SKT Splits After 37 Years... SK Telecom and SK Square System Launch Tomorrow

[Asia Economy Reporter Joeslgina] SK Telecom is entering the 'SKT 2.0 era' starting from the 1st, as it splits into a telecommunications company and an investment company for the first time in its 37-year history. Centered on the newly launched investment-specialized company ‘SK Square,’ cross-border mergers and acquisitions (M&A) activities in semiconductor as well as tech and platform sectors are expected to accelerate.

According to industry sources on the 31st, the surviving company SK Telecom and the newly established company SK Square will officially launch on the 1st. The current SK Telecom will undergo a stock trading suspension period (October 26 to November 26) and will be re-listed and renamed as SK Telecom and SK Square respectively on November 29.

Going forward, SK Telecom will focus on artificial intelligence (AI) and digital infrastructure areas based on its existing wired and wireless telecommunications, while the new company will concentrate on ICT investments centered on semiconductors. By establishing growth structures and investment foundations suitable for each sector centered on telecommunications and semiconductors, the plan is to gain proper corporate value recognition. This also aims to improve the investment environment for SK Hynix, which has faced restrictions on investment expansion due to regulations under the Fair Trade Act.

CEO Park Jung-ho stated at last month’s extraordinary general 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.’"

SK Square will be led by CEO Park, who also serves as Vice Chairman of SK Hynix. Most of the new business areas, including SK Hynix, from SK Telecom’s subsidiaries have been organized under SK Square. The 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. Based on the investment success DNA accumulated through semiconductor and ICT platform business investments, the vision is to grow the current net asset value of 26 trillion KRW to approximately 75 trillion KRW by 2025, nearly tripling it.

The surviving company SK Telecom aims to transform into an ‘AI and Digital Infrastructure Company.’ It plans to increase its annual sales from 15 trillion KRW in 2020 to 22 trillion KRW by 2025. To achieve this, it will focus on its three core businesses: wired and wireless telecommunications, AI-based services, and digital infrastructure services. Subsidiaries that can create synergy with the wired and wireless telecommunications business include SK Broadband, SK Telink, PS&Marketing, F&U Credit Information, Service Top, Service Ace, and SK O&S. The new CEO is expected to be Yoo Sang-young, the head of the mobile network operator (MNO) business.

Following this split, global M&A activities in the tech and platform sectors are expected to increase soon. CEO Park, an M&A expert, previously stated at meetings with domestic and international investors that SK Square plans to invest 5 trillion KRW over three years after its launch. The highest priority is semiconductor investment, focusing on creating synergy with SK Hynix, a core group business and subsidiary of the new company. Until now, SK Hynix, as a grandchild company of the holding company under the Fair Trade Act, had restrictions on investment expansion because it was required to hold 100% of the shares of the acquisition target company during M&A.

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

The surviving company SK Telecom will focus on wired and wireless telecommunications, AI-based services, and digital infrastructure services. It will also advance new businesses such as subscription services and metaverse platforms. The target is to increase annual sales from approximately 15 trillion KRW in 2020 to 22 trillion KRW by 2025.

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