DoCoMo signs deal to buy 10% stake in KTF

KTF Ltd., the nation’s second-largest mobile service operator, signed yesterday a strategic agreement with NTT DoCoMo Inc. to sell the Japanese firm a 10 percent stake worth 565.5 billion won ($550 million). KTF will sell 20.2 million shares to DoCoMo at 28,000 won apiece, an 8.8 percent stake in newly-issued shares and 1.2 percent in treasury stocks. DoCoMo will also receive a seat on KTF’s board of directors. The partnership is a move for the companies, both facing saturation in their own markets, to secure new growth momentum, KTF said in a press release. “The top-ranking mobile service operators of the two countries, both of which have the most developed wireless data service across the globe, will push their W-CDMA services,” said Cho Young-chu, KTF chief executive, in a press meeting. W-CDMA, an acronym for wideband code division multiple access, is a next-generation mobile communications standard allied with the world’s most common communications system, Global System for Mobile, or GSM. The alliance will offer international roaming services in both countries, while jointly seeking new business opportunities and cost savings. KTF plans to deploy a 3G network based on the same W-CDMA standard as DoCoMo. KTF adopted the W-CDMA standard in December 2000, but it has yet to start the service, partly because it already offers a similar service based on an alternative CDMA technology by Qualcomm Inc. First developed by DoCoMo and commercialized in 2002, W-CDMA has become an international 3G standard with almost 18 million subscribers around the world. KTF, which has 12.5 million subscribers, said DoCoMo chose it over Korea’s market leader SK Telecom after seeing KTF’s long-term growth potential. In addition, DoCoMo has been seeking partnerships with operators of W-CDMA services, and KTF’s efforts to expand its W-CDMA business sector were highly rated. The deal would be DoCoMo’s first large-scale investment in a foreign carrier since 2001, when the bursting of the Internet bubble forced the company to write off billions of dollars worth of investment in overseas carriers as their share prices nose-dived. The partnership between KTF and DoCoMo is expected to boost the long-term prospects for both companies. KTF, by adopting developed mobile Internet solutions, will be able to distinguish itself from mobile giant SK Telecom in the local market, said Jang Sung-min, an analyst at Samsung Securities Co. KTF projects the alliance with DoCoMo will result in a hike of over 1 trillion won in sales revenue over the next seven years. Following the deal, DoCoMo has become the second-largest shareholder of KTF behind KT, which has 48.7 percent. by Seo Ji-eun