By Kim Yoo-chul
Staff Reporter
KT, the nation's second-biggest mobile carrier, said Monday it will buy 25 percent stake in Omnitel China to jump into the rapidly growing mobile contents and convergence sectors in China.
Omnitel is a South Korea-based mobile contents developer. Its Chinese affiliate has been providing mobile VOD and other customized contents to China's leading mobile carriers.
Omnitel China has 12 million subscribers to its mobile service via China's mobile carriers and it plans to develop entertainment contents on mobile phones.
KT, led by CEO Lee Suk-chae, said it will complete the stake acquisition work in Omnitel's Chinese affiliate by the end of July next year.
"After the share purchase, KT will see further chances in the booming mobile contents-related businesses in China," a company spokesman said.
In a separate statement, Omnitel said it is planning to list Omnitel China on the Hong Kong Stock Exchange (HKSE) as early as possible.
Citing stable sales channels owned by Omnitel China, analysts say the acquisition plan will pave the way for KT to effectively penetrate into China's mobile contents-related markets.
"It is expected for KT to recover its growth potential via steady investments in mobile contents-related businesses such as WiBro and home networks," Goodmorning Shinhan Securities, a local brokerage, wrote in a memo to clients.
The stake buying plan came at a time when China is seeing a rapid mobile-data growth amid soaring demand for smartphones and other high-end digital devices such as netbooks.
Smartphones are being used for video, media and other bandwidth intensive applications. Therefore carriers are tasked to address the explosion in mobile data traffic through better network intelligence and data compression and other methods.
In line with the frenzy, China Telecom plans to launch Canada-based Research In Motion (RIM)'s BlackBerry and other 3G-based smartphones under the Ophone brand, while China Unicom has already been selling iPhones in cooperation with Apple.
According to a research firm TeleGeography, Internet traffic has been gathering an additional momentum in China as mobile broadband has emerged as the wave of the future, especially in China where fixed-line and wireless services aren't available outside of big cities.
Inspired by impressive performances of the series of smartphone models and other 3G-based handsets, network operators are unexpectedly busy upgrading Internet backbones, research firms said.
"The stake buying plan is pre-emptive move to nurture mobile contents-related businesses and to find other chances amid the drastically changing telecom landscape, there," Maeng Soo-ho, a head of KT's global business unit, said.