SK Telecom is moving ahead with a business restructuring that will spin off SK Broadband's data center and submarine cable businesses into a separate entity. The new entity will build expertise in AI (artificial intelligence) infrastructure, while SK Broadband will be restructured to focus on its existing wired telecommunications business.

New 'SK Horizon' to Be Established... Data Center and Submarine Cable Businesses to Be Transferred

According to Shinhan Investment & Securities, SK Telecom plans to establish a new entity called 'SK Horizon' through a horizontal spin-off of the data center and submarine cable businesses currently operated by SK Broadband.

Following the spin-off, the business structure will be clearly divided. SK Horizon will handle digital infrastructure-related businesses, including data centers and submarine cables, while SK Broadband will focus on its existing wired telecommunications business, including internet and IPTV services.

A New Growth Axis Aimed at the AI Era

This restructuring is interpreted as a strategy to separate the high-growth data center business from the existing telecommunications business in order to establish an independent growth foundation. As the spread of AI services increases demand for large-scale data processing, data centers have emerged as one of the new growth axes for telecommunications companies. Submarine cables are also a telecommunications infrastructure sector of growing importance, driven by rising global data traffic and the expansion of cloud and AI services.

A notable feature of this spin-off is that placing the data center and submarine cable businesses in a single entity can strengthen synergies between the related infrastructure businesses. Meanwhile, SK Broadband will be able to concentrate its management capabilities on its existing core businesses, such as internet and IPTV. As a result, the wired telecommunications business and the data infrastructure business within the SK Telecom group are expected to each establish independent business structures.

Key Points to Watch: New Investments, Utilization Rates, and Submarine Cable Expansion

The securities industry expects that factors such as SK Horizon's future new data center investments, utilization rates, and whether the submarine cable business will be expanded will be key variables in evaluating the effects of the restructuring. For SK Telecom, how it expands the value of infrastructure assets needed in the AI era, beyond its existing telecommunications-centered business structure, is likely to be a mid- to long-term point of interest.

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