EarthLink, SK Telecom link arms
The 50-50 joint venture will be a mobile virtual network operator, offering services by piggybacking on established operators.
The deal is the biggest overseas investment by SK Telecom, South Korea's top mobile phone operator, since it turned to overseas markets to drive earnings. Growth in Asia's third-largest mobile market has slowed, with three out of every four people having a mobile phone.
EarthLink, the fourth largest U.S. Internet service provider, and SK Telecom will each contribute $220 million to 50-50 joint venture SK-EarthLink over the next three years to become.
Mobile virtual network operators do not own networks and set up brands and services by piggybacking over established operators.
SK said it could not reveal which wireless operators would provide networks for the services, but SK is in a strategic alliance with Verizon Wireless, the No. 2 U.S. wireless carrier, to foster such services as data roaming, video-on-demand and TV phones.
Verizon Wireless currently provides the only U.S. service based on EV-DO, technology that delivers Web surfing to phones at speeds similar to many home computers, and at the same data speed as third-generation phone services.
"We think this is the right time as the U.S. mobile market is still in a growing stage, with carriers rushing to launch high value-added services such as EV-DO and wireless data services," SK Telecom chief executive officer Kim Shin-bae told analysts.
The venture plans to launch services in the third quarter of this year and aims to control 2 percent of the U.S. mobile market by 2009, generating $2 billion in revenue, Kim said.
SK, which is seen by many analysts as a global pioneer of advanced services such as wireless voice and data offerings including interactive gaming, video streaming and location-based services, controls 51 percent of the South Korean market. It serves 18.8 million customers.
"SK-EarthLink has the potential to reshape the mobile communications market by meeting the growing demand of U.S. consumers who are currently underserved by existing voice-oriented wireless operators," Garry Betty, EarthLink's chief executive, said in a statement.
The partnership could make sense to EarthLink because, like its larger rival America Online, it is losing premium dial-up subscribers to cable and phone companies that provide high-speed service at only slightly higher prices for access to the Internet that is 10 times faster.
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