Just two weeks after Spain’s Telefónica struck a share swap deal with China Unicom, SK Telecom has announced it will sell its 3.8% stake in the Chinese carrier.
The Korean telco said today it would sell the shareholding back to Unicom in a deal worth approximately HK$10 billion ($1.29 billion). Under a share repurchase agreement, Unicom will pay HK$11.105 per share in cash, or 23% below the HK$14.36 Friday closing price.
SK Telecom said the decision “falls in line with our vision of becoming a global ICT leader.”
But the sale follows a deal between Unicom and Telefónica on September 6,
in which each agreed to take a share in the other. Telefónica raised its stake to above 8%, while Unicom took an 0.88% piece of the Spanish firm – the first strategic investment by a Chinese carrier in a foreign counterpart.
SKT’s decision shows once more the difficulties for foreign operators in gaining entry to the mainland telecom market. Vodafone has held a small stake – now 2.5% - of China Mobile for seven years, with little to show for it inside or outside China. The Unicom-Telefónica appears to be more about global opportunities, with the two carriers boasting a combined subs base of 550 million.
However, SKT has one of the best portfolios of Chinese VAS firms among foreign carriers, including games firm Magicgrids, a Korean video site within sohu.com and shopping site qianxun.com (see below).
It also runs a wireless internet JV with Unicom, UNISK. SKT said it would continue to work with Unicom and in areas such as VAS.
It said it would use the proceeds from the sale of shares to develop new business, including the existing China content and media businesses.
SKT is selling out of Unicom at a 28% premium above the entry price. The Korean firm bought $1 billion in Unicom convertible bonds in July 2006, which it converted into stock at HK$8.63 per share in August 2007.
The share sale is expected to be completed in mid-November after the approval of Unicom's independent shareholders.