Samsung Securities on the 28th said the mid- to long-term corporate value of SK Telecom(017670), which recently spun off its subsidiary SK Broadband to accelerate the expansion of its artificial intelligence (AI) data center business, will rise. It kept its investment opinion at Buy and its target price at 111,500 won. SK Telecom's previous closing price was 99,100 won.
SK Telecom on the 27th disclosed that it will spin off its wholly owned subsidiary SK Broadband to establish SK Horizon, a specialized corporation for operating AIDC (AI data centers).
The surviving company will be SK Broadband and the new company will be SK Horizon, with a partitioning ratio of about 0.84 to 0.16 based on net worth at book value. SK Broadband will handle fixed-line, media, and enterprise, while the new company SK Horizon is expected to become a pure infrastructure corporation dedicated to expanding AIDC infrastructure.
SK Horizon is expected to lead the operation of infrastructure totaling 318 megawatts (MW), including eight existing data centers in operation and new builds in Ulsan and Guro, as well as the expansion of the submarine cable business.
In addition, SK Telecom secured an investment of 3.08 trillion won in SK Horizon from a consortium of private equity fund (PEF) managers KKR and IMM Investment–Stonebridge Capital. After the transaction is completed, the equity stakes will be reorganized to SK Telecom 51%, KKR 29%, and IMM consortium 20%.
Choi Minha, an analyst at Samsung Securities, said, "The key is that SK Telecom maintains control with a majority equity stake while securing a large inflow of cash through the sale of existing shares, and at the same time achieves the effect of diversifying the funding needed for large-scale infrastructure investment through external capital."
With this spin-off, SK Telecom's AI infrastructure business is expected to be reorganized into a two-track system.
While SK Telecom oversees partnerships with global big tech and the group's overall AI strategy, the new corporation SK Horizon will be responsible for improving the operating efficiency of the pre-secured MW-class infrastructure, its own expansions, and the expansion of submarine cables.
By contrast, SK Hyper is expected to focus on developing next-generation hyperscale mega projects that require large sites and power, aiming to build gigawatt (GW)-class capacity in the mid to long term.
Choi said, "This structure both increases the visibility of achieving the previously presented goals of 'securing 318 MW of capacity by 2030 and reaching annual revenue of 1 trillion won,' and maximizes execution by separating, by corporation, the stable cash generation based on existing infrastructure, phased expansion, and the long-term development risk of next-generation mega projects."
Choi added, "The expansion of AIDC projects rolling out nationwide will bring the market's full attention to the value of the AI infrastructure business as a new growth engine and is expected to drive a rise in mid- to long-term corporate value."