SK Telecom announced today that it will become a shareholder of SkyTel, Mongolia’s second mobile service operator, and inaugurate mobile services in Mongolia in July 1999.
In the announcement, the company said that it will own 25% of the SkyTel shares (worth 125 US dollars) and transfer technology in RF engineering and system operation by sending its engineers to SkyTel. In addition, one board member will be appointed by SK Telecom to sit on the SkyTel board of directors.
The company’s decision to enter the Mongolian market is significant in that it is exploring untapped markets and creating new demands outside Korea as the domestic market nears the point of saturation due to intensifying competition among local operators.
Moreover, what adds more significance to the decision is the fact that it heightens the possibility of the company’s venturing into more less-developed markets in the future such as China, Southeast Asia and Latin America because the decision was based on the company’s superior technology and operational know-how.
The company has become as a success story for a mobile operator that has gone abroad by making an agreement to supply its surplus equipment and technical services to make profits in the overseas markets.
Of the total of 1.608 million dollars SK Telecom earned from the sale of one set of switching system, seven sets of base station equipment and technical services, 1.25 million dollars will be paid for the 25% ownership and 358,000 dollars will be given to the company in cash.
SkyTel is a company 40% of whose shares are owned by Mongolian entities including UnivCom, 35% by Taihan Electric Co., Korea, and 25% by SK Telecom. SK Telecom will start providing services in the capital city Ulaanbaatar early July based on its analogue equipment and technology and gradually expand the service coverage to include such local cities as Erdenet and Darhan.
The company says it will push for introducing CDMA systems into Mongolia and its neighboring countries in coming years.