To Be Split into Two Companies

SK Telecom CEO Park Jung-ho explains a plan to split off the company into a telecommunication company and a non-telecommunication company in an online town hall meeting on April 14.

SK Telecom has disclosed a governance reform plan that will split off the company into two entities, a surviving company in charge of artificial intelligence (AI) and digital infrastructure and a newly created company that will specialize in ICT investment.

The surviving company will control SK Broadband as a subsidiary while the new company will control ICT affiliates such as SK Hynix, ADT Caps, 11ST and T-Map Mobility.

SK Telecom is planning to implement the governance reform plan by the end of 2021 after winning approval from the board of directors and shareholders. The name of the new company will be decided later.

The market capitalization of SK Hynix, which was acquired in 2012, has grown to 100 trillion won. SK Telecom has a 20.1 percent stake in SK Hynix. The combined value of other affiliates promoting IPOs, such as One Store, ADT Caps, and 11ST, is estimated at 20 trillion won to 30 trillion won. Nevertheless, SK Telecom's own market capitalization stood at about 22 trillion won at the end of last month.

"When affiliated with the newly created company, SK Hynix will be able to invest more actively in other companies than now," an SK Telecom official said.

Market insiders had predicted that the newly created company would be ultimately merged with SK Inc., the group’s holding company. However, SK Telecom flatly denied such a scenario, saying that it has no plan to merge the newly created company with SK Inc.

Copyright © BusinessKorea. Prohibited from unauthorized reproduction and redistribution