South Korea's top mobile operator SK Telecom (SKT) will buy a stake in China Unicom Ltd, giving it a foothold in the world's largest mobile phone market by subscribers.

Unicom yesterday said it will issue US$1 billion in convertible bonds to SKT. SKT will be able to convert the bonds to a 6.6 per cent stake in Unicom in a year.

The move could be a new milestone in the opening up of China's telecom market after the country's accession into the World Trade Organization (WTO).

Spain's Telefonica last June acquired a 2.99 per cent stake in fixed-line carrier China Netcom for about US$300 million. Telefonica has increased the stake to 9.9 per cent.

A man sends a text message in front of a billboard advertising China Unicom. South Korea's SK Telecom will invest US$1 billion in the Chinese mobile phone operator, giving it a foothold in the world's largest mobile phone market by subscribers. [China Daily]

Vodafone already owned a stake in China Mobile, Unicom's larger rival in the country's mobile phone market.

Unicom has also inked a strategic alliance framework agreement with SKT under which the two firms will co-operate in areas such as CDMA (code division multiple access), handset, value-added service (VAS), VAS platform, marketing, IT (information technology) infrastructure and network businesses.

Unicom currently operates both GSM (global system for mobile communications) and CDMA networks with a total of 130 million subscribers.

The alliance with SKT is expected to improve the performance of Unicom's loss-making CDMA networks, which have about 35 million subscribers.

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