SKT, Kakao boost partnership through equity swap

SK Telecom Vice President Ryu Young-sang, left, shakes hands with Kakao CEO Yeo Min-soo after signing a strategic partnership via a stock swap at the company's headquarters in Seoul, Monday. Courtesy of SK Telecom

By Kwak Yeon-soo

SK Telecom and Kakao will bolster strategic partnership in reshaping the nation's ICT ecosystem through a share-swapping deal, the two companies said Monday.

Under the deal, SKT will sell its company shares worth 300 billion won ($257 million) to Kakao, and the mobile messenger app operator will issue new stocks to the mobile carrier accordingly.

As a result, SK Telecom will own a 2.5 percent stake in Kakao, while the mobile messenger app operator will hold a 1.6 percent stake in the telecom company. The stock acquisition is scheduled for Nov. 5, according to them.

The two companies said the latest partnership is significant, as it involves a stock swap and encompasses not only business and services but also research and development (R&D) activities.

Together, they will develop services that utilize 5G networks for telecommunication, e-commerce, digital content and future ICT.

“This deal will boost competitiveness of 5G and mobile platforms, which will have an important impact on the future ICT landscape,” an SK Telecom official said.

“We agreed that openness and cooperation are vital to bolstering global competitiveness.”

SK Telecom said it plans to drive innovation in customer experience by merging its service with that of KakaoTalk.

It will also leverage Kakao's intellectual properties and content-creating capabilities in strengthening its media platform to create new digital content.

As for the e-commerce sector, they will work on ways to deliver a new shopping experience for their customers.

The two entities will also collaborate on future technologies such as artificial intelligence and the internet of things to better cope with the evolving ICT landscape.

“Through this partnership, we will be able to secure leading spots in 5G and mobile platform and provide new experiences and value ??to our users,” Kakao CEO Yeo Min-soo said in a statement.

He also mentioned the latest partnership could build up the competitiveness needed to beat global rivals.

“We will work closely together to bring innovation to Korea's ICT ecosystem,” Yeo said.

SK Telecom has been involved in various 5G projects for smart cities, smart offices and self-driving cars. The company has been engaging in the content creation business, forming an esports joint venture with U.S. media giant Comcast on Oct. 11.