SK Telecom to spin off mobility unit with funds from Uber

SK Telecom will spin off its mobility business to increase its focus on transport platforms and services, including its navigation app T map.

The board of the telecom operator approved the split on Thursday and the new unit has attracted 100 billion won ($87 million) of investment from Uber, according to industry sources and media reports.

“Uber made the investment as part of a strategic partnership,” said a source in the telecom industry with knowledge of the issue.

The new company, which does not have a name yet, will likely direct resources toward incorporating artificial intelligence, big data and the internet of things into existing apps T map, ride-hailing service T map Taxi and T map Parking, according to analysts.

“SK Group will likely develop the new unit into a business leading service backing autonomous driving cars and the concept of the sharing economy, a factor that could pull in Uber’s investment,” said Kim Hong-sik, an analyst at Hana Financial Investment.

The separation is also in line with SK’s move to spin off high-performing affiliates.

“SK thinks that SK Telecom has devalued significantly,” Kim said. “So it is in the process of splitting units with high growth potential and taking them public in order to increase overall corporate value.”

The group, for instance, made 11st, an e-commerce platform, an independent unit from SK Planet in 2018.

SK Telecom will have full ownership of the spun-off unit.

The telecom operator will likely scale up its transportation services by taking the mobility company public, analysts predict.

“[The spinoff] could serve as a basis for growth as it can help make decisions on partnership and investment at a quicker pace,” said Lee Seung-woong, an analyst at Hi Investment & Securities.

The move will put SK Telecom’s new business unit squarely in competition with Kakao Mobility, a mobility affiliate spun off from Kakao in 2017.

SK Telecom dominates the market in the navigation sector, but trails when it comes to taxi-hailing services.

T map has approximately 12.5 million monthly active users, according to SK Telecom.

Its taxi-hailing service T map Taxi, however, had just 1.25 million monthly active users as of 2019, while Kakao’s Kakao T claimed 10 million the same year.

SK Telecom has sought to boost the appeal of the transportation apps by incorporating its voice assistant system Nugu into the platforms.

Its shares rose 1.74 percent on Thursday to 234,500 won.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]