Why Chey's divorce settlement is fueling SK Telecom stock rally

A customer walks past an SK Telecom store in Seoul, April 29. Korea Times photo by Park Si-mon

SK Telecom has emerged as an unlikely beneficiary of SK Group Chairman Chey Tae-won's divorce ruling, as investors bet that his court-ordered cash payout could lead to higher dividends from the telecom company, industry officials said Sunday.

Shares of SK Telecom jumped more than 5 percent Friday, even as the benchmark index plunged 5 percent. The rally came after Chey was ordered to pay 944 billion won ($645 million) in cash to his ex-wife.

The key question is how Chey will raise such a large sum of cash. As of the end of the second quarter, his shareholdings were valued at 10.83 trillion won, with most of that wealth tied up in a 17.9 percent stake in SK Inc.

Through that stake, Chey has maintained control over key affiliates, including SK Telecom and the ownership chain linking SK Square to SK hynix. Market watchers therefore view a stake sale as unlikely, as it could immediately weaken his control over the conglomerate.

This brings SK Telecom into focus. In June 2024, when the appeals court handed down its ruling in Chey's divorce case, Hana Securities said SK Telecom had ample capacity to increase its payout, suggesting that the group could restructure its dividend flows so that more cash ultimately reaches Chey.

SK Group Chairman Chey Tae-won, left, and his ex-wife Roh Soh-yeong arrive at the Seoul High Court, June 15. Yonhap

"Expanding dividends from financially sound subsidiaries is virtually the only way to minimize governance-related risks at SK Group," the brokerage wrote.

Another widely cited option is for Chey to increase borrowing secured by his shareholdings. He has already taken out stock-backed loans, and the recent rise in the value of his holdings is believed to have significantly increased his borrowing capacity.

Chey could also raise cash by selling his 29.4 percent stake in unlisted affiliate SK Siltron without reducing his stake in the group's holding company. SK Group is in talks with Doosan to sell its 70.6 percent stake in SK Siltron as part of a broader portfolio restructuring. Chey's personal stake is not currently included but could be added to the deal.

The divorce battle has dragged on for a decade. Since formal proceedings began in 2015, shares of SK Group have more than tripled, while Chey's net worth has risen to an estimated 8.18 trillion won, according to the Bloomberg Billionaires Index. If upheld, the ruling would result in the costliest divorce settlement in Korean history.