[Comprehensive] SKT Corporate Split... "Will Invest in Semiconductors and Platforms" Announces Aggressive Global M&A Expansion

[Asia Economy reporters Seulgina Jo and Minyoung Cha] "We will consider deals regardless of domestic or international boundaries."

SK Telecom will split into a telecommunications company and an investment company on the 1st of next month. Centered around the newly established investment specialist company, SK Square, mergers and acquisitions (M&A) activities crossing borders in the semiconductor as well as tech and platform sectors are expected to accelerate. Park Jung-ho, CEO and the ‘M&A gambler’ who led the acquisition of Hynix during the peak of the semiconductor crisis, visited the U.S. earlier this month to personally recruit investors ahead of this corporate split. There is also growing speculation about Amazon’s potential strategic investment participation.

◇SKT to Spin Off SK Square Next Month

On the morning of the 12th, SK Telecom held an extraordinary shareholders’ meeting at its headquarters in SK Telecom T Tower, Euljiro, Seoul, where it approved key agenda items including the ‘Approval of the Split Plan.’ Accordingly, the surviving company SK Telecom and the newly established company SK Square will officially launch on the 1st of next month. SK Telecom will focus on AI and digital infrastructure based on its existing wired and wireless telecommunications, while the new company will concentrate on ICT investments centered on semiconductors. The split ratio is 0.607 for SK Telecom and 0.392 for SK Square.

CEO Park Jung-ho stated at the shareholders’ meeting, "We will demonstrate growth capabilities through investments in semiconductor and platform innovation companies," adding, "Both companies will build faster growth stories under the clear identities of ‘telecommunications’ and ‘investment.’" He further explained, "The main purpose of the split is to maximize shareholder value. Although SK Telecom has successfully diversified its portfolio, it has been evaluated within the single frame of telecommunications and thus has not received full value recognition. By separating telecommunications and ICT investments, we will proudly have the market recognize the portfolio value and return it to our shareholders."

This split is seen as a move to create future growth engines by establishing growth structures and investment foundations suitable for each sector, mainly telecommunications and semiconductors, while also aiming to gain proper corporate value recognition in the market. It also signals a declaration to actively pursue semiconductor investments, which have grown into a core cash cow for the group, replacing the subsidiary SK Hynix that faces many restrictions on business expansion due to governance structure.

The new company will be led by CEO Park, who concurrently serves as vice chairman of SK Hynix. Most of the new business areas, including SK Hynix, have been organized under SK Square, a subsidiary of SK Telecom. Park explained, "We aim to play the role of an ‘Investing Producer’ as a semiconductor and ICT investment specialist company."

The surviving company SK Telecom aims to transform into an ‘AI and Digital Infrastructure Company.’ SK Broadband and SK Telink, which can create synergy with wired and wireless telecommunications businesses, are organized under it. The new CEO is likely to be Yoo Young-sang, head of the mobile network operator (MNO) business.

◇Global M&A Expected in Semiconductors and More

Following this split, a series of global M&A activities in the tech and platform sectors are expected soon. Earlier, CEO Park announced to domestic and international investors that the new company plans to invest 5 trillion won over the next three years after its launch.

The highest priority is semiconductor investment. The focus is on creating synergy with SK Hynix, a subsidiary of the new company and a core growth engine of the group. The ‘bolt-on’ strategy, which maximizes synergy by acquiring related or similar industry companies regardless of domestic or international boundaries, will be actively pursued.

In particular, CEO Park spent about 10 days in the U.S. earlier this month meeting global investors in person. This is interpreted as both preparatory work for large-scale M&A after the split and efforts to attract global investment.

At the shareholders’ meeting, Park told reporters, "When I was doing overseas IR ahead of SK Square’s launch, the first words from shareholders were ‘thank you,’ which I appreciated," adding, "We will strive to become a better company and support better growth." Regarding cooperation with Amazon, he said, "It is going better than expected, and discussions are underway for their participation as a shareholder." However, when asked about SK Square’s first investment target, he smiled and said, "I will share that gradually."

Currently, SK Square is exploring investment opportunities not only in high-tech areas such as semiconductors but also in ▲‘big tech’ (life platforms) including media, commerce, and mobility, and ▲‘deep tech’ (global ICT) such as digital healthcare and blockchain. The goal is to increase the company’s net asset value to around 75 trillion won by 2025, which is three times the current level.

The surviving company SK Telecom will also expand ultra-collaboration with global companies including Amazon. The partnership network for the newly launched subscription service ‘T Universe’ in the second half of the year will be extended to global companies. Cooperation plans with Apple TV Plus are also expected to be announced within the year. In the digital infrastructure sector, attention is focused on cloud, data centers, and the Internet of Things (IoT). The sales target for 2025 is 22 trillion won.

Meanwhile, at the extraordinary shareholders’ meeting, a stock split was approved through amendments to the articles of incorporation. Currently, one common share with a face value of 500 won will be split into five shares with a face value of 100 won each. Along with this, SK Telecom appointed Choi Kyoo-nam, head of the Future Business Team at SK SUPEX Council, as an outside director.

SK Telecom stated, "He is a figure with abundant experience and expertise in strategy and business development for discovering and nurturing new businesses," and added, "We believe he will contribute to enhancing the company’s value through advice for sustainable growth and integrated strategic proposals for discovering new business opportunities."

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