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SK Telecom not interested in buying stake in Sprint

Posted by Joe P on July 17, 2008

Apparently the Korean Exchange doesn’t like being left in the dark. Over the past day or so, they have order SK Telecom to let them know what’s really going on with their Sprint talks. Without hemming and hawing to the exchange, SK came clean. “We are studying various business opportunities in the United States but are not seeking to take control in (any) major U.S. mobile operator,” their statement read. This seems to go along with the revised reports from Tuesday afternoon, in that SK is looking for a technological partnership with Sprint. However, as with the “groundless” talks with Virgin Mobile, SK could merely be setting up a smokescreen here.

This stands in contrast to what others are observing. From Business Week:

A U.S. credit crunch, declining asset value, and Sprint’s worsening balance sheet have prompted SK Telecom to accelerate its drive to expand its beachhead in the U.S. Investment banks “have been constantly putting together various deals for SK Telecom to lay its hands on Sprint,” says Michael Min, technology sector specialist at fund manager Tempis Capital Management in Seoul. The Korean company won’t be satisfied with just a strategic alliance, he adds. “I bet it will seek board seats in any deal with Sprint.”

Of course, this guarantees nothing. SK made overtures to Sprint last fall, to the tune of a $5 billion investment, which was denied. Given recent developments with Sprint, including their losing 1 million customers in the first quarter of 2008, with more losses, or at least flat growth, expected in the second quarter, they might be more interested in an investment from SK.

In any case, it is clear that SK wishes to expand its presence into the lucrative U.S. market. Their home market in Korea is nearly saturated, while plenty of opportunities still exist in the States. It’s just a matter of how big a stake they get. Will it be a technological alliance? Or will they start to seat members on Sprint’s board?