SK Telecom in Deal with Kakao to Quell 'Pointless' Rivalry
29 October, 2019
Korea's top mobile provider SK Telecom has teamed up with messaging app giant Kakao in an unusual share swap that will end their bitter rivalry in major business areas.
The two have been rivals in almost all mobile and digital services such as navigation, ride hailing, music and artificial intelligence.
They announced on Monday that SK Telecom will sell 1.27 million shares worth W300 billion to Kakao, which will in turn give 2.18 million stocks worth the same amount to SK (US$1=W1,171).
The exchange will result in SK owning a 2.5 percent stake in Kakao to become the fourth largest shareholder, while Kakao will own a 1.6 percent stake in SK Telecom.
The deal was accelerated when SK Group chairman Chey Tae-won met Kakao board chairman Kim Beom-soo, last month and agreed that their "meaningless and attritional competition would only encourage foreign companies to take over the Korean market."
"Each brand will remain as it is but share new technologies and not engage in harmful competition," they added in a statement.
For example, they will cooperate to develop AI technologies and use them for their services NUGU (SK) and Mini (Kakao).
The same goes for the navigation sector, where SK's T map and Kakao Navi are competing, and for digital music, where their respective brands Melon and Flo are pitted against each other.
The partnership pools SK Telecom's 27.99 million subscribers with Kakao's 35 million users monthly to create a virtual behemoth in the IT market.
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