SK Telecom treads carefully on overseas expansion

By Kim Yoo-chul

Staff reporter

SK Telecom, the nation's top mobile carrier, is reviving its efforts to expand overseas, after putting them on hold following a series of failures.

Malaysia, Indonesia and China are its new target areas.

The carrier, which controls over 50 percent of the domestic telecommunications market, has failed in its previous ventures in the United States, China and Vietnam.

On Thursday, SK said it will acquire a 25.77 percent stake in Malaysia's Packet One Networks for $100 million.

The deal is also expected to give the Malaysian broadband operator much-needed funds to expand its network, while giving SK Telecom a presence in a lucrative emerging market.

Packet One is the first and biggest provider of mobile WiMAX in Malaysia with 139,000 subscribers, SK Telecom said in a press release.

Company spokeswoman Cindy Kang said a formal agreement will be signed in June and added the decision will lift SK Telecom to become the second-largest shareholder in the Malaysian firm.

"The mutual partnership will be the right springboard for us to strengthen our content-related businesses in some alternative markets," Kang said.

The move also comes at a time when SK Telecom's home market has reached saturation point. Selling its content has emerged as the top consideration for SK Telecom for its new "industry productivity enhancement" or IPE long-term growth strategy.

IPE encompasses mobile and network solution services in finance, retail, education, healthcare and transportation.

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.

SK Telecom officials say IPE services help to maximize productivity and minimize costs by turning smartphones into mobile desktops.

The latest deal came a day after it signed a memorandum of understanding (MOU) with China's top builder to jointly develop an enhanced technology city in China.

The venture, of which SK Telecom will own 60 percent with the other 40 percent to be owned by China Railway No. 2 Engineering Group, will be launched in June at the earliest in Cheungdu City of Sichuan province with an initial investment of 13 billion won ($10.4 million). SK Telecom will name a new president to lead the venture.

Kang said the venture will be tasked with providing technological support across a commercial and residential site located along the Jinma River in Cheungdu.

The buildings and general infrastructure will be built by the Chinese company, while SKT will participate in the project from the second half of this year. The project has been set for completion by 2020.

"Various technological support such as the management of facilities, security, parking lots, communities and media will be provided by SK Telecom which will be used in the smart city," according to the representative.

Last week, it teamed up with PT Telekomunikasi Indonesia, a fixed and mobile network operator in Indonesia, to create a joint digital content exchange hub.