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Press Release
CEOs of the two companies exchange MOUs for merger next January.
Synergy from merger expected to be worth W2.8 trillion by 2004.
The merged company will develop new markets and aims to achieve W4 trillion in annual sales from wireless Internet services by 2005.
Senior executives from SK Telecom and Shinsegi Telecomm
met at the SK Telecom Head Office on June 25 to discuss a merger of the two firms. The two sides agreed to proceed with the merger in January next year, after the necessary procedures have been carried out at their respective General Shareholders? Meetings.
The two companies announced they will form a merger action committee and working teams to manage the necessary proceedings in July. The necessary legal procedures will be carried out in September, with the merger completed by next January.
The two companies have been pursuing a merger since December 1999, and the actual union will occur two years later. The newly merged company will be a truly global player as the world?s tenth largest mobile service provider in terms of subscribers.
SK Telecom President Pyo Moon-soo said, ?Now, that we?ve agreed to merge, our marketing activities will save W1 trillion by 2004 through joint handset procurement as well as an integrated distribution network and infrastructure. Over the same period, we expect to gain an additional W1.5 trillion by integrating our existing communication networks and by investing in a single cdma2000-1x network. Our support functions will also spend some W300 billion less by integrating IT systems. Thus, we anticipate a synergy totaling W2.8 trillion over three years.?
President Pyo added, ?I am convinced that this merger will develop our business and improve our communication services, ultimately benefiting the shareholders and employees of both companies as well as the general public.?
SK Telecom and Shinsege Telecomm will combine their strengths to develop new markets based on wireless Internet services. Efforts will be made to cultivate these services, which currently represent only 2.3% of total sales, so that they bring in W4 trillion a year, or 20% of total sales, by 2005.
To this end, both companies are bolstering their current wireless Internet services, expanding their platform by linking wired and wireless networks and moving into the mobile commerce business.
Meanwhile, highly skilled people are being exchanged between the two companies to concentrate their talents on areas with high growth potential. These moves will increase the synergy effect and help to normalize operations quickly after the merger is complete.
Reference 1: Merger Process to Date & Future Plans
Dec. 21, 1999: Stock sale agreement signed between SKT and POSCO, giving SKT a 51.18% share of Shinsegi Telecomm.
Dec. 23, 1999: Corporate tie-up reported to the Fair Trade Commission.
Apr. 27, 2000: A 6.5% equity in SKT is handed over to POSCO.
May 16, 2000: FTC approves conditions for corporate tie-up.
Jun. 25, 2001: MOU signed regarding a merger.
Early Jul. 2001: Merger promotion committee will be formed.
Sept. 2001: Merger contract will be signed.
Jan. 2002: Merger registration will be completed.
Reference 2: Significance of Merger Agreement.
1.Enhanced Operational Efficiency
An early merger is expected to reap a synergy effect worth W2.8 trillion by 20004. In addition, the two companies will combine their frequency spectrum, improving the frequency utilization rate. The organization will be redesigned as well, with topnotch people being reassigned to growth sectors. Thus, personnel utilization will also be improved.
2.Stronger International Competitiveness
The merger will result in the world?s tenth-largest subscriber base, giving the company the leverage to compete head to head with the best overseas players in the industry. Thus, the new company will be in a better position to conclude cooperative agreements with leading overseas service providers and advance into overseas markets.
3.Stronger Domestic Telecom Market, Greater Benefits to Consumers
The tie-up since 1999 has enabled SKT and Shinsege Telecomm to avoid redundant or excessive investment, eliminating inefficiencies in the domestic market. This move has sparked the market restructuring for deregulation. Excessive competition is giving way to a sounder business environment. Once merged, R&D investment as well as investment in new businesses such as wireless Internet services will be unified. New services can be developed more quickly, enhancing overall service quality for the consumer. In addition, Korean service providers will compete in healthier ways, strengthening the market and providing greater benefits to all customers.
met at the SK Telecom Head Office on June 25 to discuss a merger of the two firms. The two sides agreed to proceed with the merger in January next year, after the necessary procedures have been carried out at their respective General Shareholders? Meetings.
The two companies announced they will form a merger action committee and working teams to manage the necessary proceedings in July. The necessary legal procedures will be carried out in September, with the merger completed by next January.
The two companies have been pursuing a merger since December 1999, and the actual union will occur two years later. The newly merged company will be a truly global player as the world?s tenth largest mobile service provider in terms of subscribers.
SK Telecom President Pyo Moon-soo said, ?Now, that we?ve agreed to merge, our marketing activities will save W1 trillion by 2004 through joint handset procurement as well as an integrated distribution network and infrastructure. Over the same period, we expect to gain an additional W1.5 trillion by integrating our existing communication networks and by investing in a single cdma2000-1x network. Our support functions will also spend some W300 billion less by integrating IT systems. Thus, we anticipate a synergy totaling W2.8 trillion over three years.?
President Pyo added, ?I am convinced that this merger will develop our business and improve our communication services, ultimately benefiting the shareholders and employees of both companies as well as the general public.?
SK Telecom and Shinsege Telecomm will combine their strengths to develop new markets based on wireless Internet services. Efforts will be made to cultivate these services, which currently represent only 2.3% of total sales, so that they bring in W4 trillion a year, or 20% of total sales, by 2005.
To this end, both companies are bolstering their current wireless Internet services, expanding their platform by linking wired and wireless networks and moving into the mobile commerce business.
Meanwhile, highly skilled people are being exchanged between the two companies to concentrate their talents on areas with high growth potential. These moves will increase the synergy effect and help to normalize operations quickly after the merger is complete.
Reference 1: Merger Process to Date & Future Plans
Dec. 21, 1999: Stock sale agreement signed between SKT and POSCO, giving SKT a 51.18% share of Shinsegi Telecomm.
Dec. 23, 1999: Corporate tie-up reported to the Fair Trade Commission.
Apr. 27, 2000: A 6.5% equity in SKT is handed over to POSCO.
May 16, 2000: FTC approves conditions for corporate tie-up.
Jun. 25, 2001: MOU signed regarding a merger.
Early Jul. 2001: Merger promotion committee will be formed.
Sept. 2001: Merger contract will be signed.
Jan. 2002: Merger registration will be completed.
Reference 2: Significance of Merger Agreement.
1.Enhanced Operational Efficiency
An early merger is expected to reap a synergy effect worth W2.8 trillion by 20004. In addition, the two companies will combine their frequency spectrum, improving the frequency utilization rate. The organization will be redesigned as well, with topnotch people being reassigned to growth sectors. Thus, personnel utilization will also be improved.
2.Stronger International Competitiveness
The merger will result in the world?s tenth-largest subscriber base, giving the company the leverage to compete head to head with the best overseas players in the industry. Thus, the new company will be in a better position to conclude cooperative agreements with leading overseas service providers and advance into overseas markets.
3.Stronger Domestic Telecom Market, Greater Benefits to Consumers
The tie-up since 1999 has enabled SKT and Shinsege Telecomm to avoid redundant or excessive investment, eliminating inefficiencies in the domestic market. This move has sparked the market restructuring for deregulation. Excessive competition is giving way to a sounder business environment. Once merged, R&D investment as well as investment in new businesses such as wireless Internet services will be unified. New services can be developed more quickly, enhancing overall service quality for the consumer. In addition, Korean service providers will compete in healthier ways, strengthening the market and providing greater benefits to all customers.