NeoMedia Technologies, Inc (NEOM)

[ss9173]

OT DD SKT invests £540m in China (provides some insight into the chinese mobile market)

21 June 2006

http://www.telecoms.com/itmgcontent/tcoms/news/articles/20017358664.html?1=1&mp_articleid=200173...


South Korean operator SK Telecom today announced a plan for its entry into the lucrative Chinese market. The company has bought $1bn (£540m) worth of convertible bonds in second placed Chinese operator China Unicom, which can be turned into a 6.6 per cent stake in the company after a year.

But while SKT gets access to the world's biggest mobile market in terms of subscribers, Unicom also gets a partner with the know how to help it turn around its ailing CDMA business.

Unicom has been criticised for its failure to introduce low-priced CDMA handsets and cutting handset subsidies in a bid to bring its CDMA unit to profitability. The result has been that Unicom's monthly CDMA net additions for April fell 10.6 per cent month-on-month.

Unicom had 34.2 million CDMA subscribers at the end of May, compared to 99.6 million GSM subscribers. Conversely, leading Chinese operator China Mobile counted 268 million GSM subscribers at the end of the month.

Under the strategic alliance framework agreement, China Unicom and SKT have consented to cooperate on handset sourcing, value-added services and platform developing on the CDMA platform. SKT itself has some considerable expertise in the CDMA space.

Furthermore, Unicom and SKT already have a cooperative relationship dating back to the establishment of UNISK Information Technology Company in 2004, a joint venture engaging in CDMA value-added services in China such as ring tones and games.

SKT and China Unicom have also applied a principle of mutual exclusiveness to the agreement that SKT gets sole and exclusive partnership in China until the end of 2007.

Chang Xiaobing, chairman of China Unicom, said: "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."

Along with the agreement, affiliated Korean handset manufacturers, content providers, and solution developers are expected to branch out into the Chinese market, SKT said.

Shin-bae Kim, chief executive of SK Telecom, said: "By embodying and speeding up the cooperation of Korean-Chinese telecommunications, this agreement will facilitate both countries to interact in various fields. It will also give us a firm foothold to expand our global business in near future."

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