updated 04:40 pm EDT, Tue July 15, 2008
SK Telecom May Buy Sprint
Korean communications giant SK Telecom is discussing buying out third-largest American cell carrier Sprint, CNBC claims. Although technically smaller than Sprint, sources say SKT hopes to bring a private equity group into the deal that would give it enough financial clout to complete the deal. The Korean company allegedly wants any takeover to occur on friendly terms and is proceeding slowly, with any possible agreement still uncertain and weeks away at the earliest.
SKT's Korean nature also means it must be cautious and comply with US regulations concerning foreign ownership, although such large deals aren't unprecedented and were preceded by Deutsche Telekom's takeover of VoiceStream in 2001, later changing the carrier's name to T-Mobile USA.
The deal would represent a significant return to American involvement for SKT, which gave up direct control of a US carrier when it agreed to Virgin's takeover of Helio last month and gave up most of its stake in the resulting company.
It also potentially upsets the US cellular market. Sprint has continued to lose customers even as it tries to regain favor by simplifying its plans, offering unlimited data services, and introducing more designer phones such as the Samsung Instinct. An improved Sprint would both be shored up against T-Mobile and would be in a better position to compete against AT&T and Verizon, which currently have substantial leads in active subscribers.