SK Telecom to be split into two, holding company to oversee non-mobile biz

SK Telecom to be split into two

South Korea’s largest mobile carrier SK Telecom Co. will split into two separate entities. It said it will create a new holding company for its non-mobile subsidiaries to accelerate growth in promising fields and tighten its grip on its chipmaking unit, SK Hynix Inc.

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’).

Surviving entity

After the spin-off, SK Telecom will be divided into a surviving entity that will succeed its telecom business as a mobile network operator (MNO), and a new entity that is essentially an investment firm to seek new opportunities in non-telecom sectors.

The telecom operator’s spinoff plan had been widely expected after CEO Park Jung-ho said in a shareholders meeting last month that the company would overhaul its governance structure amid a slump in its share price in recent years.

SK Telecom’s share price had been in stalemate at the end of 2020 from the previous year at 238,000 won.

While SK Hynix has made active investments in the past, such as acquiring Intel’s NAND memory business in October last year for US$9 billion, its parent SK Group wants to tighten its grip on the chipmaker and help it aggressively expand investments.

The remaining entity will focus on the mobile carrier’s traditional telecom business and expand to new sectors, such as artificial intelligence and data centers.

The mobile carrier said it will decide on the details of the spinoff within the first half of this year.

Areas of interest

SK Telecom’s surviving entity will focus on artificial intelligence (AI) and digital infrastructure in addition to its current mobile and network businesses.

The entity will have SK Broadband Inc., the Internet service provider, as a subsidiary and will continue the current telecom and IPTV businesses.

The surviving company will also expand into a number of new areas such as cloud, data center and AI-based subscription segments. 

No merger

The latest announcement comes as the mobile carrier’s non-mobile subsidiaries have rapidly grown to account for 24 percent of the company’s total operating profit last year.

The subsidiaries have also formed global partnerships to boost their presence in the local market, with T Map Mobility joining hands with U.S. ride-hailing firm Uber Technologies Inc. to form a taxi-hailing joint venture in South Korea.

11Street has teamed up with Amazon.com Inc. with plans to offer the U.S. retail giant’s products to South Korean consumers.

SK Telecom is also preparing initial public offerings for app market unit ONE Store as well as security firm ADT Caps Co.

While analysts have speculated that the corporate revamp would eventually lead to a merger between SK Inc., the holding company for SK Group, and SK Telecom’s new holding company to elevate the status of SK Hynix in the conglomerate, the mobile carrier rejected the claim.

“There are no plans for a merger,” SK Telecom said in a statement.