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Group restructuring

SK Telecom to split into mobile and non-mobile units

By Apr 14, 2021 (Gmt+09:00)

SK Telecom CEO Park Jung-ho explains the company spin-off (Courtesy of SK Telecom)
SK Telecom CEO Park Jung-ho explains the company spin-off (Courtesy of SK Telecom)

South Korea’s largest mobile carrier SK Telecom Co. will split into two separate entities.

SK Telecom said on Apr. 14 that it will create a new entity, through a spin-off method, which maintains the current share ownership structure.

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 seeking new opportunities in non-telecom sectors.

The corporate names of the two entities have not been decided yet. 

SK group’s preferred option in 2018 when it first announced plans to reform its management structure, had been the split-off method, which creates wholly owned subsidiaries under the company and thus does not distribute shares of the new company to existing shareholders.

But the group’s final decision is to proceed with a spin-off to protect shareholder value, according to industry sources.


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 its 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.  

While the chief executive position of the entity has not been confirmed yet, industry insiders speculate that Yoo Young-sang, the head of SK Telecom’s MNO business division, is a likely candidate.

Yoo, along with the current SK Telecom CEO Park Jung-ho, is a board member of SK Telecom.

Park will be heading the newly created entity, an investment firm overseeing its current portfolio in semiconductor, e-commerce and mobility segments. Park currently holds the chief executive positions at both SK Telecom and SK Hynix Co.

Among SK Telecom’s current affiliates, SK Hynix, 11Street, ADT Caps, T Map Mobility will be under the new entity, which will also be responsible for their IPOs.

The new company will also act as an intermediate holding company of the SK group.


Analysts say that the creation of the new entity will accelerate SK Telecom’s long-awaited IPO plans.

The company has been active in seeking ways to grow its non-telecom business sectors with the ultimate goal to raise its valuation.

To this end, SK Telecom created an IPO-oriented task force within the company earlier this year, potentially to push forward with the IPO processes of SK Broadband, ADT Caps, One Store, Wavve, T Map Mobility and 11Street.

The mobile app market operator One Store is likely to be the first candidate among them. One Store already selected KB Securities, NH Investment & Securities and SK Securities last September as underwriters for IPO, targeting to list in the second half of 2021.

One Store is valued at around 677 billion won ($607 million) after raising funds of 21 billion won ($18.8 million) from KT Corp. and 5 billion won ($4.5 million) from LG Uplus last month. 

ADT Caps testing its security drone (Courtesy of ADT Caps)
ADT Caps testing its security drone (Courtesy of ADT Caps)

The security services company ADT Caps is projected as the next candidate in line. SK Telecom had made a promise in 2018 to ADT Caps’ financial investor Macquarie Korea Asset Management that the security company will be listed by 2023.

At the end of last year, ADT Caps merged with another security company within the group, SK Infosec and also simplified its share structure.

SK’s e-commerce unit 11Street, which formed a strategic partnership with Amazon last year, and T Map Mobility that raised an investment of 400 billion won ($359 million) earlier this month are also seeking IPO opportunities in the long run.

11Street formed a partnership with Amazon on e-commerce (Courtesy of SK Telecom)
11Street formed a partnership with Amazon on e-commerce (Courtesy of SK Telecom)


There are three major reasons behind SK Telecom’s decision to split the company into two, according to industry sources.

The first is to raise the company’s valuation. SK Telecom is the biggest shareholder of SK Hynix, the country’s second-largest company by market capitalization, with a 20.1% stake.

SK Hynix’s market capitalization is around 94.6 trillion won ($84.8 billion), meaning that the financial value of SK Telecom’s SK Hynix stocks sums up to around 19 trillion won ($17 billion).

But SK Telecom’s market valuation is only around 20 trillion won ($17.9 billion), which seems too little considering the value of its SK Hynix stocks in possession.

“This discrepancy means that SK Telcom’s current share price fails to fully take its current assets into account. It can get a thorough revaluation from the market by separating its mobile business from an entity that will hold shares of SK Hynix and other major affiliates,” said an investment banking analyst.

The banking industry forecasts that the total value of the surviving and new entities will reach around 30 trillion won ($26.9 billion), up 50% from the current market capitalization as a single entity.

The second reason is to strengthen its investment in key growth areas, especially in semiconductors, by simplifying the group’s structure regarding SK Hynix.  

SK’s semiconductor unit, SK Hynix, is legally SK Holdings’ grandchild company.

According to Korea’s Fair Trade Act, grandchild companies like SK Hynix are required to acquire 100% of shares in case of an M&A. In other words, SK Hynix must acquire a 100% stake of the company that it wants to acquire.  

“If SK Holdings merges with the intermediate holding company that will be newly created, SK Hynix becomes a direct subsidiary rather than a grandchild company, meaning that SK Hynix can acquire companies without buying a 100% stake,” said a banking source. 

However, SK Telecom said: “We do not currently have plans to merge the new entity with SK Holdings. We will first expand our semiconductor business through our new entity alone.”

SK Telecom's move will likely allow more active investment of SK Hynix (Courtesy of SK Hynix)
SK Telecom's move will likely allow more active investment of SK Hynix (Courtesy of SK Hynix)

The third reason is the Fair Trade Act’s revision from next year. After the revision, the holding company must have more than 30% of stake of its listed subsidiary versus the current 20%.

In other words, SK Telecom must put another 10 trillion won ($9 billion) to raise its share ownership of SK Hynix from the current 20.1% before the regulatory change.

SK Telecom is expected to complete its plan to split the company within this year.

Write to Han-gyeol Seon, Min-jun Suh and Jin-seong Kim at

Daniel Cho edited this article.

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