SK Telecom announced that the company will advance into the U.S. mobile communications market by establishing a joint venture (JV) company with EarthLink, an Internet service provider (ISP) of the U.S. This is a first for mobile network operators in Asia.

On January 27th at 2 a.m. (26th at midday in the American eastern time zone) at Saint Regis Hotel in New York, high-ranking officials from the two companies included Byung Mu Kim, president of SK Telecom’s branch office in the U.S., Garry Betty, CEO of EarthLink, and Sky Dayton, informally designated CEO of JV company, announced the establishment of a JV company named "SK-EarthLink" in the U.S. To this end, SK Telecom obtained the approval for this matter from its board of directors on January 26th.

To establish the JV company, each company will invest USD 220 million for a 50% equity share of the new company. They will sign a formal contract by February of this year, and start operating the company through a board of directors with an equal decision-making structure equally shared by the two companies.

SK-EarthLink plans to launch cellular voice and data services across the U.S. by the third quarter of 2005. This will be accomplished by renting networks from network operators throughout the country. This is a so-called partial mobile virtual network operator (MVNO) system. The company is expected to achieve yearly sales revenue of USD 2.4 billion, and have 3.3 million subscribers by 2009. To this end, segmented marketing activities will be carried out for a variety of customer levels.

An SK Telecom official revealed that the business launch in the U.S. market was obtained by SK Telecom within ten months after the company began global business operations in a full-fledged manner under the umbrella of ’new value management’ declared in March of 2004. This will provide great momentum in the Korean IT industry’s active search for new growth drivers, and their exploration of new export markets.

As SK Telecom introduces its advanced wireless Internet platform and ’Killer’ wireless Internet content to the U.S. mobile communications market, domestic content providers, terminal manufacturers, and IT venture companies that have special know-how on wireless Internet servers and terminal solutions, will have an opportunity to make an entry into the U.S. marketplace.

SK Telecom is forecasting that the effect of the company’s business launch in the U.S. on the national IT industry’s exports, is expected to exceed USD one billion by 2008. In addition, the economic effect on the domestic industry will be much higher than people expect, considering the huge growth potential of the U.S. mobile communications market.

The number of cellular service subscribers in the U.S. is expected to reach 300 million in the course of the next five years. Furthermore, cellular subscribers in the U.S. have recently shown great interest in EV-DO network-based wireless Internet services.

EarthLink has a total of 5.3 million Internet service subscribers, large-scale distribution channels, and about 18 thousand dealer shops across the U.S. The company has been offering an Internet service for ten years, and has been at the top in the National Customer Satisfaction Index for three consecutive years. The JV company will generate the very best in synergy effects in the U.S market by combining a U.S. company’s marketing know-how with Korean company’s technologies and ’Killer’ content.

Shin Bae Kim, president of SK Telecom, said, "Last year, we entered the U.S. telecom market with our cellular ring back tone service solution. With this agreement for establishing a JV company, SK Telecom has a great opportunity to demonstrate that our Korean wireless internet technology and content are the best in the world for the advanced market. To explore new growth engines for the company, we will continue to implement overseas business operations in those global markets in which our business partners, and Korean IT entities, can win together.

Garry Betty, CEO of EarthLink, also commented "The consumers in the U.S. have only experienced voice cellular service. Now, the advanced Korean wireless data service offered by JV company has a great potential to reshuffle the U.S. mobile communications market. We are certain that SK-EarthLink will bring a wireless Internet revolution to the U.S. telecommunications market."