SEOUL, Feb. 17 (Korea Bizwire) — KT Corp., a major South Korean telecom operator, has formalized the spin-off of its cloud services business, and its plan as an exemplary case that would contribute to improving its overall corporate value, analysts said Wednesday.
The mobile carrier said Tuesday it will establish a new entity KT Cloud by spinning off its cloud and internet data center (IDC) business in an in-kind investment format.
To protect shareholder value, KT plans to revise the articles of incorporation towards enabling dividends in kind of subsidiary shares during the general shareholders meeting scheduled to be held next month.
“In a situation where there are not yet specific regulations that mandate investor protection in a spin-off, KT’s plan is noteworthy since it ensures preemptive investor protection,” Kim Hoi-jae, an analyst at Daishin Securities, said.
“This spin-off plan is notable as it seeks to protect shareholder value when the new company is listed,” said Kim Jun-sup, an analyst at KB Securities.
“Given that KT’s cloud and IDC business is growing by 20 percent per year, it would make it easier to reassess the corporate value.”
“Considering the slow speed in external growth of telecom business, the creation of a subsidiary that can achieve outstanding revenue growth and get high valuation assessment could have a positive impact on KT’s overall corporate value.” Ahn Jae-min, an analyst at NH Investment & Securities, said.
J. S. Shin (email@example.com)