IPOs for Subsidiaries to Be Carried out This Year
The author is an analyst of KB Securities. He can be reached at joonsop.analyst@kbfg.com. -- Ed.
Changes to dividend policy, intent to reform governance structure announced
— SK telecom at its Mar. 25 shareholder meeting disclosed that in light of its view that the current share price does not fully reflect the value of its overall business portfolio the company is considering changes to its governance structure—indicating the possibility for subsidiary IPOs and governance structure reforms to be announced within the next few months.
— According to media reports (Edaily, Mar. 25), it is likely that SK telecom will be spun off and that the entity owning the SK hynix stake will merge with SK holdings—so as to allow SK hynix to pursue M&A deals on its own in accordance with antitrust laws. (The companies have not commented on these media reports.)
— SK telecom also announced plans to pay dividends once every quarter. (The company currently pays dividends twice a year).
— Shares in SK telecom on Mar. 26 ended up 8.09% vs. previous close following such announcements.
Share-price rally also attributable to anticipation of subsidiary IPOs
— SK telecom also announced at the shareholder meeting its outlook for the company’s five main business segments (MNO, media, S&C, commerce, mobility), as well as 2021 revenue guidance of KRW20tn (+7.5% YoY).
— The company confirmed that IPOs for subsidiaries engaged in these key businesses (i.e., One Store, 11st, Content Wavve) will be carried out this year.
— Meanwhile, SK telecom also announced on Mar. 26 its decision for a KRW100bn capital increase for OTT platform provider Content Wavve. The funds will likely be used as seed capital for Content Wavve’s plans to invest KRW1tn in its OTT business by 2025 via reinvestment of profits and external financing (Asia Business Daily, Mar. 26).