SKT to buy China Unicom stake for USD1.1 billion?

6 Jun 2006

South Korea’s biggest mobile phone operator SK Telecom is planning to buy a 10% stake in China Unicom for about USD1.1 billion, reports the Financial Times. SKT is reported to have started the process of hiring advisers, with one unnamed banker in Seoul quoted as saying that they have retained 50 people to look at the deal. SK Telecom CFO Ha Sung-min has denied the report, but admitted that the company is looking for investment opportunities in the People’s Republic.

Chang Xiaobing, China Unicom’s chairman and chief executive, said in March that his company was searching for a domestic or foreign strategic partner to help develop its mobile services for 3G on the mainland. Created in 1994 as part of the Chinese government’s quest to break up the monopoly of state-owned PTO China Telecom, China Unicom offers a range of integrated telecoms services including cellular, international and domestic long-distance communications, data, internet and IP telephony. It has offered GSM-based mobile services since 1994 and in recent years has spearheaded the development and rollout of CDMA services in China.

If the Korean company does purchase a stake in Unicom, it would be following in the footsteps of a number of other telecom groups keen to tap the burgeoning Chinese mobile market. Vodafone has 3.3% of China Mobile, the largest wireless operator, while Telefónica of Spain last year won approval from the Chinese government to double its stake in China Netcom, the second largest fixed-line operator, to 9.9%.

China, China Unicom, SK Telecom (SKT)