Mobile Carriers Offload Non-core Biz amid New Tech Push

SEOUL, Jan. 27 (Korea Bizwire) — South Korean telecom operators are divesting their non-core businesses, from baseball to radio communications, amid a shift in the local telecom market toward new tech services.

On Tuesday, SK Telecom Co., the country’s largest wireless carrier, said it agreed to sell its baseball franchise SK Wyverns to local retail giant E-Mart Inc. for 135.2 billion won (US$122.7 million).

The announcement came as a surprise as SK Wyverns has served as the broader SK Group’s flagship sports franchise since the team’s formation in 2000.

While SK Telecom said it would shift its focus to support local amateur sports, the move is the latest in a series of corporate shakeups by local mobile carriers.

Last week, telecom rival KT Corp. said it decided to sell its radio communications affiliate KT powertel Co. to local security equipment maker IDIS Ltd. for 40.6 billion won.

KT is also in the process of merging its digital content unit KT Hitel Co. and mobile coupon and ad unit KT mhows Co.

The moves come as mobile carriers search for new growth drivers amid changes in the telecom market.

While telecom operators have banked on the new 5G network to propel growth, the country’s mobile phone subscriptions have instead slightly declined.

Total phone subscriptions stood at 56 million as of November last year, compared with 56.1 million in April 2019 when 5G commercially launched here, according to ICT ministry data.

Against such a backdrop, telecom operators have brought out new tech businesses, ranging from artificial intelligence (AI) to video streaming services.

Last year, KT unveiled its new brand KT Enterprise to bolster its services geared to corporate clients, such as AI call centers and cloud services.

SK Telecom has also ventured into new tech businesses, such as launching video streaming service Wavve in 2019 and an AI semiconductor last year.

The telecom operator has also bolstered its status as a broader tech company as its subsidiaries have joined hands with U.S. tech giants.

SK Telecom said last year it reached an agreement for Amazon.com Inc. to acquire a stake in its online commerce unit 11Street Co., while its mobility spin off T Map Mobility Co. has joined hands with Uber Technologies Inc.

“Despite the COVID-19 pandemic, SK Telecom’s internet protocol TV and Wavve’s users have steadily grown,” Kiwoom Securities analyst Jang Min-jun said. “Its commerce operations are also expected to log increased profit growth.”

The telecom operator’s focus on new businesses also comes as it is mulling a transition into a holding company to upgrade its affiliate and memory chip giant SK hynix Inc.’s role in the conglomerate.

SK hynix is currently a second-tier company in SK Group’s web of affiliates despite being South Korea’s No. 2 chipmaker after Samsung Electronics Co.

The conglomerate’s holding company SK Holdings Co. owns a 26.8 percent stake in SK Telecom, which in turn holds a 20.1 percent share in SK hynix.

“Due to the recent growth in SK Telecom’s non-telecom businesses, there are upbeat expectations for changes to its corporate governance structure,” Jang said.

(Yonhap)