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To: cfoe who wrote (55115)	12/19/1999 11:33:00 PM
From: Ruffian	Respond to of 152472

SK Telecom to Buy Control of Korean Rival Shinsegi as Vodafone Bows Out By Judy Lee SK Tel to Buy Rival Shinsegi After Vodafone Withdraws (Update2) (Updates with comment from SK Telecom and stock market reaction.) Seoul, Dec. 20 (Bloomberg) -- SK Telecom Co., South Korea's No. 1 mobile phone company, said it will buy rival Shinsegi Telecom Co. after Vodafone AirTouch Plc canceled plans to acquire Shinsegi shares. SK Telecom said it agreed to buy a 23.5 percent in Shinsegi stake from Kolon International Corp. for about 1 trillion won ($950 million). Based on the purchase price, SK Telecom will pay Kolon $1,223 per Shinsegi subscriber, a price comparable to those in recent telecommunications acquisitions in Japan. SK will also buy Pohang Iron & Steele's 27.66 percent stake in Shinsegi, the nation's No. 3 mobile phone operator, said Park Shin Hee, an SK spokesman. The acquisition will allow SK Telecom to control almost two thirds of Korea's mobile phone market, where the number of cell phone users has tripled in the past two years to 23 million in a population of 47 million. ''The acquisition will help prevent excessive rivalry and avoid duplicated investment,'' Park said. ''I believe Korea's mobile phone industry will undergo more mergers and acquisitions in the future to survive heightening competition.'' There are three other mobile phone providers in Korea: KT Freetel Co., a unit of the nation's biggest phone company, LG Telecom Co. and Hansol PCS. KT Freetel has shown interest in the smallest, Hansol. Vodafone's Retreat SK Telecom's buyout became possible after Vodafone, the world's largest mobile phone service provider, failed to make an initial payment to buy a 16.5 percent stake in Shinsegi from Kolon by Dec. 15 after signing an initial agreement in September, said Lee Wha Yong, a Kolon spokesman. Vodafone still owns 11.4 percent of Shinsegi. Kolon said it will now sell the stake totaling 160 million shares to Pohang, also known as Posco, the world's largest steelmaker and biggest shareholder of Shinsegi, which has 3.3 million subscribers. Posco will in turn sell the stake to SK Telecom for about $4 billion. With the purchase, SK Telecom takes over a smaller rival armed with the expertise of Vodafone as mobile phone operators look to develop new services, including wireless data and Internet, to keep their customers in a saturated market. Also,, Posco will also sell its 27.66 percent in Shinsegi to SK Telecom in return for a 6.5 percent stake in the No. 1 mobile phone company. ''Details on the sale will be disclosed at 3 p.m. today after the companies' board meetings.'' said Jeong Yeon Tae, a Posco spokesman. The news sent SK Telecom shares surging by the daily 15 percent limit in the first minute of trading to a record 3.218 million won. Shinsegi earned 18.3 billion won in the first six months of this year, reversing a 30.5 billion won loss in the second half of last year. Lion's Share SK Telecom has 9.98 million subscribers, holding a 44 percent market share, followed by KT Freetel, the No. 2 mobile phone company, with 18 percent and Shinsegi with 16 percent. The solidified position of the market leader will make it easier for SK to win one of three slots that the government plans to name for the development of the next-generation mobile phone services, dubbed IMT-2000. Winners of the IMT-2000 project will be able to jump into the lucrative services of wireless data, picture and Internet at a faster speed. Korea's Internet users already total 7.2 million and the market will grow 30 percent a year, according to Merrill Lynch & Co. estimate. In anticipation, KT Freetel forged partnerships by selling its combined 9.2 percent stake last month to Microsoft Corp., the world's biggest software maker, Qualcomm Inc. and Canadian investor Capital Communications CDPQ Inc. for a total of $600 million. Posco shares surged as much as 6.6 percent to 130,000 won. Kolon International dropped 7.8 percent to 8,900 won, snapping a 28.4 percent gain in the last seven days.