Videocon & SK telecom talk over offloading of shares (South Korea)

www.WirelessFederation.com/news: In a latest attempt to bring in a foreign partner for the fledgling mobile phone services, Videocon Telecommunications has started talks with Korea’s Sun Kyung (SK) Telecom to sell a 26% stake. Rs 3,600 crore is expected by the founding Dhoot family from the sale valuing Videocon Telecommunications at a little over Rs 13,000 crore ($3 billion), an amount the analysts feel is too much and estimating the worth of the company at only about $2 billion.

SK Telecom has nearly 50% market share in South Korea and has been scouring for opportunities overseas lately and as far as the Videocon Telecommunications is concerned it has also been linked to a buyout by Mukesh Ambani’s Reliance Industries, whose board is believed to have recently authorized its re-entry into the telecoms space following the peace deal between the Ambani brothers. SK Telecom already provides phone services in China, the US and Vietnam and last month it announced new ventures in Malaysia and Indonesia

No comment has been made by Videocon Group chairman and MD VN Dhoot on a potential deal with SK Telecom but he asserted that the company is evaluating proposals from global communications firms for a strategic partnership.

According to one of the analysts, Mr Dhoot has publicly said that the telco is worth over Rs 12,000 crore, but it remains to be seen if any investor will enter at this price, which we consider a premium, especially under current market conditions and added that the global firms wanting to enter the world’s fastest-growing telecoms market would only pay a premium for a controlling stake and not minority ownership.

Talks with the UAE’s Etisalat and Turkish telco Turkcell had been abandoned by the Dhoot family amid differences over valuation and its talk with Norway’s Telenor also failed as the latter bought Unitech Wireless.