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Group restructuring

Amazon in talks to invest in SK Tel's spun-off unit

SK Telecom's plan to spin off non-telecom operations wins a majority shareholder approval

By Oct 13, 2021 (Gmt+09:00)

SK Telecom CEO Park Jung-ho at an extraordinary general meeting on Oct. 12
SK Telecom CEO Park Jung-ho at an extraordinary general meeting on Oct. 12


Amazon.com, the world's largest online retailer, is in negotiations with South Korea's SK Telecom Co. to invest in the mobile carrier's non-telecom operations to be hived off next month, SK Telecom's Chief Executive Park Jung-ho said on Tuesday.

At an extraordinary general meeting where the vast majority of SK Telecom's shareholders approved its split-off between telecom and non-telecom businesses, Park said that Amazon is considering buying a stake in SK Square, the unit of non-telecom operations, as a strategic investor. He did not elaborate further.  

Amazon recently joined hands with SK Telecom’s e-commerce platform 11Street to launch its shopping service, the Amazon Global Store, in the Korean language for Korean customers. Amazon Global Store posted a stellar performance in South Korea, since its launch in the country at the end of August of this year.

11Street is one of the 15 companies to belong to SK Square, along with an internet services provider SK Broadband Inc., a security service firm ADT Caps Co., One Store, an over-the-top service Wavve and T Map Mobility. Some of them plan to go public, though their IPO plans have not been specified yet.

The entity of non-telecom businesses, which make up 40% of SK Telecom, will kick off on Nov. 1 and be listed on Korea Exchange on Nov. 29. It will serve as an investment firm of the SK Group and the single largest shareholder in SK Hynix Inc. with a 20% stake. The memory chipmaker is the second-largest stock on Kospi, with a market cap of 67 trillion won.

Amazon in talks to invest in SK Tel's spun-off unit


SK Telecom expects the corporate value of the spun-off unit to treble to 75 trillion won ($63 billion) within the next four years, versus 26 trillion won at the end of March of this year.

"Soon after the split-off, both companies will write success stories, based on their clear business identity of telecom and investment, respectively," SK Telecom CEO Park told the shareholder meeting. 

Park, concurrently CEO of SK Hynix, will head SK Square as well.

SK Telecom’s surviving entity will focus on artificial intelligence (AI) and digital infrastructure, in addition to its current mobile and network businesses. It will also expand into a number of new areas such as cloud, data center and AI-based subscription segments, led by Ryu Young-sang, SK Telecom's mobile network operations head.

FIVE-FOR-ONE STOCK SPLIT

At the shareholder meeting, SK Telecom also put to vote a five-for-one stock split plan, which got the nod from 99.96% of the attendants, including South Korea's National Pension Service, the world's third-largest pension scheme.

Under the plan, a shareholder of one SK Telecom share will receive five shares, which will lower its face value.

The company expects the stock split will make its shares more accessible by individual investors and help lift the corporate value of both entities.

To win the hearts of its employees for the split-off, SK Telecom decided to give out 100 shares in itself to each of its employees. To do so, it announced a plan to retire its shares worth 158.3 billion won between this month and January 2022. 

Trading in the company's shares will be suspended from Oct. 26, before the two separated entities are re-listed on Nov. 29.

Earlier this month, its affiliate SK Innovation Co. officially launched two spun-off units that took over its battery and petroleum businesses, respectively.

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

Yeonhee Kim edited this article.

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