KT Freetel Confirms In Strategic Alliance With DoCoMo
SEOUL (Dow Jones)--KT Freetel Ltd. confirmed Thursday it has signed a strategic alliance agreement with Japan's NTT DoCoMo in which the Japanese wireless operator will purchase a 10% stake in KTF for about KRW564.9 billion.
DoCoMo will purchase a total of 20.2 million shares in KTF, which comprise 17.7 million new shares with the rest being treasury stock.
KTF will sell the shares at KRW28,000 each, a 15.7% premium to its Thursday closing price of KRW24,200.
As part of the alliance, KTF and DoCoMo plan to cooperate in developing wireless roaming services for customers in Korea and Japan, conduct joint marketing efforts, and jointly develop third-generation wide-band code division multiple access, or WCDMA, handsets.
KTF said in a statement that the alliance will help the company speed up the adoption of WCDMA wireless services in Korea and boost its global competitiveness.
"This alliance enables both companies to provide better services to customers in their respective markets through the development and promotion of mobile technologies and applications," the two companies said in a joint statement posted on NTT DoCoMo's Web site.
DoCoMo President and Chief Executive Masao Nakamura said in the statement: "We are confident that KTF's ability in service development combined with DoCoMo's experience with WCDMA will create synergies, such as handset roaming..."
DoCoMo will also be able to nominate one outside director to KTF's board, under the agreement.
At a press conference to announce the tie-up, KTF Chief Executive Young-Chu Cho said proceeds from the sale will be used to expand investments in WCDMA and new business areas.
Chief Financial Officer Hong Yung Do said KTF expects DoCoMo to make the payment for the shares within this month in cash.
The announcement comes after DoCoMo and KTF separately said Wednesday that they were in talks for a possible business tie-up in mobile phone services.
The tie-up marks an increasing offensive by DoCoMo in growing Asian markets. The company said Monday it will invest $6 million in the holding company of Chinese mobile payment service provider Just In Mobile Information Technology Shanghai.
The Japanese mobile phone service operator had slowed its overseas investments in the past few years following failed investments in U.S. and European telecom firms.
South Korean mobile operators, including KTF, have been looking to overseas markets for growth as a saturated and competitive market at home has led to hefty marketing costs, hurting profitability.
KTF has about 12.3 million subscribers in South Korea, giving it a market share of 32.4%. It ranks as the second-largest operator in the country after SK Telecom Co.
DoCoMo has more than 50 million customers, making it Japan's largest wireless operator.
DoCoMo shares finished unchanged at Y178,000 on the Tokyo Stock Exchange Thursday, while KTF shares closed down 3% at KRW24,200 in Seoul.
-By Yun-Hee Kim and Seon-Jin Cha in Seoul, and Yoshio Takahashi in Tokyo; Dow Jones Newswires; 822-732-2165; yun-hee.kim@dowjones.com
-Edited by Marissa Chew
(END) Dow Jones Newswires "
Posted to the site on 15th December 2005