(ATTN: ADDS stock closing price at bottom)
By Chae Yun-hwan
SEOUL, May 4 (Yonhap) -- SK Telecom Co., South Korea's largest mobile carrier, said Tuesday it has decided to cancel 2.6 trillion won (US$2.32 billion) worth of treasury shares, over 10 percent of its total floated stocks, in a move to boost shareholder value amid plans to split into two companies later this year.
The telecom operator said in a statement that it would retire 8.69 million treasury stocks, or 10.8 percent of its total issued stocks, by Thursday.
The cancellation would reduce SK Telecom's total floated stocks from 80.75 million to 72.06 million, which the company expects to boost its share price. SK Telecom said it plans to provide its remaining 900,000 treasury shares to its employees over the long run.
The move comes after SK Telecom said last month that it would split itself into two companies, forming a new holding company that will oversee operations of its non-mobile affiliates and subsidiaries, such as memory chip giant SK hynix Inc.
The spinoff plan had raised speculation that the new holding company could eventually merge with SK Inc., the holding company of the broader SK Group, so that it could have direct control over SK hynix. SK Telecom at the time rejected plans of a merger.
The latest decision reduces the chances of treasury shares being used to create conditions that would be favorable for a merger, according to analysts.
SK Telecom said the new holding company will seek to invest in semiconductor-related companies, while the remaining entity will focus on the mobile carrier's traditional telecom business and expand to new sectors, such as artificial intelligence and data centers.
Shares in SK Telecom rose as high as 5.92 percent, before closing 1.15 percent higher at 307,500 won, outperforming the broader KOSPI's 0.64 percent gain.
The mobile carrier announced its treasury stock retirement plan before the market opens.