Telecom giants unite to tackle global markets

BARCELONA, Spain - For a business partnership between industry giants to be formed, four months is far from sufficient enough time under usual circumstances. But Korea’s top carrier SK Telecom and its German counterpart Deutsche Telekom announced here Monday on the sidelines of the Mobile World Congress that they would collaborate in varying areas just a quarter after their CEOs - Jang Dong-hyun and Timotheus Hottges - first met in Seoul.

The fields of partnership range from the Internet of Things and media platforms to the standardization of information and communications technology, including next-generation 5G connectivity. And they vowed at a joint press conference Tuesday to come up with a more tangible outcome in the coming four months.

The partnership was made possible as both telecom operators face the challenging task of sustaining growth by diversifying business models. For SK Telecom, the collaboration also provides a stepping stone in its renewed push for globalization after negligible achievements in that arena to date.

“Business in the domestic market is difficult in my experience, and the global market offers many more opportunities,” Jang said at the conference in Barcelona. “It takes lots of time and investment to succeed in globalization without the help of a powerful network with accumulated experience. Collaborating with a company already equipped with such a network - Deutsche Telekom, for instance - will make access to global customers easier.”

Deutsche Telekom operates T-Mobile, the third-largest telecom operator in the United States after Verizon and AT&T, with 60 million subscribers. The telecom bellwether has 150 million subscribers across 14 countries, with a strong presence in Europe.

Hottges’ attendance at the conference was an impromptu move after he heard about it a day earlier. In a highly upbeat mood, he said nothing is more important than partnership in this era of globalization, and after talking to Jang last year, he was impressed by SK Telecom’s agility, creativity of business models and the spirit and speed toward innovations.

“I know all the telecom carriers around the world after making business trips in the past two decades,” he said. “If you look at SK Telecom, it’s just your local telecom operator. But SK Telecom is the best from my point of view.”

He mentioned his new favorite toy, SK Telecom’s portable, tiny UO Smart Beam Laser Projector, saying Deutsche Telekom will launch the product in Germany in the second quarter this year. He added that launching the beam is part of the company’s strategy to concentrate on software platforms and have global partners take care of the remaining portion in its business.

“I am very much in love now [with SK Telecom]. There are butterflies in my stomach,” he said before leaving the podium. “In a sense, this is our honeymoon at the moment and I am optimistic that this relationship will see many handsome babies in the future. But perhaps a little bit earlier than nine months.”

The two CEOs hit it off after their initial meeting in Seoul last October, as they were both born in 1963 and have a similar track record of serving as CFOs before becoming CEOs.

Jang, meanwhile, said he noticed there has been a change in global telecom operators’ perspective on 5G over the past year. Whereas carriers in Korea, Japan and the United States, where the fourth-generation long-term evolution (LTE) network has already heavily penetrated, wished to proceed with the adoption of 5G earlier, European counterparts were negative. But the mood has changed this year, he said. 5G connectivity promises up to 80 times the speed that current LTE-Advanced connection offers and may launch as early as 2020.

“The discussion on whether or not to go ahead with 5G is gone,” Jang said. “It has now become a premise for all telecom operators, and today’s issue is how to create meaningful profits with the service.”

When asked about his impression of the launch events by Samsung Electronics and LG Electronics for their new smartphones on Sunday, he said, “This is the first time I have seen the two players come up with such different strategies,” he said. “I am not sure how customers might accept the approach, but it looks very good to me.”

BY SEO JI-EUN [seo.jieun@joongang.co.kr]