[SKT Corporate Split] Semiconductor M&A Expected to Continue... SKT-Initiated 'Deep Change' Begins in Earnest

SK Telecom Splits into Telecom Operator and Investment Company

[Asia Economy reporters Seol Seulgina and Choi Daeyeol] "The dawn of the SKT 2.0 era." After 37 years since its establishment, SK Telecom’s move to split into a telecommunications company and an investment company is the core of the group’s governance restructuring that will determine its future, closely linked to creating future growth engines.

In particular, this is interpreted as a declaration to fully ramp up semiconductor investments, which have grown into a key cash cow replacing the subsidiary SK Hynix, which faces many restrictions on business expansion due to governance. By establishing growth structures and investment foundations suitable for each sector centered on telecommunications and semiconductors, SK Telecom also expresses its determination to be properly recognized for its corporate value.

This aligns with SK Group Chairman Chey Tae-won’s management philosophy of ‘Deep Change,’ which aims to lead fundamental transformation beyond merely generating profits in its own domain.

◇SK Telecom splits into telecom and investment companies, semiconductor M&A to follow

On the 10th, SK Telecom’s board of directors approved a spin-off, whereby the current SK Telecom will be reborn as a telecommunications company (the surviving company) focused on artificial intelligence (AI) and digital infrastructure, and a newly established investment company (the new company) centered on semiconductors and ICT innovation technologies.

Accordingly, the new company, tentatively named ‘SKT New Investment,’ will have subsidiaries such as SK Hynix and is expected to actively pursue domestic and international mergers and acquisitions (M&A) first. SK Telecom stated, "SKT New Investment will invest in innovative technologies, including future-oriented semiconductors with high growth potential, and build a semiconductor ecosystem together with SK Hynix."

Even after SK Telecom’s corporate split, SK Hynix remains a grandchild company under the holding company, retaining investment constraints. However, with SKT New Investment taking the forefront, group-level investments and M&A have become possible. At the center of future moves is Park Jung-ho, SK Telecom CEO and ‘M&A strategist’ who led the acquisition of the former Hynix during the semiconductor crisis. Park, who also serves as vice chairman of SK Hynix, is expected to lead the new company. He recently stated publicly, "We need to invest more in foundries," signaling plans to expand semiconductor facilities.

The market believes that the spark for merging SK Hynix into SK Inc. from a long-term perspective has not been extinguished. A securities industry official said, "To minimize market uncertainties ahead of IPOs of subsidiaries like One Store, the current governance structure will be maintained for at least a few years," but added, "In the long run, they will likely seek to remove investment restrictions on SK Hynix through a merger between the new company and SK Inc."

The listing of new ICT subsidiaries under the new company is also expected to gain momentum. The strategy is to create a virtuous cycle of ‘profit generation and reinvestment’ starting with successful IPOs. Most new business areas, including One Store, Wavve, 11st, ADT Caps, and T map Mobility, which are subsidiaries of SK Telecom preparing for IPOs, will be placed under the investment company.

◇Maximizing shareholder value... writing a ‘financial story’

Another goal of this spin-off is to maximize shareholder value. SK Telecom envisions accelerating growth in both telecommunications and new businesses to be fully revalued for corporate value and enhance shareholder value. This aims to overcome the reversal phenomenon where subsidiary SK Hynix’s market capitalization far exceeds SK Telecom’s.

The board’s simultaneous approval of a stock split proposal on the same day is in the same context. A stock split, which increases the total number of shares by reducing the par value of existing shares without increasing capital, is considered a positive factor that boosts trading volume, stock price, and market capitalization in the stock market. SK Telecom aims to transform into a ‘national stock’ accessible to anyone by lowering entry barriers and increasing the proportion of small shareholders.

This also connects with Chairman Chey’s emphasized ‘financial story.’ The financial story is a management strategy to enhance overall value by presenting growth strategies and future visions to customers, investors, and the market. CEO Park emphasized, "The split into SK Telecom and SKT New Investment marks the opening of the SKT 2.0 era that opens a greater future," adding, "We will contribute to the development of Korea’s ICT ecosystem through the company’s future growth."

Similar governance changes and preparations for new businesses are also observed in other SK Group affiliates such as refining and petrochemicals. SK Innovation, which recently transitioned to an intermediate holding company, has subsidiaries in refining, lubricants, and petrochemicals. While it has invested trillions of won in electric vehicle batteries and materials sectors over recent years, there have been no significant new investments in refining and petrochemicals. Instead, it has sold major assets and subsidiary shares acquired in the past. SK E&S, which focused on LNG-based power generation, now holds the key to the hydrogen business, designated as a future growth engine at the group level. Major affiliates like SK Networks, the group’s founding company, as well as SKC and SK Chemicals, which played solid roles during the group’s growth phase, have transformed into completely different companies. This is the fruition of the ‘Deep Change’ emphasized by Chairman Chey.

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