribers following the successive releases of 5G flagship models such as the iPhone 12 and Galaxy S21 in the fourth quarter of last year.” She added, “Media is also expected to grow by 15.6% year-on-year due to the merger effect with T-Broad and continued growth in IPTV, and excluding a one-time labor cost increase of 40 billion KRW, results are expected to exceed consensus.”

Oh Tae-wan, a researcher at Korea Investment & Securities, also commented, “Despite a one-time labor cost (incentive) expenditure of 40 billion KRW, the average revenue per user (ARPU) continues to rise due to the increase in 5G subscribers,” and evaluated, “With marketing competition among telecom companies easing, the fact that SK Telecom has been increasing its cumulative 5G market share for 10 consecutive months based on brand power is also positive.”

SKT Splits for the First Time in 37 Years... The Continuing Company Focuses on AI New Business, the Newly Established Company Accelerates Semiconductor Investment

Earlier, on the 14th, SK Telecom announced a governance restructuring plan centered on a spin-off into the continuing company, the 'Artificial Intelligence (AI) & Digital Infrastructure Company,' and the newly established company, the 'ICT Investment Specialist Company.' Through this, SK Telecom aims to separate telecommunications and new growth areas to establish management structures and investment bases suitable for each sector. This also signals a declaration to accelerate investments in semiconductors and new ICT businesses.

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 and SK Inc. later absorbs it through a merger, SK Hynix's status will change to a subsidiary, lifting the shackles that have hindered aggressive group-level investments and mergers & acquisitions (M&A).

The investment company, set to launch with about 100 employees by the end of this year, will be responsible for expanding non-telecom new businesses such as semiconductors and mobility. Existing SK Telecom subsidiaries like SK Hynix, 11st, ADT Caps, and T Map Mobility are expected to fall under its umbrella. The continuing company, emphasizing AI and digital infrastructure, will oversee SK Broadband and focus on existing telecommunications and IPTV businesses. New businesses include cloud, data centers, and AI-based subscription services.

While the names of the two split companies have not yet been decided, specific subsidiary allocations and decisions on treasury stock cancellations will be finalized before June. Subsequently, shareholder meetings are expected around August to September, followed by the split and listing in November.

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