By Kim Yoo-chul
Staff reporter
SK Telecom, the nation's top mobile carrier, has taken a small but meaningful step to effectively nurture a next revenue source overseas.
On Monday, the South Korean mobile operator said it had signed a deal with Indonesia's biggest phone company to establish a new digital contents business.
The partnership is the first in more than six months after its chief executive Jung Man-won's pledge last year to yield visible results for the company's new growth engines.
The joint venture, of which PT Telekomunikasi will own a 51 percent stake with the remaining 49 percent held by SK Telecom, will be a data exchange hub for music, games and video clips in the Southeast Asian country.
"The initial combined investment will be around 12.5 billion won or $10.3 million. SK Telecom is set to invest $5 million," company spokeswoman Cindy Kang said.
Under the deal, the two sides will see further chances to expand tie-ups in the business-to-business (B2B) market to offer networks- and other advanced telecom services-related products to influential regional players, Kang added.
"SK Telecom is very keen to make additional profits by providing our mobile content in four major segments ― connected cars, healthcare, learning and human resources," Kang said, adding that this year would be critical to put its top corporate strategy of "industry productivity enhancement" (IPE) on a stable footing.
SK, which hopes to move away from its heavy dependence on the saturated domestic mobile phone market, is focusing on its solution-linked businesses to eventually compete with Cisco, British Telecom (BT) and IBM ― once hardware-focused companies now having made successful transitions towards software-weighted ones.
IPE encompasses mobile and network solution services in finance, merchandising, retail, education, healthcare, transportation and construction, according to Kang.
The company is eyeing 40 trillion won or $35.1 billion in annual revenue by 2020, with IPE business generating half of it. SK Telecom is targeting 13 trillion won in sales this year.
Asked about further talks with other telecom companies, even in developed countries in the United States or the euro zone, Kang declined to give details, but added the carrier has been engaged in talks with "several companies" to strike similar deals in those regions.
"Our initial targets are developing countries. We won't be hesitant in our activities. But convergence has already emerged as the top concern for most telecom carriers," she said.
Globally, telecom operators are looking for new services outside the saturated traditional telecom market.
SK Telecom wants to enter overseas markets with its new business focus in B2B areas after earlier attempts to establish mobile phone businesses in the United States, China and even Vietnam failed to break through.
A month ago, the company launched a Near Field Communication mobile-payment service called T Smart Pay in cooperation with Hana-SK Card, allowing consumers to use the service after downloading the T Smart Pay application to a financial services-enabled USIM card used for 3G data connections available from select retailers.
Despite such steps, SK Telecom has found it hard to compete with industrial players for a better penetration of its convergence services as SK's software content is not strong enough to greatly appeal to corporate partners for collaboration, according to analysts.