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September 29, 2009

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Unicom buys back SK stake

CHINA Unicom has agreed to buy back its stake from SK Telecom for HK$10 billion (US$1.3 billion) after SK offered to cease a three-year alliance.

The country's second-largest mobile phone carrier said it will repurchase the 3.79-percent stake held by SK Telecom at HK$11.105 per share, 1.4 percent lower than Unicom's last close in Hong Kong trading.

The stake, equivalent to 899.7 million shares, will be cancelled after the buyback. Total shares of China Unicom will be reduced to about 22.868 billion from 23.768 billion, Unicom said yesterday in a statement to the Hong Kong Stock Exchange. Shareholding interest will be increased as a result of the reduction in the number of issued shares, the statement said.

"After the share repurchase, China Unicom will be pleased to maintain the sound cooperation partnership with SK Telecom," China Unicom Chairman Chang Xiaobing said.

SK Telecom, South Korea's largest carrier, bought US$1 billion of Unicom bonds in 2006 and converted the investments into stock a year later to become Unicom's second-largest shareholder with a stake of 6.6 percent.

But its stake was diluted to less than 4 percent after China Unicom merged with China Netcom in the country's telecom industry reshuffle early this year. Meanwhile, China Unicom sold its CDMA business to China Telecom and attained a 3G license based on WCDMA technology. SK's strengths lie in its CDMA business.

Earlier this month, Spain Telefonica SA reached a deal with China Unicom for each to buy US$1 billion worth of the other's shares.

China Unicom fell 5.15 percent to 10.68 yuan yesterday.



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