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Business diversification

SKT strengthens foothold outside mobile biz

Apr 18, 2021 (Gmt+09:00)

SK Telecom CEO Park Jung-ho at annual shareholders' meeting in March
SK Telecom CEO Park Jung-ho at annual shareholders' meeting in March

South Korea’s telecom and mobile network market leader SK Telecom Co., which announced last week its strategic long-term shift towards non-telecom sectors through a corporate spin-off, is making a rapid expansion in mobility and e-commerce areas.

Not only has the company successfully raised an investment of 400 billion won ($358 million) in March from Affirma Capital and EastBridge Partners for its mobility unit T Map Mobility Co., it is also competing against the country’s retail giants in the heated race for eBay Korea acquisition.  

Backed with the funding, T Map Mobility on Apr. 1 launched UT LLC, a joint venture with Uber Technologies. The JV will soon unveil a new platform combining both companies' taxi-hailing services, to challenge the dominant industry leader Kakao Mobility with more than 80% market share.

Uber, as a strategic partner of SK Telecom, has invested $50 million in T Map Mobility and another $100 million in UT. T Map Mobility aims to reach a valuation of 4.5 trillion won ($4 billion) within the next 5 years.

Industry sources say that T Map Mobility could draw such a large investment in March from Affirma and EastBridge largely due to its partnership with the global mobility leader Uber.

T Map Mobility, the largest mobile navigation service provider in South Korea, and Uber, the global pioneer of taxi-hailing services, are expected to create great synergies moving forward, according to analysts.

The taxi-hailing market leader Kakao Mobility is also reacting fast in regard to the strong SK-Uber partnership. On the launching day of T Map Mobility and Uber’s UT, Kakao Mobility made a shrewd move by announcing Google as its strategic investor with a $50 million investment.

SK Telecom's business areas and its role within SK Group (Courtesy of SK Telecom)
SK Telecom's business areas and its role within SK Group (Courtesy of SK Telecom)

SK Telecom is also putting great efforts into the acquisition of eBay Korea, the third-largest e-commerce platform in the country with an asking price estimated at around 5 trillion won ($4.5 billion).

E-commerce is SK Telecom’s key focus area outside the mobile business. The company’s current e-commerce business is spearheaded by 11Street Co., which formed a business partnership with Amazon last year.    

Like SK Telecom’s 11Street, eBay Korea operates open market-type platforms, namely Auction and Gmarket.

Analysts say that the three open market platforms, if brought together under one roof by SK Telecom, will create enough synergies to take market shares from Coupang Corp. and Naver Corp.

EXPERTS BEHIND THE DEALS

SK Telecom’s strategic actions outside the telecom segment are led by two investment banking specialists who joined the company in 2018.

Ha Hyung-il, vice president and head of Corporate Center 2, built a wide range of financial advisory and investment banking experiences at KPMG and Macquarie.

Jason Song, vice president and head of Corporate Development Group, also holds a long track record in investment banking from Deutsche Bank and Goldman Sachs.

Ha and Song are currently directing investment activities in SK Telecom’s three key focus areas outside its traditional telecom business: media, security and e-commerce.

The two had also led the merger of its internet service provider SK Broadband Inc. and the cable TV operator t-broad Holdings Co. in 2020 as well as the merger of its two security units SK Infosec Co. and ADT Caps Co. last month.    

Write to Chae-Yeon Kim at why29@hankyung.com

Daniel Cho edited this article.

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