SK Telecom Backs Out Of U.S. By Selling Virgin Mobile Stake To Sprint
Thursday, July 30, 2009; 3:00 PM
SK Telecom (NYSE: SKM) had such big aspirations for the U.S., and now it looks like all its efforts are for nothing.
SK Telecom's entrance into the U.S. kicked off with a bang a few years back with Helio, a joint venture with Earthlink (NSDQ: ELNK). The South Korean telecom operator sunk hundreds of millions of dollars into that venture, only to sell the company to Virgin Mobile USA (NYSE: VM) a year ago for a paltry $39 million. This week, it's exit is far from spectacular. The company has agreed to sell its entire 15.3 percent stake in Virgin to Sprint (NYSE: S) for much less than a fortune.
Yesterday, Sprint Nextel agreed to acquire Virgin for $483 million. SK Telecom spokeswoman Lauren Kim told the WSJ that the company's stake in Virgin Mobile would be diluted to below 1 percent following Sprint's acquisition. "This means there is no strategic value for us so SK Telecom has decided to sell the entire stake when market conditions are favorable."
According to AFP, the percentage will be closer to half a percentage at .53 percent. It's unknown how much SK Telekom will make for its stake because the sale price and timing hasn't been set yet, Kim said.
But considering that Sprint's trading at around $4 a share, it probably won't be anything close to what SK Telecom has invested in the U.S. over the last few years.