Friday, April 17, 2009

KT Freetel to exit U-Mobile

KT Freetel Co, the second-largest South Korean wireless service provider, plans to exit its investments in U-Mobile Sdn Bhd.

In its filing to regulator, KT Freetel said it will sell its entire 62.6 million shares to U-Mobile's major shareholder.

Bloomberg reports that KT Freetel plans to sell the 16.5 per cent stake for at least US$100 million to "avoid losses on its investments".


In December 2007, KT Freetel and Japan's NTT DoCoMo each agreed to invest US$100 million into the mobile operator, and each will take a 16.5 per cent stake.

Both "will jointly participate in U Mobile's management and draw on their 3G expertise to enhance U Mobile'scompetitiveness," a joint statement said.


It is never easy for a new mobile player to compete in the highly saturated market, especially when the big three players are defending their market share aggressively.

I remembered asking DiGi.Com Bhd CEO Johan Dennelind on his view on new entrants such as the MVNOs, U-Mobile etc. His reply: "I have seen a lot of adex (advertising expenditure) and share of voice, but I have seen very little impact on the revenue market share, none basically. If you count SIM cards, yeah, maybe it's noticeable. But, so far very much according to what I expected. It is very hard (for the new entrants) to come into the market, which currently has three very strong players, and many positions have been taken."

Will NTT DoCoMo be next to exit?



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