SK Telecom forges strategic partnership with Kakao through stock exchange

By Lim Chang-won Posted : October 28, 2019, 10:14 Updated : October 28, 2019, 12:46

[SK Telecom & Kakao]


SEOUL -- South Korea's top mobile carrier SK Telecom announced a strategic partnership with Kakao, the web service company which operates a popular messenger app, through a stock exchange program to put aside their rivalry and cooperate in Information and communications technology (ICT). They expect great synergies in competing with global players.

The two companies said in their regulatory filing on Monday that they would spend some 300 billion won ($256 million) each for their stock exchange on November 5. SK Telecom (SKT) will acquire 2.53 percent of Kakao shares while Kakao will secure a 1.57 percent stake in SKT.

Kakao, which runs Daum, a second home-grown web portal in South Korea, has diversified its business into mobility service, internet banking, blockchain and gaming. Kakao Talk, a smartphone messenger app, provides easy data-sharing and group chat features and attracts users with one-stop mobile shopping services and digital payment service.

SKT said the two companies agreed to closely cooperate in telecommunications, commerce, digital content and future ICT through a joint synergy consultative body while pushing for mid- to long-term cooperation in future ICT areas such as artificial intelligence and internet of things (IoT). The mobile carrier has developed various 5G technologies.

The two companies would combine their service capabilities in telecommunications and provide new shopping experiences to customers in the e-commerce sector. SKT's media platform would be combined with Kakao's intellectual property and content production capabilities.

"This partnership with Kakao will be an important starting point for the flagship companies in the mobile platform sector and 5G, which will be the core of future ICT, to join forces and strengthen the competitiveness of South Korea's ICT ecosystem," said SKT's mobile network operation head Yoo Young-sang.

Kakao's co-CEO Yeo Min-soo said that the partnership would help the two companies "secure competitiveness to match global players and provide users with new experiences and values."

"Unlike simple business cooperation contracts, this cooperation will involve mutual stock exchanges, enabling stronger and more forward-looking partnerships," Kakao's executive vice president in charge of investment and strategy, said, adding that the two companies would unveil detailed business cooperation plans quickly while holding mutual stakes for at least one year.
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