SK sees 3.5G boost, no China 3G in 2007

SEOUL (Reuters) - SK Telecom Co. (017670.KS), South Korea's top mobile operator, said on Wednesday China was unlikely to hand out its third-generation (3G) licenses in 2007, despite talk that they might come later this year.

SK Telecom, which made a $1 billion investment in China Unicom Ltd.'s (0762.HK) (CHU.N) bonds last year, is eagerly waiting to offer 3G services in China, the world's largest mobile market.

In South Korea, the company expects its high-speed mobile service to boost the average revenue by about 10 percent per each user shifting to the new network.

Asked when SK expected China to give out 3G licenses, Chief Operating Officer Lee Bang-hyung said: "Regarding Chinese 3G, we're hearing market talk that it will likely come after China's national congress in October."

"(However), it is unlikely to be this year," Suh Sung-won, vice president in charge of global business, said at the Reuters Global Technology, Media and Telecoms Summit in Seoul.

The Chinese congress, expected in October, has a major implication on businesses as well as deciding on leaders of each sector.

Lee expected the users for its upgraded 3G network in South Korea to reach 1.5 million by the end of this year, compared with about 240,000 currently. The company controls more than half of the country's mobile phone market with 20.9 million users at end-April.

SK, which offers services based on CDMA technology, in March launched a nationwide high-speed download packet access (HSDPA) service, an upgrade to 3G W-CDMA network that has developed from the more globally popular GSM standard.

SK is hoping the faster mobile service help grow revenue by boosting Internet browsing and use of multimedia contents such as video calls and music downloads. However, the market has yet to see a data-heavy "killer service" that would make more users subscribe to faster 3G networks.

"As of now, it's difficult to pin point the killer service for 3G networks," Lee said. "We are working to develop services based on visual communication, high-speed Web, global roaming and settlements, among others."

As a costly war to win subscribers in the saturated domestic market weighs on SK's earnings, the company is also keen to grow overseas, especially in neighboring China.

"We're strongly committed to do a telecom business in China," said Suh. "But it is difficult to estimate the value of additional investment we will make."

SK also operates in Vietnam and the United States but has yet to make profits in those markets. Its U.S. mobile venture with EarthLink Inc. (ELNK.O), Helio, is expected to turn profitable only in 2009 as it competes in the highly competitive U.S. market by going after young customers.

"Our global strategy is to concentrate on Asian markets. So we are always looking for opportunity," Suh said. "We plan to concentrate on markets that we already have investments in like China, Vietnam and the U.S."

SK also plans to list its mobile TV affiliate, TU Media Corp., but has not decided on timing and details, the executives said. SK owns a 33 percent stake in TU Media.

"We plan to list TU," said Jee Dong-seob, vice president in charge of marketing strategy. "It's not decided whether we'll go for a domestic market or foreign markets such as Nasdaq."

Shares in SK, South Korea's eighth-biggest stock, rose 1.4 percent by 0509 GMT, outperforming the wider market's 0.4 percent gain.