Bo-eun leads the digital content team. She has covered foreign affairs, North Korea, tech, economy and gender issues at The Korea Times. She did a short stint at the South China Morning Post in Hong Kong, where she obtained a new perspective on news production and life. Small sources of joy for her are lounging in the sun, having a good latte and swimming.
Decision on intermediate holding firm looming over SKT
SK Telecom CEO Park Jung-ho speaks to employees in an online event held last November. / Courtesy of SK Telecom
By Kim Bo-eun
By Kim Bo-eun
Switching SK Telecom into an intermediate holding company to change the group's governance structure has been a long-term project for SK. SK Telecom CEO Park Jung-ho made the project official at a meeting of SK Group's CEOs in 2018, and it has gained traction with him becoming vice chairman of the group's semiconductor unit SK Hynix late last year.
Currently, SK holdings has stakes of 26.8 percent stake in SK Telecom and 20.1 percent in SK hynix. The current structure limits merger and acquisition (M&A) opportunities for SK hynix, due to regulations stating that when a second-tier subsidiary of a parent corporation wants to do this, it must take over the target entity outright.
If SK Telecom becomes an intermediate holding company, SK hynix becomes a first-tier subsidiary, enabling a broader scope of M&As, which is becoming crucial in the chip industry.
Meanwhile, new antitrust regulations that raise the percentage of shares a holding company needs to hold in an affiliate will go into effect in 2022. Currently, a holding company is required to have at least a 20 percent stake in a listed affiliate firm, and 30 percent if it is unlisted. The revision requires holding companies to hold at least 30 percent in a listed affiliate, and 50 percent in an unlisted one.
If SK Telecom becomes an intermediate holding company by the end of this year, it will be able to hold 20 percent of SK hynix's shares. If the process is delayed, it will have to buy a further 10 percent, which would cost 9 trillion won to 10 trillion won based on the current share price.
Given SK Telecom's ongoing business expansion as the company seeks transform from a telecom carrier to an ICT firm, it would be structurally more appropriate for it to become a holding company of its multiple subsidiaries in the ICT business. These include T Map Mobility, SK Broadband and app market One Store.
SK Telecom becoming a holding company is also expected to benefit its subsidiaries that plan to go public. T Map Mobility, ADT Caps, SK Broadband, One Store and 11st have plans for IPOs in the coming years.
"The aim is to boost the value of SK Telecom's multiple subsidiaries," an official of the company said.
A number of possible scenarios for SK Telecom's switch into an intermediate holding company have been laid out.
One of them is dividing SK Telecom into two entities ― one in charge of the mobile communications business and the other an investment firm. Telecom-related affiliates would fall under the first entity and affiliates in new businesses, the second.
SK Telecom will unveil its earnings for the fourth quarter of 2020 and hold a conference call on these today, and attention is growing over whether the company will comment on this.
For the plan to be executed within this year, it needs to be finalized to be ready for a general shareholders meeting in March.
"It is unlikely that specifics will be unveiled at this point in time," an industry source said. "The company will proceed with the plan when conditions are ripe.”
SK Telecom has been pushing for the growth of its affiliates in media, security, e-commerce and mobility in recent years as it seeks to make the transition into a global ICT company. SK Telecom set up T Map Mobility last November, as a unit specializing in the mobility business.