SK Telecom Buys Stake in Unicom--News

South Korean company SK Telecom Co will acquire 6.61 percent of China Unicom Ltd by converting US$1 billion of China Unicom's bonds into shares, its latest effort to expand in the world's largest mobile service market.

SK Telecom will hold 899.7 million of China Unicom's shares after the conversion, making it the second-largest shareholder in the Chinese mobile operator, China Unicom said in a statement yesterday.

SK Telecom will get the shares at HK$8.63 each, a 29 percent discount on China Unicom's closing price in Hong Kong on Monday.

"SK Telecom has good experience in 3G and value-added services, and the investment may boost the two companies' cooperation," said Liu Zhe, an analyst at Analysys International, a Beijing-based IT and telecom consultancy.

SK Telecom bought the convertible bonds last June and also established a joint venture with the Beijing-based company as part of the deal. The venture, which provides value-added services such as ring tones and mobile games, is seen as a test for SK Telecom in the Chinese market.

SK Telecom plans to nominate a director to China Unicom's board, it said yesterday. It was the world's first company to start 3G mobile phone services in 2000. It started tests on China's homegrown 3G standard TD-SCDMA early this year.

A Financial Times report said last week that China Unicom may be merged with fixed-line phone operator China Telecom Corp in the lead-up to 3G high-speed wireless services.

"The tie-up is important for SK Telecom's bid to become a multinational mobile operator," said Liu.

SK Telecom now has more than 50 percent of the South Korean market and is gearing up for overseas expansion in China and the United States as further growth at home has proved difficult. The company is reportedly planning to buy into Sprint Nextel, a mobile company in the US.