Next Month Marks the Opening of SKT 2.0 Era... '99.95%' Approval for SKT-SK Square Split

[Asia Economy Reporter Seulgina Cho] SK Telecom is splitting into a telecommunications company and an investment company for the first time in its 37-year history, marking the beginning of the 'SKT 2.0 era' on November 1. By accelerating growth on both sides?existing telecommunications (SK Telecom) and new business (SK Square)?the company aims to fully re-evaluate its corporate value and enhance shareholder value. The newly established investment-specialized company, SK Square, is expected to actively pursue cross-border mergers and acquisitions (M&A) in areas such as semiconductors, technology, and platforms.

On the morning of the 12th, SK Telecom held an extraordinary general meeting at its headquarters T Tower Suprex Hall and approved the SK Telecom-SK Square split plan. The approval rate for the spin-off agenda based on the number of shares present was 99.95%, and the approval rate for the stock par value split agenda was 99.96%. It received overwhelming support from institutional investors, including the National Pension Service, as well as individual shareholders.

The surviving company, SK Telecom, and the newly established company, SK Square, will officially launch on the 1st of next month. The current SK Telecom will undergo a stock trading suspension period (October 26 to November 26) and will be re-listed as SK Telecom and SK Square respectively on November 29. Going forward, SK Telecom will focus on AI and digital infrastructure based on 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 said, “The biggest purpose of the company split is to maximize shareholder value, and after the split, we will write a fast success story with clear identities in telecommunications and investment.” He added, “We will have the portfolio value we have nurtured so far more widely recognized by the market and return it to our shareholders.”

◆SK Telecom as an ‘AI and Digital Infrastructure Service’ Company, SK Square as a ‘Semiconductor and ICT Investment Specialist’ Company

SK Telecom plans to transform into an AI and digital infrastructure service company, increasing its annual sales from 15 trillion won in 2020 to 22 trillion won by 2025. To achieve this, it will focus on three core businesses: wired and wireless telecommunications, AI-based services, and digital infrastructure services.

First, the wired and wireless telecommunications business aims to solidify its leadership in 5G and continue the growth of media services. The AI-based service will evolve the subscription service ‘T Universe,’ launched last August with positive feedback, into an online and offline subscription commerce platform, and expand the scale of the metaverse business linked with the metaverse platform ‘ifland.’ The digital infrastructure service business will actively expand high-growth areas such as data centers, cloud, and Industrial Internet of Things (IoT) businesses by utilizing 5G MEC (Mobile Edge Computing).

Under the surviving corporation SK Telecom are subsidiaries such as SK Broadband, SK Telink, PS&Marketing, F&U Credit Information, ServiceTop, ServiceAce, and SK O&S, which can create synergies with the wired and wireless telecommunications business.

SK Square will launch as a semiconductor and ICT investment specialist company. Based on the investment success DNA accumulated through investments in semiconductor and ICT platform businesses, it envisions growing its current net asset value of 26 trillion won to approximately 75 trillion won by 2025, nearly tripling it. As its name means ‘square’ or ‘plaza,’ the company plans to invigorate the entire Korean ICT industry through bold and proactive investments based on key portfolio assets such as semiconductors, media, security, and commerce, the company explained.

Unlike typical unlisted investment companies (PE, Private Equity), SK Square, as a listed company, offers the advantage that general shareholders can also participate in the company’s investment activities.

SK Square comprises 16 companies under its umbrella. These 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.

◆CEO Park Jung-ho: “We Will Return to Shareholders the Recognized Value of the Well-Nurtured Portfolio”

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

SK Telecom cites maximizing shareholder value as one of the main goals of the split. The vision is to fully re-evaluate corporate value and enhance shareholder value by accelerating growth on both existing telecommunications and new business fronts. CEO Park Jung-ho stated, “Although SK Telecom successfully diversified its portfolio, it was evaluated within the single frame of telecommunications and thus did not receive 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.”

SK Telecom first officially announced the intention to pursue a spin-off in April this year, clearly setting the goal of fully evaluating corporate value, accelerating future growth, and enhancing shareholder value. In May, it effectively canceled all 8.69 million treasury shares (about 10.8% of total issued shares), and in June, the board resolved a roughly 6:4 spin-off ratio between SK Telecom and SK Square and a 5-for-1 stock par value split, continuing efforts to enhance shareholder value. Thanks to these efforts, SK Telecom’s current stock price has risen about 30% compared to the beginning of the year.

On the same day, the agenda related to the stock par value split was also approved, consistent with this context. One common share with a par value of 500 won will become five shares with a par value of 100 won each. The par value split, which increases the total number of shares by lowering 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 lower entry barriers and increase the proportion of small shareholders, transforming into a ‘national stock’ that any investor can easily access.

This move also aligns with the ‘Financial Story’ emphasized by the SK Group. The Financial Story is a management strategy that aims to enhance overall value by presenting growth strategies and future visions to customers, investors, and the market.

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