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SK Telecom to give 60% of its cash equivalents to spinoff company Plans to pursue mergers and acquisitions of semiconductor firms

Translated by Kim So-in 공개 2021-06-14 07:40:45

이 기사는 2021년 06월 14일 07:37 더벨 유료페이지에 표출된 기사입니다.

SK Telecom, South Korea's number one wireless carrier, will spin off a new investment company, tentatively named SKT Investment, and hand over more than half of its cash and cash equivalents to the new entity.

SK Telecom’s board of directors approved its spinoff plan on Thursday. The surviving entity will remain as SK Telecom while the formal name for the new entity will be confirmed before an extraordinary shareholders’ meeting.

SKT Investment will serve as the holding company of its new information and communication technologies (ICT) affiliates, including memory chip affiliate SK Hynix, e-commerce subsidiary 11Street, app market unit ONE Store, Wavve, SK Planet, and T Map Mobility. The remaining entity will largely focus on SK Telecom's traditional telecom and pay-TV businesses.

The wireless carrier owned a total of 621.4 billion won ($559 million) as of the first quarter, including 130.6 billion won in cash and cash equivalents, 459 billion won in short-term financial assets, and 31.8 billion won in short-term investment assets. The new entity will inherit 387.8 billion won of the total, or 60% of SK Telecom's most liquid assets.

SK Telecom has decided to inherit its cash and cash equivalents to the new entity as the surviving company’s mobile network operator and pay-TV businesses have strong cash-generating capability. Even after it has handed over a significant amount of its cash equivalents to SKT Investment, it can easily recover in a short period of time. It is also capable of raising funds thanks to its strong credit ratings.

Also, SK Telecom will give its cash and cash equivalents because the new entity will serve as the holding company. SKT Investment won’t operate its own business, and has to secure financial power through dividends paid by subsidiaries. Subsidiaries that will be placed under SKT Investment’s wing are considered companies with high growth potential, but their profit-generating ability is not strong yet, except for SK Hynix.

SK Group plans to actively pursue mergers and acquisitions of semiconductor firms globally and collaborate with SK Hynix in future chip technology through the spinoff company. (Reporting by Choong-hee Won)
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