|From left: SK Telecom CEO Park Jung-ho, KT CEO Ku Hyeon-mo, LG Uplus CEO Hwang Hyeon-sik / Korea Times file|
By Kim Bo-eun
Mobile carriers are going all-out to boost their corporate value and cut their heavy dependence on the already-saturated and not-so-lucrative, conventional telecom-centric businesses.
The central point for these moves is aimed at appealing to investors, as telecom stocks have remained lackluster for the past years. They are shifting their focus from the conventional telecom business to new areas of growth, and seeking additional means to push up stock prices.
SK Telecom (SKT) said Tuesday that it will cancel 2.6 trillion won worth of treasury shares. The SK Group affiliate will cancel 8.69 million treasury shares ― almost the entirety of such shares ― on May 6. These shares amount to 10.8 percent of the total number of SKT stocks issued.
The share cancellation decision, which was approved at a board meeting early Tuesday, will cut the number of its total floating stocks to 72.06 million from 80.75 million. Usually, share cancellations have the effect of boosting stock prices by reducing the number of issued shares.
Regarding the whereabouts of the usage of the remaining 900,000 treasury shares, SKT said these will be used for various employee benefit programs, including possible stock options. SKT's stock price hit an all-time high of 322,000 won during intra-day trading as investors reacted positively to the decision. The company's stock closed at 307,500 won, up 1.15 percent from the previous day's close.
Last month, SKT said it would split into two entities through an equity spinoff ― a restructuring move it said was intended to minimize the impact on shareholders. The planned restructuring will take place to enable the telecom firm to concentrate on 5G and artificial intelligence (AI)-related businesses, while a new body will focus on investments in semiconductors for its affiliate SK hynix.
SKT has set four new core businesses ― mobility, media, commerce and security ― as future engines of growth. SKT set up a new affiliate in charge of its mobility business in December and established a separate joint venture with Uber. SKT executives are dissatisfied over its market capitalization of 20 trillion won, as SK hynix is now valued at some 100 trillion won.
It remains to be seen whether the remaining two telecom companies ― KT and LG Uplus ― apply similar specific steps to those of SKT to boost their shareholder value.
KT has identified an increased stock price as its top corporate agenda. It's been stepping up efforts to raise its corporate value by taking some "transformative efforts" to get into the field of AI robotics, as well as to start a business in media content, areas that were previously untouched. KT plans to structure its portfolio to be more B2B-based, by offering services in cloud technology and digital transition. Its CEO bought back more than 9,000 of the company's shares last year to show confidence in the company's future performance.
"We are reviewing diverse means to boost corporate value," a KT official said, but declined to elaborate. KT's stock closed at 29,100 won on Tuesday.
Regarding LG Uplus, its CEO, Hwang Hyeon-sik, recently stated at the company's general shareholders' meeting in March that it will move forward with formulating businesses to enable qualitative growth and to secure funds for new growth engines.
LG's telecom arm is seeking new B2C growth engines in advertising, data and subscription services, as well as for B2B businesses, pursuing smart factory and smart mobility projects. LG Uplus stock closed at 13,950 won the same day.