SK Telecom to buy leased-line business from affiliate

SEOUL, May 22 (Yonhap) -- SK Telecom Co., South Korea's largest mobile carrier, said Friday that it agreed to purchase a leased-line business from a sister company in an effort to reduce costs.

The company said it will pay SK Networks Co. 893.9 billion won (US$719.2 million)
for the leased-line business that is involved in connecting mobile phone networks
to radio receivers and transmitters.
The agreement also calls for SK Telecom to assume 654.1 billion won in SK
Networks' assets and 627.8 billion won in debt. SK Telecom said it will complete
the payment by September.
The deal should win approval from the state telecom regulator, Korea
Communications Commissions, as the leased-line industry is deemed a key sector
and is closely monitored by the government.
SK Telecom said it expects a significant reduction in rental costs of leased
lines as the purchase is likely to raise its mobile phone network
self-sufficiency rate to 92 percent from the current 51 percent.
"There is concern that SK Telecom depends too much on outside network resources.
However, with this agreement, SK Telecom will be able to greatly enhance
efficiency in network operations and costs," said company chief financial officer
Jang Dong-hyun.
Since 2002, SK Telecom has spent some 300 billion won a year to use leased lines
owned by SK Networks, the mobile carrier said.