SK Telecom (NYSE:SKM) announced that the Board of Directors (BOD) today approved the plan to split the company into SK Telecom (surviving entity) and SKT Investment (new entity, tentatively named) through a horizontal spin-off. The spin-off ratio has been set at 0.6073625 (surviving entity) to 0.3926375 (new entity) based on net asset value.
Through the horizontal spin-off, SK Telecom will become two separate companies – an AI and digital infrastructure company that sustains stable and solid growth, and an investment company that invests in semiconductor and information and communication technologies (ICT). The surviving company will keep its current name ‘SK Telecom,’ and the name of the new entity will be decided before the extraordinary meeting of shareholders.
The spin-off will be effective as of November 1, 2021 following the extraordinary meeting of shareholders to be held on October 12, 2021. The surviving entity and the new entity will complete listing change and re-listing, respectively, on November 29, 2021 after a month-long period of trading suspension from October 26 to November 26, 2021.
To make its shares more accessible for shareholders and increase enterprise value, SK Telecom will promote a stock split simultaneously with the spin-off. The stock split is expected to boost minority shareholders’ investment by increasing the number of outstanding stocks.
For instance, through a stock split, one common stock with a face value of KRW 500 will split into five common stocks with a face value of KRW 100. After the stock split, the total number of SK Telecom’s issued shares will increase from 72,060,143 to 360,300,715, and SK Telecom and the newly established company will divide these stocks in accordance with the spin-off ratio (about 6:4).
The effect of the horizontal spin-off and stock split will be reflected in the securities market from November 29, 2021, the date of listing change and re-listing.
For instance, a shareholder with 20 SK Telecom stocks will have 100 stocks after the stock split on November 29, and based on the spin-off ratio of approximately 6 to 4, the shareholder will be given 60 shares of the surviving entity and 39 shares of the new entity. Shareholders will be given cash in return for their fractional shares (based on Nov. 29 closing price).
SK Telecom and the new entity both have the vision to increase enterprise value and shareholder value by accelerating growth in their respective fields of business.
The new entity will actively pursue mergers and acquisitions in the global semiconductor market. It plans to build a semiconductor ecosystem with SK Hynix by investing in innovative technologies including future semiconductor technologies.
Moreover, the new entity will also strengthen its competitiveness by attracting domestic and overseas investment in diverse ICT areas including security (ADT Caps), commerce (11st) and mobility (T Map Mobility) and promote initial public offerings (IPOs) of its subsidiaries to secure future growth engines.
The surviving entity plans to establish itself as an AI and digital infrastructure company by maintaining its growth in fixed and wireless telecommunication and home media based on its leadership in the 5G market. It will further advance its services like Metaverse and subscription-based offerings by applying powerful AI technologies.
Building on its AI and digital infrastructure technology assets, the surviving entity will increase its investment in data center and mobile edge computing (MEC) cloud business to secure new sources of revenue.
The new entity will have the following 16 companies under its umbrella: SK Hynix, ADT Caps, 11St, T Map Mobility, One Store, Contents Wavve, Dreamus Company, SK Planet, FSK L&S, Incross, NanoEnTek, Sparkplus, SK Telecom CS T11), SK Telecom TMT Investment2), ID Quantique3) and Techmaker4).
1) SK Telecom C.S T1 is an esports joint venture between SK Telecom and Comcast Spectacor.
2) SK Telecom TMT Investment carries out investment activities in the U.S.
3) ID Quantique is a leading quantum-safe cryptography company based in Switzerland.
4) Techmaker is a technology joint venture between SK Telecom and Deutsche Telekom.
Companies including SK Broadband, SK Telink, PS&Marketing, F&U Credit Information, Service Top, Service Ace and SK O&S will be placed under SK Telecom (surviving company). It will continue to keep its stake in companies it invested in except for the 16 subsidiaries that will be placed under the new entity.
SK Telecom plans to complete the spin-off within this year through transparent communication with diverse stakeholders including shareholders.
“The horizontal spin-off will mark the beginning of a new era for SK Telecom,” said Park Jung-ho, CEO of SK Telecom. “We will make best efforts to contribute to the advancement of the ICT ecosystem by achieving new and sustainable growth.”
