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SK Telecom CEO
Jung Man-won |
Predecessor Leaves a Tangle of Helio, China, Vietnam Deals
By Kim Tong-hyung
Staff Reporter
Jung Man-won, SK Telecom's newly named chief executive, is facing a big challenge ― cleaning up the mess left behind by Kim Shin-bae in its overseas ventures.
SKT has lost over 400 billion won (about $271 million) in the United States, with massive investment in China and Vietnam showing no signs of turning around.
``We would like to consider our experience with Helio and other projects in the U.S. as expensive tutorials,'' said an SK Telecom official.
``Finding the right business models for each foreign market remains elusive, but we think our experience and established business relations in the country will allow us to have better ideas. We have no specific plans to comment on at the moment, but we can say that big merger and acquisition (M&As) deals are unlikely under current circumstances,'' he said, without providing exact numbers in terms of losses.
The company invested more than $400 million in Helio, a mobile virtual network operator (MVNO) it established with U.S.-based EarthLink in 2006. However, SKT only got $39 million for Helio when it was sold to Virgin Mobile USA last summer.
SKT spent $1 billion to buy a 6.6 percent stake of China Unicom in 2007, hoping for a large slice of China's growing mobile market. However, China Unicom has since merged with China Netcom, with SKT's stake reduced to 3.8 percent.
SKT-backed S-Fone, which is just the fourth-largest wireless carrier in Vietnam.
``It's apparent that MVNO is a dead business model in the U.S. The only way to go would be a merger and acquisition (M&A) with a mobile network operator, but it's questionable whether SK Telecom could manage to pull it off,'' said Choi Nam-gon, an analyst from Tongyang Investment and Securities.
``Although SKt is gaining a return-on-investment in China Unicom, it will never have much say over management decisions, considering that the Chinese government has no intention of granting SK Telecom a larger share than Spain's Telefonica in the combined company,'' he said.
SKT has been clearly plagued by its poor judgments. The company just managed to gather around 170,000 subscribers for Helio, a far cry from its goal of three million, and sustained a loss of $560 million before bailing out.
However, with Virgin Mobile only needing a short time to turn things around for Helio, there are doubts over whether SKT had poorly timed its exit.
The Korean carrier had invested more than $180 million in its business cooperation contract (BCC) with Vietnam's Saigon Postel (SPT), establishing S-Telecom to operate the S-Fone services. However, it remains to be seen whether Vietnam will ever become a meaningful market.
Jung has been known as SK Group's troubleshooter for putting SK Networks back on track after being appointed as CEO of the then-troubled trading company in 2003. He managed to complete a debt-workout program in four years.
Jung is anxious to find a similar breakout for SK Telecom's woes overseas, especially when the company is bracing for increasing competition within the domestic market.
``SK Telecom seems to have the courage, but not the plan,'' said an industry official.
``The company has hit the wall in the U.S. and you never know what you're getting in China. And unless it wins a third-generation (3G) license in Vietnam, it wouldn't be too much of a stretch to say that SK Telecom has no future in the country.''
thkim@koreatimes.co.kr
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