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".

Flashback:

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.

Analysis:

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."

http://telcoblog.nst.com.my/2008/12/digi-ceo-talks-about-industry.html

Will NTT DoCoMo be next to exit?

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