SK Telecom and China Unicom, China’s second largest mobile phone operator and exclusive CDMA cellular service provider, signed an overall contract to establish a Joint Venture company (J/V company) that will take charge of the wireless Internet business in China. As a result, SK Telecom will be setting up a J/V company in the field of telecommunication services. This is the first time China has joined with a foreign company for communication services since China has joined the WTO.



In accordance with the limit of foreign participation the Chinese government allows for value-added telecommunication businesses, SK Telecom will have 49% and China Unicom will own 51% of the J/V company’s share equity. If the two companies agree, the participation of a third company will be allowed in the future. The vice-president of China Unicom will be appointed as the chairman and the executive director of SK Telecom will take the position of vice-chairman of the J/V company’s board of directors. The organization of the J/V company’s management group and capital composition, will be finally determined by the time both companies sign the contract regarding the J/V company by the end of January this year.



This J/V company will build its own portal site and then provide wireless Internet service to China Unicom’s
cellular subscribers with its own brand. In addition, the company will be empowered to develop content and manage subscribers.



The J/V company’s revenues will be generated by the sales of wireless Internet services, content, application
software sales, consulting related to wireless Internet service, the construction of the wireless Internet
platform, and additional sales generated from new businesses.



In particular, the principles for the most favorable distribution of wireless Internet service’s information use
fees, compared to other companies, is clearly stated in the overall contract. In this regard, Korea’s leading wireless Internet companies, that plan to advance into overseas markets, will go into the Chinese market in the form of J/V companies with better conditions. This will greatly contribute to the activation of the wireless Internet market and the increase of revenue.



Through the J/V company, SK Telecom will have an opportunity to launch the world’s best wireless Internet service model into the Chinese market, and secure a new business model that the company can operate by itself overseas.



In 2002, SK Telecom exported a wireless Internet platform to Pelephone of Israel and APBW of Taiwan. Moreover, SK Teletech, a subsidiary company of SK Telecom, executed a contract to supply one million CDMA 1X handsets to China Unicom. Now by directly operating wireless Internet service in China, SK Telecom has laid new groundwork for exporting the world’s best wireless Internet service. China Unicom has over 7 million CDMA cellular service subscribers as of the end of 2002, and is expected to secure 20 million subscribers by the end of this year.



As SK Telecom advances into China’s market with more than 200 million cellular subscribers, the company will strive to assume the leading position in the world’s wireless Internet market based on a cooperative system throughout Northeast Asia. This cooperative joint venture is a giant step toward that end.