SKT Buys Into China's No. 2 Mobile Operator

SK Telecom has signed a strategic partnership agreement with China’s second largest mobile operator China Unicom that will entitle the Korean company to exclusive partnership for 18 months.

Korea’s largest mobile operator said Wednesday it signed a contract with CU to purchase convertible bonds worth US$1 billion (W962 billion) to cooperate in the CDMA business and “recognize mutually exclusive positions.” The bonds will be issued by China Unicom Limited(CUHK), the Hong Kong-listed firm that owns CU.

The three-year bonds can be converted to stock a year later. Once converted, they will account for 6.6 percent of CUHK’s total shares, making SKT the largest foreign investor in the company. The biggest benefit SKT will reap from the investment is to secure a position as an exclusive partner.

The agreement will enable SKT to try various business options in the Chinese market using CU’s 32 million CDMA subscribers. It agreed with the Chinese operator to cooperate in six areas ? phone purchase and development, marketing, wireless Internet service, network, infrastructure and software.