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SK Telecom, EarthLink to put $100 mln each in JV

Mon Jul 2, 2007 2:29am EDT

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Mergers & Acquisitions

(Adds details, dropped investment in A.D. Chips)

SEOUL, July 2 (Reuters) - South Korea's SK Telecom Co. (017670.KS) and U.S. Internet service provider EarthLink Inc. (ELNK.O) plan to inject up to $100 million each in Helio, their loss-making U.S. mobile telecoms venture, SK said on Monday.

SK has been in talks with EarthLink to put up more funds for the venture, set up in 2005 and launched in 2006.

"Our initial investment in the venture has been spent, and we will need to inject more money during the second half," said Kim Hye-jin, a spokeswoman at SK Telecom.

The timing and the exact amount of the investment have not been set, but EarthLink would also make the same amount of investment to maintain its stake, Kim added. Helio, which hopes to ramp up in the highly competitive U.S. market by going after young customers, expects to post a net loss of $330 million-$360 million in 2007, compared with a $192 million shortfall in 2006, SK said previously.

Separately, SK Telecom said on Monday that its board decided to drop a proposed $66 million investment in a domestic mobile chip company, Advanced Digital Chips Inc. (054630.KQ).

SK had agreed earlier this month to buy new shares and convertible bonds of A.D. Chips to become the latter's top shareholder, hoping the deal would help it develop new mobile services.

SK Telecom shares fell 1.41 percent to 210,000 won by 0138 GMT, lagging the wider market's 0.31 percent gain.

A.D. Chips tumbled 14.93 percent to 14,250 won, against the Kosdaq market's .KQ11 0.59 percent rise.

((Reporting by Rhee So-eui, editing by Sei Chong; Reuters Messaging: soeui.rhee.reuters.com@reuters.net; soeui.rhee@reuters.com +822 3704 5650)) Keywords: SKTELECOM EARTHLINK/

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