SK Telecom forms an alliance with KakaoSK Telecom and Kakao, until very recently rivals in a number of technologies and services, have agreed to swap stock and broadly cooperate in development and business offerings.
While no concrete plans have been established, the companies say the agreement will help them better compete internationally and help transform the sector as it is challenged by powerful new entrants.
The country’s largest wireless carrier announced Monday that each company would buy the equivalent of 300 billion won ($270 million) worth of shares in the other, leaving SK Telecom with a 2.5 percent stake in Kakao and Kakao with a 1.6 percent stake in SK Telecom.
SK Telecom will sell existing shares to Kakao, while Kakao will issue new shares to the mobile carrier.
SK Telecom said that with Kakao it could conduct research and development into technologies like artificial intelligence (AI) and the Internet of Things (IoT). It could also offer services together with the company.
In the field of digital content, SK Telecom’s media platform could boost the competitiveness of Kakao’s content production ability, according to the telecommunications operator.
Last month, SK Telecom introduced the Wavve over-the-top media service, which merged the mobile carrier’s Oksusu mobile video streaming app and Pooq, a joint video-on-demand platform formed by Korea’s three terrestrial broadcasters.
The two firms haven’t developed specific plans on how to work together. To maximize synergy, Kakao said co-CEO Yeo Min-soo and SK Telecom’s Ryu Young-sang, head of the mobile network operations division, will hold regular meetings to discuss possible collaboration.
Their partnership is meaningful in that it eliminates unnecessary competition and sets the ground for the two companies to share technologies in various fields, including fintech and mobility, according to a KB Securities report.
“We vow to use this opportunity to raise the overall consumer experience in the domestic ICT industry and to pull up the level of local ICT technology and services,” said Ryu.
“Through the partnership, two representative ICT firms in Korea will acquire the competitiveness to compete on a global scale. We will closely collaborate to revolutionize the Korean ICT ecosystem,” said Yeo.
The two companies have been competing across the board, in mobility, navigation, music, voice assistants, international calling and, most recently, messaging.
BY JIN MIN-JI [email@example.com]