Entry #10 20300156

SKT rolls the dice on game firm in China

May 16, 2008

SK Telecom, the nation’s leading mobile phone operator, has taken a $7.8 million gamble on a Chinese online game company.
The company said in a release yesterday that it has purchased a 30 percent stake in Shanghai Magicgrids Networks.
SKT said in the release that China’s online game industry has explosive potential. It has recorded an average 82 percent sales growth in recent years, and the industry was valued at around 1.2 trillion won ($1.1 billion) last year.
It is SKT’s third contract with a Chinese company this year. The company signed deals with a Chinese global positioning system manufacturer and a music label company in January and March, respectively.
SKT holds a 65 percent controlling stake E-Eye, the GPS maker, and a 42 percent controlling stake in TR Music, the music label company.

In August 2007, SKT became the second-biggest shareholder of China Unicom, a mobile phone operator.
SKT said it wants to become a market leader in China when it comes to convergence services combining mobile phones, music, games and GPS services.
“This year will be a milestone for us because we’re ready to converge services in China. We also hope to position ourselves as a game hub across the Pan-Asian region,” said Lee Suk-whan, head of SKT China Holding Company.
According to market observers, however, SKT’s purchase of an online game company shows it wants to find growth momentum in a sector outside telecoms. Despite China Unicom’s large customer base, it has unimpressive operating profits, said Kim Hong-shik, an analyst at NH Investment and Securities.

By Sung So-young Staff Reporter [so@joongang.co.kr]

SKT wants to escape from maturity maket of Korea. They discovered China's game industry potential and now do their plan. I expect the result of investment and also the result of SKT's future analysis.