SK Telecom to split to form separate telco business and holding company

South Korea's largest telco will split into two businesses, with the spin-off to function as a holding company for SK Hynix, 11StreetCo, and T Map Mobility, among others.

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SK Telecom has announced it will split into two companies, in a move that it said would facilitate future growth and allow investment activities to be made more swiftly.

Looking at the split, the surviving company will keep its existing telco assets while the spin-off company will take over operations of SK Telecom's various tech subsidiaries, such as the chip giant SK Hynix, e-commerce company 11StreetCo, and ride-sharing app T Map Mobility, among others.

This means the surviving company will continue to run SK Telecom, the country's largest telco, which currently has a subscriber base of 6.35 million 5G customers, amounting to 46.5% of the market.

It will also own subsidiaries, such as SK Broadband, which is the second largest broadband service provider in Korea, and expand investment in areas such as cloud, data centre, and subscription-based services.

"The surviving company will strengthen its position as the leading telecommunications company with AI technology at its core," SK Telecom said in a statement.

The spin-off company, meanwhile, will focus on making "diverse investments", SK Telecom said. It plans to invest in both domestic and overseas semiconductor companies to accelerate the growth of the semiconductor industry.

Prior to the decision to split SK Telecom into two companies, SK Hynix was already an active buyer in the semiconductor market, having acquired Intel's NAND memory and storage business and Toshiba's former memory business, Kioxia, in the past two years.

The newly spun-off company will also look to launch IPOs of its subsidiaries, such as ADT Caps, 11StreetCo, and T Map Mobility, SK Telecom.

The move is expected to be complete before the end of 2021.

In 2020, SK Telecom posted sales of 18.62 trillion won and operating income of 1.35 trillion won for 2020, which were both increases of 5% and 21.8%, respectively, from 2019. During that same span, SK Hynix saw its operating income jump by 84% to 5 trillion won.

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