SK Telecom to buy $720 mln network, affiliate shrs

SEOUL, May 22 (Reuters) - SK Telecom (017670.KS), South Korea's top mobile carrier, said on Friday it would buy a network business for 892.9 billion won ($719.5 million) from sister firm SK Networks (001740.KS).

The acquisition will save SK Telecom about 300 billion won in line leasing costs a year, SK Telecom said in a statement.

SK Telecom also said it would buy new shares in SK Broadband 033630.KS, a high-speed Internet provider controlled by SK Telecom. SK Broadband, 43.4 percent owned by SK Telecom, is offering new shares, expected to be worth 300 billion won, to secure funds for long-term growth.

Shares in SK Broadband fell 4.44 percent by 0050 GMT, lagging the flat Kosdaq market .KQ11.

"There had been expectations that the newly acquired network assets would be invested in SK Broadband. Share prices are falling due to disappointment," said Daniel Jin, an analyst at Goodmorning Shinhan Securities.

In 2008, SK Networks had about 500 billion won in sales from its network business, mostly line leasing, analysts said.

Shares in SK Telecom, which has about half of South Korea's mobile service market, rose 0.85 percent, outperforming the KOSPI's 0.72 percent loss. ($1=1241.0 Won) (Reporting by Jungyoun Park and Rhee So-eui; editing by Ken Wills)