China Unicom Buys Back South Korean Stake for $1.3 Billion

­South Korea's SK Telecom has sold its 3.8 percent stake in China Unicom back to the Chinese mobile network operator for US$1.3 billion, the Chinese company has announced. The move comes shortly after Spain's Telefonica agreed to a mutual shareholder agreement with Unicom which saw it increase its holding in the Chinese company.

China Unicom said it will fund the share repurchase from its cash flow and working capital, or external financing, or a combination of the three sources of funding.

SK Telecom Chief Executive Jung Man Won will resign from Unicom's board of directors once the transaction is completed in November.

Mr. Chang Xiaobing, Chairman of China Unicom said, "We are confident of China Unicom's development. The share repurchase would be beneficial for maximising the value of Shareholders investment in the Company."

The Korean company invested in China Unicom in 2006 after paying US$1 billion for bonds in the company, that was later converted into a shareholding. The two companies also agreed at the time to cooperate on CDMA developments. Since then, Unicom has been ordered by the government to split off its CDMA business to China Telecom and is now focusing on its GSM/WCDMA network.

Mr. Chang Xiaobing, added though that "after the share repurchase, China Unicom will be pleased to maintain the sound cooperation partnership with SKT," without elaborating how that cooperation would be structured.

In a separate announcement, Unicom confirmed that sales of the Apple iPhone will commence later this week with a retail price of around 5,000 yuan (US$732).

Posted to the site on 28th September 2009