SK Telecom (NYSE:SKM) today announced that its fixed broadband subsidiary SK Broadband and t-broad*, a subsidiary of Taekwang Industrial Co., Ltd., signed a merger contract to better respond to the rapid changes in the pay TV market and strengthen their media competitiveness.

* t-broad is the second largest cable TV operator in Korea with 3.14 million subscribers as of the end of June 2018. t-broad’s services are available in major cities including Seoul, Gyeonggi, Busan and Daegu.

The ownership structure of the merged entity will be as follows: SK Telecom 74.4 percent; Taekwang Industrial 16.8 percent; Financial Investors 8.0 percent; and treasury stock and others 0.8 percent.

Through corporate valuation analysis conducted by an external accounting firm, SK Telecom and Taekwang Industrial set the merger ratio at 75:25.

Moreover, the two companies have successfully attracted an investment of around KRW 400 billion from a Financial Investor MiraeAssetDaewoo.

The merged entity will officially launch upon receiving approval from the Korean Government.

Through the merger, SK Broadband and t-broad will become a media company with around 8 million subscribers. According to the Ministry of Science and ICT, the number of SK Broadband’s IPTV subscribers stood at 4.54 million and the number of t-broad’s cable TV subscribers reached 3.14 million as of the end of June 2018.

SK Telecom stated that it expects the solid financial structure of t-broad to have a positive impact on its consolidated earnings and will continue to make multifaceted efforts to promote mutual growth of IPTV and cable TV after the merger of SK Broadband and t-broad.