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By Cho Jin-seo
Staff Reporter
The Korean telecom industry is determined to expand to foreign soil this year despite the downtown on the global financial market, and the past three months have shown that they are heading in the right direction.
Since the domestic market for mobile phones and Internet services is almost saturated and there is little room for further expansion, the telecom firms have naturally turned their eyes to outside of Korea.
Not all overseas projects have been successful as shown in SK Telecom's launching of the Helio mobile service in the United States, which lost $326 million last year. But with a stable cash flow from the domestic market, SK Telecom and other big firms have little to worry about financially for now.
Moreover, the demands for faster, more stable and more convenient communication tools are growing in both rich and poor regions of the world. That is opening doors for the Korean telecom industry, which has acquired technological prowess especially in the wired and wireless broadband Internet.
SKT Rises in China
For SK Telecom, China is its second home after South Korea. The firm is now the second largest shareholder of China Unicom, the second largest mobile phone operator after China Mobile, and has been leveraging the position to expand its presence in the country of 1.3 billion people. Most recently, it entered the Chinese music market by acquiring a 42.2 percent share in Taihe Rei Music, a major recording label there.
``Our mobile phone business has reached its limit in Korea, where the market is saturated. There also are limits in the contents and convergence businesses as well,'' said CEO Kim Shin-bae. ``To make a successful foreign business, we need to do well in three areas: technological and operational capability, platform, and creative services. SK Telecom has global competence in all three sectors.''
Other than China, SK Telecom has 3.5 million subscribers in Vietnam with its S-Fone brand, and some 180,000 subscribers in the United States for its Helio service. Helio is the only Korean-operated mobile service in a developed nation.
With such a global network, Korea's largest mobile operator says that every new project it launches in the future will be designed to suit the global market.
KT, KTF Go to Wild West
KT, the leading telephone and Internet service company, has taken a rougher road than SK Telecom. With its know-how in laying and operating wired and wireless networks, the firm has been helping many developing nations such as Mongolia, Nepal, Bangladesh and Russia improve their communication infrastructure
The most notable achievement has been in NTC, the No. 1 mobile operator in the Russian eastern port city of Vladivostok. Since joining the KT Group in 1997, NTC has grown to have revenue of $115 million and $40 million in operating profits last year, the largest ever made by a Korean firm in a foreign market.
This year, KT hopes to repeat the feat in Uzbekistan. It has purchased 51 percent of the shares in East Telecom, the second largest phone company there, and 60 percent in SiMax, a local wireless Internet operator. SiMax plans to launch a Mobile WiMax Internet service this year.
KTF, the mobile phone subsidiary of KT, is going further west. It is to start mobile phone services in Africa or in former Soviet-bloc countries this year through joint ventures with local firms.
This is the second step in KTF's globalization strategy since the establishment of U-Mobile in Malaysia last year in partnership with Japan's NTT DoCoMo. The company said it wants to enter five nations by 2010 and to have 50 million subscribers and 1 trillion won in sales by 2015.
``We have studied more than 40 proposals from many nations and we will be able to sign a contract in the Commonwealth of Independent States (CIS) or in Africa this year,'' Terry Ahn, executive vice president in charge of KTF's global business, said during a press meeting last month. ``Our strategy is to invest in developing nations where mobile penetration is still low and growth potential is high. To meet our long-term goal, we must sign at least one deal this year.''
Ahn said KTF set a goal of getting 10 percent of its revenue from outside Korea by 2015. That will be around 1 trillion won given that its revenue will grow from 7.2 trillion won in 2007 to around 10 trillion won by then. KTF will have about one third of the shares in the joint ventures, he said.
Its close relations with NTT DoCoMo, the largest mobile operator in Japan, will be a big help in the process, Ahn hinted. In December last year, the two firms invested $100 million each in Malaysia's U Mobile to get a combined 33 percent share. NTT also holds a 10.31 percent stake in KTF.
``KTF and NTT will have a long-term relationship. We feel comfortable with each other and we have a similar corporate culture.'' Ahn said. He didn't specify the country KTF is targeting this year, but said it would be one of the CIS nations, except Russia, or a sub-Saharan African nation.
Mobile WiMax Boom
KT is not the only company that wants to benefit from the deployment of Mobile WiMax. Korea is the home nation of the advanced wireless Internet technology, so many equipment companies here are in an upbeat mood, expecting much demand for their products.
Mobile WiMax, called as WiBro (wireless broadband) in South Korea, is a wireless Internet platform that enables users access to the Internet even in fast-moving cars and trains, and in tunnels and underground subways. The network is in use in Seoul and its vicinities covering some 20 million people.
Other than South Korea, Venezuela also has a commercial WiMax service in operation. POSDATA, an IT subsidiary of steel maker POSCO, has been providing the necessary network devices for local operator Omnivision. The two firms plan to expand the coverage to 28 million people in three cities ― Caracas, Valencia and Maracaibo, by 2009.
In the United States, Samsung Electronics has been selected as a main provider of WiMax equipment for the planned build-up of a nationwide wireless network. But the outlook of the project has been clouded by the financial concerns at Sprint.
indizio@koreatimes.co.kr
