"SKT 2.0 Era" SK Telecom to Split Telecom and Investment Units... Proposes 5-for-1 Stock Split (Update)

[Asia Economy Reporter Seulgina Jo] "The SKT 2.0 era begins." SK Telecom has finalized its corporate split into a telecommunications business company and an investment company after 37 years since its founding. Going forward, the surviving SK Telecom company will focus on new businesses such as artificial intelligence (AI) based on telecommunications, while the newly established investment company will actively pursue domestic and international investments centered on semiconductors. The split ratio was decided based on net asset book value as 0.6073625 for the surviving company and 0.3926375 for the new company.

On the morning of the 10th, SK Telecom held a board meeting and resolved to split SK Telecom into SK Telecom and SKT New Investment (tentative name) through a spin-off. After an extraordinary general meeting of shareholders on October 12, the two companies will officially launch on November 1 (the split date) as the surviving company and the new company. Once the stock trading suspension period (October 26 to November 26) ends, the surviving company will undergo a name change listing and the new company will be relisted on November 29. The surviving company plans to retain the name ‘SK Telecom,’ while the new company’s name will be finalized before the extraordinary general meeting.

◆"Transforming into a National Stock" Face Value Split to be Pursued Simultaneously with Corporate Split

SK Telecom is pursuing a face value split simultaneously with the spin-off to enhance shareholders’ investment accessibility and corporate value. Through the face value split, one common share with a current face value of 500 won will become five shares with a face value of 100 won each. The total number of SK Telecom issued shares will increase from the current 72,060,143 shares to 360,307,150 shares, which will be divided into the surviving company and the new company according to the approximately 6 to 4 split ratio from the spin-off.

SK Telecom expects the face value split to significantly increase the proportion of small shareholders in the shareholder composition. The goal is to transform into a ‘national stock’ that any investor recognizing the value of various services provided by SK Telecom and its subsidiaries can easily access. The effects of the spin-off and face value split will be reflected in the Korea Exchange starting from the change listing and relisting date on November 29.

Assuming a shareholder holds 20 shares of SK Telecom, after the face value split, they will have 100 shares, five times more, and according to the approximately 6 to 4 split ratio, they will receive 60 shares of the surviving company and 39 shares of the new company. Fractional shares below one share will be converted to cash based on the closing price on November 29.

◆Investment Company to Actively Pursue Semiconductor M&A

The surviving company and the new company each have a vision to fully re-evaluate corporate value and enhance shareholder value by accelerating growth in AI and digital infrastructure business and semiconductor and ICT investment areas, respectively.

The new company will first actively pursue mergers and acquisitions (M&A) in the global semiconductor market. By investing in innovative technologies including future-oriented semiconductors with high growth potential, it plans to build a semiconductor ecosystem together with SK Hynix.

Additionally, it will enhance business competitiveness through domestic and international investments in various ICT sectors such as security (ADT Caps), commerce (11st), and mobility (T map Mobility), and will also play a role in preparing future growth engines by promoting IPOs (initial public offerings) of subsidiaries.

The surviving company aims to continue growth in wired and wireless communications and home media fields based on its leadership in 5G, transforming into an ‘AI and Digital Infra company.’ It plans to advance new services such as subscriptions and the Metaverse using AI technology and actively expand related businesses. Furthermore, it intends to increase investments in data centers and mobile edge computing (MEC) cloud businesses to establish them as solid future revenue sources.

◆Review of Subsidiary Organization

Among existing SK Telecom subsidiaries, most new business areas such as One Store, Wave, SK Hynix, 11st, ADT Caps, and T map Mobility will be placed under the investment company.

SKT New Investment (new company) will organize a total of 16 companies. The target companies include SK Hynix, ADT Caps, 11st, T map Mobility, One Store, Content Wave, Dreamus Company, SK Planet, FSK L&S, Incross, NanoEntek, SparkPlus, SK Telecom CST1, SK Telecom TMT Investment, ID Quantique, and Techmaker.

SK Telecom (surviving company) will include SK Broadband, SK Telink, PS&Marketing, F&U Credit Information, Service Top, Service Ace, and SK O&S, which can create synergy in wired and wireless communication businesses. The surviving company will retain all equity stakes in companies it previously invested in, excluding the 16 companies assigned to the new company.

CEO Jung-ho Park stated, “The split into SK Telecom and SKT New Investment Company marks the opening of the SKT 2.0 era that opens a greater future,” and added, “We will contribute to the development of the Korean ICT ecosystem through the company’s future growth.”

The CEOs who will lead each company will be officially announced soon. Industry insiders expect that after the spin-off, CEO Park, who concurrently serves as vice chairman of SK Hynix, will lead the investment company, while Yoo Sang-young, head of the mobile network operator (MNO) business, will lead the business company.

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