SK Telecom wins big in recent investment bets

2020.09.15 10:49:07 | 2020.09.15 17:24:57

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South Korea’s major mobile carrier SK Telecom Co. has hit it big with its recent string of investments, with the rewards likely to fuel its own engines for future growth and burnish its stock price.

The telecom operator’s shares closed Monday up 2.1 percent at 248,000 won ($210). They fell 0.81 percent to finish Tuesday at 246,000 won.

One investment that has paid off handsomely is the Israeli medical imaging startup Nanox Imaging Ltd. Despite the recent tech rout that sent the U.S. Nasdaq into correction, Nanox shares closed at $49.2 apiece as of Monday (local time), up 173 percent from its initial offering price upon its debut on Aug. 21.

In June, SK Telecom invested $23 million in Nanox for a 5.8 percent stake in the company, becoming its No. 2 shareholder. SK Telecom’s stake value has since jumped six-fold to 167 billion won.

The Korean mobile carrier last year acquired a 34.6 percent stake in local mobile ad platform startup Incross Co. for 52.5 billion won. Incross shares have been hitting new 52-year highs since the COVID-19 pandemic, benefiting from the so-called “untact economy” of contact-free digital technologies.

SK Telecom’s initial stake value of 144.7 billion won in the company has now surged by more than 170 percent.

In October 2019, SK Telecom and Kakao Corp., operator of Korea’s largest mobile messenger, signed a share swap deal worth 300 billion won, with SK Telecom acquiring a 2.5 percent share in its partner. Kakao shares have also soared 195 percent since March, raising SK Telecom’s stake value to more than 819 billion won.

SK Telecom has reaped a total 751.8 billion won in capital gains from the three companies, collecting 139.8 billion won from Nanox, 92.2 billion won from Incross and 519.8 billion won from Kakao. This is more than half of the carrier’s estimated net profit this year of 1.48 trillion won.

More importantly, the investments are becoming a foothold for SK Telecom to transform itself into a full-service ICT company.

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Nanox founder, Ran Poliakine, in a recent interview with Maeil Business Newspaper, projected that with their strategic alliance, SK Telecom would become a “powerful big data company” armed with a huge cache of medical video records to be used as 5G contents. Nanox also shared plans to build a microelectromechanical system (MEMS) chip production company in Korea to bolster their partnership.

Five of SK Telecom’s subsidiaries are also planning to go public in the local bourse, which could translate into bigger wins for the parent company.

The company furthest along in its IPO process is ONE Store, an integrated app market created by Korean wireless majors – SK Telecom, KT and LG Uplus – and the country’s biggest portal site operator Naver Corp. It is the only platform in the world that boasts a bigger market dominance than Apple’s App Store. Market transactions in the second quarter of 2020 totaled 212.2 billion won, doubling in just two years. ONE Store is aiming to go public in the first quarter of next year, with the company expected to raise more than 1 trillion won from the offering.

ADT Caps Co., a security device maker wholly owned by SK Telecom, is also poised for a blockbuster IPO. SK Telecom is currently in the middle of refinancing 2 trillion won worth of loans taken out to finance its acquisition of ADT Caps. Letters of intent from investment banks showed that orders were overbooked 150 percent than the targeted amount.

E-commerce platform 11st.com and cable TV operator SK Broadband Co. are also readying an IPO of 3 trillion won and 5 trillion won, respectively.

By Kim Gi-chul and Kim Hyo-jin

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