SK Telecom Confirms IPO Plans For Five Affiliates

SK Telecom said Friday it plans to move forward on listing its five affiliates ― ADP Caps, SK Broadband, One Store, 11 Street and Wave ― in a bid to improve the firm’s valuation.

“Plans for initial public offerings (IPOs) of our five affiliates including fixed-line operator SK Broadband, online commerce operator 11 Street and security operator ADT Caps are being reviewed,” SK Telecom finance chief Yoon Poong-young told investors upon announcing the carrier’s fourth quarter earnings for 2019.

The executive said the country’s leading mobile telecom firm will “communicate with the domestic capital markets” when deciding which valuation method to use for each of the affiliates.

“SK Telecom will delve into specifics about the valuation of the firms businesses in preparing for the IPOs. But that doesn’t necessarily mean we will put them on the stock market anytime soon,” the executive added.

“Each stock is different, and each industry or even sector has unique characteristics that may require multiple valuation methods before reaching the “right valuation.”

During the call, Yoon said the company will continue to explore progressive strategies in its media content business through planned acquisitions, and cut its heavy reliance on the already-saturated telecommunications market to ensure corporate sustainability.

“SK Telecom is on track to complete all relevant procedures to launch the combined entity of SK Broadband and T-Broad in April. The new firm will significantly help us rise as a leading media content company with 8 million customers,” corporate center head Ha Hyung-il told the investors.

Earnings results from last year indicate SK Telecom success in managing its fifth-generation (5G) telecommunications business with the number of 5G subscribers reaching 2.08 million, slightly higher than expected.

But in terms of profit from 5G, it failed to impress the market as the company saw a decline in both operating and net profits last year.

In a regulatory filing to the Korea Exchange (KRX), the country’s bourse operator, SK Telecom said its 2019 operating profit was 1.11 trillion won, a decrease of 7.6 percentage points, year-on-year, while its net profit plummeted by 72.5 percent.

SK Telecom blamed increased spending on 5G infrastructure as the reason behind its drop in profits, indicating a lack of consumer awareness on the importance of the new network.

Its crucial telecommunications business wasn’t in good shape at least in terms of numbers as the company generated 9.86 trillion won in total sales last year, a decrease of 1.3 percentage points from 2018. In 2017, SK reported 10.87 trillion won in annual sales.

During the call, executives told investors that the firm plans to boost its 5G competitiveness and launch 5G services to “enterprise customers” though active collaborations, however, they didn’t reveal capital expenditure plans for the year.

LG aims to grow its PPV-TV business with Netflix collaboration

On the same day, LG Uplus said it will expand its outreach in the media content business by collaborating with U.S.-based giant Netflix.

“LG Uplus will strengthen its strategic partnership with Netflix focused on home media content,” LG Uplus said during a conference call.

The country’s No. 3 mobile carrier said it will strengthen its 5G service, however, it clarified that it will reduce spending on promotional campaigns to attract more customers.

“Last year, we spent a lot on 5G marketing as we were under pressure to win more customers. This year, we will cut spending on marketing,” finance chief Lee Hyuck-joo told investors. Uplus spent 2.24 trillion won on marketing last year, 23.4 percent of its entire sales for 2019.

Last year, LG Group’s telecommunications affiliate reported 12.38 trillion won in sales and 686 billion won in annual operating profit, up 5.6 percentage points and down 7.4 percentage points, respectively.―Korea Times