SK Telecom to buy stake in Unicom
By Li Weitao (China Daily)
Updated: 2006-06-22 09:06 "We believe that the strategic alliance will facilitate the company's future
development, enable the company to provide better services to its CDMA
subscribers and create greater shareholder value," said Chang Xiaobing, chairman
of China Unicom.
SKT is betting the alliance with Unicom will help it
take advantage of a broader opening up of China's telecom market.
China
promised to lift geographical restrictions in opening the mobile voice and data
market related with basic telecom businesses within five years after its WTO
entry in 2001.
The Unicom-SKT deal gives SKT sole and exclusive
partnership in China until the end of 2007.
"The Chinese mobile market
has great potential both in quality and quantity," said Shin-bae Kim, chief
executive officer of SKT.
"With this partnership, we look forward to
making significant developments in the CDMA business of China
Unicom."
China had 421 million mobile phone subscribers by May. SKT
expects there will be around 600 million new subscribers within the next three
years.
Despite the great potential of the Chinese market, overseas
operators still face regulatory uncertainties in China such as a possible
industry consolidation as well as the licensing of 3G (third generation) mobile
communications technologies, said Li Jia, an analyst with Beijing-based research
house Analysys International.
Japan's leading operator DoCoMo has also
shown interest in entering the Chinese market but said there will be investment
risks due to local regulatory uncertainties.
The firm said it will wait until
Chinese regulators decide how to award 3G licences to operators.
SKT said
the investment in the form of convertible bonds gives it "the flexibility to
react to the Chinese policy environment compared to direct stock
investment."
Analysts still doubt the prospects of the partnership
between SKT and Unicom.
"Under the current regulatory framework, overseas
operators are unlikely to get a major stake. That will help little in improving
Chinese operators' performance and capabilities," said Li.
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