SK telecom to put SK communications up for sale again

SK telecom CI

South Korea’s largest telecom company SK telecom Co. is moving forward with efficiency measures in line with SK Group’s business restructuring strategy. This includes selling off non-core subsidiaries that lack synergy and enhancing its workforce restructuring efforts such as bolstering retirement support programs.

According to multiple sources from the information technology (IT) and financial investment industries on Thursday, SK Group is once again pursuing the sale of SK communications Co., a subsidiary of SK telecom that operates the Nate portal site and NateOn messenger service.

Various options, including a full or partial sale, are reportedly being considered.

“The SK communications sale has not been officially confirmed internally but is being discussed as a possibility,” an industry insider said. “The exact structure of the deal is also yet to be decided.”

Industry insiders noted that the latest move is part of a broader restructuring process being driven by SK Group’s management control tower, the SK SUPEX Council. The group has been focusing on balancing its business portfolio, and SK telecom is now implementing concrete steps to transition from a traditional telecom company to a global AI-focused business.

In line with SK Group’s emphasis on reducing the number of subsidiaries and concentrating on core businesses, SK telecom, which has continued to post strong results compared to other affiliates, is also shedding inefficient and non-core subsidiaries.

SK communications, a notable IT company with services including Cyworld, Nate, and NateOn, has struggled due to its failure to adapt to the mobile environment.

Nate was the second-largest portal in Korea at one point, behind Naver, but now, it holds less than 1 percent market share.

Its financial performance has also worsened, with an operating loss of 6.9 billion won ($5.1 million) in 2022 and 8.6 billion won in 2023.

SK Group previously attempted to sell SK communications to IHQ in 2015, but the deal fell through due to lack of agreement from IHQ’s creditors.

The rise of SK telecom’s AI assistant platform, A Dot, which was launched in September 2023, has further diminished the relevance of NateOn. Insiders added that NateOn has also lost ground to foreign platforms like Instagram.

As part of efforts to adapt to the changing trend, SK communications repositioned NateOn as a business collaboration tool, focusing on features like team rooms that are optimized for small projects.

F&U Credit Information, in which SK telecom holds a 50 percent stake, is also considered a potential sale candidate.

The company handles customer management, including debt collection for unpaid telecom bills.

Despite its profitability, SK telecom is reportedly considering the sale due to negative perceptions surrounding debt collection and concerns over potential business risks.

SK telecom is also enhancing its workforce efficiency. It recently increased the financial incentives in its Next Career program, which supports employees aged over 50 in pursuing paid leave for two years and offers a choice between returning to work or retirement. The maximum retirement bonus has been raised from 50 million won to 300 million won. The company emphasized that the program is designed to help employees improve their careers and is different from forced voluntary retirement.

It also recently partnered with the U.S. search unicorn, Perplexity AI, to enter the conversational AI search market, and plans to enhance its personalized search experience for Korean users via A Dot as well as rolling out a tailored AI agent service for the U.S. market by the end of 2024.