South Korea’s SK Telecom Co. will offer a five for one stock split once the shares are newly listed after breakup into operating and investment entities to serve as an intermediate holding company for the third largest conglomerate SK Group.

Under the reorganization scheme approved by the board Thursday, the spin-off ratio is 0.6073625 for the business-focused company SK Telecom and 0.3926375 for the new entity tentatively named SKT Investment. A formal name for the new entity will be confirmed before an extraordinary shareholders’ meeting on Oct. 12 ahead of the official spinoff on Nov. 1.

The new investment company is expected to be led by Park Jung-ho, chief executive of SK Telecom and business company by Yoo Young-sang, head of mobile network operator (MNO) business, sources said.

The existing and new company will be separately listed on Nov. 29 after a month-long trade hiatus from Oct. 26.

Shares of SK Telecom rose from the news and closed Thursday 0.15 percent higher at 328,000 won ($294.12).

To raise corporate value and stock accessibility, SK Telecom will implement a 5-to-1 stock split for common shares when they are relisted. The face value will be cut from 500 won ($0.45) to 100 won apiece, which will stretch the number of outstanding shares from current 72,060,143 to 360,300,715. The shares will be divided into 6-to-4 ratio in surviving and new company order.

A shareholder with 20 shares of SK Telecom stock, for example, will own 100 shares - 60 in SK Telecom and 39 in SKT Investment.

SK Telecom expected that the stock split will lead to an increase in the share of individual investors and contribute to a rise in market capitalization and stock price.

Under the spinoff plan, the remaining company SK Telecom will focus on artificial intelligence and digital infrastructure businesses, while the new company on semiconductor and ICT investment.

The new company will aggressively carry out merger and acquisitions in the global chip market. It will also seek to enhance business competitiveness through investment at home and abroad in various ICT sectors such as security, commerce, and mobility. It will also seek initial public offering of its units.

The new investment company will have 16 companies under its arm, including SK hynix, ADT Caps, 11Street, Tmap Mobility, and SK Planet. The wireless-focused business entity will oversee SK Broadband, SK Telink.

SK Telecom will seek new growth engines in subscription and Metaverse businesses based on AI technology.

By Lee Eun-joo

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