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SK Telecom to invest in China Unicom

Posted: 23 Jun 2006 ?? ?Print Version ?Bookmark and Share

Keywords:invest? mobile telecom? SK Telecom? CUHK? China Unicom?

SK Telecom, South Korea's top mobile telecommunications service provider, said Wednesday (June 21) it would invest $1 billion in China Unicom Ltd (CUHK), China's second largest mobile operator.

In a regulatory filing, SK Telecom said the investment is being made by purchasing three-year convertible bonds of CUHK, the 100 percent owner of China Unicom Corp. Ltd. The bonds are expected to be transferred July 5.

SK Telecom will be able to convert the bonds into China Unicom shares a year from the issue date. When converted, the bonds involved in the deal could represent 899.75 million shares, a 6.6 percent stake of China Unicom, SK said.

Both companies also signed a separate, bilateral strategic alliance under making SK Telecom a sole and exclusive partner of China Unicom in CDMA until the end of 2007. The agreement calls for both companies to cooperate in joint handset procurement, develop value-added services and platforms, and share IP and global market information.

"The investment in China Unicom aims not to seek short-term profits but prepare for future business in China," said Song Hyun-Jong, SK Telecom's vice president and head of investor relations, in a conference call.

Song added the company has chosen to buy bonds from CUHK rather than direct investment, to minimize investment risks and cope with uncertainties over Chinese policies related to third-generation mobile services.

Korean industry analysts say SK's investment in China Unicom will be a breakthrough in tapping overseas markets because of the saturated wireless service market in Korea.

China Unicom provides both CDMA and GSM services to customers. SK Telecom forecasts China's entire mobile market to grow from 393 million subscribers at present to 600 million within three years.

- Sean Shim
EE Times

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