SKT seeks to find global Blue Ocean

In Korea, where 95 percent of the population has a mobile phone, telecom operators are eager to find new growth drivers to revive their stalled sales.

Such a mission is all the more critical for market leader SK Telecom, which controls about half of the country`s mobile services market.



The saturated market has prompted SK Telecom to look for overseas growth opportunities for years.

Previously, SK Telecom focused on acquiring and running overseas wireless carriers. But the company has changed its overseas growth strategy in the face of the global economic crisis and high entry barriers.

SK Telecom has put more focus on creating new markets through new services rather than competing in existing markets, analysts said.

"Under the current market conditions, it is difficult to inject a large amount of money into mergers or acquisitions involving telecom operators," Choi Nam-kon, an analyst at Tongyang Securities, said yesterday.

He also said after years of experience, SK Telecom realized that it is hard to acquire and run telecom operators abroad.

"SKT shifted towards a more practical, realistic direction," he said.

In June 2008, SK Telecom sold its loss-making U.S. mobile unit Helio to Virgin Mobile U.S.A. Instead, SK Telecom invested $25 million in Virgin Mobile U.S.A., which gave SK Telecom a 17 percent stake in the mobile carrier.

An SK Telecom executive also indicated that the company would shun mergers and acquisitions, citing the global credit crunch.

"There is no change in our principle of actively pursuing overseas business, but considering the global economic crisis, we will carefully approach large-scale investments," Jang Dong-hyun, chief financial officer of SK Telecom, said at an earnings conference call on April 30.

"We will pursue overseas business by exploring various convergence business models for huge markets such as China and North America," he said.

SK Telecom said it seeks to create new products and services through convergence within the ICT industry and combining elements of the ICT industry with those of other sectors.

For example, the operator plans to launch a "Mobile in Vehicle" service, which enables remote control of automobiles via handsets. The service, which integrated information communication technology with automobile technology, was demonstrated at Auto Shanghai 2009 last month and commercialized this year.

The service would allow car drivers to use their cell phones to check their engine, brakes and so on and get fuel-related information as well as controlling the doors, trunk, headlights and taillights, the mobile operator said.

With the planned commercial launch of Mobile in Vehicle this year, SK Telecom said it seeks to grab the initiative of the telematics market, which is expected to grow to $15.4 billion globally in 2011.

SK Telecom also plans to step up efforts to develop and offer converged services in major markets such as China and the United States.

SK Telecom set up a mobile internet joint venture with China Unicom. It also acquired a GPS company and a music company to enter the mainland`s telematics and entertainment sectors. In the United States, SK Telecom in April this year set up a joint venture with U.S. bank giant Citigroup to develop and offer mobile financial services.

"We will secure various business opportunities in major markets such as China and the United States. Especially, with convergence trends continuing, we are continuously looking for opportunities in the United States and China, while looking at mobile business opportunities in other countries," Jung Man-won, chief executive of SK Telecom, told a news conference on April 9.

SK Telecom has presence in three countries; the United States, China and Vietnam. The Korean company holds a 3.8 stake in China Unicom in China and a 17 percent share in Virgin Mobile in the United States. In Vietnam, SK Telecom operates mobile carrier S-Fone.

Meanwhile, SK Telecom plans to jointly develop new technologies and services with other contents, application and solution firms for overseas exports.

"We will achieve mutual growth with related industries," Jung said.

The company plans to establish a Collaborative Innovation Center to provide support for its partner companies to develop and test new services and technologies.

SK Telecom also said for the country`s information communication technology industry to branch out overseas, global outposts are needed and that SK Telecom will use SK Group`s 300 overseas networks in 42 countries to achieve this aim.

Another main goal of SK Telecom is to enhance customer satisfaction.

SK Telecom seeks to lower mobile phone charges by rolling out bundled products and offering competitive wireless data plans. For the past 25 years, the company has enhanced customer benefits by launching innovative products and services.

By Jin Hyun-joo



(hjjin@heraldm.com)