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SK Telecom's subsidiaries eye IPOs

All News 15:00 October 04, 2020

By Chae Yun-hwan

SEOUL, Oct. 4 (Yonhap) -- SK Telecom Co., South Korea's top telecom operator, is eyeing initial public offerings (IPO) for its digital service subsidiaries starting next year, analysts said Sunday, as the company seeks to realign its business structure.

The move has been widely expected after the mobile carrier announced its IPO ambitions for its wide ranging digital units of internet protocol TV (IPTV) operator SK Broadband Co. to video streaming service operator Content Wavve Corp. in its second quarter earnings call in August.

Analysts expect SK Telecom's Android app market unit ONE Store, which has an estimated value of 1 trillion won (US$855.1 million), to lead the IPO push.

"Among SK Telecom's ICT subsidiaries, the first IPO candidate will likely be ONE Store," Choi Nam-kon, an analyst at Yuanta Securities Korea Co., said in a report. "The company is expected to file for a preliminary IPO review in the first half of next year and complete the process during the second half of next year."

SK Telecom's subsidiaries eye IPOs - 1

SK Telecom holds a 52.7 percent stake in the Android app market operator, which was established in 2016 after merging with rivals from the country's top portal operator, Naver Corp., and the carriers KT Corp. and LG Uplus Corp.

ONE Store has narrowed its operating losses in recent years from 12.9 billion won in 2018 to 5.2 billion won last year after gradually expanding its market share.

The homegrown app store's total sales were estimated at 1.1 trillion won last year, accounting for 11.2 percent of the local market share, according to the Korea Mobile Internet Business Association, compared with an 11 percent stake at 940.3 billion won in 2018.

While the figure pales in comparison with the 63.4 percent share held by Google's Play store at 6 trillion won last year, ONE Store has been in the spotlight lately amid growing discontent from local app developers against Google.

The U.S. tech giant recently decided to enforce its billing system on all apps on the Play store, taking a 30 percent fee for all in-app digital content purchases. In comparison, ONE Store charges 20 percent.

SK Telecom's other digital subsidiaries are expected to follow ONE Store's IPO, including SK Broadband and smart security firm ADT Caps.

"SK Broadband's sales growth continues as the local pay TV market is increasingly centered around IPTVs," Jang Min-jun, an analyst at Kiwoom Securities, said. "ADT Caps' security business is also experiencing a continued growth due to rising demand for unmanned systems."

Video streaming firm Wavve Content Corp., a joint venture between SK Telecom and the country's three major broadcasters KBS, MBC and SBS, is also targeting an IPO in 2024.

The video streaming service Wavve is shown in this undated file image provided by Content Wavve Corp. (PHOTO NOT FOR SALE) (Yonhap)

The company, which launched last year, said its subscriber count has surpassed 10 million on the back of its growing catalogue of original series.

SK Telecom owns a 30 percent stake in the video streaming firm.

Analysts expect the IPOs to accelerate SK Telecom's goal to move beyond its telecommunications realm and become a tech giant.

"The IPOs could lead SK Telecom's transition to an ICT holding company from just a network service provider," Choi said.

SK Telecom CEO Park Jung-ho said earlier this year the company is considering dropping Telecom from its name to shift away from its network-focused business.

yunhwanchae@yna.co.kr
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