By Jung-Ah Lee
Of DOW JONES NEWSWIRES
SEOUL (Dow Jones)–South Korean mobile operator SK Telecom Co. (SKM) said Thursday it has sold its entire 29.3% stake in Mongolia’s Skytel LLC to existing shareholders raising a total of KRW28.3 billion ($25.4 million) and marking its exit from the country as the market becomes saturated.
The move is part of SK Telecom’s ongoing strategy to pull out of unprofitable markets and shift its focus into other markets and business areas using more advanced network technology. In September last year, SK Telecom also sold its entire 3.8% stake in China Unicom (Hong Kong) Ltd. for US$1.35 billion. In June 2008, SK Telecom sold its unprofitable U.S. mobile unit, Helio, for $39 million in stock to Virgin Mobile USA Inc., which was acquired by Sprint Nextel.
“The penetration rate of the Mongolian cellphone market has reached more than 60% and is getting saturated,” said Lauren Kim, a spokeswoman at SK Telecom. “The funds will be reinvested in the areas we are now focusing on, such as (mobile) platforms.”
SK Telecom said it sold the stake to existing shareholders in Mongolia including Sun Clay Group and Global Com LLC.
SK Telecom acquired an initial 20% stake in Skytel in 1999 and provided analog telecommunications equipment. The Korean company further increased its stake in Mongolia’s second-largest mobile telecommunications firm by subscribers to 29.3% by investing KRW600 million in cash in 2002.
SK Telecom said it received an additional KRW2.5 billion in dividend income after the stake sale.
Skytel was established in 1999 through a joint venture between SK Telecom and Korea-based firm Taihan Electric Wire Co.
The divestment comes after SK Telecom said in May that it will buy a 25.8% stake in Malaysian broadband network operator Packet One Networks (Malaysia) Sdn. Bhd. for $100 million, a tie-up that would help SK Telecom expand into other promising overseas markets while giving Packet One the capital it needs to expand its WiMAX high speed broadband network in Malaysia.
Telecommunications firms in South Korea have been looking abroad for growth in recent years developing products that bundle fixed-line, mobile and Internet services as growth slows at home.
-By Jung-Ah Lee, Dow Jones Newswires; 822-3700-1907; firstname.lastname@example.org