SKT, Kakao seek ‘strategic partnership’ in share swap deal

Putting aside competition over mobile apps and smart speakers, two companies aim for future cooperation in content and e-commerce

Published : Oct 28, 2019 - 18:11 Updated : Oct 29, 2019 - 09:18

South Korea’s biggest mobile carrier SK Telecom and the country’s largest chatting app operator Kakao said Monday they will enhance business partnership by exchanging stakes with one another.

According to the two companies, SKT will sell 300 billion won ($256 million) of its shares to Kakao and the internet company will issue new shares to the telecom firm. The exchange will allow SKT to secure a 2.5 percent stake in Kakao, while Kakao will obtain a 1.6 percent stake in SKT.

The share swap is expected to pave the way for extensive cooperation in the telecom business, mobile commerce, digital contents and other information technology areas where the two companies can exercise their business prowess, they said.

“Our partnership with Kakao will be an important starting point for strengthening the competitiveness of Korea’s ICT ecosystem,” said Yoo Young-sang, who leads mobile network operation division at SKT.

SKT's Mobile Network Operation Division chief Yoo Young-sang(left) shakes hands with Kakao's co-chief Yeo Min-soo. Yonhap

Kakao’s co-Chief Executive Yeo Min-soo echoed the sentiment, saying its cooperation with the country’s biggest telecom firm would “offer consumers new services and improve competitiveness against global tech giants.”

While the two companies still compete against one other in mobile navigation apps, smart speakers and other tech businesses, Industry sources expect that Monday’s announcement will help leverage their respective business strength and create more areas of cooperation.

For example, mobile cartoons popular among Kakao users can be adapted into movies by the company’s entertainment affiliate, Kakao M, and broadcast on SKT’s streaming service Wavve as well as its paid-TV service.

Another likely combination is connecting SKT’s online shopping platform, 11Street, with Kakao’s mobile payment system provided by Kakao Pay. Not only can they make the payment process more comfortable, but they can also develop new business with the massive amounts of consumer data, the sources said.

“Since the launch of KakaoTalk in 2010, SKT telecom business’s biggest challenge has come from not local mobile carriers, but Kakao. … Their cooperation would bring an impact that can shake the market,” said an industry watcher.

By Yeo Jun-suk (jasonyeo@heraldcorp.com)