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SKT Plans $2.2B Spending Spree

SK Telecom (Nasdaq: SKM) has KRW3 billion (US$2.27bn) to spend on new investments, the company's recently appointed CEO, Man-Won Jung, has revealed.

This is part of a five-year development plan that has been prompted by the lack of growth opportunities in South Korea's traditional telecoms market, a situation that Jung referred to as: "much more serious than I thought from the outside."

SK Telecom is looking at both domestic and international investments centered on ICT services and software and is aiming to stimulate South Korea's ICT services and software industry to reach a global position similar to that held by the nation's mobile handset vendors.

South Korea's software players currently account for 2 percent of the global market, compared to the 25 percent held by their mobile terminal counterparts.

Jung, who took over as CEO at the beginning of the year, said the company will concentrate on pursuing opportunities in China and the U.S., according to a report from Reuters.

SK Telecom already has activities in both target markets and this can be seen as a development of an existing strategy rather than a completely new departure.

It holds a 3.8 percent share in China Unicom Ltd. (NYSE: CHU), but, more significantly, over the last two years it has acquired large shares in companies leading the development of key content areas in China.

These include: a 30 percent share and a strategic partnership in online gaming company Magicgrids; an equal majority share in Beijing Taihe & Rye Music, China's largest record label; and a controlling stake in E-ye High Tech, which provides location-based services.

SK Telecom also has a US$16 million mobile financial services joint venture with Citibank called Mobile Money Ventures. This was created to take the financial services that have been successful for SK Telecom in South Korea to a global audience, and its first services were launched in Hong Kong last October.

In the U.S., SK Telecom has a 17 percent share in Virgin Mobile USA Inc. (NYSE: VM), which resulted from Virgin's acquisition of Helio Inc. , SKT's MVNO joint venture with EarthLink Inc. (Nasdaq: ELNK), which was recognized for its slick phones and services but failed to impact the U.S. market. (See Helio, Goodbye).

At the heart of SK Telecom's plans is the development of an end-to-end converged and service-oriented concept named ‘5nGINE.' According to the company, this includes everything from access technologies -- such as LTE and, further in the future, the 4G systems like LTE advanced or WiMax advanced and service-enabling technologies, such as automatic translation and personalization -- to business platform technologies including cloud computing and smart power technologies such as smart grid and cross-industry convergence technologies.

The name, 5nGine, is a convoluted acronym derived from "next-generation, global de facto standard, innovation, no border, and experience." We can only hope that the acronym is not widely adopted, although it is clearly SK Telecom's intention that the concept is.

Announcements regarding specific strategies and investments in both domestic and overseas markets are to follow, according to the company.

— Catherine Haslam, Asia Editor, Light Reading

menexis 12/5/2012 | 4:07:23 PM
re: SKT Plans $2.2B Spending Spree I think this is a good move for SKT as there is still much growth in the South Korean market
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