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Organizational restructuring

SKT to spin off; 5-for-1 stock split in November

SK Group's restructuring plan moves forward, with SK Telecom splitting into telecom and investment firms

By Jun 10, 2021 (Gmt+09:00)

SK Telecom CEO Park Jung-ho
SK Telecom CEO Park Jung-ho

South Korea’s largest mobile carrier SK Telecom Co. is moving forward with its spin-off plan announced in April.

SK Telecom held a board meeting on June 10 to approve the spin-off plan that will create another entity on Nov. 1, tentatively named SKT Investment Co., which will oversee its portfolio outside the telecom sector.

The board also approved another plan to conduct a 5-for-1 stock split, along with the spin-off. The stock split will increase the total number of its shares outstanding from the current 72.06 million to 360.30 million shares. 

SK Telecom will hold a shareholders’ meeting on Oct. 12 for the final approval of its two major corporate changes. Once approved, the effects of the spin-off and stock split will be reflected in the local stock market from the day of re-listing on Nov. 29, after its shares are stopped from trading between Oct. 26 and Nov. 26.

The surviving entity, SK Telecom, will focus on the mobile, artificial intelligence and digital infrastructure segments. It will also grow the metaverse segment and offer new subscription-based offerings. SK Telecom will have the internet provider SK Broadband Inc. and the telecom service provider SK Telink Co. as affiliates.

The new investment-oriented entity will have a total of 16 units under its umbrella, including SK Hynix Co., ADT Caps, 11st and T Map Mobility. Wavve will also be under the investment company.

WHAT IT MEANS FOR SHAREHOLDERS

According to the approved plan, about 60.7% of SK Telecom’s shares will remain in the telecom-focused entity while the other 39.3% of its shares will form SKT Investment Co.

Simply put, a shareholder who currently has 20 shares of SK Telecom will have 100 shares of the company following the stock split.

And when the spin-off is completed, 100 shares will be changed into 60 shares of the surviving entity and 39 shares of the new entity. The fractional shares of less than one unit will be paid out to the shareholder in cash based on the closing stock price on the day of re-listing.

In theory, the stock split does not change the company’s valuation. But in reality, the split often boosts the trade volume as well as the stock price.

“We expect a whole new flow of minority shareholders with the stock split. SK Telecom’s stock is going to become one of the most accessible shares in the country,” said SK Telecom.

Write to Han-gyeol Seon at always@hankyung.com

Daniel Cho edited this article.

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