Korean SK Telecom Denies Sprint Buyout Rumors
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Richard Baguley Published on July 26, 2007 Comment on this |
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26th July 2007 - Press reports that Korean telecoms company SK Telecom may buy US network Sprint have been circulating for a while, but it seems that there is no real substance to these at present. In their second quarter earnings call this morning, SK Telecoms CFO Sung Min Ha downplayed the rumors, saying that "during the course of our work, we do receive many different investment proposals and this (Sprint Nextel) was one of those. But as we have already disclosed, we haven’t pursued the proposal."
The financial aspects of a deal would also be difficult for SK Telecom to work out; their value on the stock market is around $28 billion, while Sprint Nextel is valued at $60.45 billion. That's not an insurmountable obstacle (SK Telecom could partner with another company, or borrow the money), but it does make it much more difficult. What is a possibility, though, is SK Telecom buying a minority stake in Sprint. At the moment their only inroad into the US market is a steak in the MVNO (Mobile Virtual Network Operator, a company that resells access to a network) Helio, which is a joint venture between SK Telecom and Earthlink. Helio uses the Sprint network. SK Telecom is looking for ways to expand their reach beyond South Korea, a nation where four out of five users already have cell phones.
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