DoCoMo agrees in principle to take stake in SK Telecom

NTT DoCoMo and SK Telecom Co. Ltd., the largest cellular carriers in Japan and South Korea respectively, have reached an agreement under which DoCoMo will take a stake in SK Telecom, according to a source at the South Korean carrier.

The two companies have yet to work out the specific details of the deal, including such issues as the size of the stake or cost, the source said. Those details are expected to be hammered out during meetings scheduled to take place during July between DoCoMo, SK Corp. and SK Global Co. The two South Korean companies transferred their combined 14.6 percent stake in SK Telecom to an overseas investment company earlier this year. The Cayman Islands-based company, Signum IX, was designated to hold the shares while talks were under way with potential foreign partners. A deadline of June 30 had been set to find a partner, although this has now been extended to Sept. 30 to accommodate the talks with DoCoMo, SK Telecom said in a statement on Thursday.

"At present, it is the intention of SK Corporation and SK Global to meet with representatives of NTT DoCoMo, Inc. during the month of July to explore a potential strategic partnership and foreign direct investment," the statement said.

For NTT DoCoMo, the stake would represent its third in an Asian wireless operator, should the talks be successful. The company made its first investment in Asia, and its first investment overseas, in late 1999 when it acquired a 19 percent stake in Hong Kong-based Hutchison Telephone Co. Ltd. and then in November 2000 it picked up a 16 percent slice of Taiwan's KG Telecommunications Ltd. The Japanese company has increased its stakes in both companies recently, pushing its share in Hutchison to 25.4 percent and in KG Telecom to around 21.5 percent.

SK Telecom announced plans earlier this week to merge with Shinsegi Telecomm Corp. in January 2002. The merger, which is being timed to avoid paying excessive tax, will make SK Telecom the world's tenth-largest cellular carrier by subscriber numbers, the companies said in a statement earlier this week.

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