South Korea's SK Telecom plans to split into two companies. The horizontal spin-off is aimed at increasing enterprise and shareholder value, the operator said. The plan will leave the surviving company focused on its telecom business (tentatively named ‘AI & Digital Infra Company’) and the spin-off company taking over the memory business and new ventures (tentatively named ‘ICT Investment Company’).
The company expects the spin-off to create an opportunity for the telecommunications, semiconductor and new ICT businesses “to be properly valued in the market to deliver greater value to shareholders”. The surviving company and the spin-off company will each build a management structure and provide investors with two separate investment options.
SK Telecom claims a 46.5 percent share of Korea’s 5G market with its telecom operator business, ending February with 6.35 million 5G subscribers. SK Telecom’s subsidiary SK Hynix making memory products has over KRW 100 trillion of market cap. SK Telecom’s New ICT businesses – including media, security and commerce – accounted for 24 percent of SK Telecom’s total operating income in 2020.
The surviving company will focus on strengthening SK Telecom as a telecommunications company with AI technology at its core. It will have subsidiaries including SK Broadband. SK Telecom expects that, based on a stable cash flow, the surviving company will continue to create new revenue streams in 5G, while investing in new technologies. In particular, it plans to expand digital business areas such as cloud, data center and subscription-based services.
The spin-off company will actively carry out diverse investment activities. It plans to invest in both domestic and overseas semiconductor companies. SK Hynix has grown significantly after acquiring Kioxia Corporation (formerly Toshiba Memory) and Intel’s NAND business. Through the spin-off, the company’s investment activities will be proceeded in a swifter manner, says SK Telecom.
The spin-off company will also promote IPOs of its subsidiaries, including ADT Caps, 11st and T Map Mobility. SK Telecom added that it has no plans to merge the spin-off company with SK Inc.
SK Telecom plans to complete the spin-off this year.
