SK Telecom announced the decision to purchase SK Networks’ leased line business and issue new shares of its subsidiary, SK Broadband.
Under the deal, SK Telecom would pay KRW892.9 billion and assume KRW654.1 billion of assets and KRW627.8 billion of debt.
The acquired business includes the mobile telecommunication transmission network which is expected to secure sufficient network capacity for the company’s mobile phone service.
The acquisition will allow SK Telecom to increase its mobile phone network self-sufficiency rate from 51% to 92%, expanding its optical cable from current 4,947 kilometres to 88,416 kilometres.
The company could also reduce their rental cost of leased lines which currently reaches KRW300 billion annually.
Once the deal is signed, the business transfer agreement will go through a two-month approval process of the Korea Communications Commissions and be completed in September when the company settles the payment.
Dong-Hyun Jang, CFO of SK Telecom, said: Concerns were constantly raised that SK Telecom was too dependent on outside network resources. However with this agreement, SK Telecom will be able to greatly enhance efficiency in network operation and costs.
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