SK Tel to Invest Up to $280 Mln in Vietnam Venture
Wed Nov 9, 2005
SEOUL (Reuters) - South Korea's top mobile operator, SK Telecom Co. (017670.KS: Quote, Profile, Research), said on Tuesday it would invest up to $280 million in its Vietnam venture as it faces slowing growth in an increasingly saturated local market.
The announcement came after SK Telecom, which controls half of South Korea's mobile market, said last month it was no longer in talks with India's Tata Teleservices over a possible investment.
"The decision, based on our expectations for changes in regulation in Vietnam and accelerating mobile growth, is to bolster our competitiveness and to grow as one of the major players in Vietnam," SK said in a statement.
SK Telecom aims to attract 4 million subscribers and generate $350 million in revenue by 2008.
The total investment in Singapore-based SLD Telecom Pte. Ltd., a venture owned by SK Telecom, LG Electronics (066570.KS: Quote, Profile, Research), Dong Ah Elecomm and semi-private Saigon Post and Telecommunications Co., is subject to change, based on other shareholders' decisions, SK Telecom said.
SLD Telecom runs the S-Fone brand in Vietnam, which had 4.96 million mobile subscribers at the end of 2004, up 62 percent from 2003 when the penetration rate was only 3 percent.
Industry officials say the potential for expansion is huge in a country with 82 million people.
SK Telecom would compete with Vietnam's two key operators, Vinaphone and Mobiphone, as well as global giants such as Hutchison Telecommunications International Ltd. (2332.HK: Quote, Profile, Research), which obtained approval for its CDMA mobile business in Vietnam early this year.
The deal would mark the biggest overseas investment by SK Telecom this year. In January it announced a $220 million investment to a joint venture with U.S. Internet service provider EarthLink Inc. (ELNK.O: Quote, Profile, Research) to sell wireless services in the United States.
SK has turned to international markets to boost earnings as growth in South Korea has slowed, with nearly four out of every five people having a mobile phone.
Shares in SK Telecom closed up 0.8 percent at 188,500 won, marginally outperforming the broader market index.
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